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Apple and AT&T score big with iPhone launch

Everyone knew that the iPhone was going to be big from the moment it was announced in early January. Apple CEO Steve Jobs hailed the device as the ultimate in mobile communications given that it could function as a phone, a mobile Internet device and as an iPod.

As the months progressed, the hype mushroomed even though the iPhone lacked a user-replaceable battery, physical keyboard, expansion slot, voice dialing, A2DP, MMS, iChat, flash support, copy and paste ability and video recording -- not to mention that the iPhone was tied solely to AT&T.

It appears that all of the minuses stacked against the iPhone weren't enough to phase buyers who lined up days in advance to purchase the latest "it device" from Cupertino. Not even the $499 (4GB) and $599 (8GB) price tags were enough to keep Apple from selling around 525,000 iPhones from 6:00 PM Friday evening through close of business on Sunday.

Nearly all of AT&T's stores were depleted of iPhone stock by Saturday whereas Apple's retail stores are currently faring much better (you can check iPhone availability here).

Apple's iPhone launch didn't go off glitch free, however. Many users complained of activation problems with iPhone. The iPhone can be activated through iTunes and the steady rush of users scrambling to activate their phones overloaded AT&T's servers.

"We are working on any issues on an individual basis with customers who were impacted," said Michael Coe, a representative for AT&T.

AT&T spokesman Mark Siegel noted that a "small percentage" of customers were having activation issues. "Our first priority is to get them up and rolling as quickly as we can," Spiegel continued.

For its part in the matter, an Apple spokesman simply said "There are a small percentage of iPhone customers who have had a less than perfect activation experience."



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RE: In 1 years time
By Master Kenobi (blog) on 7/2/2007 12:53:16 PM , Rating: 5
Well I'm predicting they wont hit the target of 4% I believe they were shooting for?

Much like the PS3, which sold out initially as well, the number of units shifting really died down quickly.

We have a few key things to look into here as to why the iPhone likely will never get the marketshare they wish it would.

#1- It doesn't play nicely with Corporate email systems. We have Lotus here at my company (God I hate it) and iPhone won't work with it, were using Blackberries instead. In theory the iPhone should work, but in practice we never got it working to a satisfactory level. I have heard from an ex-coworker of mine who is with a company using Exchange 2003 and soon moving to Exchange 2007, they met similiar problems getting it to work with their systems as well.

#2- Battery. Not having a swappable battery is typically not good for a phone, many people use Cell Phones as the primary phone line these days, and in many cases even the only phone line. If you can't swap the battery and it dies, there will be problems.

#3- Touch Screen. I'm sure most of you have owned iPod's. What happens to those nice screens when you have your fingers constantly all over them? They scratch, quite easily too, and become smudged. Smudging isnt too bad because you can typically wipe it off pretty well with just your shirt, but scratching accumulates quickly and it becomes a real pain in the ass to use.

#4- Price. We know this one end to end now. It is hard for the mainsteam consumers to justify the high price tag on a phone. You might be able to justify it somewhat by labeling it a Smart Phone, but most people don't own Smart Phones. They are typically reserved for the Corporate environment, and you can refer to point #1.

#5- Cell Phone Plans. People typically stick with the provider that has done them good. If you use Verizon, Nextel, T-Mobile, Sprint, and they are good to you, you will stick with them rather than take a chance with a different company. You also have to remember that people can't switch to a new provider until their current plans expire otherwise it will cost them around $200. People likewise may not want to switch to AT&T/Cingular because of terrible service in the past.

These are all defining points that will deter heavy adoption of the iPhone. Once the initial shock and drama plays out and the numbers settle, I think we will see a repeat of the PS3 launch. All thunder, with a few quick lightning strikes, but in the end, no rain.


RE: In 1 years time
By TomZ on 7/2/2007 1:09:31 PM , Rating: 2
I agree with everything you say, and in my opinion the only thing working against your argument is that many consumers are not rational decision makers.

Therefore, the purchase decisions that many consumers make is based more in perception than reality, and that can cover anything from functionality, cost, reliability, network, etc. People will put up with a lot if they are properly "brainwashed" by good marketing.


RE: In 1 years time
By Master Kenobi (blog) on 7/2/2007 1:19:17 PM , Rating: 2
True, which is why we had a very high initial turnout. I've spoken with a few people that are completely gaga over the iPhone. They can never give me a sound reason why other than "coolness" or "its easy". This is the crowd apple is marketing towards, however these same people I have asked also do not have the financial means to support their lust for the iPhone and will have to pass.

Also, it should be noted that Apple Employee discounts for friends/family/etc.... do NOT apply for iPhone purchases, you pay full price period.


RE: In 1 years time
By Oregonian2 on 7/2/2007 2:17:20 PM , Rating: 2
I suspect the weekend sales were sales based on hype alone. I suspect people didn't go into the store to see the phone first and 'then decide'. They were decided upon unseen and with no other-user experience. A true testament to Apple's sales and marketing departments!

Hopefully there will be some software upgrades soon that will provide the basic cell phone features that it has missing. Presumably the iPhone was so behind getting out in time that they had to limit the feature set to make it only slightly late rather than old-hat late (which would affect the marketing push). Slightly late helps but at some point lateness becomes a liability.


RE: In 1 years time
By dnkypnch on 7/2/07, Rating: -1
RE: In 1 years time
By encryptkeeper on 7/2/2007 2:55:05 PM , Rating: 1
#1- It doesn't play nicely with Corporate email systems

525k devices sold in 3 days. 12 million by end of 08. exchange sync has been done on 3 separate occasions. Ximian did it with evolution. Symbian has done it, and entourage can do it. With 12 million devices you don't think someone is going to figure it out with that massive market? you're high if you dont think it will sync with exchange.


Corporations that are willing to pay $600.00 for a fucking phone expect it to work out of the box.

#2 Battery. Not having a swappable battery is typically not good for a phone.

why do you replace a battery? because it runs out of juice or the battery fails. in almost 10 years of only having a cell phone as my only phone i have never once had a battery 'fail'. and if i can use the iphone for 6-8 hours of talk time and recharge via the wall, car, or USB ... hell my blackjack rarely gets low on power.


This is a cell phone, and essentially it may be the beginning of a merge of technology between phones and UMPCs. You pay $600.00 for a wireless device, you expect it to work whether its for business or personal use. If it's business, and the battery fails, your business is lost until you get it back online. Even if it was like Ipods service plan, it's 3 days before you get one back. And even then, if the problem doesn't present itself at Apple, they'll send it back to you and you've lost MORE time.
#3 Touch Screen.

the iphone has a glass scratch resistant display. ipods have plastic screens.


Still, break the glass and you're fucked. People drop phones all the time, but not as much as Ipods, since you generally strap an IPod onto an arm or in a pocket.

#4 Price
ipod with color screen = 250
smart phone = 200-300

iphone = 500-600 and does everything in one package.


Lots of people have IPods already, so it's like spending 800 dollars or even more.

#5 plans

all providers suck. most phones suck. doesnt matter who you have all providers suck.

half a million devices sold in one weekend and you think this device is a flash in the pan? wtf do people nay say? is there something in it for you to hate on everything? doesnt logic alone pretty much dictate that this device has merit? over half a million people drop 500-600 dollars and all you can do is look at the negative ... blows my mind.


All providers do not suck (I swear I don't work for one) but after the initial hype of the PS3 died down, we realized (those of us that didn't know it before) that there is a maximum that people will pay for items. Basically, we now know not to bust a nut over a good launch, it's what happens 6 months later.

Few people have smartphones as it is, and they're relatively cheap now, at 200 bucks or so and less than 80 dollars a month for service plans.

And your last comment on half a million people buying these things? See if you're singing the same tune in 4 months. there are 270,000,000 people in America and half a million of them is only .2% of the population. Not a huge number for the sheer number of people who use cell phones.


RE: In 1 years time
By FITCamaro on 7/2/2007 2:58:49 PM , Rating: 3
I don't know what kinds of batteries you buy, but every lithium ion battery out there only lasts 1 and a half to two years. My last cell phone at only about a year and a half old barely kept a charge for an entire day. My current phone is about a year old and seems to be faring well so far, but I give it another year before the battery starts conking out.

And while you may always have your phone plugged in 1) thats not good for the battery and 2) others don't. And any phone, especially one as expensive as the iPhone should have a replaceable battery. The sheer fact that it doesn't is absurd. Their only reason is because then it wouldn't look as sleek. And people being the sheep that they are, look past it and buy it anyway because its a status symbol and something cool and hip.

And as far as your "all providers suck" arguement, I'm quite happy with Verizon as I was with Sprint. The only reason we left Sprint is because in my parents house, we couldn't get a signal (could under 4 story building though). But with Verizon, we're good. My friends though who all used to have Cingular have since switched to Verizon because they got tired of the Cingular's BS.


RE: In 1 years time
By omnicronx on 7/2/2007 5:42:24 PM , Rating: 2
i just wasted one minute of my life reading your post.
All of your points mean nothing, and explain nothing.
Also if you think lithium ion batteries work forever without degrading you are a complete idiot, and if you dont think this plan is unreasonable compared to other plans you are also an idiot. I dont even live in the states and i know you can get the same plans with unlimited net for 40-45 dollars.. the minimum for iphone is like 60 dollars a month, and you only get some 500 minutes.

there will always be critics of any product or service, but if you are going to stand up for one, at least make valid points that make sense.


RE: In 1 years time
By vectersmith on 7/2/2007 1:28:00 PM , Rating: 3
I would like to respond to some of your points if I may...

#1 - Corporate compatibility has yet to be implemented and the only announcement that has been made is the Exchange plug-in. At this point you are correct, and perhaps this will change but as of now business users will have this decision to make.

#2 - For me I have never swapped a battery in a phone, or for that matter even a laptop. This is one of those personal preference things that will never create 100% satisfaction.

#3 - Unless I use a diamond (which I won't) the scratching is a moot point. You can't do it, its hardened glass and so far my screen remains scratch free within my pockets. As for smudges I am actually surprised from really not noticing them. The screen is so bright it really hides them. If I do see any I just use my shirt to wipe them off.

#4 - I wont really argue with this, pricing for anything is another personal preference. Hey my first gen razr cost more than the iPhone so again it's really what you are willing to pay. And I will say the iPhone has gone well beyond the smartphone, it just really implements everything very well, even the touchscreen typing (yes it will take time to get used to).

#5 - Another personal preference. I have been with ATT/Cigular/ATT for over 6 years and really haven't had any issues with phone service or customer service. Again no matter the carrier you will have your moments.

Will these lead to a lack of heavy adoption? Perhaps but really it boils down to you preference. I chose to get one and really am blown away by it. It is a masterful piece of technology.


RE: In 1 years time
By Master Kenobi (blog) on 7/2/2007 1:38:29 PM , Rating: 3
Valid counter-points.
I would like to counter #2 with first hand experience of just how many iPod's I saw being sent back for "battery problems" over the last few years. I did a part-time weekend job at Best Buy's Geek Squad for kicks (and the nice discount) and let me tell you, there was alot. Easily a dozen per day complaining about the battery in the things. Granted we got about 6 a day with the Nano line and the iPhone is supposed to be using similar technology so we shall see.


RE: In 1 years time
By oab on 7/2/2007 2:23:31 PM , Rating: 2
I worked two years at a Candadian best-buy like retailer in the service dept, and we had our own share of iPods coming in.

About one person coming in per day with 'battery problems' in their iPods, and from what I saw, only about half of them actually had a battery problem (defined by Apple as lasting for less then 50% of the initial charge specified). So, people would say "my iPod lasts for 30 minutes!" 12 hours later, with the iPod was still playing and had 30% battery life left.

I have seen other problems though, one of them is when you know it has a lot of charge (it was just charged), but it lasts for maybe 30 minutes, but if you leave it alone long enough for the battery to completely die, and charge it again, it will last for 8+ hours. Hard-resetting the iPod, or doing a restore on it is another way to 'force' it to behave itself, and fixes almost all problems with an ipod except for defective HDD ("folder error" message/sad iPod face) and a truly defective battery.


RE: In 1 years time
By oab on 7/2/2007 2:23:37 PM , Rating: 2
I worked two years at a Candadian best-buy like retailer in the service dept, and we had our own share of iPods coming in.

About one person coming in per day with 'battery problems' in their iPods, and from what I saw, only about half of them actually had a battery problem (defined by Apple as lasting for less then 50% of the initial charge specified). So, people would say "my iPod lasts for 30 minutes!" 12 hours later, with the iPod was still playing and had 30% battery life left.

I have seen other problems though, one of them is when you know it has a lot of charge (it was just charged), but it lasts for maybe 30 minutes, but if you leave it alone long enough for the battery to completely die, and charge it again, it will last for 8+ hours. Hard-resetting the iPod, or doing a restore on it is another way to 'force' it to behave itself, and fixes almost all problems with an ipod except for defective HDD ("folder error" message/sad iPod face) and a truly defective battery.


RE: In 1 years time
By oab on 7/2/2007 2:24:14 PM , Rating: 2
double-post, sorry. Ignore this one.


RE: In 1 years time
By Parhel on 7/2/2007 1:50:14 PM , Rating: 2
Choice of provider isn't always just a personal preference. I'd very much like to get an pair of iPhones for my wife I, but unless they are available for the Sprint network, I can't do it. We call US to Brazil about 1000 minutes / month. Only Sprint offers a reasonable per minute rate for those calls. In addition, I get 15% off my Sprint bill through my work. Switching to any other provider would cost me at least an additional $200 / month.

The other issue for me is that I dial by touch. I doubt that's possible to do using the touch screen, and the iPhone doesn't offer voice dialing. I use my phone a lot, and would have a problem with having to actually look at the phone every time I needed to make a call.

I would also like to see a replaceable battery on a device that cost as much as the iPhone, but if Apple will service it for a reasonable cost I don't have a problem with it.


RE: In 1 years time
By vectersmith on 7/2/2007 2:02:34 PM , Rating: 2
Yes very true choosing a provider doesn't allows allow the personal preference and types of plans are a very deciding factor.

I think my main point was more that there are a lot of negative posts about ATTs service and for my own experiences I couldn't be happier. It would be nice if more positive experiences came out, but perhaps they are far and few between.


RE: In 1 years time
By masher2 (blog) on 7/2/2007 1:39:30 PM , Rating: 2
> "Much like the PS3, which sold out initially as well, the number of units shifting really died down quickly..."

The PS3 sold, what, 81K units its opening weekend. The iPhone's figures are 700% higher. The two aren't even comparable.

> "#2- Battery"

True for the iPod also, and its the hottest selling consumer device in the past couple decades.

> "What happens to those nice screens when you have your fingers constantly all over them? They scratch"

Initial reviews are that the iPhone screen is quite scratch resistant. Admittedly, these are short term only, but assuming this is going to be a problem seems very premature.

> "#1- It doesn't play nicely with Corporate email systems"

The phone has been out a few days only, and you're writing this out as a permanent problem? If there's a problem (it works fine with my own companies email), it'l be addressed, and soon. In any case, corporate email is not a huge selling point for the consumer public.


RE: In 1 years time
By Master Kenobi (blog) on 7/2/2007 2:10:22 PM , Rating: 2
Ah... So it looks like I have to tackle the masher. I figured this day might come.

quote:
The PS3 sold, what, 81K units its opening weekend. The iPhone's figures are 700% higher. The two aren't even comparable.

The 81K figure was for Japan. I was unable to get the numbers for North America, nobody seems to know how many were sold. But I did get the ones for Europe.
According to Financial Times, PS3 sold 600,000 units in the first two days of its release in Europe.

quote:
True for the iPod also, and its the hottest selling consumer device in the past couple decades.

It wasn't the hottest selling until the price dropped. I remember the Gen 1-3 iPod's not selling as well as they did starting with Gen 4.

quote:
Initial reviews are that the iPhone screen is quite scratch resistant. Admittedly, these are short term only, but assuming this is going to be a problem seems very premature.

How many times have they tried making "Scratch resistant" glass or polycarbonates only to see them scratched still? I will believe this one when I see it. History is really against Apple on this one, I have never seen a good piece of scratch resistant glass or plastic yet.

quote:
The phone has been out a few days only, and you're writing this out as a permanent problem? If there's a problem (it works fine with my own companies email), it'l be addressed, and soon. In any case, corporate email is not a huge selling point for the consumer public.

It may or may not be a permanent problem. Also keep in mind that Corporations have less trouble dropping $500-600 on a mobile device for an Employee, than a home user would for a new Cell Phone. The corporate market is a very large target for the Smart Phones that the iPhone is really competing against. If they want large market share, they had better make it work with corporate email servers without using obscure hacks and tricks. For now my company has Vetoed any further considerations with the iPhone and we are looking to the AT&T/Cingular 8000 line of Blackberries.


RE: In 1 years time
By masher2 (blog) on 7/2/2007 2:33:09 PM , Rating: 2
> "Ah... So it looks like I have to tackle the masher. I figured this day might come."

I had an interesting idea that you and I could place a public wager on eventual iPhone sales, with DT holding the stakes and informing the public as to the outcome. What do you say?

I don't know if Apple will meet its own projection over the next 18 months, but I'm confident they'll sell at least 9 million units, far more than enough to establish the device as a flash-in-the-pan failure. Want to bet on that figure?


RE: In 1 years time
By Master Kenobi (blog) on 7/2/2007 3:49:03 PM , Rating: 2
No. Taking into consideration the worldwide market I expect them to sell around 15 Million. There are over 3 Billion cell phones in the world, so 15 Million should be a drop in the bucket.


RE: In 1 years time
By masher2 (blog) on 7/2/2007 6:08:44 PM , Rating: 2
> "Taking into consideration the worldwide market I expect them to sell around 15 Million..."

That's 50% higher than even Apple's estimates. You seem to be simultaneously predicting the phone will be a flop and a resounding success. :p


RE: In 1 years time
By Master Kenobi (blog) on 7/3/2007 10:15:13 AM , Rating: 2
Well a flop compared to the size of the market, but lets be serious, Apple has only (as someone corrected me) shot for 1% of the market. I was under the impression it was 4%, in which case I can't see them getting that much. 1% however is doable just on hype. If they are only shooting for 10 million iPhone's, they should be able to manage that, but not necessarily by the end of this year, maybe end of 08.


RE: In 1 years time
By Shadowself on 7/2/2007 2:44:36 PM , Rating: 2
First, Apple's stated goal is 1% (*not* 4%) by the end of 2008 -- almost 18 months from now.

Second, the PS3 sold a very small fraction of what the iPhone did in its first weekend. Even if the sales rate over the next week is 15% of what it was over the first weekend the iPhone will outsell what the PS3 did in its first weekend.

With regard to
#1: It does play nicely with some corporate emails. Your experience (with an email system you admittedly hate -- so why are you annoyed?) and your friend's email experience is anecdotal at best. Besides, Apple has explicitly said Exchange support would *NOT* be forthcoming in the initial release. Expect better corporate email system support in coming weeks or months. Rumors have already started flying about Apple directly licensing Exchange API's and such directly from Microsoft (and the Microsoft fanboys are already gloating about how Apple has to come to Microsoft for this).

#2 If I can get 8 hours out of my phone for voice why do I need a longer battery life? I try to sleep at least 4-6 hours a day and I don't talk on the phone for even one third of the remaining 18-20 hours. My current phone barely gets 4 hours of talk time (if I baby it) and I've only once ran out of battery power in over 2 years. Thus I'd expect 8 hours talk time with charging overnight would be fine for most people. Additionally, since it has an iPod type connector people will be able to charge it through already available third party systems in their car, office, airplane, etc.

#3: The touch screen is on optical glass rather than the iPod's plastic. It is much, much tougher. It is effectively the difference between getting a nice watch versus a cheep one. The nice watch has optical glass or sapphire for the "crystal"; the cheep watch has plastic. The plastic ones are virtually unreadable in six months and the better ones are readable for decades.

#4: The price is not cheap but it is not outrageous. Remember the RAZR when it first came out? It was well over $600 with accessories *plus* a two year plan (just like the iPhone). Many, many people who are not tied to corporate email systems want a smart phone. They want a phone with everything that the iPhone promises. Does the iPhone do everything? No, it does not do IMs. It does not do "push" email from Exchange. But it does what it does better than any other phone that tries to do all the same things. And things it does not do will be coming.

#5: Some people love their current provider. Some do not. This is very much a personal thing. And it will not be forever. You may recall that the RAZR was exclusive to Cingular for quite a while. It also started out at $500 (plus a two year plan). When you added some of the extras to do with it what you wanted its cost could easily run to well over $600. Then the exclusive deal ran out and the RAZR became available from virtually all the plan providers. The price dropped significantly too. If you search and do not impulse buy you can even get a RAZR for free with some plans during sales. The same will be true of the iPhone. Expect all the major plan providers to eventually carry it.

The bottom line is that the iPhone is far from perfect, but it is one of the best "smart phones" out there -- AND -- NOTHING stays the same. Corporate email support will come (it's just a matter of how soon). Multiple wireless provider support will come (it's just a matter of how soon).


"People Don't Respect Confidentiality in This Industry" -- Sony Computer Entertainment of America President and CEO Jack Tretton

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