A little over a year ago, people lined up for hours (or even days) to get the original iPhone. After an enormous amount of hype, and a lot of media buzz, the first iPhone owners finally got their hands on their new devices. During this launch, customers were allowed to take their iPhones home, and activate them over the Internet. Needless to say, the first wave of activations were plagued by well documented problems. Since customers were essentially forced to pay the full price of the device, going home to activate your iPhone was a small concession. These problems simply foreshadowed more serious launch problems to come.
The way Apple and AT&T agreed to handle the iPhone 3G has essentially made the purchase and activation process more difficult. This time around, AT&T is subsidizing the cost of the iPhone, which has resulted in much lower prices for consumers. By reducing the price by $200, and allowing other international carriers to sell the device, Apple is set to pull in a substantial amount of new customers and raise its market share significantly. In order to remain profitable, AT&T had to change the price and terms of the data plan for the iPhone 3G. The data plan is now $10 more a month, and includes no text messages, while the original data plan included 200 texts. Essentially, the new iPhone will cost approximately $160 more over 2 years for the average customer, if they add $5 per month for 200 text messages. Furthermore, Apple and AT&T require in-store activation, a 2 year contract, and you cannot have any discounts on your AT&T account. This means that everyone who gets a discount for AT&T through their business, or possibly through their university, must remove the Foundation Account Number (FAN) that flags their account for an automatic billing discount. This was all designed to keep people tethered to AT&T for the duration of their 2 year contract, and allow the carrier to turn a profit.
Unfortunately, all of these precautions taken by Apple and AT&T to keep people tied to their device and services have once again resulted in activation problems. Not only did activations slow to a crawl and ultimately fail for many people in the stores, but Apple launched the iPhone 2.0 software update simultaneously, and people attempting to upgrade first generation iPhones from home bricked their phones when the updates stopped in mid stream. This series of unfortunate events could have been avoided by staggering the iPhone release, and by delaying the iPhone 2.0 software update for a few days to reduce server traffic. Overall, the experience of purchasing the iPhone and activating it is a disappointing one for new iPhone users, and extremely disappointing for customers who are going through it for the second time.