Is Apple’s iPhone Fix Enough?

Apple may have jumped the gun with its ad campaign touting the iPhone 3G’s faster performance (“Twice as fast, half the price”) on AT&T’s 3G network. One month after launch, the company finally responded this week to complaints on user forums and other online sites that, in fact, the iPhone 3G’s performance wasn’t all that great.

Monday night Apple quietly released an update designed to address the performance issues. “The iPhone 2.0.2 software update improves communication with 3G networks,” Apple (NASDAQ: AAPL) spokesperson Jennifer Bowcock said in an e-mail sent to, which has pretty much been the company’s only comment on the matter to the media. It remains a mystery just what the update is specifically fixing.

There have also been reports that the update is designed to address a fault in a communications chip in the device made by Infineon. If that’s the case, analyst Rob Enderle said the update is likely to fall short of a true fix.

“When it’s a hardware problem, it’s very unlikely a patch will completely correct the problem,” Enderle, principal analyst with the Enderle Group, told “It can try and reduce the hardware failure as it comes into play, but typically there’s a trade-off like reduced range.”

If it truly is a hardware problem, Enderle said Apple might have to turn to one of its chips suppliers at fault to cover the cost of a recall. For now, he suggests anyone thinking of buying an iPhone 3G at least wait till September when Apple reportedly plans to release another update that address problems with certain third-party applications crashing the device.

“I think they rushed the 3G to market when they saw there’d be heavy competition from Samsung, LG, RIM and the Android phones that are still to come,” said Enderle. “But when you rush to ship in volume that means less time testing and that tends to result in problems.”

Analyst Tim Bajarin said “there was no question the iPhone 3G dropped calls” based on his personal experience and what he’s seen on message boards. He said he expects the software update to address the issue, but is waiting to see what the response is as it rolls out to users this week.

On the performance side, Bajarin, president of Creative Strategies, said his iPhone has consistently performed well in areas he’s traveled across the country where AT&T’s 3G network is in play. In areas the 3G network can’t be reached, the iPhone defaults to AT&T’s slower 2G, or EDGE network so performance varies depending on location.

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