Consumer Reports Confirms iPhone Hardware Defect, Refutes Apple Claims

Rating:

(75)

Paul Thurrott

Windows IT Pro

InstantDoc ID #125588

The respected consumer advocates and technical experts at Consumer Reports have independently tested Apple's controversial new iPhone 4 smartphone and concluded what the rest of us have known for weeks: The device ships with a major hardware defect related to the 3G radio that will not be fixed by Apple's upcoming software update. As a result, the organization recommends that consumers not purchase the iPhone 4.

"Consumer Reports' engineers have just completed testing the iPhone 4, and have confirmed that there is a problem with its reception," a Consumer Reports blog post reads. "Due to this problem, we can't recommend the iPhone 4."

Consumers Reports "calls into question" Apple's claims that its forthcoming software iPhone fix will help consumers, since the fix will only change the way the device reports reception strength and won't address the iPhone 4 hardware defect at all. The organization also directed the blame away from AT&T; the wireless carrier has been a convenient target for angry iPhone users for three years now, but it's becoming clear that many of the iPhone's reception issues were, in fact, Apple's fault.

In an official statement about the iPhone 4 reception issues earlier this month, Apple claimed that "gripping almost any mobile phone in certain ways will reduce its reception ... This is true of iPhone 4, iPhone 3GS, as well as many Droid, Nokia, and RIM phones." Not so, says the Consumer Reports, which has been testing products since the 1930s. After closely examining other smartphones running on AT&T's network, including older versions of the iPhone, the organization found that "none of those phones had the signal-loss problems of the iPhone 4."

Consumer Report's verdict on the iPhone again raises questions about the testing regimen—or lack thereof—that Apple products undergo before being unleashed on the public. And this lack of testing is especially problematic because Apple's more successful products, like the iPhone, quickly sell millions of units. Consumer Reports has a recommendation for Apple, too: "Come up with a permanent and free fix for the antenna problem."

For those customers who were lured by Apple's hype-heavy marketing and already purchased an iPhone 4, Consumer Reports notes that covering a gap in the device's antenna with duct tape will solve the problem, albeit in an unaesthetic fashion. Another solution would be to purchase a case, though again the organization doesn't believe that consumers should shoulder the financial burden of fixing this issue.

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"The raw materials cost cause sales to be a negligible contributor to their P&L. I should have said, they've never had a high-dollar item that significantly contributed to their *profits*. My bad. They made billions in revenue during the 90s, but lost vastly more"

So you are claiming that Apple does not make any significant profits from sales of the Macintosh computers. I can't even begin to start with how wrong that it. Most estimates put the margins on a Mac at about 25-30% meaning they generate over $1B in *profits* from Mac sales per quarter.

"Ignore their debt and the fact that they were losing many millions per quarter for multiple years and no one could figure out if they had a turn-around plan. The 150M represented a huge chunk of money that wasn't collateralized. The 150M also represented a show of confidence, which the markets needed to help allay the fears of further deterioration. Maybe you're downplaying it, but the markets reacted very favorably. It was a bailout on multiple points."

You are right about the show of confidence, but that came from the commitment to develop and support Office and other software for the Mac, not from the cash. The cash was a meaningless piece of this.

"Thus, the PPC was a disaster technically and economically. They could have moved x86 in the mid-90s fairly easily and the economies of scale would have probably saved everyone a lot of pain and might have shaved years of red-ink."

Maybe for Motorola and IBM, but not for Apple. They did quite well on the back of the G3 & G4. That was the period of their turnaround. Apple was profitable during the second half of the PowerPC era, not matter how you try and spin it. Those chips also were generally best in class for the core of Apples market at that time, as seen with the constant Photoshop bake offs.

17/15/2010 10:14:19 AM

"its almost 58% growth"

Sadly all of their key competitors experienced *vastly* higher growth than 58%. They were losing ground to everyone. It was ~2006 before they actually started gaining appreciable market share relative to other suppliers.

"What world are you living in where $3.76B is not meaningful revenue for a quarter?"

The raw materials cost cause sales to be a negligible contributor to their P&L. I should have said, they've never had a high-dollar item that significantly contributed to their *profits*. My bad. They made billions in revenue during the 90s, but lost vastly more.

"The $150M from Microsoft was hardly a bailout when they had 1.2B in cash already."

Ignore their debt and the fact that they were losing many millions per quarter for multiple years and no one could figure out if they had a turn-around plan. The 150M represented a huge chunk of money that wasn't collateralized. The 150M also represented a show of confidence, which the markets needed to help allay the fears of further deterioration. Maybe you're downplaying it, but the markets reacted very favorably. It was a bailout on multiple points.

"That is what I said"

Perhaps, but your implication was that they were casually moving away from the desktop PPC because IBM just wasn't interested in making a low-power version. The reality is the product line was a losing proposition for IBM/MOT for many years.

In October 2003 Motorola announced they were dumping their desktop CPU business. They lost nearly 3.5B in 2 years and shipments fell 40 percent. Guess who was their only client of any significance? It takes unique talent to cause your suppliers to want to dump one of their multi-decade-old divisions.

Thus, the PPC was a disaster technically and economically. They could have moved x86 in the mid-90s fairly easily and the economies of scale would have probably saved everyone a lot of pain and might have shaved years of red-ink.

O7/14/2010 8:10:41 PM

G3 and G4 were not in Apple's "boom" years. In fact the G3 was released the same time as Microsoft's $150M bailout of Apple. Their total sales share fell, and then stagnated during the PPC years.

Apple sold 2,874M macs in 1997. By 2005, the last year before the transition to intel, in 2005, they sold 4,534M. Hardly stagnant., its almost 58% growth. The $150M from Microsoft was hardly a bailout when they had 1.2B in cash already.

"I don't think Apple has ever had a high-dollar product that contributed in any meaningful way to their revenue."

Well Apple sold 2.94M computers last quarter counting for $3.76B in revenue. What world are you living in where $3.76B is not meaningful revenue for a quarter? Or are you saying that Macs are not considered a high-dollar product?

"No it wasn't... The problem was that IBM/Mot lost tons of money on the architecture and couldn't sell enough CPUs to justify the required R&D to compete with AMD/Intel. PPC is no longer a general purpose architecture."

That is what I said. They did not want to develop the chips that Apple wanted (low power G5) and went into gaming (see Xbox, wii).

Do you even read?

17/14/2010 5:59:03 PM

"68K was VASTLY superior to x86"

Ditto on that. The instruction sets on those early Motorola processors were a thing of beauty. The problem is the performance didn't always match... The 68060 was a really interesting CPU. I'm surprised that Apple didn't run with it (I've only seen one first-hand in a PBX)... RISC reminds me of the dot com years -- everyone started running that direction thinking it was the holy grail of computing, and then said, "To heck with that" and came home again.

Now, everything is so abstracted that a goobly-gook architecture can turn out okay, provided the CPU doesn't behave poorly with certain commands. Abstraction might have been great for coders, but it effectively ruined the CPU business for smaller players and niche architectures. That's a pity, but it certainly makes progress easier when everything seems to conform to a few known standards.

O7/14/2010 4:40:36 PM

Hey, what's better than the Windows/Mac wars? CPU architecture wars!

Of course, it's a moot argument now, since x86 won, and no one cares anyway, because no one codes in assembler anymore. Back in the days when it mattered:

68K was VASTLY superior to x86. 68k assembler was almost like coding in C. It was really easy, the 68K had many general purpose registers, a really elegant instruction set, and back in the day a huge, linear memory address space. It was a delight, while x86 was an abomination.

PPC was good on integer performance, and in some respects a nice instruction set for floating point, fmuladd for instance would do a "floating point multiply and add" in ONE instruction, which was wonderful for linear algebra.

Intel won because Intel had their business at risk. I never ever imagined that we would still be using, deep down, an x86 architecture, but, like the Rabbit, Intel was running for its life, while the Fox (IBM) was only running for its lunch, ie, PPC was a very minor business. Therefore Intel won.

And I have to give them credit for a great job, despite many legacy issues that looked insurmountable. If only the Win part of WinTel had improved as much as the tel part.

In the end, x86 makes a fine chip for OS X.

Jones7/14/2010 3:24:32 PM

"The PPC 750 (G5)"

My bad 970. The 750 was the G3-era.

O7/14/2010 2:23:05 PM

"You are really lost if you think the Power PC era was a bad idea."

It was a terrible idea. It had decent integer performance and rated well on SPEC tests, but this never translated to real-world performance. Every *real* (i.e. non-synthetic benchmark) had the Intel/AMD equivalents performing the same tasks, faster than PPC variants.

PPC did have some traction in research, because it was *very* good at integer math. If you needed to perform significant data analysis, it was the tool of choice (the Alpha and SPARC processors had traction as well -- but PPC was more cost effective). However, none of these applications were "commercial" (usually created in-house for a specific research project).

G3 and G4 were not in Apple's "boom" years. In fact the G3 was released the same time as Microsoft's $150M bailout of Apple. Their total sales share fell, and then stagnated during the PPC years. The Apple corporate boom was created by the iPod years later. The first iMac saved them from bankruptcy but was not a "boom" product (led to a lot of legacy replacements). It's also important to note, the products which saved them, and greatly inflated market-value, are all inexpensive. I don't think Apple has ever had a high-dollar product that contributed in any meaningful way to their revenue.

The PPC 750 (G5) also had some big problems, namely switching between 32/64-bit caused substantial performance hits (flushed the entire pipeline and wasted CPU cycles like you wouldn't believe). This is a big problem for a mixed-bit OS like OSX. x86 had this same problem between 16/32. x64 does not and handles mixed code much more favorably than did the PPC implementation.

"The downfall of the PowePC was that IBM and Motorola did not seem..."

No it wasn't... The problem was that IBM/Mot lost tons of money on the architecture and couldn't sell enough CPUs to justify the required R&D to compete with AMD/Intel. PPC is no longer a general purpose architecture.

O7/14/2010 2:20:22 PM

""PowerPC ?"

Really bad idea."

You are really lost if you think the Power PC era was a bad idea.

The G3 and G4 were fine processors that were superior in many ways to the x86 ones at the same time. Those were the machines that started Apple on the comeback trail.

The downfall of the PowePC was that IBM and Motorola did not seem interested in pursuing lower powered versions of the chips for desktop computers and there was no G5 for portables. They became more interested in the embedded and gaming markets.

As a User who has been through all the architecture changes, the impact has been minimal and surprisingly easy.

17/14/2010 10:22:39 AM

When I mentioned this to a friend who is a 3GS user and also a devoted Consumer Reports fan, he mentioned that the CR "not recommended" is an OBJECTIVE review of the product while the ratings are actually the result of consumer ratings gathered by surveys sent to their subscribers. So it seems that the top rating is, in fact, subjective and not the result of the objective tests run by CR labs. IOW, CR says don't get it but iPhone users who read CR think it's great.

Buyaky7/14/2010 8:21:50 AM

Considering this Apple/CR issue and the deletions made in the Apple support forum (of course officially only to keep the forum messages on subject) I found this to be very funny:
http://geekandpoke.typepad.com/geekandpoke/2010/07/whats-the-difference-between-apple-and-the-iphone-4.html

Clark7/14/2010 4:11:28 AM

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