Apple's iPhone 3G reception issues could be more than a network problem -- or even a firmware problem. The issue could run as deep as the hardware, which could cause the handset maker millions in product repairs or replacements.
iPhone 3G users have been complaining about dropped calls, abrupt network switches, poor reception and service interruptions.
One financial analyst recalls similar complaints with 3G phones launched in Europe five years ago and speculates that the culprit could be the chipset inside the iPhone 3G. The new handset runs on an Infineon 3G chipset.
"We believe that these issues are typical of an immature chipset and radio protocol stack where we are almost certain that Infineon is the 3G supplier," Richard Windsor, a financial analyst at Nomura, wrote in a research paper. "This is not surprising as the Infineon 3G chipset solution has never really been tested in the hands of users. Some people will not experience these problems, as it is only in areas where the radio signal weakens that the immaturity of the stack really shows."
Infineon could not immediately be reached for comment on the possibility that its chip could be the cause of 3G reception woes. Apple has not yet acknowledged any issues with its latest handset.
Although some commentators have made strong arguments that Apples 3G issues are due to a hardware issue rather than a network or firmware problem, at this point it's impossible to know exactly where the problem lies, according to Charles King, principal analyst at Pund-IT Research.
"If it is an underlying problem with the processor, that makes repairing it either difficult or impossible. If that is the case, that could be a disaster for Apple," King said. "In any case, the 3G performance is obviously a problem."
King figures both Apple and AT&T are working behind the scenes to correct the issue. But, he said, Apple's tight-lipped approach to the problem could come back to haunt the company.
"Sitting on your hands and either not discussing the issue publicly or claiming there is no problem when a firestorm of people are online complaining about difficulties means the inferno is just going to get bigger and bigger," King said. "If Apple finally does admit there is some sort of systemic issue, the result would be disastrous."
As King sees it, the underlying issue here is Apple's culture of secrecy. He pointed to iPhone-related issues Apple's secrecy has already created. Most recently, the kill-switch fiasco is a strong example.
"Apple installing a kill switch and not telling anyone caused a firestorm in the application-developer community online," King said. "Steve Jobs admitted to the fact that a kill switch does exist and tried to explain what the purpose of it was, but if Apple had simply announced it early on and the reason for it, there would not have been such controversy. Apple's handling of the situation is emblematic of how it does business. it points to a real systemic weakness as Apple moves forward."