NikHatter

June 25 (Bloomberg) — Apple Inc. responded to complaints about reception on its new iPhone by telling customers they should hold the device differently.

“Gripping any mobile phone will result in some attenuation of its antenna performance, with certain places being worse than others depending on the placement of the antennas,” Apple said today in an e-mailed statement. “If you ever experience this on your iPhone 4, avoid gripping it in the lower left corner in a way that covers both sides of the black strip in the metal band, or simply use one of many available cases.”

Yesterday’s introduction of the iPhone 4 was marred by criticism that signal strength diminishes when users cover the bottom left corner of the phone with their palm. The iPhone, introduced in 2007, has become Apple’s top-selling product even after users reported glitches and dropped calls with previous versions of the device.

Customers posted videos on the Internet demonstrating trouble with the iPhone 4’s new antenna. The phone signal drops out when users cover the bottom left-corner of the device with their palm to make a call, according to the videos.

“That is exactly what is happening to me,” said Jennifer Sue, 21, a senior at the University of Southern California who waited overnight to buy the phone in Burlingame, California. “Everything else is running smoothly.”

Chief Executive Officer Steve Jobs added a high-definition video camera, multitasking and video calling to the iPhone 4 to fend off competition from phones running Google Inc. software.

Debut day sales may reach 1 million units, predicted Andy Hargreaves, an analyst at Pacific Crest Securities. The company had received more than 600,000 preorders for the device, setting a single-day record and exceeding the company’s expectations.

Software Fix?

David Carey, vice president of technical intelligence at UBM TechInsights, an Austin, Texas-based company that studies the engineering of electronic devices, said the antenna problem might be fixed with a software update from Apple. The phone’s operating system may be incorrectly interpreting signal strength when people touch the phone a certain way, he said.

“There is a point where software can’t dig you out of a hole,” he said. Given the phone’s rigorous testing process, “it would strike me as surprising that they would have a permanent problem on their hands,” Carey said.

Apple rose 41 cents to $269.41 at 9:34 a.m. New York time in Nasdaq Stock Market trading. The shares had gained 28 percent this year before today.

Google Rivalry

The company said this week it’s delaying the release of white iPhone 4 models until the second half of July because of unexpected manufacturing challenges. Jobs unveiled the phone on June 7.

Reviews of the new model have been positive. Walt Mossberg of the Wall Street Journal deemed it a “major leap” and the “best device in its class.” In the New York Times, David Pogue rated it “the first phone to make good video calls.”

Apple, based in Cupertino, California, is facing increased competition from Android phone makers, such as HTC Corp., which rely on Google Inc.’s software. There are some 60 Android-based mobile phones.

In the U.S., a 16-gigabyte model of the iPhone 4 costs $199, and a 32-gigabyte model is priced at $299. AT&T Inc., the exclusive U.S. carrier for the iPhone, said this month it will end unlimited data plans, an effort to manage the surge in demand caused by devices like the iPhone. The carrier has been criticized for dropped calls.

Apple may sell more than 10 million iPhones in the quarter ending in September, said Colin Gillis, an analyst at BGC Partners in New York.

—With assistance from Arik Hesseldahl in New York. Editors: Ville Heiskanen, Tom Giles

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net; Crayton Harrison in New York at tharrison5@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net; Peter Elstrom at pelstrom@bloomberg.net