Apple solves mystery of faulty iPhones

Apple's iPhone 4 is the most ballyhooed technology product since, well, the iPad, and the company sure was shocked when it received thousands of complaints almost immediately that calls were disconnecting.

The theory of the problem, many users said, was a faulty antenna that failed to work because it's built into the outer skin of the device. If you hold the phone a certain way, the antenna doesn't work.

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Not so, Apple said today. How you grip any cell phone can affect the antenna. 

The real problem is that the formula the iPhone uses to estimate signal strength "is totally wrong."

Cell phones measure signal strength by bars in the screen. In Apple's case, the bars are in the upper left corner of its screen.

How bad is the formula? Really bad, Apple conceded.

"Our formula, in many instances, mistakenly displays 2 more bars than it should for a given signal strength," the company said in a statement on its Web site today.

And, it mentions almost as an aside, the same problem is in the iPhone 3GS and the iPhone 3G. It doesn't say whether there are problems with the iPad.

How to fix? Apple will use a new signal-strength formula, built by AT&T (T), oft criticized for operating a network that can't handle all the demand from iPhone users. Post continues after video:

While the signal strength won't change, the iPhone 4 will give you a more accurate measurement.

The fix will be available in a few weeks and will also be good on the iPhone 3GS and the iPhone 3G.

Apple shares were off 0.6% to $247 this morning. The stock is down nearly 10% since peaking at $274.07 on June 18.