Steve Jobs on Antennagate: Data, Cases, and Fixes

There's an awful lot of hoopla hoopla around the iPhone antenna When you dip it with the death drill and your call slips away The media loves a failure in a string of successes The facts won't ever matter if they can make their bigger messes Oh sure I can make it happen, but in terms of daily uses I've yet to drop a call, so this whole damn thing is stupid And you can call me a fanboy, I've been called worse things Because Modo is ridiculous, pulling their anti-Apple strings So you bought a stolen prototype, get over it and move on Hey I've got an idea, let's all sing this song It goes if you don't want an iPhone 4, don't buy it If you bought one and you don't like it, bring it back If you don't want an iPhone 4, don't buy it If you bought one and you don't like it, bring it back If you bought one and you don't like it, bring it back

If you bought one and you don't like it, bring it back If you bought one and you don't like it, bring it back Bring it back, bring it back, bring it back Back to the Apple Store But you know you won't Good morning, thanks for joining us here We saw that on YouTube this morning and couldn't help but want to share it So thanks for coming We would love to answer your questions today Before we do I've got about just 15 minute quick presentation To maybe go over some stuff in a more efficient manner And then open it up for questions Sound alright?

Great Well let me get started You know, we're not perfect We know that, you know that And phones aren't perfect either But we want to make all of our users happy And if you don't know that about Apple, you don't know Apple We love making our users happy That's what drives us to make these products in the first place So we're going to talk about how we're going to do that today Before we get into that though I want to talk a little about the problems and the data that we've got That can help inform us about what the problems really are So that we can make sure we make all our users happy So let's get started The iPhone 4 is perhaps the best product we've ever made at Apple And we have sold well over 3 million Since we launched it three weeks ago Just three weeks ago And it's been judged the number one smartphone in a variety of publications These are just a few Wired, Engadget, PC World, Consumer Reports So people seem to like it More importantly, users seem to love it It already has the highest customer satisfaction rating of any iPhone ever And of any smartphone out there So that's not bad in the first three weeks However, we started getting some reports of people having issues with the antenna system

Which is a very advanced new antenna system And the problems they were saying Obviously, Gizmodo put their video on the web People were touching X marks the spot here And they were seeing a large drop in bars And this has been since dubbed Antenna Gate So we heard about this not long after we started shipping Just 22 days ago from today It's not like Apple's had its head in the sand for three months on this It's been 22 days And Apple is an engineering driven company We've got some of the finest scientists and engineers here in the world In the areas that we need to create our products And the way we work is we want to find out what the real problem is Before we start to come up with solutions And so we've been working our butts off for the last 22 days To understand what the real issues are here So that we can come up with real solutions And today we want to share with you what we've learned So let's go right to the data Antenna Gate Doesn't seem like a good idea if you can touch your phone Or in particular grip your phone in a certain way and the bars go way down That doesn't seem like a good thing Well it turns out it's certainly not unique to the iPhone 4

That was one of the first things we learned You could go on YouTube and see videos of Nokia phones And Motorola phones and other phones doing the same thing Nobody had ever looked at them much before And frankly we didn't trust them either So we did our own testing We have extremely sophisticated testing here And let me just show you an example of some other smartphones So we're going to start off with some very credible phones These are all good phones, there's nothing wrong with them The first is the BlackBerry Bold 9700 made by RIM This is perhaps the most popular smartphone in business So let's take a look at what happens when you hold it in a totally normal way So you can see the bars right there It's got 5 bars and we're going to grip it Like you might easily grip it to make a phone call And you'll see the bars go down to 1 fairly rapidly And you ungrip it and the bars go back up to 5 Pretty much identical to the videos on the web about the iPhone 4 So there's the BlackBerry Bold, 5 bars to 1 bar Different people grip phones in different ways But you can imagine that's a pretty popular way to grip that phone Next, the HTC Droid Ares It's an Android phone, let's take a look at it Starts off with 4 bars, they only have 4 bars And the time it takes for the bars to go down is dictated by their algorithm The signal goes down right away

But the algorithm sometimes delays it to make sure it's not just a temporary glitch As to not confuse the user So it goes down to 0 bars And then when you take your hand away from wherever their antenna weak spot is It goes back up eventually to 4 bars there So again, the HTC Droid Ares, same behavior 4 bars to 0 bars Samsung Omnia 2, a Windows mobile phone Let's take a look at it It's got 4 bars to start We grip it in a not unusual way This one I believe they have a long hysteresis in their algorithm So it takes a minute or so to drop the bars But again, the signal strength dropped immediately The display goes dark quickly, they're trying to save battery life Again, the signal's already down to, I believe, 1 bar But they're just taking their time to show it to make sure they're not making a mistake None of this is standardized, by the way Manufacturers come up with their own delays And so again, you'll see it go back up I think they go back up a little faster than they go down So we get back to 4 bars here pretty quickly

Now, these phones So, we could have gone on and on and had another 5 or 6 phones to show you Most smartphones behave exactly the same way Now, these phones were all tested in areas of relatively weak signal strength Just like people have been testing the iPhone 4 And you can see that the bars go from 5 to 1, 4 to 0, 4 to 1 This is life in the smartphone world Phones aren't perfect. And it's a challenge for the whole industry.

And we're all doing the best we can. But every phone has weak spots. Most every smartphone we've tested behaves just like this when it's in a relatively weak signal area, and you grip it in a certain way that's not unusual. Now, we're not perfect. We made it very visible with a little help from our friends on certain websites. What we did was x marks the spot. We went to a lot of trouble to put this really beautiful line in the stainless steel to say, here's where you touch it, everybody. Might as well could have just put a wave, a little red flag right there. And we had incorrect bars so that when it did drop, the drop looked far more catastrophic than in reality it was.

You thought you were dropping from five bars to one bar, when in reality you were probably dropping from two or three bars to one bar. But we screwed up on our algorithm. By the way, some of these other phones might be being a little too liberal with their algorithms too. But that's their choice. Our choice is to put the correct algorithm in, which we've just done with a release we sent out yesterday. And hopefully that will give people a better indication of the signal strength that they're in. Their bars will still drop by a bar or two when they put their finger or they grip the phone in just the right place. And again, all smartphones seem to do that. We haven't figured out a way around the laws of physics yet.

So we do a lot of testing. We've got an extremely sophisticated antenna lab. This is one of the pieces of equipment. Somebody will sit there and rotate around inside this. These are all antennas looking at the antenna reception from every angle. Again, fully automated testing, where we're testing the reception in free space. Here's our biggest room right here. Again, you have to build these rooms because if you don't shield what you're testing from all of the outside interference, you don't get accurate tests. And you can't put your equipment in the room either. The equipment's got to all be remoted outside the room. Now, this is a state-of-the-art antenna test facility.

We have 17 anechoic chambers. These things are not cheap. We've invested over $100 million in our antenna testing facilities over the last five years. We have 18 PhD scientists and engineers on a much larger staff, 18 PhD scientists and engineers working in this area. And they do some very advanced antenna design. And so the iPhone antenna went through all of this. We tested it. We knew that if you gripped it in a certain way, the bars are going to go down a little bit, just like every smartphone. We didn't think it'd be a big problem, because every smartphone has this issue. So phones aren't perfect.

And it's a challenge for the entire industry. And we're hoping to make some contributions to this in future years. As a matter of fact, we think we've started with this antenna, which is a more advanced antenna than ever has shipped on a smartphone before. People are reporting better reception with this antenna than they've ever seen with their smartphones before. So what have we learned? The first thing we've learned is smartphones have weak spots. This is not unique to iPhone 4. This is a property of smartphones. They have weak spots. You can grab them in the course of normal use. And they're all different. But you will drop reception.

Next, some really interesting data from AppleCare. As you know, we get very high marks in terms of customer service. Our customer service program is called AppleCare. Whenever anyone calls in for a problem, in addition to solving their problem, they're logged. We look at the statistics. And we've got the statistics on AppleCare. And we asked ourselves, what's the percent of all iPhone 4 users who have called AppleCare about issues relating anything about the antenna or reception or anything even near antenna or reception? In other words, if you read all these articles out there, you would have thought, Jesus, at least half our customers must have called in to complain or ask questions or be angry.

So what percent of iPhone users have called AppleCare? Hard data. One half of 1%. One half of 1%, 0.55%. This data is just a few days old. 0.55%. Historically for us, this is not a large number. So this doesn't really jive with what you read about this problem. Let's keep going. So smartphones have weaknesses. In AppleCare, about a half a percent of our iPhone 4 users have called in about problems related to reception, antennas, et cetera.

Even after reading all of these articles out there, 0.55%. The third, return rates. Like Apple, AT&T, who is the largest reseller of iPhones in the world, has a, if you will, buyer's remorse return period. And people return phones for all sorts of reasons. The reception in their area isn't what they'd hoped. They try it out. They just don't like it. The antenna doesn't work for them when they grip it a certain way. Whatever it is, no questions asked. They can return a phone. So what are the return rates to our largest reseller of iPhone 4s? Well, what we're going to do is compare it to iPhone 3GS.

Because iPhone 3GS has been the best selling smartphone in history. It's the gold standard. So in the early days of iPhone 3GS a year ago, AT&T's return rates were about 1.5%. 3GS a year ago, AT&T's return rates were 6%, which is below the smartphone average. Everybody was pretty happy about that. What are they for the iPhone 4? Again, you go online, and you read all these articles about it, and you think it must be, jeez, at least half the people must be returning their phones, right? It's pretty serious. Well, we've got the data now.

And the hard data says it's 1.7%. It is less than a third of the return rates for the iPhone 3GS. Hard data, just a few days old. Just a few days old. So smartphones have weak spots. About a half of 1% of all iPhone owners have called AppleCare about anything related to antennas and reception. And the returns at our largest iPhone 4 reseller are a third of what they were for a phone that was regarded as spectacular a year ago.

OK, pretty interesting. One more data point. AT&T has given us the early call drop rate information just three days ago. They obviously run a very sophisticated network. They do a great job. And they log call drops. That helps them improve their network. And so we can't give out the absolute call drop data. That's very confidential and proprietary to them for competitive reasons they don't want to give it out. And I totally agree with them. But they're going to let us release the delta to the iPhone 3GS. So how is the call drops?

How have iPhone called? How do call drops on iPhone 4 compare to call drops on iPhone 3GS during its early period a year ago? How many additional calls are dropped for every 100 calls you make on an iPhone 4 compared to an iPhone 3GS? And I can tell you, since we are being totally transparent, that even though we believe the iPhone 4's antenna is superior to that of the iPhone 3GS, I must report to you that the iPhone 4 drops more calls per 100 than the iPhone 3GS. That's what the data says.

We got it three days ago. So how many more calls per 100? Does the iPhone 4 drop than the iPhone 3GS? Again, listening to AntennaGate on the web, you would think, well, it must be dropping half the calls. It must be dropping at least 50 more calls per 100, or 25 more calls per 100. Right? Wouldn't you expect that? This is the hard data. The iPhone 4 drops less than one additional call per 100 more than the iPhone 3GS.

Less than one additional call per 100. Now, 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 were already in stores that fit the 3GS perfectly, since the design didn't change.

And in our stores, 80% 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% of the people are going out with a case. And I think that has something to do with this disparity. But who knows? We're going to track it down. But again, zooming out, less than one additional call drop per 100 calls over the iPhone 3GS. So if you put these four things together, smartphones have weak spots.

Almost every smartphone we've tested exhibits the identical behavior, if grabbed in a reasonable way, as the videos you've all seen on the web of the iPhone 4. Around a half of 1% of iPhone owners have called AppleCare in relation to reception and antenna issues. Only 0.55% of all iPhone owners have called, an extremely low number. The return rates for iPhone 4 are running one third of those for the iPhone 3GS a year ago. And the iPhone 4 drops less than one more call per 100 than the iPhone 3GS.

Now, when we look at this data, when our engineers and scientists look at this data, it's very hard to escape the conclusion that there is a problem, but that that problem is affecting a very small percentage of users. I myself have gotten somewhere over 5,000 emails from users telling me how their iPhone 4 works perfectly, and they can't figure out what all of this is about. So we think there is a problem, but we think it's affecting a small percentage of users. And we think some of that problem is inherent in most every smartphone.

But having said this, we care about every user. And we're not going to stop until every one of those is happy. But I think it's important to understand the scope of this problem. Because what the data says leads you to the conclusion that this has been blown so out of proportion that it's incredible. I know it's fun to have a story, but it's less fun when you're on the other end of it. So we care about every user. So let me tell you what we're going to do. The first thing we did yesterday, we released iOS version 4.0.1.

That is now out. People are updating it. It fixes the wrong formula that we use to calculate how many bars to put up for a given signal strength. And there was a nasty exchange bug in there that a lot of our corporate customers are hitting, and that's fixed as well. So those bugs are fixed. iOS 4.0.1 is out, and we recommend that every iPhone owner update to it. Secondly, a lot of people have told us the bumper solves the signal strength problem. Consumer Reports is the latest one this week. We've heard it from a lot of people. Why don't you just give everybody a case? OK, great. Let's give everybody a case. We've got our bumper case here, but we want to give everybody a free case.

Every iPhone user is going to get a free case. One for every iPhone 4. If you've already bought one, we'll give you a full refund for a bumper. And we're going to do this for every iPhone 4 purchased through September 30th. We'll re-examine this in September and decide whether to keep going, or maybe we'll have a better idea. But at least through September 30th, a free case for every iPhone 4. And if you've bought a bumper, we'll give you a full refund. Now, everything in life is more complicated than it seems on the surface. We're going to send you a free case. We can't make enough bumpers. We're planning on selling them and making a certain percentage and we have the tooling done.

If we're going to try to give a bumper to everyone, no way we can make enough in a quarter. So what we're going to do is source some other cases and give users a choice of cases. And they'll be able to pick one. And we're going to apply on our website starting late next week. It'll take us about a week to get this all up. Pick a case. Zoom will send it off to you. That simple. So a free case for every iPhone 4 user. Simple. And if you're still not happy before or after you get a free case, as we've said, you can bring your iPhone 4 back undamaged within 30 days for a full refund.

We've waived any restocking fees, anything. Full refund. So we are going to take care of everyone. We want every user to be happy. And if we can't make them happy, we'll give them a full refund. Does that make sense? So I've got some other updates for you. Just some other things going on relative to the iPhone 4. And then we'll get into Q&A. Again, iOS 4 version 4.0.1 was released yesterday. We're tracking some problems with the proximity sensor. And we're working on some solutions.

And hopefully, we'll get those into the next software update. It seems to affect, again, a fairly small number of users. But it's probably a pesky problem for those users. So we're going to try to get it fixed as fast as we can. White iPhone, a lot of people waiting for the white iPhone. We're going to start shipping it end of this month. And our quantities will be limited at first. And we're ramping up as fast as we can. But white iPhones will start shipping at the end of July. And also, on July 30th, we are going to bring the iPhone to 17 more countries. And these are the same 17 we talked about before, with the omission of just South Korea, because it's going to take us a little longer to get government approval there.

But 17 countries, July 3. So that's the update on the iPhone 4. In ending, I'd like to just give you a feel of what we care about, and how we operate, and how we make decisions. We love our users. We really love them. And we try very hard to surprise and delight them. We work our asses off for them. And it's great. And we have a blast doing it. And we make some pretty interesting products for them. Macs, and iPods, and iPhones, and iPads, and Apple TV, the App Store, the iTunes Store, Mac OS X, iOS, iLife, iWork, Final Cut.

We make some pretty great products for them. And what motivates us is to just have them love them. So we love our users. And we work really hard to surprise and delight them with these products. We also connect them with. great apps, and developers through our app stores, and great content through iTunes, and really bring the world of content creation and app creation and our users together in some extremely innovative ways, even if we don't make a lot of money from it. We love our users so much that we built 300 Apple retail stores for them to give them the best buying experience in the world, and more importantly, the best ownership experience in the world with genius bars that cost nothing to come in and talk to people and get your products fixed and get advice.

We have one-to-one seminars to teach people how to use our products. We had over 60 million people through our stores last quarter, 60 million. So we do all this because we love our users, and when we fall short, which we do sometimes, we try harder, we try harder. We pick ourselves up, we figure out what's wrong, and we try harder. And when we succeed, they reward us by staying our users. And that makes it all worth it. So that's what drives us.

And when we have problems like this and when people are criticizing us, we take it really personally. Maybe we shouldn't. Maybe we should have a wall of PR people keeping us away from all that, but we don't. We all read these stories. We all take it really personally. And if a user's having a problem, it's our problem. So we've been working really, really hard for the last 22 days to try to understand what the real problem is so that when we solve it, we actually solve it, rather than just putting a Band-Aid on it or giving a certain press person what they think they want us to do. And we think we've gotten to the heart of the problem here.

And the heart of the problem is smartphones have weak spots. We made ours extremely visible. Some took advantage of that to demonstrate it. It was very easily demonstrable. We screwed up on displaying too many bars and made that demonstration more theatrical than it needed to be. And so for those small number of customers that are having problems, we're gonna give them cases, which we think will take care of most of those problems. And for those that still are unhappy, we're gonna give them a full refund. And that's everything we can do to try to make every customer happy. But the data supports the fact that the iPhone 4 is the best smartphone in the world.

And that there is no antenna gate. There is a challenge for the entire smartphone industry to be able to improve its antenna performance someday to where there are no weak spots on any smartphone. And we're dedicated to doing that. But unfortunately, that's a day in the future. So for today, we love our customers and we're gonna try to take care of every single one. And that's what I had.