Free iPhone 4 cases will cost Apple $175 million

Apple said on Tuesday that the free cases for its iPhone 4 antenna issue will cost the company $175 million.

Apple announced the free cases at an emergency press conference held last week. On an earnings conference call with investors today, Apple revealed the cost of the free cases. Apple said that it plans to expense the cost of the cases which will result in $175 million in deferred revenue. The figure is an estimate that Apple is accounting for on its Q4 balance sheet. 

Prior to the iPhone 4 launch, customers who pre-ordered their device and received it a little early, began reporting widespread reception issues when holding the iPhone 4 with their left hand. Apple eventually responded to the reception reports and said it planned to issue a software fix. This software fix (iOS 4.0.1) corrected a bad algorithm for displaying signal bars but did not address the core issue of poor antenna performance. Apple was forced to hold an emergency press conference and promised a free case for every iPhone 4 user. Apple said it has sold 1.7 million units in its first weekend of sales.

Apple announced its financial results on Tuesday for the third quarter of 2010 ending June 26. Apple once again had a strong quarter and blew past Wall Street estimates. Apple's previous Q1 and Q2 2010 results were strong mainly thanks to iPhone sales. The iPad sales are extremely strong and nearly topped Mac sales for this quarter.

Image Credit: Dan Hendricks (Flickr)

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46 Comments

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You know. I think all people should get a replacement, but. You buy an iPhone, that because of a problem, you get a free case and now the phone is fine! Kind of good I guess.

i think that this was needed because of a faulty product with antenna issues..if they had not done this then iphone popularity would have tanked..good job apple..175 million dollars is deserving the the consumers who buy the iphone

Just waiting to see the new site where you can register for you case pop up... right now the only cases in their online store is the bumpers... I want one that protects the back too

The bigger they are the harder they fall. It's coming, Jobs simply doesn't sees it. since there is no class action suit, Jobs will deal the next f****ed up product the same way. And then he (and Apple) will come crashing down.

r1ddl3r said,
The bigger they are the harder they fall. It's coming, Jobs simply doesn't sees it. since there is no class action suit, Jobs will deal the next f****ed up product the same way. And then he (and Apple) will come crashing down.

You will have to wait a long time for that. The small Apple is worth more than Microsoft, and now with Q3 earnings, earns more than Microsoft and has about $$ 40 Billions free cash.

r1ddl3r said,
The bigger they are the harder they fall. It's coming, Jobs simply doesn't sees it. since there is no class action suit, Jobs will deal the next f****ed up product the same way. And then he (and Apple) will come crashing down.

+1 Guys I have said this in almost every mac realated news post.

Steve Jobs I present to you the slow and painful death of Apple Inc.

Xypro said,

+1 Guys I have said this in almost every mac realated news post.

Steve Jobs I present to you the slow and painful death of Apple Inc.

Well I can't imagine Apple are paying £30 which is what they are charging people for the cases. I bet they don't even cost Apple 20p to buy.
I wish it would cost them more, greedy sons of a bitches.

TonyLock said,
If Microsoft did this, people would be up in arms.
Please. Microsoft put about as much effort into the 360 RROD. Instead of a recall, they just extended the warranty to 3 years. I've gone past that 3 years, what happens if my 360 dies? Considering the fact that if it were to RROD it would be experiencing a common issue, I think not offering to replace it is a joke. At least these Apple cases will last a bit longer.

really?

I had to have my xbox fixed 3 times (RROD) over 3+ years. Never had an issue with returns (even after the warranty), and lived off of gold edition live for free from their customer service. After I finally got a fix that stuck, I had no issues since. If it breaks again down the road, I will purchase another console, as it will have been time to upgrade anyhoo.

The case is just rubber. If it breaks, snags, etc... good luck getting another one for free from apple.

seriously, which company bent over backwards to actually help customers with their issues?

Apple has some really good ideas and some potentially great products. As someone who has never bought an Apple product myself, I do feel they need to change the way they do business. They have a nice comfy niche and they could easily lose it with arrogance like this and the Flash fiasco.

I am not buying that amount in the slightest... simple math shows that to be a huge cost per sleeve, unless you imagine that apple will suddenly sell 4 million more 4s in the next little while.

Skin said,
I am not buying that amount in the slightest... simple math shows that to be a huge cost per sleeve, unless you imagine that apple will suddenly sell 4 million more 4s in the next little while.
It works out as around $58 per case. Including shipping etc., is that a lot for a case in the US?

the cases should be proved ineffective and a total recall should be made, why cover something up when its clearly broke ?

CarlMS said,
You know somethings wrong when spending $175 million isn't considered a big deal...

For a company that made 3.25 BILLION dollars this year? I think not.

Stetson said,

That was just for one quarter.

Indeed, you're right. I'm no Apple fan, but I'm pretty sure its safe to say this doesn't cost them that much.

Someone should inform them that some Chinese people on ebay sell them for like 3 dollars shipped...

Better plan give me the 175 million and I'll get the cases they need. They sold around what 3 million phones at 3 dollars a case, man I'll make a lot of money...

Halfalive said,
Someone should inform them that some Chinese people on ebay sell them for like 3 dollars shipped...

Better plan give me the 175 million and I'll get the cases they need. They sold around what 3 million phones at 3 dollars a case, man I'll make a lot of money...

They also have to refund $29 to each and every person who bought a bumper case.

Stetson said,

They also have to refund $29 to each and every person who bought a bumper case.

I bet almost 95% of that $29 was profit for Apple anyways.

andrewbares said,

I bet almost 95% of that $29 was profit for Apple anyways.

I'm sure it was, but that's still money lost if they refund it.

Glendi said,
Nobody buys a Mac anymore.

Get your facts straight. Mac sales are increasing year over year. + 30% each year.

PsykX said,

Get your facts straight. Mac sales are increasing year over year. + 30% each year.

Which is very little conisdering their tiny marketshare.

andrewbares said,

Which is very little conisdering their tiny marketshare.

which is a positive effect that people are recognizing the company.

andrewbares said,
Which is very little conisdering their tiny marketshare.

...increases aren't smaller based on market share.

peterish said,
$175 million, otherwise known as pocket change.

yeah thats not bad at all, a recall was going to cost what 1.3 billion?

peterish said,
$175 million, otherwise known as pocket change.

It's still more than they'd like to pay. 3 million iPhone users, divided into 175 million, shows about 53 dollars per person is what they are spending. Something isn't adding up.

ccoltmanm said,

It's still more than they'd like to pay. 3 million iPhone users, divided into 175 million, shows about 53 dollars per person is what they are spending. Something isn't adding up.

Not everyone will request a case, the "bumpers" cost Apple probably about $2 - its the 3rd party cases which will cost the most and seeing as they're going to be buying ini bulk they wont cost as much as you would think either