8:31AM – On the way to Cupertino! I’ll check back in when I hit the mothership.
9:36AM – We’re here! Everyone’s milling about outside getting ready to head inside in a bit.
9:59AM – We’re in and seated! This is definitely the smallest Apple event I’ve ever seen.
10:00AM – Fairly unprecedented for an Apple event, too — I’ve never seen Apple gather an audience to not announce a product. (Of course, I’m making an assumption here that they’re not announcing anything today — maybe an update on the white iPhone 4, though.)
10:03AM – Looks like we’re having some difficulties getting our images system online today, so there’s a possibility updates will be text only! The team is working to figure out what’s up, though.
10:04AM – It’s starting!
10:05AM – YouTube video: iPhone antenna song. “There’s an awful lot of hoopla about the iPhone antenna…” Harshing on the media! “In terms of daaaaily usage I’ve yet to droooop a call.”
10:05AM – “Gizmodo is ridiculous with their anti-Apple strings. … 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!” I can’t — but also totally can — believe they’re playing this video.
10:06AM – Here’s the video: http://www.youtube.com/watch?v=VKIcaejkpD4
10:06AM – Steve’s up: “Good morning, thank you for joining us! We saw that on YouTube today and we wanted to share it.” Chuckles. Opening up for QA after 15 minutes of preso.
10:07AM – “We’re not perfect. Phones aren’t perfect. We know that, you know that. But we want to make all our users happy. If you don’t know that, you don’t know Apple. We’re going to talk about how we’re going to do that.”
10:08AM – “We’re going to talk about the problems and the data we’ve got. The iPhone 4 is perhaps the best product we’ve ever made at Apple. We’ve sold over 3m since we launched it just over 3 weeks ago. It’s been judged the #1 smartphone by a variety of publications — people seem to like it. Users seem to love it.”
10:08AM – “It has the highest customer satisfaction rating of any iPhone, and of any smartphone. However, we started getting some reports about people getting issues with the antenna system. … people have been seeing a large drop in bars, and this has been since dubbed antennagate.”
10:09AM – “It’s been 22 days. Apple is an engineering-driven company. The way we work, we want to find what the real problem is before we come up with a solution. We wanted to find out what the real issues are, and we want to share what we’ve learned. So let’s go to the data.”
10:10AM – “‘Antennagate’ — it doesn’t seem like a good idea if you touch your phone in a certain way and the bars go down. But one of the first things we learned: it’s certainly not unique to the iPhone.”
10:11AM – “We did our own testing — let me show you an example of some other smartphones. First, BB Bold 9700, perhaps the most popular business smartphone.” Video showing the bars — they drop from four or five to one. “Pretty much identical to the videos on the web about the iPhone 4.”
10:12AM – “Five bars to one bar. You can imagine that’s a popular way to grip that phone. Next: the HTC Droid Eris.” Shows the bars dropping from 4 to zero bars.
10:14AM – “Samsung’s Omnia 2 — it’s got four bars to start. None of this is standardizes by the way. Manufacturers come up with their own ways to show bars.” It went from five to one bar by holding it tightly. “We could have gone on and on, but most smartphones behave exactly the same way.”
10:14AM – “This is life in the smartphone world. Phones aren’t perfect.”
10:15AM – “It’s a challenge for the whole industry, and we’re doing the best we can. But every phone has week spots. Now, we’re not perfect: we made it very visible (with a little help from some of our friends from certain websites).”
10:16AM – “X marks the spot. You know exactly where to [not] hold it! … we screwed up on our algorithm. Again, all smartphones seem to do this — we haven’t figured out our way around the laws of physics. Yet.”
10:23AM – “That’s 1/3rd of the return rate of the iPhone 3GS. Pretty interesting. One more data point. AT&T has given us the early call drop rate just a couple days ago. They log call drops, it helps them improve their network.”
10:23AM – “AT&T won’t give out the absolute call drop data for competitive reasons, but they’ll let us release the delta. But how do the call drops on iPhone 4 compare to 3GS a year ago per 100 calls?”
10:24AM – “I can tell you that since we’re being totally transparent, even though we believe the iPhone’s antenna is superior, the data says the iPhone 4 drops more calls than the 3GS. But how many more calls per hundred does it drop?”
10:25AM – “Again, listening to ‘Antennagate’ on the web, it must be dropping many more calls! The iPhone 4 drops less than ONE call per hundred than the 3GS. Less than one.”
10:25AM – “I have my own pet theory about this — when the 3GS came out, there was already a healthy market for cases that fit it. But in our store 80% of iPhones walk out without a case.”
10:27AM – “But again, zooming out, less than one call drop per hundred calls.”
10:27AM – Steve’s reviewing his points from before — really hammering this stuff home. But still, none of this explains the single-finger data blocking phenomena.
10:28AM – “When our engineers and scientists look at this data, it’s very hard to escape the conclusion that there is a problem — but it’s affecting a very small percentage of our users. I myself have gotten over 5000 emails from users telling me their iPhone works fine, and they can’t figure out what this is about.”
10:28AM – “Having said this, we care about EVERY user. And we’re not going to stop until every one is happy. But it’s important to understand the scope of the issue — the data says the issue has been blown so far out of proportion, it’s incredible.”
10:29AM – “It’s fun to have a story, but it’s less fun to be on the other end of it. So here’s what we’re going to do. Yesterday we released iOS 4.0.1 that fixes some of these bugs with our algorithm. We recommend every iPhone owner update to it.”
10:29AM – “Secondly: a lot of people have told us the bumper solves the signal strength problem. Okay. Great. Let’s give everyone a case. We want to give everyone is going to get a free case.”
10:30AM – “One for every iPhone 4, if you’ve bought one we’ll give you a refund, and we’ll keep this going through September 30th.”
10:31AM – “Now, everything in life is more complicated than it seems on the surface. We’ll send you a free case. But we can’t make enough bumpers. So what we’re going to do is source some other cases — you’ll pick a case, and we’ll send it off to you.”
10:31AM – “And, if you’re still not happy even after getting a case, you can bring your iPhone 4 back undamaged for a full refund. We are going to take care of everyone. We want every user to be happy — and if we can’t make ‘em happy, we’ll give them a full refund.”
10:32AM – “So, I’ve got some other updates. We’re tracking some problems with the proximity sensor, we’ll have that in the next update. White iPhone: lot of people are waiting for it, and they’ll start shipping at the end of July in limited quantities.”
10:32AM – “On July 30th we’re going to bring the iPhone to 17 more countries — these are the same we announced before.”
10:33AM – “In ending, I’d like to just give you a feel of what we care about, how we operate, and how we make decisions.”
10:33AM – “We love our users. We try very hard to surprise and delight them. We work our asses off. And it’s great, and we have a blast doing it. And we make some pretty interesting products for them — Macs, iPhones, iPads, iPods, the Apple TV… we make some pretty great products.”
10:35AM – “We love our users so much we’ve built 300 Apple retail stores for them — the best buying experience in the world, and the best ownership experience in the world. With Genius Bars that cost nothing to bring your products in and get advice. We had over 60m people through our stores last quarter.”
10:35AM – “So we do all this because we love our users. And when we fall short — which we do sometimes — 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.”
10:36AM – “That’s what drives us. When we have problems like this and people criticize us, we take it really personally. Maybe we should have a wall of PR people to insulate us, but we don’t — when our users have a problem, we have a problem.”
10:37AM – “We’ve been working really hard over the last 22 days to figure out the problem to solve the real problem — we think we’ve gotten to the heart of the problem, and that is smartphones have weak spots. Some took advantage by demonstrating that — and it was easily demonstrable — but for those small number of customers having problems, we’re going to give them free cases or a full refund.”
10:38AM – “But the data supports the fact that the iPhone 4 is the best smartphone in the world, and there is no ‘Antennagate,’ but there is a challenge to the entire industry. Today, we love our customers and we’re going to take care of them.”
10:38AM – Q&A time with Tim Cook and Bob Mansfield.
10:39AM – Q: How’s your health, Steve? How are you doing?
A: I’m fine! I was on vacation in Hawaii, but this was important enough to come back for. I’m fine.
10:40AM – Q: Any changes for future antenna designs in iPhone?
A: Steve: We’re still working on this — we’re happy with the design. … we’re getting a lot of reports from customers that it’s way better than the 3GS. I don’t know what our next antenna design will be — maybe our wizards in the antenna lab will come up with something better. But looking at the data, we don’t think we have a problem.
10:43AM – Q from me: how does touching the corner with a single finger seem to cause this issue? It’s not just a grip, it can just happen by touching a single finger.
A from Bob: Your body is a pretty effective signal absorber. When you make contact with that phone, its performance in contact with you is less than its freespace performance. It’s a way to attenuate the signal by some amount. [Basically Bob didn’t answer the question.]
10:45AM – Q: Did anyone warn you about this?
A Steve: I assume you’re referring to the Bloomberg article? Yeah, it’s a crock. … what’s portrayed in that article never came across my consciousness, and I talked to Ruben [Caballero, senior antenna engineer] and he agrees it’s total bullshit.
10:46AM – Q: Your investors seem to want you to make an apology of some sort — would you be willing to do that?
A Steve: [Long pause] To our customers who are affected by the issue, we are deeply sorry, and we are going to give you a free case or a full refund. We want investors who invest in Apple for the long haul, because they believe in us. To those investors who bought the stock and are down by $5, I have no apology. If we hit a bump in the road, it’s like having kids.
10:48AM – Q: Do Apple customers have to choose between form and function?
A Steve: No. The Retina Display in the iPhone 4 is being widely hailed as the best display ever created. … We try to have our cake and eat it too, we try to have great design and great performance. If you look at our products, that’s what we deliver.
10:50AM – Q: Is there anything you could have said in the launch keynote to lower expectations?
Steve: I’ve thought about that a LOT. We didn’t fully understand if there were problems at that point. We might have set the expectation that smartphones have weak spots… but the fact is, most smartphones seem to have the same characteristic as the iPhone 4. If you grip them in a certain way they lose signal strength dramatically, especially in a low signal strength area. And one of the things we’ve learned is that as a leader in the smartphone world now, we need to educate. So what we need was data. And now we’ve got some and we’re sharing it now.
10:52AM – You could make a really big smartphone that doesn’t have this problem — some of these guys are making Hummers now — so big you can’t get your hand around it. But no one’s going to buy that. But the press around this, maybe it’s because people thought we were perfect, and they saw somewhere we aren’t, and they jumped on it. But I can tell you, we are a band of people. We are not perfect, and we are working our asses off.
10:53AM – Q: After September 30th, is it because after then you expect people to buy a free case?
Steve: It’s so we can reevaluate this in September, I have no idea what solutions may come up.
10:56AM – Q: If you bought a 3rd party case, will you get a refund?
Steve: We’re not going to refund the 3rd party cases — it’s a very small number because we didn’t sell as many cases because we didn’t share the phone design with case manufacturers in advance of launch. But now we kind of wish there were more cases out there! [heh] It’s really simple why: when people find out about your new product, they stop buying your old products. Sometimes websites buy stolen prototypes and put ‘em on the web, and we don’t care for that. But if we give the designs to case makers, they have a history of putting them up on the web as well.
10:56AM – The case vendors haven’t had a history of helping us through that. It’s a conundrum. We’ll consider things on a case by case basis. [har har]
10:57AM – Q: Do any of you carry your iPhone 4s with the bumper?
Laughs. All three show their phones are bare.
10:58AM – Steve: I use it in my home — and I live in a brick house. And I’ve gotten reception where I haven’t gotten it before, I’m thrilled. That doesn’t mean other people don’t have problems, but that’s been my experience.
10:59AM – Q: What have you learned here?
Steve: There are some things we know that we did learn here. One thing is how much we love our customers and how we are going to take care of them. We were stunned and upset and embarrassed by the Consumer Reports stuff, and the reason we didn’t say more is because we didn’t know enough. If we’d have done this event a week and a half ago, we wouldn’t have had half the data we have today.
11:00AM – We’re an engineering company, we think like engineers, and we think it’s the right way to solve real, hard problems. I don’t think the fact that we love our customers is going to change at all. I don’t think we could run any faster — we’ve had cots in the labs, cars in the parking lots all night, we’ve been living here.
11:01AM – I guess it’s just human nature, when you see someone get successful you just want to tear it down. I see it happening with Google. Google is a great company. Look at everything they’ve created. Would you prefer we’re Korean companies? Do you not like the fact that we’re an American company leading the world right here? Of course we’re human, of course we’ll make mistakes. But sometimes I feel that in search of eyeballs for these web sites, people don’t care about what they leave in their wake.
11:03AM – I look at this and think wow. Apple has been around 30 years. Haven’t we earned the credibility and trust that we’re going to take care of our users? … we weren’t just innocents in this. But the reaction has been so overblown… we could actually use your help here.
11:05AM – Steve: You can see pictures of a Nokia phone with a sticker on it that says “don’t touch here.” No one has solved this problem. Would I love Apple be the first? Can we make our situation better than it is right now? Maybe, we’ll see, but most of our customers are not experiencing this problem. In actual use, they never encounter it — just like any phone, certain customers will hold it in a way that exposes its weakness, and we want to get ‘em a case. We will continue to work on more advanced antenna designs that don’t have this problem or put this problem in an out of the way place.
11:07AM – Q: Did you consider a recall?
Steve: When you love your customers, nothing is off the table. But we want to be data driven. We send engineers to people’s homes with test equipment and take logs…
Bob: For the record, we told them we were coming.
Steve: And we didn’t bash down any doors! [Laughs.]
11:08AM – Q: Return rates at Apple stores?
Tim: Extremely small, even lower than the AT&T numbers.
11:11AM – Q (Josh, Engadget): NY Times says this might have a software fix, is this something that can be helped with software?
Steve: We just spent the last hour going through how the iPhone 4 drops only 1 more call per hundred than the 3GS. … Go talk to the Times, because you guys talk to yourselves a lot, and they’re just making this stuff up.
11:12AM – Forstall jumped up on stage: “That statement is patently false. Can we continue to tune the way the baseband interacts with the network? Yes, and we do this all the time. But that statement is untrue.”
Steve: “One many statements lately that fall into that category.”
11:14AM – Q: What kind of impact do you think this will have?
Tim: We’ll hold financial stuff for our Q2 results call next week.
11:17AM – Q from Markoff: I’ve used my iPhone on a heavily congested cell in SF. I’d like to know if the handset has any role in congestion management. Does the stack play no role in congestion?
Steve: I’ll let Scott answer, but I have something that’s a higher-order bit. When AT&T wants to add a cell tower in Texas, it may only take 3 weeks. But in SF, on average, it takes 3 years. No one wants a cell tower in their back yard, but everyone wants perfect reception.
11:18AM – AT&T is investing — they have to expand their networks. And we know, because we’re constantly asking them about SF and the Bay Area. But it takes a long time, and I think that’s the high order bit on congestion.
11:20AM – Q: A couple years ago you released a software fix that improved reception, can you square that with this?
Steve: To understand Apple, an insight came about 8 years ago: We didn’t want to get into any business that we didn’t own and control the primary technology. If they do, they’re going to beat you in the end — you have to build on top of them. We didn’t have to make the processors… software is the most important component.
11:21AM – The iPod proved that we could do that — but we brought that software to the phone business in a way we’d never seen before. One of the things we did was make the process of updating your software an order of magnitude easier than it was before. We can frictionlessly distribute those updates… everybody’s copying Apple now, but we’re the first to do that in a practical way.
11:25AM – Q about Steve’s email habits.
Steve: I get a lot of email, and my address is out there. I can’t reply to all of these emails — I have a day job. Some people post them on the web, which is kind of rude, but the most recent phenomena is people just making them up! But they’re our customers, and I want to communicate with them.
11:25AM – Steve: Thank you for coming! Has this helped? I wish we could have done this in the first 48 hours, but then you wouldn’t have had so much to write about. [yuk yuk]
11:26AM – Thanks everybody, apologies for the early technical difficulties on the photos. (If it’s of any consolation, you didn’t miss much — obviously this event was all about the message Apple is trying to get across.)