July 16, 2010 12:18 am

Apple to address iPhone 4 problems

Apple will use a rare on-campus press conference on Friday to address complaints about the iPhone 4’s reception, but will not issue a full recall for the devices, people familiar with the matter said on Thursday.

Investors had seen a recall as a remote but unnerving possibility, with a cost estimated at $1bn to $1.5bn.

Other possible steps by Apple could also disrupt sales, but are unlikely to seriously dent the company’s progress, analysts said. The iPhone has become Apple’s flagship product since its introduction in 2007, with the iPhone 4 selling a record of 1.7m units in the first three days it was available.

Apple could offer free bumpers, normally priced at $29, that wrap around the innovative metal antenna that circumnavigates the phones. That would solve the main problem, where touching the lower left corner of the antenna can reduce connectivity, causing calls to drop and Web pages to stop loading.

Apple might also announce a change in the manufacturing process, putting something inside the phones to mitigate the impact of touching, or a coating of some kind. It could then allow buyers who are experiencing problems to exchange their purchases or have them modified at stores.

Perhaps as important as the concrete measures Apple will take is the tone it adopts. Apple has been on an upward trend for years, most recently upending the mobile phone industry and introducing the iPad, the first tablet computer to catch on with a mass audience.

Throughout its dramatic growth in sales and stock market value, Apple has stuck to a closed formula that includes choices in industrial design, software and business allies. The final arbiter of all those decisions is chief executive Steve Jobs.

When the resulting products have been hits, Mr Jobs has been hailed as a genius. But in a rare misstep like that with the antenna problem, Apple can be seen as arrogant. It has until now instructed iPhone 4 buyers to hold the phone differently or buy a bumper and await a software patch, distributed on Thursday but that did nothing to improve reception.

Many Apple fans and investors will closely listen to the company on Friday for signs of contrition and for a full explanation about the choices it made in the past, as well as how it intends to remedy the current problem.

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