Live Update: iPhone 4 press conference

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9:56 Hi everybody. This is Jason Snell reporting live from Cupertino at the site of Apple's iPhone 4 press conference.

9:57 We're not going to do reader comments today because it's just me! But thanks and we're glad you could join us.

9:57 CoverItLive is dynamic so nobody should have to refresh their browser.

10:00 Some jazz is playing as the members of the press get seated and set up their laptops.

10:03 The Town Hall theater in 4 Infinite Loop is only about half full, probably due to the very short notice for this event - we heard about it Wednesday evening and many of our eastern compatriots couldn't make the trip.

10:04 "The iPhone 4 Antenna Song" is playing

10:04 It's a YouTube video

10:04 Here’s the link

10:05 Pretty funny. You can watch the video for yourself. But interesting: It basically defends the iPhone 4 and says the media has made too big a deal about it. Subtext?

10:06 "If you don't want an iPhone 4, don't buy it / if you don't like it, bring it back... but you know you won't"

10:06 Steve Jobs emerges

10:06 15 minute presentation, Jobs says.

10:07 "You know, we're not perfect. 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."

10:07 "So we're going to talk about how we're going to do that today. But before we go into that, I want to talk about the problems and about the data we've got" that informs us and helps us make our users happy.

10:07 "We have sold well over 3 million since we launched it 3 weeks ago"

10:08 PC World namechecked as listing iPhone as #1 phone

10:08 Highest customer satisfaction of any iPhone or smartphone ever

10:08 However, we started getting some reports of people having some issues with the antenna system, which is very advanced...

10:09 We heard about this 22 days ago and have been working our butts off

10:09 It's not like we've had our heads in the sand for 3 months; it's been 22 days

10:09 And Apple is an engineering driven company. We have some of the finest engineers here in the world, in the areas that help us create our products

10:09 So we want to find out what the real problem is before starting to work on solutions. So we've been working our butts off to come up with real solutions

10:09 And today we want to share with you what we've learned.

10:10 Doesn't sound like a good idea to grip your phone and lose signal. But it's not unique to the iPhone 4. you can go on YouTube and see videos of other phones doing this, but we needed to do these tests ourselves

10:11 Blackberry Bold 9700, made by RIM. Perhaps the most popular smartphone in business. Video showing bars drop from 5 to 1 rapidly when putting it in a grip.

10:12 Next HTC Droid Eris. Starts off at 4 bars, grip, then goes down to 2 bars. The delay in bar drops is based on an algorithm, phone by phone.

10:12 Samsung phone, same deal, grip in the right spot, the bars go down.

10:14 Jobs: "We could have gone on and on with another 5 or 6 phones. Most smartphones behave exactly the same way. Now these phones were tested in areas of relatively weak signal strength, as other testers have reported. This is life in the smartphone world. Phones aren't perfect."

10:14 It's a challenge for the whole industry, and we're doing the best we can, but every phone has weak spots.

10:15 Now, we're not perfect. We made it very visible. What we did was, "X marks the spot," put a beautiful line in the stainless steel that says, here's where you touch it, everybody!

10:15 And we had incorrect bars, so when it did drop, the drop looked far more catastrophic than it really was.

10:15 Our choice was to change the bar algorithm, which we put out yesterday.

10:16 Other smartphone makers decide for themselves about how to do this. But this happens to all phones. We haven't found a way around the laws of physics... yet.

10:16 Photo of a guy in a chair surrounded by various objects, testing phones in massive shielded rooms at Apple

10:17 17 anechoic chambers. $100 million investment. 18 PhD scientists and engineers on our staff. And they do some very advanced antenna design.

10:17 And so the iPhone antenna went through all of this. We knew that if you gripped it in a certain way, the bars were going to go down a bit, like every smartphone. And we didn't think it would be a big problem.

10:18 So phones aren't perfect, and it's a challenge for the entire industry. And we are hoping to make some contributions

10:18 We have learned: Smartphones have weak spots. You will drop reception.

10:18 Next, we have gotten some very interesting information from AppleCare. Whenever anyone calls in with a problem, it's logged and we have the statistics.

10:19 And we asked, what's the percent of iPhone 4 users who have called AppleCare with any issues about antenna or reception, or anything near.

10:19 0.55% of all iPhone customers have called AppleCare with an antenna issue.

10:19 So this doesn't really jive with what you read about this problem.

10:20 AT&T return rates. Like Apple, AT&T has a "buyer's remorse" return period. People return phones for all sorts of reasons. Reception isn't what they hopped, they try it and don't like it.

10:21 AT&T, largest iPhone reseller in the world, compared to iPhone 3GS, which has been the best selling smartphone in history.

10:21 3GS return rates during this period last year were 6 percent, which was below the industry average. For iPhone 4, it's 1.7%.

10:22 We've got the hard data. It's less than a third the return rates of the iPhone 3GS.

10:22 AT&T call drop rates. Gave them to us 3 days ago.

10:24 AT&T will compare iPhone 3GS drops versus iPhone 4. Additional calls dropped per 100 calls compared to iPhone 3GS. Even though we think the iPhone 4's antenna is superior, I must report to you that the iPhone 4 drops more calls per 100 than the iPhone 3GS. That's what the data says.

10:24 But it's less than 1 call per 100 than the 3GS.

10:25 I have a theory: When the iPhone 3GS came out, it was the same shape as the iPhone 3G, so people could use their old cases.

10:26 And people could use old cases already in stores, so people could buy cases when they bought the phone.

10:26 So iPhone 4, radical new design, not many cases, limited supply of bumpers.

10:26 (Jobs says that's his theory, but doesn't know if it's related, and they're looking into it)

10:28 It's very hard, when we look at this data, not to conclude that there is a problem. But it's a problem affecting a small percentage of users.

10:28 I've gotten thousands of emails from users who say there's no problem for them.

10:28 But, having said this, we care about every user, and we're not going to stop until every one of those is happy.

10:28 But I think it's important to understand the scope of this problem. Because the data leads you to the conclusion that it's been blown so out of proportion, it's incredible.

10:28 I know it's fun to have a story, but it's less fun when you're on the other end of it. (laughter)

10:28 Let me tell you what we're going to do.

10:29 First think, we've released iOS 4.0.1, which fixes the wrong formula for bars and there was a nasty Exchange bug, and that's fixed too.

10:29 We recommend that every iPhone owner update to it.

10:29 Second, a lot of people have told us, the bumper solves the signal strength problem. Why don't you just give everyone a case?

10:29 Okay. Everyone will get a free case.

10:30 Refund if you bought a Bumper.

10:30 For every iPhone 4 purchased through September 30.

10:30 But. We can't make enough bumpers. 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.

10:30 Apply on Apple website starting late next week. Pick a case, zoom, we'll send it off to you. That simple.

10:31 And if you're still not happy, before or after you get a free case, you can bring your iPhone 4 back undamaged within 30 days for a full refund.

10:31 No restocking fee or anything. We want to take care of everyone. We want every user to be happy.

10:31 "Does that make sense?"

10:32 (Now, some other updates for us...)

10:32 Tracking some problems with the proximity sensor, and we're working on solutions, and we'll try to get it fixed in the next software update.

10:32 White iPhone 4 shipping end of July. Quantities limited at first, ramping up.

10:32 And on July 30, we are going to bring the iPhone to 17 more countries - the same 17 we talked about before with the omission of South Korea

10:33 In ending, I'd like to just kind of give you a feel of what we care about and how we operate and how we make decisions.

10:33 We love our users. We really love 'em. And we try very hard to surprise and delight them.

10:33 We work our asses off for them. And it's great. and we have a blast doing it.

10:33 And we make some pretty interesting products for them. Macs, ipods, iPhones, iPads, Apple TV, App Store, Mac OS X, iLife, iWork, Final Cut...

10:34 What motivates us is to have them love them. We love our users. And we work very hard to surprise and delight them with these products. We also connect them with great apps and developers in our App Store and content through iTunes.

10:34 We've built 300 Apple retail stores for them, with the best buying experience in the world and the best ownership experience in the world.

10:35 We do all this because we love our users. When we fall short, we try harder. We pick ourselves up, 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.

10:36 So that's what drives us. When we have problems, and 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 it, but we don't. We all read those stories. And we care.

10:36 We've been trying to understand this so when we solve it, we really solve it, not slap a band-aid on it.

10:37 The problem here is, Smartphones are limited, we made ours very visible, some people chose to demonstrate it, we screwed up with the display of the bars. So we are giving everyone a case and if you still have a problem, we'll give you a full refund.

10:37 But the data supports the fact that the iPhone 4 is the best smartphone in the world, and there is no "antennagate," there is a challenge for the entire smartphone industry someday to improve so there are no weak spots on any phone.

10:37 We love our customers. And we're going to try to take care of every single one.

10:38 Jobs inviting up Tim Cook and Bob Mansfield to join him on stage for Q&A

10:38 first Q, how's your health? Jobs: I'm fine. I was better earlier this week, on vacation in Hawaii. But I thought it was important to come back for this. I'm fine. Thanks.

10:39 Q: Are you considering any changes in the antenna design of future iPhones? A: We've been kind of preoccupied with this. We're pretty happy with the antenna design than the iPhone 4. It's a better antenna than the 3GS in almost every way. We waved a red flag in front of a bull by putting the "grip me here" design and made it very obvious.

10:40 So 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 we're not feeling that this is a giant problem we need to fix.

10:41 Q: Is this a PR problem? Should Apple have had more iPhones in more hands, earlier? A: Well we did, and we do now, and most people aren't seeing it. If we did this all over again, we'd try to come up with some mitigation, but so far nobody in the industry has been able to do it.

10:41 Q: I can't do the death grip here. A: WE've got strong signal here. We have AT&T and Verizon cell sites on campus.

10:43 Q: Ryan from GDGT. You can cause the signal drop with one finger, not a whole grip. A from Mansfield: On any phone, your body is a signal absorber. And none of us has a walkie-talkie style antenna anymore....

10:44 Q: Were you told earlier? A: You're referencing the Bloomberg article, and it's a total crock. We talked to everyone about it. We have a great community of scientists. They debate everything. And it's healthy. The best ideas win. I'm sure in some corners of the antenna world that was debated hotly, but if anyone had said, look, this antenna has questions, we're concerned, we would have dispatched the right people and looked at it.

10:44 Jobs: Certainly what was portrayed in that total article never passed my consciousness. And I talked to Ruben and Ruben says it's total bullshit too.

10:46 Q: Do you owe people an apology? A: People say it's the coolest phone they have ever had. But we want people to be satisfied, and they can return the company. We want investors who want a long-term view, who trust us in the long run to keep innovating.

10:47 Q: Is Apple a company that makes uses choose between form and function? A: No, we are a company that likes to do both. We strive very hard to make our products. Look at the iPod touch. We work to make it wonderfully thin, and that costs us extra, but we do it. The Retina display is being widely acknowledged as the best display ever created. It blows away every other phone display. And it costs a little more, and we had to work really hard to bring it into reality... but that's what we do.

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