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Apple, AT&T, and iPhone 4

I have been watching the iPhone 4 pre-order madness unfold with pretty good feelings, mainly because I am not involved in it, other than as a passive spectator. I am not responsible for supporting either AT&T or Apple as my customer, and I will not be purchasing an iPhone that is tied to AT&T’s network.

When I worked in high tech, I had the pleasure of serving BOTH Apple (then “Apple Computer”) and AT&T’s major precursor, SBC, as my EXCLUSIVE customer, at different times, when I was with different companies. The insights gained, and my present lack of involvement, allow an objectivity that I would otherwise lack. I still have some friends, and even more former co-workers, :-) who are working at Apple, at AT&T, and at companies supporting EACH of them.

OK, enough preamble – What happened yesterday? “Apocalypse Now (Redux)?” :-) said, “AT&T’s epic iPhone 4 pre-order snafu on Tuesday was the latest in a long line of headaches the carrier has caused Apple.” :-)

SNAFU is such a descriptive acronym, first used in 1941. It no longer requires a world war for its use. “Business as usual” is sufficient. :-)

Apple said that it sold 600,000 iPhones on Tuesday. The ordering frenzy was 10-fold the number of orders that AT&T serviced last year for the iPhone 3GS, and AT&T SHUT DOWN SALES (as in “suspended”) today, because the company has run out of inventory!

Pre-orders, which were initially scheduled to be delivered on June 24, are now only guaranteed to arrive by July 14 (hmmmmmm…. Bastille Day! Somehow appropriate…. :-) )

The two CNN articles linked above must be read to be “enjoyed.” :-) Let’s add a third, that discussed the error messages and busy signals, and then there is the logging into accounts of other customers and viewing of personal information (Gizmodo has a wonderful “when-worlds-collide” (1) kind of image at that link), and there are personal anecdotes (and a video) of the CNN employees who tried to pre-order an iPhone 4, as well as tales of manual data entry (as in “paper and pencil”). :-)

AT&T spokesman, Mark Siegel, said that Tuesday “… was the busiest online sales day in AT&T history.” Somehow, his remark seems like understatement. :-) I am glad that I was not there.

AT&T noted that iPhones will be available in retail stores next week “on a first-come, first-serve basis.” Yup… just like Bastille Day! Bring torches and pitchforks. :-)

According to a CFI Group study, the top reason that customers who are in the market for an iPhone decide to pass is AT&T’s 3G network problem. But the customer outrage over AT&T’s 3G coverage and performance has been discussed almost to exhaustion….

Drake Johnstone of Davenport & Co. forecasts that as many as 40% of AT&T’s customers will leave for Verizon, once that company gets the iPhone. Fortunately, AT&T has signed many of them up for a new contract with a $325 Early Termination Fee (ETF). View it as a “going away present.” :-)

After the flood of traffic (foot, phone, and computer) OVERWHELMED AT&T’s systems, Apple apologized. (CNN noted that AT&T has not – maybe they have by now.) An apology (especially a SINCERE one) is an AMAZING thing in business – something that I learned a long time ago. Perhaps it is because apologies (especially sincere ones) are so rare. I do not think that Apple always understood the power of an apology (especially when you are viewed by the customer as the “innocent party”), BUT THEY CERTAINLY UNDERSTAND IT NOW! :-) And they use it with great effect…!

(Note added June 25, 2010: Please note the similarity of AT&T’s “lack of apology” with Comcast’s “lack of apology” in a recent, roughly 12-hour outage in my neighborhood. My personal belief is, having worked with such folks as customers, that telecommunications companies of both the “cable” and “phone” subspecies :-) hire a lot of people with the same personality types. Many of the more introverted of these types would prefer not to communicate with you at ALL, let alone to apologize. Ironic, in “telecommunications” companies…. :-) )

OK, are you ready for “the other shoe to drop?”

Remember, all of those nifty brand-new iPhones won’t be in the hands of customers until roughly, uh, Bastille Day. CNET is already asking, “Is AT&T ready for the iPhone 4?” AT&T has updated its networks. AT&T has issued new data plans that cap usage at 2 GB/month.

So, is AT&T ready for the new traffic? We shall see….

CNET notes that “In many ways, AT&T has been a victim of its own success.” Most of us are either realistic enough, or pessimistic enough, to expect bad times. Not all of us are able to handle WILD SUCCESSES! Some corporate cultures are able to adjust far more rapidly than are others.

The CNET article by Margeurite Reardon has some insights into the “big picture,” both technological and competitive. The article also has some insightful comments by Charles Golvin, a research analyst with Forrester Research, who shares my belief that ANY exclusive carrier of the iPhone traffic in the U.S. would have experienced similar problems with heavy data usage on a cellular network.

For those who have never seen it at their companies, :-) iPhone and iPad are REAL examples of “disruptive innovation” that drives change.

-Bill at

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