Image: A customer looking at an iPhone 4
Eric Thayer  /  Reuters
Because the iPhone 4's metal antennas are on the outside of the phone, holding the phone in certain ways can cause it to lose reception. This customer, looking at an iPhone 4 at the Apple Store 5th Avenue in New York, on June 24, 2010, may be holding it wrong.
By Wilson Rothman
updated 7/16/2010 12:47:42 PM ET 2010-07-16T16:47:42

On the day before Apple publicly addresses the iPhone 4 antenna design flaw that has plagued the company for weeks, an analyst who spoke with manufacturers who work with Apple said that there will likely be an internal hardware fix.

Ashok Kumar, an analyst at Rodman & Renshaw in New York, said that the fix may be bigger than just distributing free accessories that nullify the antenna issues. It may, in fact, be a hardware fix that requires the phone to be sent away for servicing. (This news was first reported by

If you've been following the story , you know that the antenna faults are caused by a user's hand wrapping around the external antennas, causing them to short and lose some connectivity. A proposed solution has been for Apple to distribute rubber "bumper" accessories for free, as the use of the bumper nullifies the negative effect on the antenna.

Though he cannot be 100 percent certain, Kumar told that the fix Apple may announce tomorrow would likely entail "a mechanical solution that provides isolation for the antenna," what he called "a rubber bumper on the inside instead of the outside."

Kumar is guessing that this is the reason AT&T is delaying shipments to customers for another eight weeks, after previously promising units in 1-2 weeks. (AT&T representatives could not verify this.)

The tech blog has been reporting a "silent recall," that is, customers who have replaced their phones claim to be getting improved reception on the new units. Though it's based more on anecdotal fact than scientific demonstration, the replaced phones may in fact have received the fix that Kumar described.

Cries for some kind of real hardware fix are even starting to emanate from Capitol Hill. Sen. Charles E. Schumer (D., N.Y.) wrote a letter to Apple CEO Steve Jobs, in which he asked for "a clearly written explanation of the cause of the reception problem" and "a public commitment to remedy it free of charge." Schumer's note added that "the solutions offered to date ... seem to be insufficient."

The sad part is that, if Kumar is right about the fix, it's likely to require you to send away your phone. "It's a very technical solution," said Kumar, who said Apple Stores wouldn't be set up to deliver a while-you-wait repair of this nature. Kumar equated it with having a phone sent away for a battery replacement.

To be clear, the fix Kumar describes is not a phone replacement, and would not likely cost Apple anywhere near the worst-case-scenario $1.5 billion that some analysts have mentioned. It would still be an admission of guilt: "By acknowledging a fix, the company admits it's a design defect," said Kumar.

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Video: Will Apple recall iPhone 4?

  1. Closed captioning of: Will Apple recall iPhone 4?

    >>> what is apple going to do about the major problem with the new iphone 's antenna? the company has scheduled a news conference later today to address some mounting complaints. nbc's george lewis is outside apple headquarters in cupertino, california.

    >> reporter: apple will not announce a full blown recall of the iphone . will apple opt for a simpler, cheaper fix? mark contreras makes his living as a tennis pro. when he's not giving lessons, he's taking calls from potential clients.

    >> every call for me is very important.

    >> reporter: that's why contreras got worried when his new iphone started dropping calls. contreras is one of the 1.7 million people who bought the iphone 4 when it came out last month, and he's not alone in complaining about its reliability. consumer reports tested the iphone and said it could not recommend it after finding a design flaw in the stainless steel antenna that surrounds the device. if you touch the bougttom left side of the phone while you're on a call, the signal fades and you can lose your connection.

    >> only the engineers who built this phone can really explain what happens when you touch the phone this way.

    >> reporter: according to bloomberg news, apple 's engineers knew about the problem before the iphone went on sale.

    >> it is the thinnest iphone in the planet.

    >> reporter: apple ceo steve jobs wanted a sleek design and the stainless steel antenna made it possible.

    >> while they chose a design they knew could pose potential reception problems, they felt confident their engineering team could solve the problem.

    >> reporter: one solution, a $29 plastic accessory called the bumper that fits around the phone like a rubber band and prevents you from touching the antenna, or you could go with a piece of duct tape. all of this has made apple an easy target.

    >> and the number one sign you purchased a bad iphone , it only accepts calls from mel gibson .

    >> it's certainly a known, real issue. what i think is interesting about it is as an iphone 4 user i don't notice it. there aren't lines of people waiting to return their iphone 4s.

    >> reporter: despite the problems he's had with his iphone , contreras says he's willing to stick with it as long as apple serves up a quick fix for the flaw. now one quick fix might be to give away those rubber bumpers to people who have already bought the phone, although that kind of detracts from the phone's sleek appearance. matt?

    >> george lewis , we'll wait to see. thanks very much, george. michael paul is a corporate crisis manager here in new york city . omar wasso is a technology analyst. good morning to both of you guys.

    >> good morning.

    >> michael, let me start with you, okay, this is somewhat new territory for apple . this is the darling of the technology world. they're used to people patting them on the back saying, you guys are hip, you guys are great.

    >> that's right.

    >> and how do you think they have to handle this at this news conference today?

    >> this is not only an apple but a steve jobs hit. he supposedly knew himself about a year ago from one of his techs. he said keep moving forward. so i think the bottom line here, though, is this rubber bumper is not going to be the fix. if i bought the phone a couple days ago and my buddy gets it 30 days from now and it's perfect, i want the perfect phone.

    >> in terms of handling a corporate public relations crisis and you're the expert on that, so far this company has basically taken the problem -- one problem approach. they can't have that tone at this news conference, can they?

    >> the root of this is trust. they can't have that tone and the bottom line is we need to know what happened, when it happened, when you knew it, and make sure you're coming transparentally to us.

    >> is it possible that because they've been such a darling and haven't had a situation like this they simply don't have the people in place who knew how to deal with a crisis like this?

    >> they may have some folks in place who had experience. they don't have the experience within apple of having problems like this on a consistent basis and that's going to be a problem for them.

    >> you mentioned steve jobs . conflicting reports. one major newspaper said he may have known of this problem before these phones were shipped. another says he didn't learn about it until after. if it turns out he did know, how big a hit?

    >> major hit. we want some humility. we want him to admit that he was wrong. we want the tech to come clean as well because he is nervous about speaking to the media right now, and there are a lot of people trying to reach him.

    >> omar , let me bring you in here. 1.7 million people rushed out to buy the iphone 4. many of those people are not happy with it. what do they want to hear at this news conference today?

    >> well, i think mike made the main point which is people do want a clear explanation. apple made clear you can return your iphone up to 30 days and given it only came out less than 30 days ago, there is that option for people who might be from frustrated with their current phone. people want to hear a clear explanation, the ambiguous explanation that is have come out so far are insufficient and what you are going to hear is the detailed report on how they're engaging this problem, the latest software update that came out yesterday makes some progress, how perhaps it's not just hardware, it's an interaction between software and hardware.

    >> if they tell me i can get a band around the iphone , even if it's for free, i like george's poi point, people bought the phone because they like the looks of it, the aesthetics, the way it looks in their hand. rubber band . to look down at

    >> and certainly that's a complaint, but it's a relatively -- i mean, asking people to put a rubber band or the bumper on isn't a major imposition either. i think you will see, though, apple wants to make a stronger claim that this is fixable with things like software, with perhaps a coating they may be putting on the current batch of iphon iphones. so it's unclear whether they actually are going to do the bumper as the solution. i think maybe a sort of more sophisticated presentation that tries to say this is something that is partly about software, pa partly about how the algorithm they used to represent the antenna signal and interact with the antennas. i agree with you, though, the bumper -- they're doing a press conference, that's going to leave people wanting more.

    >> you followed this business a long time, omar . have you seen anything with apple like this before?

    >> well, you know, the one thing that's a little bit like this when they first released the iphone it came out and had a $600 price and then a few months later they dropped it quickly and there was an outroar of people saying, hey, wait a minute, you've just burned your most loyal customer and they issued a $200 gift certificate to everyone who wasn't an adopter. they have had moments like this. they seem to have been caught off guard by this and are now trying to play catch-up.

    >> omar wasow , mike paul, we'll see what happens when they


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