MacRumors

Cult of Mac spoke with several public relations experts who suggest that a recall of Apple's iPhone 4 is "inevitable" given growing criticism over the device's antenna issues that is spilling over from blog communities into the mainstream media. The PR crisis grew substantially yesterday when the widely-read Consumer Reports review and recommendation magazine failed to recommend the iPhone 4 to potential customers despite the device otherwise topping the rankings of smartphones.

"Apple will be forced to do a recall of this product," said Professor Matthew Seeger, an expert in crisis communication. "It's critically important. The brand image is the most important thing Apple has. This is potentially devastating."

Crisis communication experts contacted by CultofMac.com, including Chris Lehane, former Clinton White House "Master of Disaster," agree: the iPhone 4 reception issue presents a Toyota-style PR crisis for Apple, and the company must respond with a more meaningful fix than a software patch.

Apple issued a press release earlier this month claiming that the problem is merely a software issue that causes the onscreen signal strength display to overstate the actual signal strength, also noting that some attenuation of signal while the device is being held is normal. But Consumer Reports and others have determined through their own testing that the iPhone 4 does in fact suffer more significant signal attenuation than other devices, an issue that would not be remedied by a simple software fix to signal strength displays.

Apple has consequently been taking criticism for not coming clean about the issue or tackling these reports of demonstrable signal laws head-on. In fact, Apple has been going so far as to delete threads in its support forums pointing to the Consumer Reports article rather than allowing an open discussion of the topic or addressing the claims. Meanwhile, some observers hope that Apple's seemingly extended timeframe for pushing out the promised software update to address the signal strength display issue could indicate that the company is quietly working on more substantial software changes to address the issue in some way if at all possible.

DigiTimes today reports on rumors that Apple is looking to launch its second-generation iPad as soon as the fourth quarter of this year, adding OLED-based 5.6-inch and 7-inch models to its existing 9.7-inch LED display model.

The sources noted that Apple has recently placed new iPad orders to Taiwan-based component makers for the fourth quarter of 2010 and the first quarter of 2011 with 9.7-inch, 5.6-inch and 7-inch models all included.

The 9.7-inch model will see some minor changes, while Apple will add Chimei Innolux (CMI) as one of its panel suppliers.

The new 5.6- and 7-inch iPads will mainly target the e-book reader market, separating them from the 9.7-inch model, which mainly targets multimedia entertainment, the sources stated.

The report also suggests that Taiwanese manufacturer Compal will be producing the new iPads, a surprise given earlier expectations that Pegatron would be the manufacturer brought on board to supplement Apple's existing production for iOS devices through Foxconn.

DigiTimes' own research analyst , Mingchi Kuo, casts some doubt on the rumors, however, claiming that Samsung, the world's dominant OLED manufacturer, can't even keep up with demand from its own product lines, and even with new investments in production there appears to be no way the company could ramp up production to the levels needed by Apple within the timeframe indicated.

Kuo also claims that Compal would be unlikely to be interested in producing the new iPad models given the scant profit margins available on the device in relation to its current profitable work assembling netbooks.

While claims of OLED displays for a number of Apple products have been around for many years without coming to fruition, DigiTimes in April specifically floated the idea of an OLED display for the second-generation iPad, but noted that pricing and production volume issues were likely to preclude the possibility. DigiTimes has also reported in April that Apple was looking to launch a smaller iPad in the 5- to 7-inch range as soon as the first quarter of next year.

Earlier today, a Consumer Reports post made headlines after they concluded that they simply could not recommend the iPhone 4 due to the widely reported signal issues related to touching the lower-left corner of the device. This single issue alone has prevented them from fully recommending the iPhone 4. However, their formal testing otherwise revealed that the iPhone 4 ranked the highest amongst all smartphones in their testing.

AllThingsD (via LoopInsight) summarizes the report (subscription required).

The [iPhone 4] scored 76 out of 100 points -- two points ahead of its closest rivals, the iPhone 3Gs and the HTC Evo 4G.
...
The product evaluation agency rated the iPhone 4 "Excellent" in its display, navigation, Web browsing, multimedia and battery life categories, "Very Good" in phoning and messaging and "Good" in voice quality.

The iPhone 4 beat out the HTC Evo as well as all the other Smartphones and had the highest score of 76/100. The signal issue described is that holding the lower-left corner of the iPhone 4 can reduce cell phone signal and affect calls in areas with lower reception. The issue depends on your local coverage and can be alleviated with a phone case.

Late last week, Wired reported that a lawsuit filed against Apple and AT&T over the carrier's exclusivity arrangement for the iPhone has received class action status, meaning that it now automatically covers every iPhone customer in the United States.

In an interview Friday with Wired.com, Mark Rifkin, lead counsel representing the plaintiffs of the suit, highlighted that the terms of AT&T's two-year customer contract say that customers have the option to terminate whenever they wish for a fee to switch to another carrier.

By only offering the iPhone on one carrier, iPhone customers are still essentially locked in despite having the termination option, the suit argues.

Playing a significant role in the lawsuit has been the disclosure in documents related to the case that AT&T's exclusivity agreement with Apple was originally scheduled to last five years from the device's 2007 launch, or into 2012. The plaintiffs have argued that even customers fulfilling their two-year contracts with AT&T for the iPhone are unable to switch carriers and continue using their handsets, effectively locking them in to AT&T for longer than their signed contract unless they are willing to switch phones.

In a response filed by Apple's legal team in 2008, Apple claimed the allegations of monopoly were contrived.

"[T]here was widespread disclosure of [AT&T's] five-year exclusivity and no suggestion by Apple or anyone else that iPhones would become unlocked after two years," Apple said in a response. "Moreover, it is sheer speculation - and illogical - that failing to disclose the five-year exclusivity term would produce monopoly power."

Some observers have pointed to the original five-year exclusivity agreement between Apple and AT&T as evidence that the iPhone will not be making an appearance on Verizon or any other U.S. carrier in the near future. Multiple sources have indicated in recent years, however, that the exclusivity agreement is for a significantly shorter period of time, possibly expiring this year and opening the door for the iPhone to make its way to competing carriers. Even if the original agreement did call for a five-year exclusivity period as detailed by USA Today in 2007 and confirmed in the court documents associated with this case, it is certainly possible that Apple and AT&T have renegotiated their agreement such that more recent reports of shorter timeframes are accurate.

Engadget reported over the weekend that some of AT&T's "most valuable customers" have been receiving offers for free 3G MicroCell devices, which recently went nationwide after being tested in limited geographic areas. The 3G MicroCell taps into a user's home broadband Internet connection, routing voice and data over the customer's own connection to provide enhanced coverage in areas with weak cellular signal. Carrying a $150 list price, the MicroCell can be used with a customer's own cellular plan minutes for no additional charge or customers can purchase additional MicroCell minutes for a monthly fee.

While we've no clue how widespread AT&T's generosity is, or how you might get one, it appears that the company's "most valuable customers" are now receiving free range-boosting femtocells. Today, loyal reader Jason got a old-fashioned paper letter in the mail, offering his iPhone-wielding family a 3G MicroCell with no strings attached.

Speculation has suggested that customers being signaled out by AT&T for the offer are high-value customers with substantial monthly contracts that are nearing expiration. The MicroCell offer could then be considered an enticement to convince those customers to re-commit to AT&T for a new contract term.

AT&T has reportedly claimed that the free MicroCell offers are part of a trial the company is running to test various methods of offering the device. As Engadget notes, "free" is usually a pretty good method, although the company has provided no additional information on how it is selecting customers for the trial offer.

Earlier this month, popular product review and comparison group Consumer Reports noted that it felt that signal issues with the iPhone 4 were not significant enough for users to forgo buying the device, citing overall improvement in signal strength and the fact that many phones experience the same issue.

There's no reason, at least yet, to forgo buying an iPhone 4 over its reception concerns. And even if those do materialize, Apple's Steve Jobs helpfully reminds new iPhone buyers that "you can return your undamaged iPhone to any Apple Retail Store or the online Apple Store within 30 days of purchase for a full refund."

Just one day later, however, Consumer Reports confirmed that it had been able to duplicate the signal loss issue in real-life settings, something it wasn't able to do in its testing center.

Today, as part of its smartphone ratings, Consumer Reports officially reports that it is unable to offer a "recommended" label for the iPhone 4, despite the fact that the device's feature set placed it at the top of the magazine's rankings.

It's official. Consumer Reports' engineers have just completed testing the iPhone 4, and have confirmed that there is a problem with its reception. 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 magazine confirmed the signal loss issue in its testing laboratories while also finding no comparable loss in other smartphones, including the iPhone 3GS, suggesting that Apple's claim that the problem is simply a software display issue may not be true. The magazine also confirmed that duct tape placed over the affected portion of the case alleviates the issue, as should also be the case with cases and bumpers.

Consequently, Consumer Reports notes that it is unable to recommend the iPhone 4 until Apple comes up with a permanent and free fix for the signal issues.

As noted by Hardmac, Apple on Friday issued a support document outlining a repair/replacement program for users experiencing power problems with Time Capsules manufactured between February and June 2008.

Affected Time Capsule models
Some Time Capsules with serial numbers in the following range may be affected:
XX807XXXXXX - XX814XXXXXX

How to find the serial number on your Time Capsule.

If your Time Capsule falls within serial number range above and it does not power on or shuts down unexpectedly after starting up, it may be eligible for repair or replacement.

Users experiencing the documented issues are invited to contact Apple, an Apple retail store, or an Apple Authorized Service Provider for diagnosis and repair or replacement. Users in the U.S. and Japan wishing to retain the data on their Time Capsules can contact Apple to arrange for mail-in service, while customers in other countries can arrange for data transfer to a replacement device through their Apple retail store or service outlet.

Apple notes that the program will cover Time Capsules for three years from the date of original purchase, and customers who previously paid for repair or replacement of Time Capsules experiencing the issue can contact Apple for a refund.

BMW is the first car manufacturer to have announced support for a little-known feature in iOS 4 called iPod Out. CNET reported last week on this new iOS 4 feature:

This feature allows a connected iPhone 3G, iPhone 3GS, iPhone 4, or iPod Touch (second or third generation) to output and display an iPod interface on a connected device's external screen. That device, in this case, would be a future BMW or Mini vehicle.

Rather than displaying BMW or Mini's iPod interface, the connected vehicle would display Apple's own interface, which will be controllable with the vehicle's controls. Users will be able to control the iPod's music playback and browse their music catalog, playlists, podcasts, and Genius mixes.

BMW has released a video demonstrating the feature that is coming in their cars in 2011.

The new feature allows users to see an iPod interface on the car's display while also providing direct control and access to features such as Genius mixes.

An Apple patent application filed in May 2008 and published in November 2009 revealed that the company had been researching methods to allow media devices like the iPhone and iPod to "push" their interfaces to accessories to provide more native-like control from the accessories. That technology seems to have finally made its appearance as iOS 4's "iPod Out" feature being used by BMW.

Apple continues pushing their easy to use the video conferencing of the iPhone 4 as its main marketing message. Four new FaceTime TV ads debuted tonight on Apple's website. Two (Meet Her and Big News) are embedded above. They include:

- Meet Her
- Haircut
- Smile
- Big News

Each commercial shows personal conversations and moments where video conferencing plays a key role. The iPhone 4 sold 1.7 million units in the first three day of sales, making it Apple's most successful product launch to date.

Apple's impressive new retail store in Shanghai, China opened today to large crowds. MICGadget provides a gallery of photos from the launch and the Wall Street Journal reports that 150 fans were waiting overnight to be the first in the Store.

Apple opened the doors of its second store in the entire country on Saturday, drawing crowds of all ages as early at 5 a.m. Some drove several hours or flew in from other provinces for a chance to line up outside the cylindrical glass building. Many hoped to catch a glimpse of the iPhone 4 or of Steve Jobs, but were disappointed.

Like the company's flagship store on Fifth Avenue in Manhattan, the Pudong store is located below ground level and utilizes the glass tower as an iconic entryway with a glass stairway descending to the store below.

Early visitors were given free special edition t-shirts celebrating the store's opening.

Apple expects to open a second retail store in Shanghai and a total of 25 stores in China by the end of 2011.

Arstechnica reports on at least one other iTunes user who also claims to have been the victim of fraudulent App Store charges, possibly by a developer.

Ars reader Harper Reed contacted us to detail the problem. His account was used earlier today to purchase 34 of WiiSHii Network's apps without his permission, for a total of $168.89. The apps appear to mostly be travel guides for cities in China, and come in both English and Chinese versionsoddly enough, Reed ostensibly bought both.

Coincident with this activity which occurred today, WiiSHii's apps are also rising in the travel section suggesting that Reed's account may not have been the only one compromised. WiiSHii's apps were previously noted to be look suspicious by TheNextWeb.

The news comes soon after another report of similar fraudulent activity for another developer. In that case, Apple shut down that developer's account, reported that only 400 accounts were affected and denied that there was any compromise of Apple's iTunes servers themselves. Analysts had speculated that phishing had been the source of the account information:

"Standard phishing attacks," said Sullivan when asked to speculate on the most likely way Nguyen obtained access to the iTunes accounts. "That's much more likely than someone hacking the accounts or Apple's database," he added.

According to F-Secure's data, approximately 20% of online users use the same password across multiple accounts, so if that one password is stolen, it opens up access to all of those user's accounts. In this instance, Reed's password was apparently not an easily guessable word, but there was no indication if he used his password elsewhere on the internet.

According to one forum report, stolen iTunes account information is readily available for sale through certain Chinese web sites. If true, this means that the individuals actually stealing the accounts and those using them might not be the same. Based on the single data point, it's also impossible to say for sure the developer was behind the attacks, though they had the most to benefit. That said, it seems unlikely they will benefit from their efforts as Apple will almost certainly shut down their account if they are responsible.

ifoAppleStore reports that Apple has decided to pay out bonuses of $150 to its retail store employees who worked the iPhone 4 launch day, at least in the U.S. But there appears to be a catch: Eligible employees have to have worked at least 12 hours on that day, far in excess of the normal workday.

The company wasn't able to give store employees a free iPhone 4 back in June because of severely constrained supplies of the smartphone. However, the company did allow employees to reserve an iPhone 4 in the days before the launch, and pay with their own money. Apparently that gesture wasn't enough to stem some grumbling among store employees. Now, sources say, Apple will hand out $150 bonuses to those who worked at least 12 hours on iPhone launch day, which could presumably be used to help pay for a new iPhone.

It is unknown what percentage of retail store employees will qualify for the bonus, although it is likely that many of them signed up for extended hours on that day given Apple's need for an "all hands on deck" presence to assist with the crowds.

The report also notes that the bonuses will qualify as taxable income, reducing their final value by a significant amount. Had Apple been able to provide employees with "free" iPhones, however, they too would have been subject to tax on their value.

There has been considerable discussion over the past couple of days regarding possibilities for front- and rear- facing cameras in the next-generation iPod touch, sparked by claims that the device will carry an iPhone 4-like 5-megapixel rear-facing camera. While the assertions have since been reported to be speculation rather than claimed facts, it hasn't stopped the rumor mill and leaks from winding up.

Yesterday, we noted that the iPhone 4's 5-megapixel camera would not fit within the body of the current iPod touch given the camera's 6.5 mm depth. And while a front-facing camera suitable for FaceTime video calling seems like a reasonable addition to the iPod touch, it remains to be seen whether Apple will be willing and able to squeeze a rear-facing camera into the device.

9 to 5 Mac is now reporting that a source has indicated that the next-generation iPod touch could gain a 3.2-megapixel rear-facing camera such as that found in the iPhone 3GS.

Well informed sources have notified us that the rumors of a 5 mega-pixel camera coming to this fall's iPod touch line may not have merit. They claim the new iPod touch will have a 3.2 megapixel camera that has similar characteristics to the one found in the iPhone 3GS.

But even that specific camera module would have difficulty fitting into the current iPod touch body, as iFixit's Kyle Wiens tells us that the iPhone 3GS camera's 5 mm depth is still too much for the iPod touch's tapered body. A "squaring off" of the body similar to that seen on the iPhone 4 would seem to leave sufficient room for the 3GS-like camera module if Apple decided to go with a uniform 8.5 mm thickness, the current maximum thickness of the iPod touch.

Another option for Apple, should it be looking to slim down the iPod touch even further, could be a new camera module carrying a thinner form factor, as technology has obviously advanced in year since the iPhone 3GS was released. It is unknown, however, whether Apple has acquired such thinner 3.2-megapixel camera modules. While several prototypes of the current-generation iPod touch surfaced carrying rear-facing cameras, we do not know the physical details and specs of that camera module that enabled it to fit within the existing iPod touch body design.

Reuters reports on comments from Google executives at this week's Allen & Co. media industry gathering in Sun Valley, Idaho, noting that Google co-founder Larry Page has accused Apple CEO Steve Jobs of "rewriting history" in comments over the past few months suggesting that Google followed Apple into the smartphone business with its Android platform.

Apple's Jobs recently told a conference that Google was responsible for the change in the relationship between the two companies because Google elected to compete with Apple's iPhone by developing the Android smartphone software.

On Thursday, Google's Page suggested that Jobs' assessment was "a little bit of rewriting history."

"We had been working on Android a very long time, with the notion of producing phones that are Internet enabled and have good browsers and all that because that did not exist in the marketplace," Page said. "I think that characterization of us entering after is not really reasonable."

Google CEO Eric Schmidt noted, however, that Apple and Google continue to maintain a number of partnerships and that there is room in the mobile space for both companies to thrive.

Fortune has put together a timeline of the Android/iPhone relationship, showing that Google purchased the Android platform in August 2005, a full year before Schmidt joined Apple's Board of Directors and nearly a year and a half before Apple officially announced the iPhone. According to the report, an Apple insider claims that the relationship between Apple and Google did not begin to deteriorate until Google and T-Mobile finally introduced the G1, the first Android-based handset, in September 2008.

According to a former Apple employee, the day that the Apple-Google relationship started to crumble was the introduction of the T-Mobile G1. According to him, Steve Jobs and Apple Mobile Software VP Scott Forstall had only seen Android prototypes that looked like Blackberries. The new form factor was 'way too similar to the iPhone for Jobs' tastes'.

Schmidt resigned from Apple's board in August 2009, and tensions between the two companies have continued to increase as they have begun to compete head-to-head in a growing number of markets.

In a new survey released today, Fortune has chosen Apple CEO Steve Jobs as the smartest CEO in tech. The survey drew upon 100 advisers and experts for nominations in ten different categories, who were then evaluated based on their perceived intelligence as well as their impact over recent timeframes.

Fortune points to the incredible success of Apple since Jobs' 1997 return to the company, seeing its market capitalization rise to $250 billion as the company changes industry after industry.

Rocking one industry could be luck, but upending four? That's smart.

He is a visionary, a micromanager, and a showman who creates such anticipation around new products that their releases are veritable holidays. And Jobs is a pop culture icon like no other business executive: An episode of The Simpsons a few years ago featured a Jobs-like character named Steve Mobs.

The profile also points to his "dictator-like control" that has resulted in the eschewing of Adobe's Flash technology while also driving Apple's products to possess the "elegance" of refined design the company is so famous for.

Runners-up behind Jobs in the "smartest CEO" category include Amazon's Jeff Bezos, biotech company Dendreon's Mitch Gold, Chinese e-commerce site Alibaba's Jack Ma, and Demand Media's Richard Rosenblatt.

Matching Jobs' performance, Apple's Jony Ive also claimed the top spot in the "smartest designer" category.

As Apple's senior vice president of industrial design, Ive, 43, is an expert at manufacturing lust. Like his boss, he is a perfectionist who leads a small team working in near secrecy. Most Apple employees aren't allowed in his studio. From the iPod to the iPhone to the iPad, his contributions have set the course not just for Apple but for design more broadly.

Ive's profile notes the presence of his designs in art museums as an example of his design prowess, while also pointing to his ability to satisfy both customers and his "demanding boss".

Noted patent holding firm NTP today announced that it has sued Apple, Google, Microsoft, and several other technology companies for infringement of its patents related to wireless delivery of email.

NTP Incorporated, the company founded by Tom Campana, the inventor of wireless email, yesterday filed lawsuits against Apple, Inc., Google Inc., HTC Corp., LG Electronics Inc., Microsoft Corporation, and Motorola, Inc. in the United States District Court for the Eastern District of Virginia for infringing NTP's eight patents related to the delivery of electronic mail over wireless communications systems. Each of the defendants is a manufacturer or developer of either wireless handheld devices or software applications used in the delivery of email across wireless communications systems.

Donald E. Stout, NTP's co-founder, said, "Use of NTP's intellectual property without a license is just plain unfair to NTP and its licensees. Unfortunately, litigation is our only means of ensuring the inventor of the fundamental technology on which wireless email is based, Tom Campana, and NTP shareholders are recognized, and are fairly and reasonably compensated for their innovative work and investment. We took the necessary action to protect our intellectual property."

NTP famously faced off against Research in Motion (RIM) over this same intellectual property, reaching a 2006 settlement in which RIM agreed to pay $612.5 million. Emboldened by its success against RIM and an upholding of many of its patent claims in a review by the U.S. Patent and Trademark Office, NTP has now decided to take on Apple and other major players over what has become a ubiquitous technological feature for a host of wireless handheld devices.

NTP's business is solely focused on management of its portfolio of over 50 patents primarily related to wireless email delivery, and the company has been criticized as being a "patent troll" for its very aggressive enforcement of its patent rights while having no intention of pursuing the technology itself. The company also has a number of lawsuits still outstanding, one targeting Palm and another group targeting the major U.S. wireless providers: Verizon, AT&T, Sprint, and T-Mobile.