by Mark W. Hibben
Jobs Answers the Mail at the July 16 Press Conference
Many months ago, I began the iPad Saga by observing that the deep schism between Apple supporters and detractors mirrored the deeper schism in the US between political conservatives and liberals. The recent media coverage of the iP4 antenna reception problem, which has often been technically clueless and biased, has only served to substantiate this perception. Most technology news coverage is performed by the business news media, and they seem to be a somewhat conservative lot, as well as lacking genuine technical knowledge. With “Antennagate”, something very new happened: the Anti-Apple bias was promulgated throughout the general news media so that even Brian Williams was decrying the iP4’s inability to “make calls” on NBC evening news. As I warned on June 28, the PR damage potential of the antenna problem, left unaddressed until July 16, has been substantial, but is by no means permanent. That Steve Jobs had to take matters into his own hands shows that he at least realized the seriousness of the situation, even if his underlings did not. His press conference was not merely a way to address Apple’s critics but also to set an example for the entire corporation, which has tended to lapse into an insular arrogance. Jobs took exactly the actions I recommended on June 28: acknowledge the problem, acknowledge that iP4 and Apple in general are not perfect, offer every iP4 user a free case, and waive the usual restocking fee for returns. That this hasn’t been enough to silence Apple’s critics only shows how difficult “life at the top” will be for Apple now that Apple’s market cap exceeds Microsoft. The business media apparently intend to hold Apple to a standard of perfection that Microsoft certainly has never maintained.
Some Important Facts
The media coverage of Jobs’ press conference has been long on sound bites but short on facts, although Jobs had important facts to impart and which bear repeating. The most important facts pertain to the issue of user satisfaction, which should be of interest to the Apple investor community, of which I continue to be a member. Jobs stated that Apple Care had only received calls complaining about the antenna problem from 0.55% of iP4 users. Furthermore, the AT&T return rate was only 1.7% for the iP4 vs. 6.0% for the iP3Gs. These numbers certainly substantiate that iP4 user satisfaction is very high despite the antenna problem and accompanying bad press.
Jobs also stated that the free case policy would be revisited and might expire come September 30. This suggests to me that Apple plan to have a more permanent fix to the antenna problem by September 30. This is consistent with the need by Apple to clear out the existing supply of iP4s and get the antenna fix into production and into stores by 9/30. If Apple were starting from now, they probably wouldn’t have enough time to make that deadline, but remember that Jobs also stated that they have known about the antenna problem for some time prior to the initial release of the phone to stores, so they’ve probably been working on this for some time leading up to the start of retail sales. Some readers may be disturbed that Apple could knowingly release a “defective” iP4 for sale, but this is done all the time. Rarely do manufacturers not know of some deficiency in their product. The design, engineering and manufacturing of consumer goods is inherently an imperfect process.
Some have called for Apple to recall the iP4, but this simply isn’t justified. Product recalls are done when there’s a consumer safety issue, and no one has suggested that the iP4 is unsafe to use. The iP4 antenna problem is a performance and consumer satisfaction issue that is best handled by Apple’s current return-for-full-refund policy. This isn’t even a warranty return issue, since no mobile phone maker, Apple included, warrants phone reception performance. There are just too many extraneous factors that affect reception performance that the manufacturer has no control over, such as distance from the cell tower, physical geography, phone orientation, etc.
An Antenna Fix Timeline
As I pointed out in the iPad Saga, new product development for sophisticated products such as the iP4 can take months, even years. Much of the groundwork for the iP4 was already covered by the iPad development, but given the new packaging, antenna design, high resolution display and chip count reduction for the circuit card assembly (CCA), I would estimate that iP4 development required a year prior to start of production, with production start about 6 months prior to having product in stores. Just prior to the start of manufacturing, the iP4 development program would have held a Manufacturing Readiness Review (MRR) which reviews all the known issues related to the performance and “manufacturability” of the phone. At this stage, the program has developed so much momentum (think of a moving freight train), that the MRR’s almost never decide to delay the start of manufacturing. Thousands of people have been working, millions of dollars have been spent. Undoubtedly, by that time, the antenna problem had been identified through early testing of pre-production prototypes. Rather than delay manufacturing start, actions would have been taken to come up with a fix that could be implemented ASAP. If the fix is to appear at the end of September, about 3 months after start of retail sales, then that indicates that the fix started production about 3 months after the initial start of iP4 production. What kind of fix could be implemented in 3 months? Nothing very ambitious, but the design of the antenna does provide some flexibility. The antenna frame is machined from stainless steel by Computer Numerical Control (CNC) milling machines. This means that changing the design of the frames is a matter of coming up with a new CAD design and reprogramming the machines, which can be done in 3 months. What would the design change consist of?
I can think of two options: 1) the lower part of the frame is machined to be recessed into the body of the phone, thus providing room for a permanent rubber bumper to be applied to the outside of the frame, 2) the insulated gap between the two frame pieces is increased in thickness, providing greater isolation between the two antennas, even when bridged by someone's hand.
A more remote possibility is some form of software change that ameliorates the problem. It’s not at all unusual, when programs get into binds like this, for program management to look for a “magic bullet” software fix that is generally less expensive than a hardware modification. The magic bullet almost never works out, but this doesn’t seem to discourage program managers from looking for them anyway.