Comment: Apple facing crunch decision on iPhone 4

Iain Thomson

Apple will hold a press conference on Friday morning Pacific time at its headquarters in Cupertino for a select few who won't ask tough questions. The event has been hastily arranged after a week of bad press about the reliability or otherwise of the iPhone 4.

The company has already seen billions wiped off the value of its stocks, thanks to the flawed antenna design on the new phone. At first there were just murmurings of unrest but, as the number of reported problems grew, Apple faced a growing storm of anger.

Friday is a chance for the company to solve the problem, but the long-term damage to its brand will be significant if Apple fails to appease its customers.

Apple has had these problems before, and has behaved in broadly predictable ways. The G4 Cube with its design problems, the original iPhone price drop that imposed a 'geek tax' on early adopters, the list goes on. So what will Apple do?

The first option is a total recall. But let's face it, that's not going to happen. Apple plans its manufacturing fairly well in advance and, if everyone demanded a new iPhone, its supply chain would just fall over and die. There's already a backlog of demand for the devices, and I've yet to meet anyone who would give up their place in the queue.

The costs to Apple of a recall would be in the billions, and I just can't see it happening. If it did, an entire new generation of fans would be born, and perhaps we'd see the rest of the industry trying to make amends for past mistakes. Let's just say I'm not holding my breath.

The second option, and the one I think Apple is going to take, is offering a discounted 'buffer' case to existing owners, which will apparently solve the antenna problems. There could be some discounts on the App Store, although I have my doubts about that.

The other option could be the 'ground zero' of responses. If Apple denies the problem and insists there's nothing wrong, the company could be slitting its own throat.

If you believe certain reports, Apple knew of the antenna problem some time ago, and did nothing about it because Steve Jobs loved the design. I don't buy this for a moment. During the WWDC keynote, specific mention was made of the antenna design and that wouldn't have happened if a problem was in the offing. Apple is arrogant, but not to the point of insanity.

So we will wait and see. If Apple is magnanimous it will lock in a new generation of users with an example of corporate munificence. If, as our company IT wizard suggests, Apple chases the cents and ignores the dollars, the company will be in a lot of trouble.