Apple faces backlash over latest iPhone

July 14, 2010

Apple is facing a growing backlash over poor iPhone 4 reception issue after the technology group blocked links on its user-support pages to a negative review by an influential US consumer watchdog.

Consumer Reports, the non-profit magazine, on Monday published a review online where it tested three iPhone 4s in controlled settings and found that touching the lower left corner “can significantly degrade” the signal, causing dropped calls.

Apple deleted references in several online forums to the consumer group’s online posting, leading investment blogs to pounce on what they described as censorship in the Apple-hosted forums.

Apple shares declined 3 per cent in midday trading to $250.

Most Wall Street analysts said they did not think the antenna issue would seriously hurt sales of the iPhone 4. “In our experience, concerns around product issues tend to be overblown,” Ben Reitzes, Barclays analyst, wrote to clients on Tuesday. “We do not believe these issues will materially impact Apple’s product momentum.”

Apple last month sold an industry record 1.7m units in the first three days of availability, topping even the most optimistic projections. It is expected to update that figure when it releases earnings results on July 20. Consumer Reports praised other features in the iPhone and actually ranked it higher than any other smartphone it tested recently.

Apple has maintained that all phones have some areas where contact will decrease connectivity and told buyers either to avoid holding the iPhone 4 in a way that covers the corner in question or to buy a $29 accessory – a bumper that wraps around the metal edge of the phone.

But Apple’s new design is the first of its kind. “The reality is that the antennas are now external, meaning there is no layer of insulation between a user and the antenna”, said Shaw Wu, Kaufman Bros analyst. He warned that increased focus on the issue “could create risk” to sales estimates.

Apple had earlier fanned the flames by denying there was any reception problem.

It originally said the real culprit was software that displayed a higher number of “bars” than appropriate, indicating greater signal strength than was warranted. Touching the left corner therefore showed a precipitous drop in connectivity instead of a minor pullback, Apple said, and it promised to fix the display issue with a software patch.

Consumer Reports faulted that explanation in its posting this week, saying that “Apple needs to come up with a permanent – and free – fix for the antenna problem before we can recommend the iPhone 4.”

SOURCE: FT.com

Posted By Russ · In Industry 

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