• by Mark Walsh  @markfwal, July 2, 2010

Under fire for wireless reception problems caused by the wraparound antenna on the iPhone 4, Apple conceded Friday that all of its phones mistakenly inflate their signal strength.

The company said the method it uses to determine how many bars to display was incorrect. In many cases it will show two more bars than it should for a given signal level, such as four bars instead of two, leading users to believe that reception is stronger than it actually is.

"Upon investigation, we were stunned to find that the formula we use to calculate how many bars of signal strength to display is totally wrong," stated Apple in an open letter addressed to iPhone 4 users. To fix the problem, Apple plans to adopt AT&T's recommended formula for calculating how many bars to display, and will issue a free software update in a few weeks for every model except the original iPhone.

Following the launch of the iPhone 4 last week, complaints began quickly mounting that holding the device -- for which the stainless steel frame doubles as the antenna -- in a certain way caused signal strength to plummet. The company initially responded to the so-called Death Grip problem by telling customers to avoid covering the lower left corner of the device or get a rubber "bumper" Apples sells for $29.

That advice did not end the controversy, however. The glitch has already triggered at least three lawsuits claiming that Apple knowingly sold a defective product.

Apple maintains that the problem is not the result of a faulty antenna, but only in how its iOS operating system reports bars of signal strength. "We have gone back to our labs and retested everything, and the results are the same -- the iPhone 4's wireless performance is the best we have ever shipped," stated the letter.

The antenna controversy has cast a cloud over what has otherwise been a hugely successful launch for the iPhone 4, with a record 1.7 million units sold in its first three days of release through June 28. The phone offers a raft of new or upgraded features including a front-facing camera, faster processing power and a thinner body.

Avi Greengart, research director for consumer devices at Current Analysis, wasn't so sure that Apple's explanation Friday would put the issue to rest. "Now Apple is saying that the reception gauge is broken," he said. "Okay, but that still doesn't change the fact that you have an external antenna on this device, and making skin contact with part of that antenna reduces the signal by a now unknown amount."

He suggested that Apple provide iPhone customers with a bumper case for free to eliminate the skin contact problem.

Michael Gartenberg, a partner at digital consulting firm Altimeter Group, downplayed the ruckus over the iPhone 4 reception issues -- saying that most of the device's 1.7 million users, including him, have not had a problem. The promised software update from Apple in the next few weeks should determine how the matter plays out. "We'll wait and see if that quiets things down or throws more fuel on the flames," he said.