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The iPhone 4, by most accounts, is absolutely excellent. I love mine. It’s a huge step forward, and all previous iPhones look dated and primitive by comparison.

But there’s a giant asterisk. It has two major flaws, both of which appear to be physical and unsolvable by software updates:

1. The antenna’s reception severely decreases when the phone is held in an extremely common way. If you hold the phone with your left hand, you probably cause this problem to happen regularly. Every review mentions this issue, and Consumer Reports refuses to recommend the iPhone 4 until (and unless) it’s fixed.
2. The proximity sensor often fails, causing the user to inadvertently push buttons with their ears and faces during calls. Every iPhone has had a proximity sensor, and none have ever worked poorly or intermittently on a large scale.

Both have been reported and demonstrated by such large numbers of customers that I’m confident that these are not limited to only some iPhone 4 devices. I’m fairly certain that both problems are affecting all iPhone 4s sold so far. They don’t seem to be manufacturing defects limited to a subset of the units.

The proximity sensor issue hasn’t received any official recognition, but Apple Store employees have come up with some creative non-answers.

The bigger issue, and the one that concerns me, is Apple’s response to the antenna issue. Paraphrased, they effectively said that the real issue is that iPhones over-report their reception levels, and their solution is an imminent software update that will display fewer “bars” for much of the signal range.

Unfortunately, that’s a bullshit non-solution. And everyone knows it.

Apple’s arrogance and indifference in issuing this response is disappointing. It’s as if they’re expecting this issue to go away if they just wait long enough and ship enough iPhones. But it won’t. It’s only going to get worse as more people try to exchange their iPhones at the Genius Bar for these two issues, thinking it’s just a problem with their iPhones, and encounter the same problems with every replacement.

AT&T’s miserable network has already given the iPhone a reputation of being a terrible phone that always drops calls. Both of these issues make phone calls significantly worse. And for a phone that’s so great in nearly every other way, usually with such carefully considered design, these are embarrassing flaws that make me suspect that the iPhone 4 was rushed without enough testing because Apple had devoted too much time this spring to the iPad’s release.

To fix the problems, Apple will need to replace, redesign, or relocate the proximity sensor and prevent electrical conductivity between the antenna sections (possibly with an insulating coating on the steel). They can do this with a mid-cycle hardware revision, but they’d face an even more massive PR disaster (and a potential class-action suit) if they didn’t recall all iPhone 4s sold so far for replacement with the fixed models. It would need to be an unconditional (but probably optional) recall.

But I seriously doubt that the same Apple that wrote that giant-middle-finger response to the antenna problem would swallow their own pride enough to admit that they were wrong and conduct a recall on their flagship product.

And that’s a shame, because the temporary negative press from doing a recall is minimal compared to the huge asterisk that everyone will always place next to anything good about the iPhone 4.

Addendum: On free bumpers

A lot of people have suggested that a recall isn’t necessary to fix the antenna issue, since Apple could just give away free Bumpers. I think that’s unlikely. What’s more likely, if Apple chose to go this route, is that they’d come up with something similar in function to the Bumper, but extremely minimal and cheap. Every new iPhone would start coming with it, and existing owners could mail-order one for free upon request. It would work, but would be so basic, ugly, and cheap that it would convince a lot of affected people to just buy a Bumper for $30.

It would be similar to the solution Apple came up with to the original iPod Nano’s scratching issue: they settled the class-action lawsuit ($25 per person) and started including a basic slip-case in the box with all Nanos.

I think, if Apple is going to address this issue, that this sort of solution is the most likely. But this is only a complete solution if the proximity-sensor issue can be fixed in software.