After being plugged in for somewhere between 5 to 10 minutes I heard a sizzling sound. I looked down on the iPod just in time to see it explode open and start shooting sparks and spewing smoke. I managed to unhook the iPod from my computer’s USB port immediately. I noticed that a small fire had started on the table I had the laptop and the iPod sitting on, and I managed to extinguish those flames quickly before any apparent damage could be done to my laptop. Unlike in other cases, I’ve read about, my iPod continued to spew smoke and spit sparks while throwing out some kind of sooty substance from the inside of the iPod for several minutes after removing the cable from the computer.”

– A Consumerist reader recounts his experiences with Apple’s iPod Flamo

What an ugly week for Apple. Voice and data reception issues plaguing iPhone 3G, MobileMe still not up to company standards and now reports of sparking iPod Nanos. Japan’s Ministry of Economy, Trade and Industry (METI) is investigating a possible battery defect in Apple’s older iPod Nano music players after receiving reports of minor fires caused by overheating devices. “There have been multiple cases of overheating and fire damage, in particular during recharging, so please use caution,” METI said in a statement on its Web site.

METI is working with Apple Japan to diagnose the problem, which is said to affect only Nanos sold in Japan between Sept. 2005 and Sept. 2006, although there have been reports of similar incidents in the states.

Another tough break for Apple (AAPL), which just can’t seem to shake this negative news cycle.

UPDATE: Apple just issued the following statement:

Apple today responded to statements reported by Japan’s METI regarding batteries in the first-generation iPod nanos. Apple has determined that in very rare cases, batteries in first-generation iPod nanos sold between Sept. 2005 and Dec. 2006 can overheat, causing failure and deformation of the iPod nano. Apple has received very few reports of such incidents (less than 0.001 percent of first-generation iPod nano units), which have been traced back to a single battery supplier. There have been no reports of serious injuries or property damage, and no reports of incidents for any other iPod nano model.

Any first-generation iPod nano customers who have experienced their battery overheating should contact AppleCare for a replacement. Any other customers who have concerns about their first-generation iPod nano battery should also contact AppleCare.

(Image credit: magerleagues/Flickr)

(Image credit: magerleagues/Flickr)

I live in downtown Los Angeles, where 3G coverage is a given, and not only is the 3G wonky and unreliable, but oftentimes I’m struggling to even get decent Edge support! Edge is absolutely worse on my new 3G than it ever was on my first-generation iPhone. Adding insult to injury, I drop multiple calls every day, something that rarely happened before my ‘upgrade.’ “

– A post to Apple’s iPhone 3G discussion forum

Good thing the iPhone was chosen as Time Magazine’s 2007 Invention of the Year, because a growing chorus of discontent suggests its successor is unworthy of the honor in 2008. Voice and data reception issues have been troubling the device for weeks now and it seems the blame for them lies not with the network carriers, but with Apple (AAPL) itself. On Wednesday, T-Mobile Netherlands stepped forward to blame Apple for the reception issues with the iPhone 3G. “We suspect that it is a hardware/ software-specific issue of the iPhone itself,” the company said in a (poorly translated) blog post. In Australia, Vodafone also blamed the iPhone 3G’s reception issues on Apple. In Sweden, engineering weekly Ny Teknik claims that iPhone 3G’s sensitivity to third-generation wireless network signals is well below the 3G standard.

In the states, “well-placed sources” have told BusinessWeek that the Infineon Technologies (IFX) chip Apple chose for the handset is undermining its performance. And they are not the first to make such claims. Earlier this week, Nomura analyst Richard Windsor fingered the device’s chipset as the problem as well. “The 3G iPhone has been out for a month, but signs of problems are appearing that should give competitors some breathing space,” Windsor said in a report to clients. “Problems include high incidence of dropped calls, switching onto EDGE while the device is stationary and loss of reception while in good coverage. 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.”

So if that’s truly the case, what’s the solution? A firmware upgrade, most likely. Those “well-placed sources” mentioned earlier say Apple and Infineon are prepping one for September release. In the meantime, the companies are sticking with time-tested workaround: “no comment.“