Apple's (AAPL) "Edsel" Won't Slow Down Demand

Apple Inc. (NASDAQ: AAPL) has built an "Edsel." The new iPhone 4 has a major hardware defect and company chief executive officer Steve Jobs may have been warned about the flaw early in production.

The only difference between the car named for the son of Henry Ford and the iPhone 4, is that most hideous vehicle to ever come off of Detroit assembly lines had no buyers, while the latest smart phone from Apple is the hottest gadget in the world right now.

Last year, Ruben Caballero, a senior engineer and antenna expert, told Jobs that there was a design flaw in the metal antenna that surrounds the device and it may cause a crippling issue with reception.

Apple ignored the warnings and decided on the bezel design for the antenna to allow for a lighter and thinner handset.

The design flaw has caused user to lose signal and drop calls when the handset is held a certain way, and Consumer Reports has refrained from endorsing the new device due to the imperfection.

Still, do not expect Apple to issue a recall when they host their news conference on Friday. Offering free cases or a discount may be the most Apple-heads can expect from the company. Apple could also offer some type of credit, something they did for iPhone owners in 2007 after a surprise price cut.

One thing is certain; there will be a new version of the iPhone as soon as the company can effectively get one out.

Remember the first iPod Nano, the one that would shock or even burn users when plugged into a power source. That did nothing to tarnish Apple's reputation, and as long as the iPhone 4 remains a status symbol, consumers will continue to carry them in their pockets, even if the phone is not capable of making phone calls. Remember these are the same consumers that have been dealing with dropped calls on AT&T’s (NYSE: T) network for years.

Shares of Apple are feeling the heat, down 3.88 to $248.93 in midday market movement Thursday.

Market Moving News and Intelligence - Free Sign-Up
http://www.streetinsider.com/premium_content.php

You May Also Be Interested In

• Apple investigating exposure to Tata Electronics data breach, full analysis underway - Reuters
• SanDisk and Micron surge as Apple confirms memory price pass-through
• KGI Securities Downgrades Apple (AAPL) to Hold