iPhone 4 Recall Unlikely; AT&T Dodges a Bullet

In case you havent heard, theres a press conference today in Cupertino, Calif. at Apple Inc. HQ. The suspected subject is, of course, the now-notorious iPhone 4, the gadget that even the non-tech-savvy are starting to associate with the words doesnt work. In fact, to quote this reporters mother: Isnt it that pricey gadget that everyone stood in line for only to be stuck with something that doesnt work? Well [drag on cigarette], I wouldnt buy anything else from them.

And that sums it up. While the iPhone 4 actually does work (mostly), the hit that Apples brand is taking among the non-Appleheads is palpable. So Steve Jobs is essentially forced to take to the public stage to assuage detractors and, well, explain. That said, the company will likely not issue a recall it would be extremely expensive when there are other fixes, and it would take the marquee phones off the market, leaving Apple with its drawn-down supplies of iPhone 3GS and nothing much else to sell until the hardware is retooled. Which, if Samsungs response to the AMOLED display shortage is any indication of how quickly components manufacturers move, could take a while (well have a new factory online in 2012! said the vendor, which is responsible to shortages of the Droid Incredible and the HTC Evo WiMAX handset).

More likely, Apple will offer free bumpers and a free replacement or upgrade down the road. Of course, then theres this guy, who thinks Apple is going to announce a Verizon Wireless version of the iPhone.

But absent of that being true, Apple taking the heat today is of course lucky for AT&T Inc., which has been mum about the problem handset its helping to sell. And why should it pipe up, really? Its benefitting from a business model that was previously a frightening one for carriers the handset maker carries the consumer relationship there. The iPhone takes AT&T out of the equation for all but network connectivity, leaving it with all of the capex to handle congestion and very little of the customer loyalty associated with the device. Thats certainly off now. There are benefits to adjusting ones place in the value chain.

Compare that with consumer response to Verizon Wireless launch of its top smartphones, the Droid Incredible and the Droid X, which are both sold out. The lack of availability is one thing, but the heavy advance marketing in both cases and widely publicized assurances of supplies for the Droid X whipped up consumer hopes, only to dash them against the rocks of improperly set expectations. Verizon has been subject to comments, many of them unprintable, about the shortages, as a result. Forget who might be to blame all people see is a carrier that promised them something and didnt deliver. If it were a hardware issue, would consumers think Motorola or think Verizon as the go-to complain-receiver? This reporters moneys on Verizon.

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