Will Apple Recall the iPhone 4?

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Update: Apple announced yesterday afternoon that they would hold a press conference at their headquarters in Cupertino, California to address concerns about the iPhone 4. There is no word yet about whether they will use that opportunity to announce a recall or a possible fix.

Rumors are rocketing around the web this week that Apple (Stock Quote: AAPL) may have no choice but to recall the newest iPhone due to problems with the antenna.

CultofMac.com, a popular blog for all things Apple, spoke with several public relations experts who argued that Apple must recall the phone due to signal problems in order to save their brand. Similarly, publications like CNET and BusinessWeek have hinted that a recall is more likely than not. In fact, one betting agency has actually put odds in favor of a recall for anyone willing to put money on it.

However, the final straw for Apple may be the damning review issued by Consumer Reports. On Tuesday, the venerable publication declared that they could not recommend the iPhone 4 to consumers. “When your finger or hand touches a spot on the phone's lower left side—an easy thing, especially for lefties—the signal can significantly degrade enough to cause you to lose your connection altogether if you're in an area with a weak signal. Due to this problem, we can't recommend the iPhone 4.”

The last time Consumer Reports warned shoppers against buying something was back in April with the new Lexus SUV, and shortly after Toyota ended up recalling thousands of the vehicles. Could Consumer Reports have the same affect on Apple now?

Apple, for its part, has flip flopped a bit in their explanations and approach to dealing with the problem. Steve Jobs, the CEO of the company, initially responded to complaints by telling users to hold the phone differently or buy a $30 case to cover up the antennae. A few days later, Apple came out with a statement, explaining that the signal issue is a software problem, not a hardware problem, and that there was no actual signal degradation issue. Apple said that a fix would be on the way “within a few weeks” free of charge though it’s now been nearly two weeks since that statement was made and still no fix. To make matters worse, Consumer Reports has argued that this may actually be a hardware problem after all.

We reached out to Apple to find out when a fix might be made or if a recall is forthcoming, but received no response.

This is not the first time that Apple has been plagued by recall worries. Back in 2005, the company recalled more than 100,000 batteries for their Mac laptops and last year, they recalled first generation iPod Nano’s in Korea. There were even concerns that the previous generation iPhone might have to be recalled because the battery got too hot.

What makes this rumor so astounding is that the iPhone 4 had otherwise been considered a great success. It sold nearly 2 million units in the first three days alone and was even praised as the best iPhone yet by many of those who now bash it, including Consumer Reports. In fact, the biggest problem with the iPhone in the beginning was just that it didn’t come in white.

Those who argue that the iPhone 4 won’t be recalled point to the fact that it would cost Apple as much as $1.5 billion to do so, which would be a huge hit to the company. At the very least, Apple will be obligated to provide a fix for the product, whether it’s a software update or a case to protect the antennae. If the problem persists after that, Apple will have to consider the recall option more seriously.

In the meantime, those who are affected by the issue do have a few options. You can splurge and spend $30 to buy a case, which helps the signal problem by preventing your fingers from touching the antennae directly. Alternatively, if you don’t want to spend, Consumer Reports suggests putting a layer of duct tape over the antennae on the back of the phone.  Or if you just want to be done with it, you can return the phone to Apple within 30 days of the purchase and get a full refund.

—For a comprehensive credit report, visit the BankingMyWay.com Credit Center.

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