Video: AT&T: IPhone’s Achilles heel?

By Reporter
updated 6/28/2007 5:35:30 PM ET 2007-06-28T21:35:30

For the most part, reviews of the iPhone have been glowing, whether they are about its video and music functions, its two-mega-pixel camera, or simply its incredible design. But one consistent gripe has nothing to do with Apple, and everything to do with AT&T.

The phone operates on AT&T’s older, slower network, known as EDGE, which will considerably slow down Web browsing compared to new, so-called “3G” wireless technology. Critics also say AT&T’s service is slow and spotty at best, and that could be a drag on the iPhone’s sales.

On the eve of the official launch, it qualifies as the first real bad buzz for Apple. Analysts say they're watching this development, but not losing sleep over it.

“At the end of the day, I think people are going to look at the iPhone as both a handset for communicating phone calls and an iPod, with the Web experience being more of a secondary use,” said Harry Blount of Lehman Brothers. "If that's the situation, then I don't think the service will be much of an impact on overall demand."

And it's not like other hugely popular products are that much better in this particular aspect.

“Take a look at Blackberry experience - quite slow. But that hasn't deterred the enthusiasm,” said Blount.

Apple CEO Steve Jobs defended the match with AT&T in an e-mail to the Wall Street Journal.

"AT&T is the most popular wireless carrier, and they have been investing billions of dollars in the last couple of years to create a great network,” he said.

Jobs also points out that although the main cellular network might be slower, when the iPhone is on Wi-Fi, it's at least as fast as on a 3G network.

Sounds too technical? Market researchers say Apple fans are tech-savvy enough to figure this out.

“Especially in the first run, these are people who are really excited. They know technology, and they will be able to make it work,” said Shiv Bakhshi, a mobile and wireless market researcher. “The EDGE network may not be that big of a hindrance as many have thought of it.”

Bad buzz, but not killer buzz. Apple will learn soon enough if consumers care about these possible glitches, and the word is out that an iPhone with 3G technology could already be in the pipeline.

© 2012 CNBC, Inc. All Rights Reserved


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