Now that Apple Inc (NASDAQ: AAPL) has said it will stop giving people a little rubber case to improve reception of the iPhone 4, Consumer Reports is back in the market with a savage report on the handset. It is as if Apple had done nothing at all to help its customers.

The consumer advocacy operation reports that “Apple provided no data to detail its claim of lower-than-expected incidence of dropped calls with the iPhone 4. In his July 16 news conference announcing the free cases, Apple chairman CEO Steve Jobs said the iPhone 4 dropped only about one call per hundred more than its predecessor.”  The Consumer Reports view of the Steve Jobs explanation: smoke and mirrors.

And Consumer Reports objects to Apple’s ongoing program which requires the owner to “fix” his or her own phone by asking the electronics company’s  for a piece of rubber that may address the problem. “But putting the onus on any owners of a product to obtain a remedy to a design flaw is not acceptable to us. We therefore continue not to recommend the iPhone 4, and to call on Apple to provide a permanent fix for the phone’s reception issues,” the group writes.

Consumer Reports has been bashing Apple for the iPhone 4 design flaw since it was clear that the antenna on the handset had problems. Apple, the organization believes, has underplayed the problem by arguing that only a “few” of the smartphones have the issue. And, Consumer Reports takes the position that if even one iPhone 4 does not work, it will not recommend the product.

Consumer Reports may not be so critical of other electronic devices that it reviews, or the cars and appliances it examines. This observation is in no way a defense of Apple, which downplayed what was a real flaw with the iPhone 4.

There are  no statistics that show whether the Consumer Reports statements have hurt iPhone sales. People who subscribe to the Consumer Reports magazine may stay away from AT&T (NYSE: T) and Apple stores. The devices sell well enough that Apple may not care. Jobs did fire the head of the hardware unit that designs the iPhone. That must have been a sign of some displeasure.

The iPhone 4 still works better than a can attached to a string, so Apple is likely to brush off what Consumer Reports says as a rant from an advocacy group that makes its living by criticizing products. Apple zealots will not have any problem with accepting that argument. Everyone else can buy a Palm Pre.

Douglas A. McIntyre

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