Consumer Reports' iPhone 4 Slap Stings Apple -- and Boosts Google

Consumer Reports' stinging rebuke to Apple over the vaunted tech company's iPhone antenna problems ultimately may not deter too many Apple afficianados from buying, but it sure can't hurt Google's (GOOG) big push into the smartphone market with its Android operating system.

On Monday, the highly respected consumer ratings magazine warned readers that it could not recommend Apple's (AAPL) already popular iPhone 4 due to those antenna problems. Much has been made about this uncharacteristic design failure that causes the newer iPhones to dramatically lose signal reception when a user places a finger or palm on the handset in a way that bridges two parts of embedded antenna set around the edges of the phone.

Apple has continued to proclaim that, contrary to what the blogosphere is saying, the latest iPhone actually has the best reception of any iPhone handset to date.

Mindless Drones?

Attorneys have filed class actions against Apple, with plaintiffs suing the consumer electronics giant to recover damages (of course, they could just as easily have taken their phones back and availed themselves of Apple's 30-day no-questions-asked, no-restocking charge, get-your-money-back policy). Consumer advocates have wagged their finger at Apple, claiming the company tried to downplay and even conceal the problem. Apple, however, has steadfastly repeated that the reception problem is not really that big a problem, which has further enraged the already frothing-at-the-mouth tech blogosphere.

Still, not much seems to have changed at Steve Jobs & Co. The latest iPhones continue to sell at a frenzied pace, validating the side-splitting YouTube spoof posted by a too-witty-by-half BestBuy (BBY) employee that lampoons iPhone buyers as mindless drones.

But under the noise and the fireworks, the likely winner in all of this debate will be Google and its Android platform, which has continued to chug along and hoover up market share in the fast-growing wireless voice and data sector. All major carriers now have Android phones offered on their networks, and the operating system's latest version has received strong reviews for eye-popping speed and its ability to easily run multiple programs.

Adding to Google's Momentum

Google is also picking up steam in applications development, with the number of apps available to Android phones steadily catching up with the number available for the iPhone. And on Monday, Google announced Google App Inventor for Android, a new software development kit aimed squarely at nonprogrammers who want to create their own Android apps.

At the same time, AT&T (T) has steadfastly refused to lower prices in response to price cuts for voice and data plans on Sprint (S) and T-Mobile, among others.

All of these factors have combined to add momentum to Google and Android as the upstart that's gaining credibility and popularity even as the incumbent sticks to its guns. True, the latest iPhone solves many of the beefs critics had with the previous model. But bad reception is the ultimate sin on smartphones because it eliminates the most basic of subscriber rights -- connectivity to a fast wireless network.

In short, with an iPhone you pay a higher monthly price to get an often-overtaxed network and a phone that not only costs more upfront but now apparently has serious reception problems built-in -- and a very public vote of no confidence from a venerable consumer-products monitor. Talk about a ready-made marketing campaign for the opposition.