Place Your Bets: Will Apple Recall The iPhone 4?

The Apple iPhone 4 has been plagued by bad press due to its wireless signal strength issues, so much so that some industry watchers and analysts are dropping the dreaded R-word: recall.

The latest iteration of the now-iconic iPhone has been in users' hands for less than a month, and the wireless connectivity problem, coupled with Apple's flippant brush off of the issue, could surely be damning for Apple. But is a full-on recall in the cards?

One Irish bookmaker thinks so. Paddy Power is taking wagers on whether Apple will actually recall the Apple iPhone 4. Currently, the odds are 4/6 that Apple will recall the iPhone 4, and 11/10 that it won't.

"Complaints about poor reception and a scathing report by an influential consumer guide sparked a betting frenzy over the past 24 hours with hundreds of shrewd punters backing a potential recall with Paddy Power before the bookie had a chance to react," Paddy Power wrote.

The company added: "It looks like Apple may have been a little too fast out of the traps with the iPhone 4 launch. If current betting trends are to be believed it now seems certain that a recall is on the cards."

The Apple iPhone 4, which likely has sold well over 2 million units since it hit stores June 24, took quite a lashing earlier this week when Consumer Reports said it couldn't recommend the Apple iPhone 4 because of a flaw in the antenna design, which is causing users to experience dropped calls and weak connectivity. "There is a problem with its reception," Consumer Reports wrote, later adding in a blog that "due to this problem, we can't recommend the iPhone 4."

In response to reports of poor reception and dropped calls, Apple essentially told users experiencing the issue that it was their fault because they were holding the device wrong. Still, Apple said it will work to solve a software glitch that affects the signal strength, but insisted that the wireless performance of the iPhone 4 was top notch.

Along with the dodgy reception and wireless connectivity, the Apple iPhone 4 has also been met with a host of other complaints, many more trivial than dropped calls, but issues nonetheless.

NEXT: Analysts Weigh In On Recall Possibility

The entire saga has created a swirl of bad publicity for Apple and has both consumers and industry analysts rethinking their once unconditional Apple love. And while most mention a possible recall, many say it isn't likely. Analysts agree, however, that Apple must do something to calm the flames.

"We view this as more of a PR issue that Apple needs to address to preserve the brand and loyal customer base than a serious reception issue for most users. We don't see a full product recall as likely but believe Apple would benefit from extending concessions to any customers experiencing issues and/or providing more details about how it can fix the problem in future production runs," Morgan Stanley's Katy Huberty said.

Bernstein Research analyst Toni Sacconaghi said in a research note on Tuesday that an iPhone 4 recall would cost Apple $1.5 billion, but a full recall is unlikely. Instead, Sacconaghi said Apple will most likely offer iPhone 4 users a free bumper case, which normally runs $29, to help ease their connectivity woes.

"It could be done immediately, would directly address the Consumer Report's concern, and would be financially immaterial," Sacconaghi wrote, according to CNET. "While it would force Apple to 'acknowledge' a design issue with the iPhone, we believe that consumers are increasingly aware of the antenna issue, and remedying it rather than dismissing or ignoring it appears most appropriate."

Piper Jaffray's Gene Munster was also on the bumper boat, but noted that Apple could also weather the storm and avoid a recall altogether.

"One option for Apple is to give away Bumper cases it currently sells for $29. Assuming 85% of all iPhones sold over the next year are iPhone 4s and Apple gives a Bumper away to every iPhone 4 customer, we estimate the company would give away 36m cases at a $5 cost per case for a total cost of $178.5m (1% of Operating Income over that time period)," Munster wrote, according to Fortune.

"A second is option is for Apple to do nothing; as we've mentioned, we estimate that only 25% of iPhone users are periodically affected by the issue, and Apple could weather the storm by letting the current demand for the iPhone speak for itself," Munster continued. "The third option is a recall, which we see as a highly unlikely scenario given the issue is completely resolved with a case, which is a significantly less expensive solution for the company."