The Wall Street Journal reports that Apple's engineers are working on a software upgrade to fix problems with the iPhone 3G's "immature chipset and radio protocol stack," the most likely cause for complaints that the new models drop calls a lot when in 3G mode. Apple uses a custom chip made by Infineon, a German supplier. Officially, no one is saying anything. In reality, "people familiar with the matter" are getting out the word for the companies involved. (Photo by AP/Paul Sakuma)

In agreeing to sell the iPhone, does Best Buy know what its getting itself into? Steve Jobs is issuing mea culpas about MobileMe, Apple's flaky email-and-synching service. But there are no Jobsian apologies over the iPhone 3G. Sure, sales are fine, $30 million changed hands through iTunes App Store in its first month, and Apple's market cap is now larger than Google's. But InternetNews.com's Andy Patrizio says it's obvious there's something wrong with the device itself.Specifically, the "3G" part of "iPhone 3G." Patrizio writes that "on disabling 3G, service improved immediately. There were no more dropped calls. Audio quality was fine. Battery life was much better." An analyst tells Patrizio a chip inside the phone is the problem: "We believe that these issues are typical of an immature chipset and radio protocol stack where we are almost certain Infineon is the 3G supplier." Patrizio's three other problems with the iPhone: