Antennagate Bottom Line

What is not in dispute: the iPhone 4 antenna has a weak spot in the lower-left corner of the frame, marked by the black line in the frame. When covered by your hand, this antenna suffers from attenuation. This is much like other smartphones. Further, because the antenna is external, the iPhone 4 can suffer from a different kind of “holding it wrong” signal loss: bridging the gap on the lower left corner of the antenna with your skin.

This conductive bridging issue is either (a) a critical design flaw that never should have been released, and renders the iPhone 4 a dud product; or, (b) a minor problem resulting from a reasonable design trade-off, different but no worse, in practice, than the “regular” signal attenuation seen in most smartphones, including the iPhone 3GS, and weak spot or no, it’s no reason not to buy one.

In short, (a) implies the iPhone 4 antenna is a design that Apple should regret; (b) implies it is not.

Apple, obviously, says it’s (b). They backed this up on Friday with three pieces of “hard data”:

Only 0.55 percent of iPhone 4 owners have called AppleCare to report problems with reception.

The return rate to AT&T stores for the iPhone 4 is 1.7 percent, compared to 6.0 percent for the iPhone 3GS during its first month on the market. (According to Jobs, even the 3GS’s 6.0 percent return rate is considered good for a smartphone.)

According to AT&T’s data, the iPhone 4 indeed drops more calls than the 3GS, but the difference is less than one call per hundred.

Are there some iPhone 4 users for whom this problem is significant? Yes. Will the free cases and offer of a full refund suffice? It seems so. In terms of practical real-world effect, the worst you can say about it is that it tends to drop about one more call per hundred than the 3GS.

Now, you can argue that that’s a euphemistic way of presenting the call-drop statistic. Farhad Manjoo, in his coverage of Antennagate for Slate (headline: “Here’s Your Free Case, Jerk”), writes:

While Jobs did admit this fact in his press conference, he mangled the stats to make the iPhone 4’s dropped call increase look minor. “The iPhone 4 drops less than one additional call per 100 than the 3GS,” he said. As Jobs sees it, that’s not a big rise in dropped calls. Yet that’s not an obvious conclusion. Last year, an AT&T spokesman told me that AT&T’s average iPhone dropped-call rate is 1 percent — in other words, the old iPhone dropped one call out of 100. If the iPhone 4 drops nearly one additional call out of 100, that could be close to a 2 percent dropped-call rate — or double the dropped-call rate of the old iPhone. That sounds a lot more serious, doesn’t it?

Jobs stated during the event that, for competitive reasons, AT&T would not allow Apple to reveal the absolute dropped call rate — only the delta between the dropped call rate of the 3GS and 4. I think it’s safe to say most people would consider a number of, say, 5 percent to be shockingly high, even with AT&T’s reputation. And at the other end, I’d have a hard time believing that the 3GS’s dropped call rate was significantly lower than 1 percent. So the increase in dropped calls for the iPhone 4 must range between twice as many to 1.2 times as many.

Here’s an academic paper by M.V. Simkin and J. Olness (PDF, via this thread on Hacker News) which estimates the mean industry-wide dropped call rate to be 2.4 percent — all phones on all carriers. The paper was published in 2002, however, so it’s impossible to say how applicable it is to the industry-wide dropped call rate in 2010. But it sets a reasonable baseline — a baseline that suggests a “less than 1 per hundred” increase in dropped calls is, though disappointing, not particularly alarming.

[Update, 21 July 2010: According to slide 11 of this PDF presentation from AT&T back in January, their network-wide dropped call rate for 3G was 0.91 percent.]

I have a theory, by the way, for why Jobs sounded a tad annoyed — that is, a tad more annoyed than his already annoyed tone throughout the entire event — when announcing Apple’s offer of free cases for all iPhone 4 owners through September 30. I’ve seen many argue that the existence of Apple’s bumpers is an indication that Apple knew all along that the iPhone 4 had reception problems that were alleviated by a case (e.g. Jean-Louis Gassée yesterday). I think it’s simpler than that, and requires no less cynicism to believe.

After revealing that the iPhone 4 has a slightly higher dropped called rate than the 3GS, Jobs said:

“Even less than one is too much for us. We’re trying to find out why. We want to drive this lower than the 3GS. But this does put it in perspective. So, I have my own pet theory on this, which we have no proof of, but I’ll give it to you anyway. When the iPhone 3GS came out, we did not change the design from the iPhone 3, and there was a healthy market of cases for the iPhone 3G that fit the 3GS perfectly because the design didn’t change. And in our stores, 80 percent of the iPhone 3GS users walked out with a case. iPhone 4 has a radically new design; none of the old cases fit. Since we didn’t show it to anybody, none of the new cases are ready, and we can’t make enough of our bumper cases. And so in our stores, about 20 percent of the people are going out with a case. And I think that has something to do with this disparity.”

So for the 3GS, when cases were in plentiful supply at the debut, 80 percent of iPhone buyers at Apple stores walked out with a case. I think Apple wanted in on that market. And because the 4 needs different cases than the 3G/3GS, Apple had the iPhone 4 case market all to itself for a few weeks, and mostly to itself for a few months. At $29 a pop retail, I don’t think it’s a stretch to think that Apple saw this as a $100 million opportunity — say, 5 million bumpers at $20 profit apiece. They could have made money with their own cases a year ago with the 3GS, but nowhere near as much as they could have now, as the only case in town that fits the iPhone 4.

Put in context, the fancy secret antenna testing lab Apple revealed Friday cost, said Jobs, about $100 million. Now, Apple’s a multi-billion dollar company. A few hours ago they released quarterly results showing them making over a billion dollars in profit per month. So $100 million isn’t that big a deal. But the way you get to be a billion dollar company is by having a nose for opportunities. $100 million is $100 million. So if you want to know why Jobs sounded annoyed when he said (around the 25:25 mark of the video feed), “Why don’t you just give everybody a case? OK. Great. Let’s give everybody a case,” well, I think you can explain why he sounds peeved by reading that quote as, “Why don’t you just give away $100 million? OK. Great. Let’s give away $100 million.”

Anyway, bottom line on the iPhone 4 antenna: it has a weak spot but there’s no evidence that it’s a significant, let alone catastrophic, problem in practice. It’s telling that the criticism surrounding this issue has shifted, quickly, from speculation about a technical defect in the iPhone 4 hardware to criticism over the tone of Apple’s response to it.