The Great AT&T and Apple iFiasco of 2008

Yesterday morning, I took an early lunch at 11am to go see if the iPhone was worth getting, and if the line was short, so I walked the block from my office to the Chelsea AT&T store. A quick calculation of about 30 people in front of me, at least 6 salespeople, at 15 minutes per transaction (on average from what was being said on the webs) meant that I'd be taken care of in between 1 and 1.5 hours. I waited 37 minutes and was the 16th person in line, when an AT&T employee came out to announce that only 5 iPhones were left, all 8GB. I turned and went right back to my office.

I had been stymied, like the 100 people behind me (and 11 in front).

Over the course of the day, my RSS feeds on the tech sites and blogs I frequent started revealing the story (mostly on CNet's excellent coverage): Apple and AT&T (but mostly Apple) had completely screwed up what was poised to be a summer blockbuster of major proportions, and during a recession, no less. When I left to go back to the office, there were approximately 100 people behind me. Let's do a quick tally of how much was lost, at minimum, before Noon yesterday, for a single AT&T store's gross profits on the day: 111 x $199 (8GB iPhone) + $36 (activation fee) = $26,085. That obviously does not include the people who would have joined the line at Noon. Let's say this happened roughly equally around the country at all the AT&T stores (according to CNet, there's 1,800), that would mean an extremely conservative loss of approximately $46,935,000. In one day. Before Lunch.

On top of that, when I called to see if the other local AT&T stores had iPhones in stock, both told me that they were out and that all the AT&T stores were out and might, or might not, be restocked on Saturday, Monday, or the week after. That doesn't sound very good for AT&T or Apple.

On Wall Street, AT&T stock lost over .58% by the end of the day. Apple was down 2.28%.

Now for Apple's story: it is clear that they did not follow proper Business Process Engineering standards. Nor did they follow proper business procedures.

If I'm an Apple or AT&T executive, based on last year's successful iPhone launch, I would prepare, at minimum, to handle at least as much as last year (about 700,000 iPhones sold from 7/1-7/3 last year). Then I would also plan to handle at least that many concurrently at the moment I made the software upgrade available. Why would they not do something like the following: Day 1, release iPhone 3G in the North American market; Day 8, release software upgrade for iPhone 1 on Apple's Web site (or through automatic update) for the same market; Day 15: Release to Western/Eastern Markets in a phased manner (Europe first day, then Asia, then Australia, then South America, etc.); Day 22, release software upgrade to the rest of the world.

I haven't yet seen the bad sales figures for Apple, nor do I know what they predicted they would do. I can be fairly certain that they will fall far short of expectations for this opening weekend due to this iDebacle. We'll see how low things go when the markets open on Monday. I don't know what the total loss will be when all is said and done, but it will be in the high millions, no doubt, when taking into account lost revenue from the iPhones that weren't sold, the AT&T high rate data plans that weren't started (and compounded by the fact that people will continue to make money for their competitors while using their old phones!) and iPhone apps that won't be bought now, later, or never. This is without even mentioning what will happen to the Apple brand and can't-miss aura.

I wonder if AT&T is secretly happy: the next iPhone might have more telecomm partners (which is what usually happens to exclusive deals in the industry after 1 or 2 years--see Q, Motorola), and perhaps won't sell quite as many as they might have, had they been successful on this launch. Conspiracy theory, anyone? Hmm...

iPhony or iPhonetastic? An Early Adopter Explains Why He'll Wait on This One Until Gen2.0

Last night, The Wife and I were near the Apple Store on 5th Avenue around Midnight. We thought we would check out the latest electronic gadget. It would not surprise anybody to know that the writer of a blog titled what this one is would be what is called in the business an Early Adopter. Not only am I an early adopter, I'm also an Early Proseletyzer, because if I like the gadget, everyone I know certainly will know about it.

So did I buy the iPhone?

The answer, surprisingly, is no. Why?

The iPhone is beautiful, simply put. The technology packed into this tiny, thin, lightweight device is alluring, in a digital way, of course. But I'm not going to buy it. These are some reasons why:

• I want to listen to music and I have a big collection, over 30GB of mp3s. Why would I want an iPod that only holds 4GB or 8GB? I like being able to put my entire collection on there and listening to anything I feel like. This does not replace my 2nd generation iPod (which replaced a 1G iPod of course).



• I can't use it with the really fast Verizon network I'm currently enjoying with my Motorola Q (which I early adopted and proseletyzed to many, including my boss at GMHC). Web pages looked great on the iPhone, way better than my Q, but they were a lot slower-loading than I'm used to.



• I use my Q for work email, which means it has to work with Exchange Server. Also, my Q syncs with Outlook (and Entourage). There is no mention anywhere of a seamless synchronization with these important workplace technologies.



• Even though my current contract with Verizon finished just this month, and I did not have to pay a cancellation fee, and even though I already pay $99/m for my plan, it is really not worth paying $600 for a new phone or iPod, or iPhone plus iPod.

This morning I read the review in the New York Times by David Pogue who seemed to be dead-set against the iPhone. His main arguments were the battery life, lack of a physical keyboard, and the AT&T plan. I think the battery life problem is really not a big deal, because if it's a phone, who's going to keep it more than two years, really?

Mossberg also mentioned the physical keyboard, as did Michael Robertson, formerly of Linspire and MP3.Com, in one of his self-serving broadcast emails ostensibly trying to be "helpful" to potential iPhone purchasers. Having used it, I don't think it will be much of a problem--people will get used to it. Also, I believe that it will become far less of a liability once voice dial becomes a feature. Not only that, it's probably too short-sighted to claim something like this will be the "downfall" of the iPhone--user-interface design is changing user interaction rapidly, and Apple has been at the forefront since the beginning of the digital revolution, so I don't buy this argument.

Cost, though, that might do it for some people. I'm not exactly frugal--but something has to be a life-changing purchase for me, either by allowing me to listen to a large music collection on the go, check my email, check that I'm still leading my fantasy baseball team (thank you, Q!), use Google Maps and gmail, and put it all in my regular phone, that will do it, and my Q at $149 was somewhat expensive. But I really can't justify $600 plus all that New York City tax to go to slower plan.

You know what I will buy, though? An 80GB iPod that looks exactly the same as the iPhone, without the phone features, but with 802.11g Wireless technology. For $350.

And next year's 2nd gen iPhone, when my Q becomes two years old!

NOTE: first image by Mary S. Butler, Q photo, on msb_nyc Flickr.com; second image by me using the iPhone at the Apple Store