July 13, 2010 8:12 pm

Apple faces backlash over latest iPhone

 
An iPhone 4 buyer shows off his new purchase

Apple sold 1.7m units of the iPhone 4 in three days

Apple was on Tuesday facing a growing backlash over poor iPhone 4 reception 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 that stated it had tested three iPhone 4s in controlled settings and found that touching the lower left corner “can significantly degrade” the signal, causing dropped calls.

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

Apple declined to comment on the forum issue; it has previously intervened to eliminate records of criticism on other topics.

The restrictions did not stop the debate – even on Apple’s pages. “If they don’t have a fix for this soon, I’m going to return mine” wrote one longtime Apple customer from Philadelphia.

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.”

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