The Only Real Solution to Apple’s Antenna Problem

Posted on: July 17, 2010
Posted in Mobile, Strategy

The Only Real Solution to Apple’s Antenna Problem

TechCrunch Link

Leading up to Apple’s press conference tomorrow, there’s been endless speculation about the iPhone 4 antenna issue. Amidst all the wrangling, both sides have been pretty bipolar about the solution’suggesting either a complete recall, or a hand-waiving session, free bumpers, and a general denial of the hardware issue.

The best solution lies in between both of those extremes: a full admission of the hardware issue, together with a voluntary recall and an immediate manufacturing fix. Here’s why:

The antenna issue is not only very real, but it’s also open-ended. To date, only 3M iPhone 4 units have shipped. PC World estimates that 40M units will ship by 2011.

This staggering forecast quantifies the true issue for Apple – it will never really go away. With each iPhone 4 sold, the installed base grows. And since the issue appears to be fairly fickle, presenting itself differently depending on location and signal, the potential for problems grows geometrically as shipments increase. And continued negative mainstream press could actually expand Apple’s woes exponentially.

There is a simple solution:

ODMs (original design manufacturers) in Taiwan are incredibly deft at making quick changes to their manufacturing runs. In my visits to Foxconn and Taiwanese ODMs, I was always completely blown away by how they made changes in the middle of product cycles. Most people aren’t aware that components inside consumer electronics equipment change as often as every 3-6 months. And these are component and software level changes, which are much more difficult than simple changes to the industrial design.

A person only needs to think of HTC (part ODM, part OEM) to witness this. If HTC is capable of producing entirely new models of phones every 1-2 months on average, then it’s very clear that Foxconn and Apple should be able to implement a mid-run manufacturing tweak to modify the design of the antenna.

What would this tweak constitute? It’s fairly straightforward: An insulating coating should be applied to the stainless steel antenna. Surely Apple design God Jonathan Ive has an arsenal of materials at his disposal which could coat the steel, yet retain the look, feel, transparency, and hardness of the stainless steel band.

Together Foxconn and Apple should be able to complete this in a month or less. Foxconn can stage the runs of new iPhone 4’s, and switch the manufacturing line over as soon as new antennas are ready. Since there is no shortage of stainless steel (unlike Retina displays for instance), this solution would only be gated by how quickly Apple and Foxconn can move.

Considering the antenna issue is quickly becoming the worst gaffe in Apple’s history, mobilizing the required resources should be Apple’s No. 1 priority. In fact, if Steve Jobs announces tomorrow that such a fix is already under way, it will go a long way towards silencing the uproar.

This is imperative for Apple, since the installed base is rapidly growing, and since Apple’s lack of attention to quality assurance threatens to become a permanent blemish. Both the lack of testing and Job’s email response were extremely sloppy. The antenna issue stands in complete contradiction to Jony Ive’s recent interview in which he boasts about Apple’s command of materials – it doesn’t take an RF engineer to know that stainless steel is conductive.

It’s much better to fix the antenna now. Apple can then do a ‘voluntary recall’ after a certain date once manufacturing has hit its stride. For example, the voluntary recall is announced now, and starting September 1st, customers can exchange their iPhone 4 at a genius bar for up to three months.

Such a voluntary recall would only produce a modest financial hit since it would be spread between two quarters (the September and December quarters), muting any hit to earnings. And since many newly-educated customers will be using bumpers or after-market cases by that time, plenty of people won’t even bother with the recall.

Fix the antenna Apple. Or the issue will damage your brand and become much worse. By the way, I talked to iFixit, the self-repair site, and they think Apple is using some sort of coating.

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