Apple offers iPhone 4 refund, free cases

RAW DATA: Watch Apple's official video of the announcement [Note: Apple's site has been re-directing traffic to the original iPhone 4 announcement from June 7. If you get redirected, copy and paste this URL ito your browser:  http://events.apple.com.edgesuite.net/100716iab73asc/event/index.html]

RAW DATA: Watch Apple's official video of the announcement [Note: Apple's site has been re-directing traffic to the original iPhone 4 announcement from June 7. If you get redirected, copy and paste this URL ito your browser:  http://events.apple.com.edgesuite.net/100716iab73asc/event/index.html]


Ahead of Apple's press conference this morning, Microsoft New Zealand's recently departed CTO, Brett Roberts predicted:

"Although it pains me to say it: Steve will announce an iPhone 4 fix process which will inspire awe and much media fawning."

And lo, it has come to pass.

Apple chief executive Steve Jobs turned in another brava performance this morning as he addressed the so-called Grip of Death reception issue at a Cupertino press conference held 10am Friday US West Coast time (5am Saturday NZ time).

A mounting PR disaster has been diffused with a relatively deft solution. To wit:

All iPhone 4 customers are being offered a free bumper case (wrapping a case around the handset prevents your hand making direct contact with the external antenna on the lower left of the phone, causing the reception problem). 

Apple's official rubber bumper (pictured above) is available in six "two-tone" colours: white, black, blue, green, orange and pink.

The free case must be claimed by September 30.

A spokesman for Vodafone NZ said the iPhone 4 would "probably" be sold with a free bumper when the handset is released here.

And there will be a refund for those who have bought an iPhone 4 case already (Apple's official bumper case costs $US29).

If an iPhone 4 customer is still unhappy they can claim a full refund if they return their handset, undamaged within the next 30 days.

Those who chose to return their iPhone 4 will not have to pay any contract penalties to US carrier AT&T.

An iOS4 software update has also been released to ensure the iPhone's five signal bars better reflect actual signal strength. A future iOS4 upgrade is promised to help the handset better deal with the actual reception problem.

Apple has sold more than three million iPhone 4s since the handset's June 22 release in the US, UK, Germany, France and Japan.

A swathe of additional countries are due to get the iPhone 4 on July 30. New Zealand is on the July 30 list, but Vodafone has yet to confirm any release date.

He can't help arguing the toss
Although offering the comprehensive free remedy that everybody from the flip-flopping Consumer Reports to US senator Charles Schumer had demanded, Mr Jobs still attempted to play down the issue.

AT&T had supplied data showing that the iPhone 4 dropped more calls than its predecessor, the iPhone 3GS, said Mr Jobs.

But the total number of problem calls was still negligible, the Apple boss said.

“This has been blown so out of proportion that it is incredible,” Mr. Jobs told the press conference.

Only 1 in 200 customers had encountered the issue, the Apple boss claimed.

AT&T's iPhone 3GS return rate was 6%; the iPhone 4 return rate so far was 1.7%.

Nevertheless, with Apple shares having dropped from around $US269 to around $249 since the controversy broke, perception was as important as reality - and Mr Jobs clearly felt he had to act.

No worse than the others, he reckons
Although tests by Consumer Reports found the iPhone 4's reception issue worse than that of other smartphones, Mr Jobs displayed a video showing that Google Android-based phones and BlackBerries also suffered degraded reception when held in a certain way.

Market bets people will keep their iPhone 4
As Mr Roberts predicted, the market seemed awed, or at least adequately impressed.

Investors appeared to be betting that most would choose to keep their iPhone 4 rather than claim the refund.

Apple's shares (NAS: AAPL) were up in trading immediately following the announcement. They closed down 0.62% to $US249.90 (against a broader Nasdaq fall of 3.11%), but were marginally positive in after-hours trading.

The only loser are the IT accessory companies that have been churning out iPhone 4 cases.

On Thursday, one importer told NBR they had a load of silicone cases landing in September. They might want to cancel that order.

Apple's solution may also be problematic for New Zealanders who have snaffled an iPhone 4 before the handset's official local release.

However, early adopters spoken to by NBR have either not encountered the reception issue, or only encountered them occasionally (read: Grip of Death strikes in Auckland).

Mr Roberts suggested that the next iPhone, like Mr Jobs, come with a Teflon coating.

MORE: Jobs - White iPhone 4 July 30

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