Chatter over Consumer Reports revoking their recommendation of the iPhone 4 has spurred many a debate over whether or not Apple should recall the latest iPhone. The likelihood of such a massive recall would not only tarnish Apple’s reputation but it would cost an estimated $1.5 billion, says Bernstein Research analyst Toni Sacconaghi.
“It could be done immediately, would directly address the Consumer Report’s concern, and would be financially immaterial,” Sacconaghi wrote. “While it would force Apple to ‘acknowledge’ a design issue with the iPhone, we believe that consumers are increasingly aware of the antenna issue, and remedying it rather than dismissing or ignoring it appears most appropriate.”
While “PR experts” or “crisis management experts” can mouth off all they want about what Apple should do, the fact of the matter is they won’t recall the iPhone 4 unless it starts to catch on fire or explode. The software patch that Apple promised in its open letter earlier this month will only remedy the 2-year-old reception display issues and not the apparent hardware issue causing reception woes. A cheaper alternative than handing over 3.5 percent of its cash on hand would be to issue free bumper cases, which would only cost $1 per unit.
In the grand scheme of things Apple’s ego could potentially alienate current and future customers with the way it’s handled multiple major events of the last few years.
(More on Techland: How To Fix iPhone 4 Reception Issues With Scotch Tape)
“Perhaps the bigger, longer-term concern for Apple investors is 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,” Sacconaghi wrote. “Examples of its behavior have included its limited disclosure practices, its attack on Adobe’s Flash, its investigation into its lost iPhone prototype, its restrictions on app development, and its ostensibly dismissive characterizations of the iPhone’s antenna issues. The worry is that collectively, these issues may, over time, begin to impact consumers’ perceptions of Apple, undermining its enormous prevailing commercial success.”
For what it’s worth, I have yet to replicate any reception issues with the unit I received, but I am having battery issues.
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