Apple has published a letter that explains the recent woes concerning a visible drop in signal strength when holding the phone: it is partially due to a bug in the way iOS computes how many signal “bars” it should display. Put bluntly, the formula to compute the number of bars was “completely wrong” in Apple’s own words.
We think that this is true: we looked into this problem over the past week and the drop in signal strength could not be reproduced consistently, depending on our location and on the (real) signal strength. We noticed that the drop was more dramatic in places where signal was traditionally weak (our office is reputed for that). We were actually surprised to get 5 bars at work – and now we know why: it was displaying wrong information. Apple will issue an update soon and that will at least fix the symptoms, which is a perception issue.
Apple says that “gripping almost any mobile phone in certain ways will reduce its reception by 1 or more bars”. There’s no question that signal can weaken if something (one’s hand) is in front of the antenna, but most of the damage seems done by the fact that your body is effectively connecting the WIFI (left side) and the 3G antennas (right side).
Also, while we did not experience drop calls due to the drop in signal strength, we did measure significant 3G data rate drops, going from 1Mbps down to zero after gripping the handset with the left hand. Once the formula is updated, we will re-evaluate this issue in our full iPhone 4 Review.
Update: There’s an excellent article at Anandtech that I recommend if you want to know more about the details. The article also states that the antenna design is overall better than the 3GS.