Come on, Apple, hand over the bumpers

Giving every iPhone 4 user a bumper is the cheapest short-term way to fix the antenna problem.

By Kim Peterson Jul 14, 2010 3:59PM

Credit: (© Paul Sakuma/AP)
Caption: Apple CEO Steve Jobs holds the new iPhone 4Apple (AAPL), would you just give out free bumpers and make this all go away?

The company's ongoing reception problems with its new iPhone 4 can, in many cases, be solved by putting a $30 bumper case on the device. But as Consumer Reports and Information Week note, the user shouldn't have to pay to fix an Apple problem.

From a financial standpoint, it's clearly in Apple's best interest to give a free bumper to any iPhone 4 owner who wants one. Giving cases to 3 million people would cost $45 million, according to one analyst.

That's nothing for a company sitting on $41 billion in cash.

The other options? Apple could repair the 3 million phones, which would cost about $300 million, according to the analyst, Mike Abramsky at RBC Capital Markets. A total recall of the phone would cost $900 million. But every week that Apple spends working on this issue could cost another $200 million.

Abramsky's comments were reported on the AppleInsider blog. Another analyst, Toni Sacconaghi at Bernstein Research, says a full recall of the iPhone 4 would cost Apple $1.5 billion. Rubber bumpers, however, cost the company about $1 each, Sacconaghi estimates.

 

 Post continues after video:

Abramsky thinks free bumpers would cost the company about 4 cents per share. That compares with 24 cents per share for a repair and 71 cents per share for a complete recall.

Abramsky doesn't factor in the cost of bad publicity, or the hit to iPhone 4 sales that the antenna issue is bringing.

Consumer Reports said it could not recommend the iPhone 4 because of the reception problems. Apple shares slid in response.

Apple has been playing down this issue from the beginning. Chief executive Steve Jobs reportedly counseled people to simply avoid holding the phone a certain way to get it to work. The company promises a software update soon, though there is no guarantee that will fix the antenna problem.
If Apple gave out free bumpers, it would have to admit that it shipped a flawed device. I'm sure the company doesn't want to do that.

But it's hard to believe that Apple has let this antenna issue go for so long without a fix. The class-action lawsuits are piling on. The bad publicity isn't going away.

Giving away bumpers is the cheapest and most considerate way of addressing the problem in the short term. As far as a long-term fix goes, it's a good thing the company is hiring some antenna engineers.

Sacconaghi, one of the analysts, is more interested in the growing arrogance that Apple seems to be displaying, according to Cnet:
"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."

At the time of this writing, Kim Peterson didn't own any shares of Apple, nor does she own an iPhone.

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