Published: Jul 16, 2010 8:00 PM EDT
Updated: Jul 16, 2010 9:42 AM EDT

CUPERTINO, Calif. (AP) - Apple Inc. will give free protective cases to buyers of its latest iPhone to alleviate the so-called "death grip" problem in which holding the phone with a bare hand can muffle the wireless signal.

Apple CEO Steve Jobs announced the giveaway Friday during a news
conference at the company's headquarters, even as the company denied that the iPhone 4 has an antenna problem that needs fixing.  The more than 3 million people who have already bought the iPhone 4 and new buyers through Sept. 30 will all be eligible.

People who already purchased the $29 "Bumper" cases will be efunded.

Jobs began the event by saying, "We're not perfect," but was quick to point out that no cell phone is perfect. He played a video showing competing smart phones, including a BlackBerry from Research in Motion Ltd., losing signal strength when held in certain ways.

Phones usually have an antenna inside the body. In designing the iPhone 4, Apple took a gamble on a new design, using parts of the
phone's outer casing as the antenna. That saved space inside the
tightly packed body of the phone, but means that covering a spot on the lower left edge of the case blocks wireless signal.

Consumer Reports magazine said covering the spot with a case or even a piece of duct tape alleviates the problem. It refused to give the iPhone 4 its "recommended" stamp of approval for this reason, and it had called on Apple on Monday to compensate buyers.

On Friday, in the company's first remarks following the magazine's report, Jobs said Apple was "stunned and upset and embarrassed."  Jobs said the iPhone 4's antenna issue isn't widespread. He said just over five out of every thousand users have complained to Apple's warranty service, and less than 2 percent have returned the device.  "We're not feeling right now that we have a giant problem we need to fix," Jobs said. "This has been blown so out of proportion that it's incredible. I know it's fun to have a story, but it's less fun when you're on the other end of it."

Analysts have criticized Apple's first responses to reports of reception problems as dismissive, and cautioned that the company shouldn't come across as arrogant.  Earlier, Apple said the problem with the phone was primarily a software issue, with iPhones displaying more cell phone signal "bars" than they should have been - leaving people who believed they had a strong signal frustrated by dropped calls. Apple issued a software update Thursday it said would make the number of bars shown on the phone's face more accurate.

But Consumer Reports painted the problem as much broader. On
Friday, the magazine said the free cases were "a good first step toward Apple identifying and finding a solution for the signal-loss problem of the iPhone 4."

Jobs apologized to buyers who had less-than-perfect experiences
with the new device. "We're going to do whatever it takes to make them happy and if we can't make them happy we're going to give them a full refund and say we're really sorry we inconvenienced you, and we're going to do better next time," the CEO said.