AT&T-botched iPhone 4 launch -- an Apple nightmare

Apple may have sold out on its first run of pre-order-ready iPhone 4 units, and demand may be ten times higher than for any previous model, but that's no excuse for AT&T's seeming complacency.

That could be harsh, and it is only a personal opinion, but take a look:

We know -- we just know -- the new iPhone is going to set new sales records for Apple. That's inevitable for a company controlling 60 percent of the conversation on Twitter.

Deutsche Telekom this morning said demand for the iPhone 4 has been ten times higher than last year when the iPhone 3GS went on pre-sale. Apple sold one million iPhone 3GS devices across the launch weekend in 2009.

That report has since been confirmed with the following statement from Apple.

    "Yesterday Apple and its carrier partners took pre-orders for more than 600,000 of Apple's new iPhone 4. It was the largest number of pre-orders Apple has ever taken in a single day and was far higher than we anticipated, resulting in many order and approval system malfunctions," the company said.

    "Many customers were turned away or abandoned the process in frustration. We apologize to everyone who encountered difficulties, and hope that they will try again or visit an Apple or carrier store once the iPhone 4 is in stock."

We know iPhone 4 will tip the balance against Android (that's why Google engineers are all of a sudden 'laser-focused' on the user interface -- who doesn't copy Apple?).

We know iPhone 4 may see up to 9.5 million sales in the current quarter, we know Apple will make smartphone market share gains as consequence.

That's good news. We know all this.

We could have guessed most of it for months.

AT&T and iPhone:

What a mess

Jonny Evans:

AT&T-botched iPhone 4 launch -- an Apple nightmare

IT News Podcast:

AT&T, Apple struggle to cope with iPhone 4 pre-orders

Amir Lev:

AT&T iPad privacy breach: Goatse email "theft" thoughts

IT Blogwatch:

New AT&T privacy pratfall: now it's Apple iPhone 4 pre-order process

We can even tell that if Apple maintains its current trajectory, iPhone may account for as much as 10 per cent of the world's 3G mobile data traffic by 2013. Wow. These things are just calculation. Like looking at Google Insights to find out that interest in the new model iPhone was far above that for any other model pre-launch.

If we on the outside can determine all this useful information, then why could Apple's carrier partner not ensure it was fully prepared for the launch of the product?

After all, Apple's commitment to AT&T is widely seen as reason the iPhone isn't enjoying an even bigger US marketshare. And is also why Android-powered devices are selling strongly on other networks.

Surely this arrangement is on borrowed time? Even AT&t customers continue to be underwhelmed by AT&T's coverage.

On that, AT&T CEO Randall Stephenson this week told CNBC,

"The demand [for iPhone] was really impressive, and it had an effect on voice quality. We have been going hard at the voice quality issue in New York, and made tremendous progress. And so, we're getting to a point where voice quality is getting to where it should be, and mobile broadband is the fastest in the nation. as measured by any number of independent people."


So AT&T knows its systems need fixing, and knew the iPhone 4 launch would be a phenomenon.

So what did it do?

Just look at the travesty that was AT&T's ordering system yesterday.

In short order:

1/ Systems couldn't cope. In the end people realized the best way to secure an iPhone was either:

        - Order for in-store pick-up at an Apple store

        - Order the new iPhone as a new unit for an existing account (as you could rectify this later).

Reports claimed success using both methods.

2/ System security was deeply flawed. AT&T customers logging in to pre-order their iPhone 4 would find themselves inside other user's accounts. This was apparently related to "a major fraud update that went wrong."  

This bug exposed AT&T users' private information, including credit card details, some have claimed. Payments were reportedly made against the wrong credit card, some claim.

3/ AT&T didn't test the ordering system pre-launch. This allegation comes via Technologizer, which claims,

"The most damaging of these may be an source close to the carrier which now claims the system which AT&T was not tested before the launch."

So -- you are about to introduce a product demand for which will exceed demand which set new records last time you introduced a device like it, and you fail to test your systems?

That's so ludicrous I feel a need to disbelieve Technologizer. Though I don't.

4/ AT&T's pre-ordering page was taken down this morning.

What's going on, AT&T?

Since this article first appeared, AT&T has issued the following statement, attributing its problems to the extent of the orders taking place.

iPhone 4 pre-order sales yesterday were 10-times higher than the first day of pre-ordering for the iPhone 3G S last year. Consumers are clearly excited about iPhone 4, AT&T's more affordable data plans and our early upgrade pricing.

Given this unprecedented demand and our current expectations for our iPhone 4 inventory levels when the device is available June 24, we're suspending pre-ordering today in order to fulfill the orders we've already received.

The availability of additional inventory will determine if we can resume taking pre-orders.

That's fine -- but it doesn't explain the security glitches or the lack of systems testing -- and doesn't bode too well for the robustness of the network on June 24, when these things actually go into use.

We all know Apple has been producing iPhone 4 in quantities of three million a month since May, suggesting it could have as many as 4-5 million ready to hit distribution on June 24.

Did AT&T not get this memo?

Here's how it looks to me.

- AT&T is the sole US carrier for the iPhone.

It has weathered thousands of complaints concerning its network coverage, it has suffered multiple instances in which its cell network collapsed during key events and trade shows. It has patchy 3G coverage, though it does carry more data than anybody else.

- We agree that the exclusive deal between Apple and AT&T enabled the Steve Jobs company to get the iPhone out there.

Speaking at All Things D in May, Jobs talked about the iPhone in the US.

  • Walt: Would there be advantages to having two carriers in the US?
  • Steve: There might be.
  • Walt: In the near future?
  • Steve: You know I can't comment on that.

On AT&T's network problems.

  • Q: Steve, we love our iPhones... but our concern is that we can't make a phone call on it. Is someone working on that?
  • A: Well, we're talking about it. You can bet we're doing everything we know how to do.
  • Q: Can we expect something soon?
  • A: I'm told that a lot of places are getting better certainly by the end of this summer.
  • Q: And if they don't get better?
  • A: Then they won't.

The challenge here is that AT&T knows it has an exclusive grip on the world's most popular smartphone.

Apple has given AT&T a fantasy license to print money.

AT&T has no need to improve any aspect of the end user experience, because it knows it has the only iGame in town, at least in the US.

Apple may consider taking AT&T's money-making license away -- soon -- or potential iPhone consumers may instead choose Android devices from alternative carriers.

With its utterly botched iPhone 4 pre-ordering, AT&T has once again shown itself to be unprepared to match Apple's focus on the user experience.

It would be good to see this used as a reason to introduce new model iPhone 4's for Verizon and Sprint, despite the mixed-up nature of the US mobile network. (Why do you have multiple standards? That was a crazy decision, America.)

Despite all these problems, Apple managed to sell its entire first run of iPhone 4s in around 20 hours, begging the question, if iPhone 4 were available on every US network, would Apple (or its Foxconn workers) be able to build these thing s quickly enough?

One more thing: given we're looking at ten times the sales on a product which now does multi-tasking, and given the current strength of AT&T's network, who thinks AT&T will be able to handle the iPhone 4 traffic efficiently? Steve Cheney certainly doesn't... and he notes that Apple may partially be to blame...

What does everybody else think?

Copyright © 2010 IDG Communications, Inc.

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