Apple to Fix 4S Battery Drain Bug; Siri Has Some Early Stumbles

Apple (NASDAQ:AAPL) announced that it found a software bug in iOS 5 that is causing the poor battery life that many customers have complained about of late. The company promised to release a software update to eliminate it, finally breaking its silence on an issue that caused hundreds of users to flock to Apple’s support site and other Internet forums in the weeks since Apple pushed out the iOS 5 update and released the iPhone 4S. ^[1] The Phone 4S has gained tremendous coverage given that the 4S was the best-selling smartphone in October for Verizon (NYSE:VZ), AT&T (NYSE:T) and Sprint (NYSE:S) despite only being available for half of the month and accounts for over half of the company’s value by our estimates.

However some early bugs are slowing its growth. In a comparison released on its official site, Apple notes that the new phone beats out its predecessor by one hour of 3G talk time, yet falls 100 hours shorter when it comes to standby. But affected users said that Apple’s numbers are far too generous with fully charged devices running out of juice during the course of a workday, even with minimal use.

We maintain our price estimate of $502 for the Apple stock, which is about 25% above market price.

This episode is reminiscent of a similar incident that had happened shortly after iPhone 4 was released last year when there were complaints about a weak signal when customers held the phone in a certain way. ^[1] In response Apple offered cases to customers to fix the antenna issue. This time, fortunately, the company has prevented the issue from snowballing into a ‘batterygate’ storm by a timely acknowledgement of the problem and announcement of the software update.

It would have been worrying for Apple had the issue been with the battery hardware itself since that would have entailed either a recall of the iPhones or a replacement of the faulty batteries. This would not only have been disastrous on the cost front but also the company’s brand value which would have taken a massive hit in the absence of the iconic Steve Jobs.

In other recent news, Siri, Apple’s voice-controlled assistant, is apparently experiencing an outage for many users nationwide. ^[2] We understand that with increasing complexity of smartphones these days, bugs are inevitable. However, such issues do dampen the iPhone enthusiasm somewhat and with Samsung and HTC munching on growing market share in the smartphone market, Apple will want to rectify these issues as soon as possible.

Understand How a Company’s Products Impact its Stock Price at Trefis

1. Apple to fix iOS 5 battery issues with software patch, FierceWireless, Nov 2011 [↩] [↩]
2. Siri is down, iPhone 4S users lament, SlashGear, Nov 2011 [↩]