Apple's iPhone Activation Problems … Again [UPDATED]

When Apple first released the iPhone, neither that company nor AT&T was prepared for the business onslaught, so you could forgive the gross miscalculation that left people frustrated when they bought a unit and then couldn’t start using it. Then, a year later, Apple came out with a new version and, yup, another problem with activation. That seemed ridiculous given the previous experience. But now … seems with what reportedly significantly shorter lines and, presumably, somewhat lower demand, there’s again an activation problem. Until the company can exercise enough control and operational insight to avoid what should be expected, it isn’t going to find itself resurgent in corporations and leaves itself open for attack even on consumer electronics, which have become its real home.

According to various reports, Apple has been sending $30 apology emails in the form of iTunes store credit to people because of issues that started on Friday and, as of yesterday, were apparently expected to extend for another couple of days. Here’s the email text:

Dear Apple Customer,

Thank you for your recent Apple Store order. We appreciate your patience and apologize for the inconvenience caused by the delay in your iPhone activation.

We are still resolving the issue that was encountered while activating your iPhone with AT&T. Unfortunately, due to system issues and continued high activation volumes, this could take us up to an additional 48 hours to complete.

On Monday, you’ll receive an email from Apple with an iTunes Store credit in the amount of $30. We hope you will enjoy this gift and accept our sincere apologies for the inconvenience this delay has caused.

Thank you for choosing Apple.

Sincerely,
Apple Online Store Team

Some are blaming AT&T for the recurring fiasco, but the activation servers belong to, and are run by, Apple, and this round mirrors previous problems. In addition, for many years, AT&T has run commercial data services and network traffic volume that should make the activation requests nothing in comparison. To be fair, it’s not as though Apple did nothing in anticipation:

The company did take multiple steps to try to prevent activation issues, though, as Apple rolled out the new iPhone 3G, the 2.0 software, and the MobileMe service at the same time last year. The company took a staggered approach this time, releasing the 3.0 software a few days before the new hardware was released. Apple also likely took steps with its server architecture to handle the demand as well.

Not that anyone knows for sure because Apple refuses, as usual, to talk about its problems. That might make sense in the image-dominated consumer electronics space. But corporations are nowhere near as forgiving and would not be satisfied with an iTunes coupon make-good. What does that do for increased operational costs and lost opportunities and profits?

And Apple faces some significant resistance in the corporate market. A major developer of commercially-focused software recently told me that it is on multiple handsets so far and just came out on the Pre, but isn’t available yet on the iPhone because its corporate customers aren’t widely on that device at the moment. Clearly Apple would like to change that. The iPhone has made some progress in this regard, but it only takes one big incident like the activation issue (or even the lack of a replaceable battery, which practically begs support people to turn thumbs down) to convince IT people that perhaps the product is a potential headache they don’t want. A cool image is fine, but Apple has to remember that corporate clients have a significantly different set of requirements, including going along to get along.

[UPDATE: In his first public statement since going on medical leave, Apple CEO Steve Jobs announced that the company had sold 1 million iPhones in the last three days. I'm guessing that technically includes all of the upgrade orders, so it's actually longer than three days, or else the lines would have competed visually with the last two years. This makes the previous predictions of 500,000 units (whether from Apple or from analysts who would have talked to Apple before coming up with the number) seeming like either disingenuous attempts to hype the expected number or signs that the company is terrible at forecasting. But in neither case does it matter. If management can't deal with this level of activity, then it's not ready for the enterprise.]

Image via stock.xchng user rammag, site standard license.