Analysts: Apple needs to respond quicker to issues

Apple on Friday quelled concerns on iPhone 4’s signal and reception issues, but the company needs to shed its mask of secrecy and be quicker in addressing customer concerns before such issues spiral out of control, analysts said.

Apple will offer free Bumper cases until the end of September to alleviate iPhone 4 customer concerns about signal and reception issues, company officials said at a hastily organized press conference in Cupertino, California. The company is also offering a full iPhone 4 refund within 30 days of purchase for unsatisfied customers.

Apple CEO Steve Jobs also reiterated that there were no design problems in the iPhone 4, saying other smartphones have similar characteristics that could lead to reception issues and drops in signal strength. Jobs blamed a faulty algorithm used to calculate the bars representing signal strength. The company this week released the iOS 4.0.1 update with an algorithm to more accurately represent the signal strength.

Holding a last-minute press conference to address the issue was uncharacteristic, but a good move, analysts said. However, it came too late, and if Apple had taken a proactive stance to resolve the issue, the press conference may not have been necessary. The smartphone was launched on June 24 in five countries, and customers started pointing out signal and reception issues within a week.

The controversy will not likely affect the iPhone 4 sales, analysts said. Expectations for devices like the iPhone are high, and small issues can easily spiral out of control.

It was late, but Apple took the right steps in offering free Bumper cases, said Jack Gold, principal analyst at J. Gold Associates. “The case is not going to cost them so much money, and it’s going to keep people happy,” Gold said. “It certainly will quell the flames. It still doesn’t put them out.”

Most customers don’t seem to have antenna or reception problems with the iPhone 4, said Jeff Kagan, a wireless industry analyst. The issue won’t affect the company in the long term unless other issues with the iPhone 4 erupt.

Apple’s customers are emotionally connected with the products, so there are expectations for the company to make “bulletproof” products, Kagan said. A backlash against a minor problem in an Apple product could quickly spiral out of control, and the company has to respond quicker instead of staying silent, Kagan said.

Apple set itself up to take the blame with the hype surrounding the iPhone 4, but AT&T has to take an equal amount of blame, Gold said. “If the problem was so simple just to give everyone a rubber Bumper, AT&T could have done that,” Gold said.

While Apple addressed voice and dropped calls in the press conference, the company didn’t address data, Gold said. “It’s harder to do data on a phone than it is to do voice.” Gold said. As the signal decreases, data transfers slow down too, Gold said.

Apple said it has sold over 3 million iPhones in the three weeks since the launch. Less than 1 percent of iPhone 4 users have called Apple’s support service about signal or reception problems, Jobs said. He also pointed out that the return rates for the iPhone 4 were less than its predecessor, the iPhone 3GS.

Apple earlier in a public letter said the hardware design was not faulty, pointing to a algorithm flaw in the phone.

Nonprofit publication Consumer Reports initially recommended the iPhone 4 as one of the top smartphones, but after testing antenna performance, questioned Apple’s claims and pulled its recommendation. The publication said the use of Apple’s Bumper case to mask the antenna could remedy the problem.