Analysts: Apple bears the brunt of 3G woes

Consumer complaints over the iPhone’s subpar 3G network performance have grown exponentially as a purported firmware fix on Monday failed to deliver. Today, the discontent is even escalating into legal action with an Alabama woman filing a lawsuit over the iPhone’s slower-than-advertised 3G speeds. As the backlash continues, the question becomes: what happens when the complaints meet critical mass? According to some in the industry, Apple might soon find out.

“This is a wake-up call for Apple,” said Yankee Group analyst Jonathan Edwards. “Apple’s core business and legacy businesses are vertical solutions where they’ve been able to control the entire stack for the end-user experience, and that has boded well for them because in that closed environment they can guarantee certain levels of quality of service and satisfaction. What they are finding out now is that when you start to work with a wireless carrier, there are a lot of balls in play there.”

Juggling the various interests takes time, and it may be the case that Apple – in its desire to maintain the iPhone-induced hype – moved too quickly with a network still in its infancy. Since the first sign of network problems, there has been finger pointing as to whom or what is to blame. In addition to being a byproduct of a new network, Edwards said the problems likely lie in the Inferion chipsets that power the phone’s 3G radios. AT&T foresaw these issues, he said, but Apple wasn’t as prepared.

“What we’ve found here at Yankee Group is that they’ve also run into technology issues in passing off calls from [UMTS] to EDGE,” Edwards said. “That is another indication of how a traditional mobile phone manufacturer understands these issues and how important they are – the transfers from network to network to maintain the level of consistency and quality of service. I think Apple is finding out the hard way that that needs to be perfected before going to market.”

Apple did release an iPhone 2.0.1 firmware update on Monday for “bug fixes” but many consumers found it did little to rectify the problems and may have actually added new issues, including interfering with the phone’s GPS. Some consumers have even reported on the blogosphere that they are now getting ‘no service’ messages in previously 3G-covered areas.