Live Update: iPhone 4 press conference

9:56 Hi everybody. This is Jason Snell reporting live from Cupertino at the site of Apple’s iPhone 4 press conference.

9:57 We’re not going to do reader comments today because it’s just me! But thanks and we’re glad you could join us.

9:57 CoverItLive is dynamic so nobody should have to refresh their browser.

10:00 Some jazz is playing as the members of the press get seated and set up their laptops.

10:03 The Town Hall theater in 4 Infinite Loop is only about half full, probably due to the very short notice for this event – we heard about it Wednesday evening and many of our eastern compatriots couldn’t make the trip.

10:04 “The iPhone 4 Antenna Song” is playing

10:04 It’s a YouTube video

10:04 Here’s the link

10:05 Pretty funny. You can watch the video for yourself. But interesting: It basically defends the iPhone 4 and says the media has made too big a deal about it. Subtext?

10:06 “If you don’t want an iPhone 4, don’t buy it / if you don’t like it, bring it back… but you know you won’t”

10:06 Steve Jobs emerges

10:06 15 minute presentation, Jobs says.

10:07 “You know, we’re not perfect. And phones aren’t perfect either. But we want to make all of our users happy. And if you don’t know that about Apple, you don’t know Apple.”

10:07 “So we’re going to talk about how we’re going to do that today. But before we go into that, I want to talk about the problems and about the data we’ve got” that informs us and helps us make our users happy.

10:07 “We have sold well over 3 million since we launched it 3 weeks ago”

10:08 PC World namechecked as listing iPhone as #1 phone

10:08 Highest customer satisfaction of any iPhone or smartphone ever

10:08 However, we started getting some reports of people having some issues with the antenna system, which is very advanced…

10:09 We heard about this 22 days ago and have been working our butts off

10:09 It’s not like we’ve had our heads in the sand for 3 months; it’s been 22 days

10:09 And Apple is an engineering driven company. We have some of the finest engineers here in the world, in the areas that help us create our products

10:09 So we want to find out what the real problem is before starting to work on solutions. So we’ve been working our butts off to come up with real solutions

10:09 And today we want to share with you what we’ve learned.

10:10 Doesn’t sound like a good idea to grip your phone and lose signal. But it’s not unique to the iPhone 4. you can go on YouTube and see videos of other phones doing this, but we needed to do these tests ourselves

10:11 Blackberry Bold 9700, made by RIM. Perhaps the most popular smartphone in business. Video showing bars drop from 5 to 1 rapidly when putting it in a grip.

10:12 Next HTC Droid Eris. Starts off at 4 bars, grip, then goes down to 2 bars. The delay in bar drops is based on an algorithm, phone by phone.

10:12 Samsung phone, same deal, grip in the right spot, the bars go down.

10:14 Jobs: “We could have gone on and on with another 5 or 6 phones. Most smartphones behave exactly the same way. Now these phones were tested in areas of relatively weak signal strength, as other testers have reported. This is life in the smartphone world. Phones aren’t perfect.”

10:14 It’s a challenge for the whole industry, and we’re doing the best we can, but every phone has weak spots.

10:15 Now, we’re not perfect. We made it very visible. What we did was, “X marks the spot,” put a beautiful line in the stainless steel that says, here’s where you touch it, everybody!

10:15 And we had incorrect bars, so when it did drop, the drop looked far more catastrophic than it really was.

10:15 Our choice was to change the bar algorithm, which we put out yesterday.

10:16 Other smartphone makers decide for themselves about how to do this. But this happens to all phones. We haven’t found a way around the laws of physics… yet.

10:16 Photo of a guy in a chair surrounded by various objects, testing phones in massive shielded rooms at Apple

10:17 17 anechoic chambers. $100 million investment. 18 PhD scientists and engineers on our staff. And they do some very advanced antenna design.

10:17 And so the iPhone antenna went through all of this. We knew that if you gripped it in a certain way, the bars were going to go down a bit, like every smartphone. And we didn’t think it would be a big problem.

10:18 So phones aren’t perfect, and it’s a challenge for the entire industry. And we are hoping to make some contributions

10:18 We have learned: Smartphones have weak spots. You will drop reception.

10:18 Next, we have gotten some very interesting information from AppleCare. Whenever anyone calls in with a problem, it’s logged and we have the statistics.

10:19 And we asked, what’s the percent of iPhone 4 users who have called AppleCare with any issues about antenna or reception, or anything near.

10:19 0.55% of all iPhone customers have called AppleCare with an antenna issue.

10:19 So this doesn’t really jive with what you read about this problem.

10:20 AT&T return rates. Like Apple, AT&T has a “buyer’s remorse” return period. People return phones for all sorts of reasons. Reception isn’t what they hopped, they try it and don’t like it.

10:21 AT&T, largest iPhone reseller in the world, compared to iPhone 3GS, which has been the best selling smartphone in history.

10:21 3GS return rates during this period last year were 6 percent, which was below the industry average. For iPhone 4, it’s 1.7%.

10:22 We’ve got the hard data. It’s less than a third the return rates of the iPhone 3GS.

10:22 AT&T call drop rates. Gave them to us 3 days ago.

10:24 AT&T will compare iPhone 3GS drops versus iPhone 4. Additional calls dropped per 100 calls compared to iPhone 3GS. Even though we think the iPhone 4’s antenna is superior, I must report to you that the iPhone 4 drops more calls per 100 than the iPhone 3GS. That’s what the data says.

10:24 But it’s less than 1 call per 100 than the 3GS.

10:25 I have a theory: When the iPhone 3GS came out, it was the same shape as the iPhone 3G, so people could use their old cases.

10:26 And people could use old cases already in stores, so people could buy cases when they bought the phone.

10:26 So iPhone 4, radical new design, not many cases, limited supply of bumpers.

10:26 (Jobs says that’s his theory, but doesn’t know if it’s related, and they’re looking into it)

10:28 It’s very hard, when we look at this data, not to conclude that there is a problem. But it’s a problem affecting a small percentage of users.

10:28 I’ve gotten thousands of emails from users who say there’s no problem for them.

10:28 But, having said this, we care about every user, and we’re not going to stop until every one of those is happy.

10:28 But I think it’s important to understand the scope of this problem. Because the data leads you to the conclusion that it’s been blown so out of proportion, it’s incredible.

10:28 I know it’s fun to have a story, but it’s less fun when you’re on the other end of it. (laughter)

10:28 Let me tell you what we’re going to do.

10:29 First think, we’ve released iOS 4.0.1, which fixes the wrong formula for bars and there was a nasty Exchange bug, and that’s fixed too.

10:29 We recommend that every iPhone owner update to it.

10:29 Second, a lot of people have told us, the bumper solves the signal strength problem. Why don’t you just give everyone a case?

10:29 Okay. Everyone will get a free case.

10:30 Refund if you bought a Bumper.

10:30 For every iPhone 4 purchased through September 30.

10:30 But. We can’t make enough bumpers. So what we’re going to do, is source some other cases and give users a choice of cases. And they’ll be able to pick one.

10:30 Apply on Apple website starting late next week. Pick a case, zoom, we’ll send it off to you. That simple.

10:31 And if you’re still not happy, before or after you get a free case, you can bring your iPhone 4 back undamaged within 30 days for a full refund.

10:31 No restocking fee or anything. We want to take care of everyone. We want every user to be happy.

10:31 “Does that make sense?”

10:32 (Now, some other updates for us…)

10:32 Tracking some problems with the proximity sensor, and we’re working on solutions, and we’ll try to get it fixed in the next software update.

10:32 White iPhone 4 shipping end of July. Quantities limited at first, ramping up.

10:32 And on July 30, we are going to bring the iPhone to 17 more countries – the same 17 we talked about before with the omission of South Korea

10:33 In ending, I’d like to just kind of give you a feel of what we care about and how we operate and how we make decisions.

10:33 We love our users. We really love ’em. And we try very hard to surprise and delight them.

10:33 We work our asses off for them. And it’s great. and we have a blast doing it.

10:33 And we make some pretty interesting products for them. Macs, ipods, iPhones, iPads, Apple TV, App Store, Mac OS X, iLife, iWork, Final Cut…

10:34 What motivates us is to have them love them. We love our users. And we work very hard to surprise and delight them with these products. We also connect them with great apps and developers in our App Store and content through iTunes.

10:34 We’ve built 300 Apple retail stores for them, with the best buying experience in the world and the best ownership experience in the world.

10:35 We do all this because we love our users. When we fall short, we try harder. We pick ourselves up, figure out what’s wrong, and we try harder. And when we succeed, they reward us by staying our users, and that makes it all worth it.

10:36 So that’s what drives us. When we have problems, and people are criticizing us, we take it really personally. Maybe we shouldn’t. Maybe we should have a wall of PR people keeping us away from it, but we don’t. We all read those stories. And we care.

10:36 We’ve been trying to understand this so when we solve it, we really solve it, not slap a band-aid on it.

10:37 The problem here is, Smartphones are limited, we made ours very visible, some people chose to demonstrate it, we screwed up with the display of the bars. So we are giving everyone a case and if you still have a problem, we’ll give you a full refund.

10:37 But the data supports the fact that the iPhone 4 is the best smartphone in the world, and there is no “antennagate,” there is a challenge for the entire smartphone industry someday to improve so there are no weak spots on any phone.

10:37 We love our customers. And we’re going to try to take care of every single one.

10:38 Jobs inviting up Tim Cook and Bob Mansfield to join him on stage for Q&A

10:38 first Q, how’s your health? Jobs: I’m fine. I was better earlier this week, on vacation in Hawaii. But I thought it was important to come back for this. I’m fine. Thanks.

10:39 Q: Are you considering any changes in the antenna design of future iPhones? A: We’ve been kind of preoccupied with this. We’re pretty happy with the antenna design than the iPhone 4. It’s a better antenna than the 3GS in almost every way. We waved a red flag in front of a bull by putting the “grip me here” design and made it very obvious.

10:40 So I don’t know what our next antenna design will be. Maybe our wizards in the antenna lab will come up with something better. But we’re not feeling that this is a giant problem we need to fix.

10:41 Q: Is this a PR problem? Should Apple have had more iPhones in more hands, earlier? A: Well we did, and we do now, and most people aren’t seeing it. If we did this all over again, we’d try to come up with some mitigation, but so far nobody in the industry has been able to do it.

10:41 Q: I can’t do the death grip here. A: WE’ve got strong signal here. We have AT&T and Verizon cell sites on campus.

10:43 Q: Ryan from GDGT. You can cause the signal drop with one finger, not a whole grip. A from Mansfield: On any phone, your body is a signal absorber. And none of us has a walkie-talkie style antenna anymore….

10:44 Q: Were you told earlier? A: You’re referencing the Bloomberg article, and it’s a total crock. We talked to everyone about it. We have a great community of scientists. They debate everything. And it’s healthy. The best ideas win. I’m sure in some corners of the antenna world that was debated hotly, but if anyone had said, look, this antenna has questions, we’re concerned, we would have dispatched the right people and looked at it.

10:44 Jobs: Certainly what was portrayed in that total article never passed my consciousness. And I talked to Ruben and Ruben says it’s total bullshit too.

10:46 Q: Do you owe people an apology? A: People say it’s the coolest phone they have ever had. But we want people to be satisfied, and they can return the company. We want investors who want a long-term view, who trust us in the long run to keep innovating.

10:47 Q: Is Apple a company that makes uses choose between form and function? A: No, we are a company that likes to do both. We strive very hard to make our products. Look at the iPod touch. We work to make it wonderfully thin, and that costs us extra, but we do it. The Retina display is being widely acknowledged as the best display ever created. It blows away every other phone display. And it costs a little more, and we had to work really hard to bring it into reality… but that’s what we do.

10:48 The iPhone 4 antenna is an exterior antenna, which doesn’t use internal space, so we can add more battery and give it a longer battery life. And there are some other advantages too. It’s the thinnest smartphone in the world. So we try to have our cake and eat it too. We try to have great design and great performance. And if you look at our products, that’s what we deliver.

10:48 Q: AT&T plans will be refunded too? A: Yes. AT&T is giving full refunds, yes. And through Apple as well.

10:48 Q: And people can get out of their contracts? A: I believe so, yes.

10:50 (Missed the Q) I don’t know what there was we could have said. Maybe we could have set the expectations appropriately, that most smartphones have weak spots. We certainly could’ve shipped the phone with a better algorithm to calculate the bars, so it didn’t look so dramatic. But most smartphones seem to have the same characteristic as the iPhone 4. When you grip them in a typical way they lose some signal strength when you’re in a low-signal area to begin with. The iPhone 4 seems no different.

10:51 Right now to the best of our knowledge, it’s not possible to make a smartphone that doesn’t have weak spots. Well, I think you could make a big one that wouldn’t fit in your pocket. Some of these guys are making Hummers now. You could make a big Hummer that you couldn’t get your hand around it, but nobody would want to buy it.

10:52 But the press that’s surrounded this. Maybe people thought we were perfect, and they saw this as an example where we weren’t, and thought it would be fun to jump on it. Let me tell you, we are not perfect. We are human. And we make mistakes sometimes. And we don’t know everything. But we figure it out pretty fast. And we take care of our customers.

10:52 This is why we have the best and most loyal customers in the world.

10:53 Q from Connie at Bloomberg: Why Sept. 30 for case limit? A: We just are going to wait and see, maybe we’ll have a better idea. It’s just a chance to say we’ll reevaluate it in September.

10:53 (Interesting, Connie G. is on the byline for the story that was referred to as “total bullshit” previously.)

10:54 Q from Kevin McKean at Consumer Reports: What about refunds on third-party cases? A: No, but it’s a very small number of those cases that are out there. We wish it would’ve been hire, because then there would be more cases out there.

10:55 McKean: It’s very hard to get cases right now. If Apple had given the dimensions of the phone earlier, then there’d be a bigger supply of cases. A: As a consumer electronics manufacturer, if we tell the world what our future products are going to be, they tend to stop buying our current products. And if they [do that], then we have a crisis and have to focus on that and stop focusing on new products… so in general, we don’t tell people about new products until they’re just about ready to go.

10:55 You know, sometimes web sites buy stolen prototypes and put them on the web. And we don’t like that. But if we give things to case vendors, they have a history of putting them on the web too. So that’s what we run up against.

10:57 Q from John Gruber: Do any of you carry your iPhone 4’s with a bumper? A: They all bring theirs out, and none of them have a bumper. (laughter)

10:57 Gruber: I don’t have one either.

10:57 Jobs: I got an iPhone 4 and reception in my house is way better, but I hold it like this a lot and I’ve never had a problem with it, so I’m thrilled. That doesn’t mean other people don’t have problems, but that’s been my experience.

10:59 Q: What have you learned? Jobs: We always knew how much we care about our customers. We were stunned and upset and embarrassed by the Consumer Reports stuff that came out this week, but we didn’t need that to tell us to take care of our customers. The fact we didn’t say anything after a week, it’s because we didn’t know enough. And it’s taken us a while to get the data. If we’d have done this a week and a half ago, we wouldn’t have had half the data that we shared with you today.

10:59 I’m sure in a few weeks we’ll have more data. We’re an engineering company. We think like engineers. We create stuff like scientists and engineers. And we love it. And we think it’s the right way to solve real, and hard, problems.

11:00 I don’t think that’s going to change at all. That stuff is just operating like it normally does, and some people have wanted us to run a little faster. I don’t think we can run any faster. I’ve seen cars in the parking lot late at night, cots in some of the engineering offices. I don’t think we could’ve worked any harder.

11:01 But I guess it’s just human nature when some organization gets successful, there’s someone who wants to tear it down. I see it happening with Google. Why are they doing that? Google’s a great company. Google invented all of this great stuff that we love to use. And I see them jumping on us now. Would you rather we are Korean companies rather than American companies? Do you not like that we’re innovating here in America?

11:01 (I assume there’s a reference to Chuck Schumer in there somewhere.-j.s.)

11:02 In search of eyeballs for websites, people don’t care what they leave in their wake. So I look at this whole thing and say, wow. Apple’s been around for 34 years. Haven’t we earned the credibility and trust from some of the press to give us a little bit of the benefit of the doubt, of our motivations, the fact that we’re confident and will solve these problems. I think we have that trust from our users, but I didn’t see that in the press. This thing was blown so far out of proportion. But I’m not going to say we’re not at fault. We didn’t educate enough.

11:03 And we painted a big target on ourselves. And that someone who had it in for us was going to put videos on their web site and say, do this. So we were not innocents in this. But.

11:03 Based on the data we have, this has been so overblown… so to digest this is going to take a few weeks, maybe. And we could use your help. We’d like to know, maybe you can tell us, can we do better at this?

11:05 Q: Possible for hardware fix for this product? A: Right now, the state of affairs in this industry, nobody has solved this problem. We’d like to be the first. Maybe. We’ll see. But most of our customers aren’t experiencing, and the ones who are, many of those are in test mode, duplicating what they saw on the web.

11:07 Q: Did you consider a recall? A: When you love your customers as much as we do, nothing’s off the table. But the way we work is to be data driven. We want to go find out what the problems are. We’ve sent people all over this country to visit customers. I get e-mails, “My phone isn’t working right, I don’t have reception,” I dispatch them to my engineers, they’ve sent teams all over the country, visiting these people in their homes. These people literally get a knock at their door from Apple engineers with a bunch of equipment and want to plug it in and test reception. We’re really serious about this.

11:07 So again, that’s who we are. And we try to find out the truth of the matter. And then we do whatever it takes to take care of our customers.

11:07 Mansfield: For the record, we told them we were coming. Jobs: And we didn’t bash down any doors.

11:08 Q about returns at Apple Stores. A: Cook says there were fewer than 3GS.

11:11 Q from Josh at Engadget: Report in NYT about different software fix. Is it possible? Or is this hardware or nothing. A: [Jobs complains about Josh’s characterization.] Could we leap ahead of every smartphone by having better software on our phone? I’d love it. Josh: I’m citing the Times article. Jobs: You like to talk to yourselves a lot. But they’re just making things up.

11:12 Scott Forstall appears: NYT says a latent software issue between the baseband and the AP, and that’s patently false. There’s no latent issue. As far as, can we continue to tune? We do that all the time. I would love for us to continue to work with carriers to improve how we hold calls, and we always are. But that story about a bug is patently untrue.

11:12 Jobs: One of many statements in the past few weeks that fall into that category.

11:13 Jobs: We can’t make ’em fast enough. We are way behind demand. And probably the only thing we’ve gotten more emails on other than this lately, is customers who are upset that they have to wait for their iPhone 4.

11:13 Jobs: Reminds you of the Woody Allen movie. The food here is terrible, and gosh, the portions are so small.

11:13 Ben from Mashable asks: What kind of impact do you think this will have on the bottom line?

11:14 Cook: We’ll be announcing Q3 results on Tuesday and will be giving guidance on Q4, and we’ll hold financial stuff till then.

11:14 Hank from Marketwatch: Has there been a slowdown in sales? Due to shortages? Or an impact in sales in the past week? Jobs: We were able to build up a supply before the launch date, but the run rates we were at weren’t 1.7 million every three days.

11:15 Cook: The 1.7 was a fairly precise number. This number is “well over 3 million.” Jobs: I’m just trying to give you a feel for the fact that this is our most successful product launch and demand looks beyond what we’re capable of supplying, and that hasn’t changed. Cook: We are selling every phone we can make right now.

11:16 Jobs: John Markoff! Nice to see you. Markoff: I’ve had an iPhone in a heavily congested cell in SF for a long time. I’d like to know if the handset has any role in congestion management. Separate from the iPhone 4 and iPhone 3 issue. Does the stack play no role in the management of congestion?

11:17 Jobs: When AT&T wants to add a cell tower in Texas, they say it takes about 3 weeks. When they want to add a cell tower in SF, the average time to get approval is 3 years. Not all of us want cell towers in our backyard, but we all want good reception. They’ve tried to make them look like banana trees, but still, it’s a problem.

11:17 Jobs: AT&T can’t expand their networks beyond a certain point unless they put up more antennas, and that can be a very long process. And I know, because we’re constantly asking them about SF and the bay area, and it’s one of the toughest spots to get approvals. Sometimes I think they should enlist the support of all the iPhone users in the community.

11:19 To understand Apple, one of our biggest insights came about 8 years ago. We didn’t want to get into any business where we didn’t own or control the primary technology. Because if someone else owns it, they’re going to beat you in the end.

11:20 And in the computer business, we thought software was the most important tech. And we made our own OS. Our big insight 8 years ago was that for most areas of consumer electronics, it was going to shift from big displays or optical pickup heads for DVDs being important, or radios in cell phones, to software being the most important component. And we realized, we were pretty good at software.

11:20 And so the iPod really proved that to ourselves, that we could do that, and we brought that to the phone business.

11:21 We really made the whole process of being able to update your software an order of magnitude easier than it was before. So we’ve been able to frictionlessly distribute major updates for the software for the iPhone, continuously, and have been able to fix bugs, improve performance, add new features… all for free. And everyone’s copying Apple now, but we were the first ones to really do that in a practical way.

11:21 The formula we use to calculate bars has been off from the beginning. And the update for 4.0.1, fixes it for the 4, 3GS, and 3G.

11:23 Fortune/CNBC: You’ve been communicating more via e-mail. Can you talk about whether you’ve shifted the way you communicate with Apple’s customers? Jobs: I get a lot of emails, and I always have on some occasions replied to some of them. I can’t reply to a lot of them, because I’ve got a day job. At some point people started posting on the web, which is a little rude, to be honest. And now the most recent phenomenon is, people are making them up. So don’t believe everything you read.

11:24 I try to reply to some of them just because, you know, they’re our customers. So it’s pretty hit and miss.

11:24 Stokes from Ars Technica: Will the free case offer extend outside the US? Jobs: Yes, it’s international.

11:25 Jobs: Well, thank you for coming this morning. Has this helped? Great. I wish we could have done it in the first 48 hours, but then you wouldn’t have had so much to write about. Anyway, thank you.

11:25 Applause, music, and that’s it.

11:25 Thanks everyone for being here.

11:25 And thanks to your kind comments on Twitter about my liveblogging.

11:25 My fingers are numb now. 🙂

11:26 Stay tuned to Macworld for all the latest on Apple and Apple products.

11:26 Until next time, good morning from Cupertino, and farewell.