Toni Sacconaghi, an analyst for Bernstein Research, said in a note to clients on Tuesday that while a full product recall is "highly unlikely," it could theoretically cost the company up to $250 per phone. Sacconaghi estimates 6 million units sold or in transit, resulting in a recall price tag as high as $1.5 billion.
Another option is for Apple to offer an in-store hardware fix, which could cost $75 per phone. Giving away a free bumper case, which currently retail for $29, would be a much cheaper alternative for the Cupertino, Calif., company. Sacconaghi estimates this approach would cost just $1 per unit.
Examining the longer-term consequences for Apple, Sacconaghi turned to "the emerging pattern of hubris that the company has displayed, which has increasingly pitted competitors (and regulators) against the company, and risks alienating customers over time."
As some examples, the analyst noted Apple's "limited disclosure practices, its attack on Adobe's Flash, its investigation into its lost iPhone prototype (which culminated in a reporter's home being searched while he was away and computers being removed), its restrictions on app development, and its ostensibly dismissive characterizations of the iPhone's antenna issues (i.e., phone needs to be held a different way; a software issue that affects the number of bars displayed)."
Sacconaghi further speculates that "these issues may, over time, begin to impact consumers' perceptions of Apple, undermining its enormous prevailing commercial success."
The report arrives just a day after Consumer Reports — the nation's largest and most trusted nonprofit product review organization — warned that it could no longer recommend the iPhone 4. After conducting its own tests inside a radio frequency isolation chamber, the organization issued a statement on its blog reversing its previous recommendation of the phone.
For its part, Apple earlier this month released an open letter stating that the iPhone 4's ">reception issues
Another Wall Street analyst, Gene Munster with Piper Jaffray, estimated Tuesday that a fix from Apple could impact its operating income by 1 percent. Like Sacconaghi, Munster also suggested the possibility of issuing free bumper cases. Additionally, the analyst said that since only 25 percent of users are affected by the issue, the company could "weather the storm" by doing nothing.
Apple stock was down $5.49 (2.13%) at the market's close on Tuesday.
110 Comments
With $41B in its warchest, my initial reaction was... "That's it?" given operating margins, revenue, and its balance sheet, this would be a drop in the bucket.
So there are perhaps some real reception issues while holding it a certain way. But most everyone I know who has iPhones puts a case on. And from what I know, those who don't have hand sizes and natural positions that don't involve "bridging the gap".
So drop in the bucket + non-issue = an ever more profitable Apple.
A free bumper with your iPhone4 and be done with it!!!
Of coarse, Apple haters will never let it go, but who gives a f__k what they think anyway!
On the other hand, if a software fix is actually possible, that would be even better.
A full recall is not going to happen because the iPhone4 works great with a damn bumper on.
Non-profit? Don't you have to pay for a subscription to their site just to see their reviews?
They'd better get started, then.