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It’s iPhone 3G release day, and the havoc out there makes it pretty clear that the activation process for new phones was far from smooth. In fact, it was so unsmooth that owners of the “old” iPhone had trouble upgrading to the iPhone 2.0 firmware because the iTunes store took a big hit and fell over from the influx of customers. Meanwhile, network speeds on 3G, when 3G service can be found at all, sounds like it’s all over the place. Yet these issues will likely stabilize soon, leaving us with the sad iPhone 3G GPS as the only other feature worth anything.

A couple days ago, David Pogue of he NY Times commented on the iPhone’s GPS:

Unfortunately, there’s not much you can do with the G.P.S. According to Apple, the iPhone’s G.P.S. antenna is much too small to emulate the turn-by-turn navigation of a G.P.S. unit for a vehicle, for example.

As we said last month, there’s a reason Apple didn’t showcase additional GPS features of the iPhone 3G before release. It turns out it’s because the GPS hardware in the iPhone simply isn’t as powerful as people hoped it would be, making turn-by-turn navigation a major problem, despite the fact that TeleNav claims they’re working on it (TomTom jumped the gun when it made a similar announcement last month). The issue itself is a muddy one, with the clear hardware obstacle being the low-powered receiver, which makes the iPhone a poor choice for an in-car navigation system. This problem could be surmountable with an add-on car kit that includes an external GPS antenna, but as we pointed out in our earlier commentary, the new iPhone doesn’t feature an antenna-out port, which in our book means that Apple lost some potential sales right there, especially given the number of GPS navigation units designed for vehicles that offer cell-phone integration via bluetooth.

There’s also the matter of network speeds still being too slow for turn-by-turn navigation, even on 3G. That’s because the existing Google Maps application requires that maps be downloaded upon request, and simply can’t grab images fast enough for real-time display. A solution would be to offer a way to download whole map packages onto the iPhone, which TeleNav and/or TomTom may be envisioning. Of course, this brings us to the next issue: turn-by-turn applications appear strictly forbidden in the end-user license agreement for the iPhone SDK. This move suggests that Apple is either reserving the right to be the sole distributor of a true navigation program (which would open them up to lawsuits for sure), else they’re not convinced the iPhone’s hardware could do it well enough. If the latter is indeed the case, it would mean that Apple would rather not have turn-by-turn navigation on the iPhone at all, compared to a solution that only works half-assedly and might degrade the iPhone’s reputation.

In the end, the iPhone’s GPS may be a nice component for third party applications, but it’s a sad one for those expecting to replace their vehicle-mounted GPS solutions with an all-in-one solution like the iPhone. Given that GPS was a much-asked-for feature, and Apple failed to deliver with great GPS integration, is the 3G-capability of the new iPhone really worth $200 dollars and dealing with the annoyance of the day’s long lines and delayed activation?

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