Updated at 12:08 p.m. with additional information.
Apple plans to give iPhone 4 users a free case in hopes of satisfying concerns about the design of its antenna and signal problems.
CEO Steve Jobs made the announcement (click here for the live blog) during a press conference at Apple's headquarters in Cupertino, Calif., Friday morning in response to a public-relations crisis over signal issues reported with the iPhone 4, which was unveiled in June. iPhone 4 owners will apply for the free bumper (a case that protects just the outer rim of the phone) online at Apple's Web site, and owners who already purchased a bumper will get a full refund, Jobs said. (Apple will post a video of the conference here shortly, it's not live as of 11:57 a.m. PDT.)
"We're not perfect, phones aren't perfect. But we want to make all our users happy," Jobs said.
Jobs said Apple can't make enough bumpers for of all 3 million iPhone 4 customers, so it's contracting with third-party manufacturers and will offer customers a choice of cases.
Apple plans to continue offering these free cases until September 30, at which point Apple will re-evaluate whether or not that's still the best solution. Jobs admitted that Apple's internal iPhone 4 testing showed the phone dropped more calls than the iPhone 3GS, but said the number of additional dropped calls was extremely small and that competitive smartphones such as the BlackBerry and the Droid suffer from similar problems.
After the press conference ended, Apple posted photos, videos, and details about its testing process that were shown during the event. The issue occurs when iPhone 4 users touch a small area on the lower-left side of the iPhone 4 where there is a gap in the iPhone 4's external antenna.
Jobs said just 0.55 percent of iPhone 4 owners called Apple to lodge complaints about the signal problems and return rates have been lower than they were for the iPhone 3GS. But a loud outcry against the design and Apple's response to complaints exploded on the Internet, which in Jobs' opinion was "blown way out of proportion."
Apple faced a similar outcry in 2007 when it drastically cut the price of the original iPhone from $599 to $399, and the company delivered a similar response: a $100 store credit.