Date: Wednesday, July 14th, 2010, 04:08
Category: iPhone, News
Following up on the iPhone 4 antenna issue, one research investment firm has studied the numbers and determined that a recall of the iPhone 4 could cost Apple as much as US$1.5 billion.
Toni Sacconaghi, an analyst for Bernstein Research, said in a note to clients on Tuesday that while a full product recall is “highly unlikely,” it could theoretically cost the company up to US$250 per phone. Sacconaghi estimates 6 million units sold or in transit, resulting in a recall price tag as high as US$1.5 billion according to CNET.
Another option is for Apple to offer an in-store hardware fix, which could cost US$75 per phone. Giving away a free bumper case, which currently retails for US$29, would be a much cheaper alternative for the Cupertino, Calif., company. Sacconaghi estimates this approach would cost just US$1 per unit.
The report arrives just a day after Consumer Reports warned that it could no longer recommend the iPhone 4. After conducting its own tests inside a radio frequency isolation chamber, the organization issued a statement on its blog reversing its previous recommendation of the phone.
For its part, Apple earlier this month released an open letter stating that the iPhone 4’s reception issues were largely due to an inaccurate formula for calculating signal strength. The company assured that a free software fix would be available in the coming weeks. Consumer Reports’ findings are in opposition to Apple’s statement.
Another Wall Street analyst, Gene Munster with Piper Jaffray, estimated Tuesday that a fix from Apple could impact its operating income by 1%. Like Sacconaghi, Munster also suggested the possibility of issuing free bumper cases. Additionally, the analyst said that since only 25 of users are affected by the issue, the company could “weather the storm” by doing nothing.
Stay tuned for additional details as they become available.