The incorrect formula is responsible for iPhone 4 showing unrealistically high signal strength in low strength areas, according to Apple.

Consequently, the drop in signal appears more dramatic than it really is when the iPhone is gripped in a certain way, the company claims.

“Users observing a drop of several bars when they grip their iPhone in a certain way are most likely in an area with very weak signal strength, but they don’t know it because we are erroneously displaying four or five bars”, Apple said in an open letter to users.

“Their big drop in bars is because their high bars were never real in the first place”, the letter said.

To fix the problem, Apple plans to release a free software update “within a few weeks” that incorporates the corrected formula for calculating signal strength.

The software update will also be available for the iPhone 3GS and iPhone 3G.

“We have gone back to our labs and retested everything, and the results are the same – the iPhone 4’s wireless performance is the best we have ever shipped”, Apple said.

This story was first published by Computer Weekly