Glitches Bug New iPhone's Debut

Sales Brisk But Server Problems Prevented Phones From Being Fully Activated In-Store

(CBS/AP)  The launch of Apple Inc.'s much-anticipated new iPhone turned into an information-technology meltdown on Friday, as customers were unable to get their phones working.

"It's such grief and aggravation," said Frederick Smalls, an insurance broker in Whitman, Mass., after spending two hours on the phone with Apple and AT&T Inc., trying to get his new iPhone to work.

In stores, people waited at counters to get the phones activated, as lines built behind them. Many of the customers had already camped out for several hours in line to become among the first with the new phone, which updates the one launched a year ago by speeding up Internet access and adding a navigation chip.

Apple says the problem was the result of a software glitch in the iTunes store, preventing many people from being able to turn on the phone, reports CBS News Science and Technology Correspondent Daniel Sieberg.

Instead, employees were telling buyers to go home and perform the last step by connecting their phones to their own computers, spokesman Michael Coe said.

However, the iTunes servers were equally hard to reach from home, leaving the phones unusable except for emergency calls.

The problem extended to owners of the previous iPhone model. A software update released for that phone on Friday morning required the phone to be reactivated through iTunes.

"It's a mess," said freelance photographer Giovanni Cipriano, who updated his first-generation iPhone only to find it unusable.

And not one likely to endear the new iPHone to the corporate market, to which Applie is pushing the new iPhone, noted CNET-TV's Natali Del Conte on The Early Show Saturday.

Apple shares fell $4.04, or 2.3 percent, to $172.59 in afternoon trading, amid a general decline in U.S. stocks.

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Read CNET's coverage of the new iPhone.
Watch CNET's coverage of iPhone problems.
Read CNET's blog on what to do with your old iPhone

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When the first iPhone went on sale a year ago, customers performed the whole activation procedure at home, freeing store employees to focus on sales. But the new model is subsidized by carriers, and Apple and AT&T therefore planned to activate all phones in-store to get customers on a contract.

The new phone went on sale in 21 countries on Friday, creating a global burden on the iTunes servers.

The iPhone has been widely lauded for its ease of use and rich features, but Apple is a newcomer to the cell-phone business, and it's made some missteps. When it launched the first phone in the U.S. a year ago, it initially priced the phones high, at $499 and $599, then cut the price by $200 just 10 weeks later, throwing early buyers for a loop.

Rollouts to other countries were slow, as Apple tried to get carriers on board with its unusual pricing scheme, which included monthly fees to Apple. The business model of the new phone follows industry norms, and the price is lower: $199 or $299 in the U.S.

Tom Krazit, a reporter for CNET, told Sieberg, "The fact that it's going to cost a whole lot less now is definitely going to make it more appealing to a wider set of people -- you know, not just the Apple fanboys and gadgetheads."

On Thursday, Apple had problems with the launch of a new data service, MobileMe. The service is designed to synchronize a users personal data across devices, including the iPhone, but many users were denied access to their accounts.

Enthusiasm was high ahead of the Friday morning launch of the new phone.

"There are gonna be Apple faithful who are glad to spend another $200 or more for the higher capacity iPhone," observes CBS News Technology Analyst Larry Magid, "but I think, more importantly, there are people who are holding out, who didn't want to spend $400 or more, who wanted the faster network, who wanted the GPS, and I think this will grow Apple's market share in a very significant way."

Alex Cavallo, 24, was one of hundreds lined up at the Fifth Avenue store, just as he had been a year ago for the original iPhone. He sold that one recently on eBay in anticipation of the new one. In the meantime, he has been using another phone, which felt "uncomfortable."

"The iPhone is just a superior user experience," he said. The phone also proved a decent investment for him: He bought the old model for $599 and sold it for $570.

Nick Epperson, a 24-year-old grad student, spent the night outside an AT&T store in Atlanta, keeping his cheer up with bags of Doritos, three games of Scrabble and two packs of cigarettes. Asked why he was waiting in line, he responded simply "Chicks dig the iPhone."

IPhone fever was strong even in Japan, where consumers are used to tech-heavy phones that do restaurant searches, e-mail, music downloads, reading digital novels and electronic shopping. More than 1,000 people lined up at the Softbank Corp. store in Tokyo and the phone quickly sold out.

"Just look at this obviously innovative design," Yuki Kurita, 23, said as he emerged from buying his iPhone, carrying bags of clothing and a skateboard he had used as a chair during his wait outside the Tokyo store. "I am so thrilled just thinking about how I get to touch this."

The phone went on sale first in New Zealand, where hundreds of people lined up outside stores to snap it up right at midnight - 8 a.m. Thursday in New York.

"Steve Jobs knows what people want," Web developer Lucinda McCullough told the Christchurch Press newspaper, referring to Apple's chief executive. "And I need a new phone."

In Germany, sales were brisk at local carrier T-Mobile's stores, particularly in Munich, Hamburg and Cologne, said spokeswoman Marion Kessing.

[anecdote1]

Posted by BC_Kelly at 07:22 PM

So BC, you are obviously an apple exec. Will apple reimberse families that lose teens in accidents due to driving and surfing? Or does apple forget it''s clients after their product is sold?

[anecdote1]

100 years ago, the initial rise (ahem, no pun intended, so let''''s stay focused on the matter at hand, ahem) of Film, Movies, Hollywood etc was mostly financed by profits from dirty movies in nickelodeons. And the enterprises behind it all were not your Mom and Pop business types of the day (will let you ''''read between the lines'''' to figure who it was ;-)


Yes, but could you drive and watch a nickelodeon at the same time?

[anecdote1]

Posted by BC_Kelly at 10:11 AM

So what you are saying is it''s pocket porn. Great inovation.

[floydzepp5]

How pedestrian.

Blackberry is where it''s at.

Posted by Landica at 07:57 PM : Jul 13, 2008
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Agreed. And I''m a Mac computer fan - mostly. The iPhone is lipstick on a Steven Jobs Pig. Pretty Interface is the only thing it has going for it, but technologically, its badly designed and badly implemented. Just like the iPod. But that''s typical for the Rainbow Dust Sandal Set that works for Apple.

[brianbwb-2009]

Do you have some firm numbers to back that up ? Posted by BC_Kelly

"When it launched the first phone in the U.S. a year ago, it initially priced the phones high, at $499 and $599, then cut the price by $200 just 10 weeks later, throwing early buyers for a loop."

Slashed the price by almost a third, and still made a profit? I would call that seriously overpriced.

[brianbwb-2009]

"Mercedes-Benz''''s U.S. market share was unchanged at 1.3 percent..."
Thanks, BC

I did ask worldwide, which is the same market scope hoped for by Apple, and with the admonission that the US market is increasingly irrelevant these days.

"Think it is highly debatable they are.. just as functional." Posted by BC_Kelly

Well, since they are either made in the same factories that make the "i-whatever", simply non branded, "over quota", or "reverse engineered" by some rather clever people, they are essentially the same without the logo.

"Plus, are numerous 3rd Party types who will change battery in iPod for less than $30 (Google them)"

I can change my own battery for free, in less than 30 seconds if they would use common sense, and use standard battery compartments.

"AND, think Griffith Tech, et al, has ''''extra add on battery packs'''' - Google some more"

So it goes from a simple portable devise to a multi-component device. Real smart for the people "on the go", that one.

"And/or - get adapter to plug in car lighter, easily solved, yes?"

Not if you don''t own a car, or have, as many ex smokers have done, removed the lighter.

"Might even be some ''''solar re-charge system'''' around - with adapters for ALL tech devices."

You forget the "memory effect", the precipitation and crystallization of electrolytes, the reason why after so many charges the battery will no longer hold a charge, and need replacement anyway.

[Wookiee-1138]

How pedestrian.

Blackberry is where it''s at.

[brianbwb-2009]

"What about BMW or Mercedes share in Autos?" Posted by BC_Kelly

Worldwide? They are near, or at the top. If they are not number 1 or 2, the Japanese cars are. US cars suck, and as a result their share of the world market is a lot less than Americans would like to think. Don''t just see the US as the market, our country is growing increasingly irrelevant.

Your comparison provided a perfect analogy, if it is good, and affordable, it will compete, Apple really doesn''t.

[brianbwb-2009]

Posted by BC_Kelly

Your point is almost well made, but has flaws, Apple always debuts their products at a cost far in excess of market value, in a couple months you will see them drop the price as other Chinese made knock-offs selling for less than a third the price hit the market and just as functional, but unlinked to any one carrier, which is a distinct advantage.

MS also sux earthworm balls (and that is low!), Vista being one of the most spectacular failures in the history of software, at least you do have alternatives. While the same is true for the iPhone, if you do have one, try something that should be simple, like changing the battery. Even worse, try doing that on the iPod, then tell me about how Apple''s design attitude and pricing strategy doesn''t suck.

[luvwknd69]

BC Kelly

You **** Apple so shut your pie hole!

I am a 25 year IT veteran who "plays" both fields & I see a lot less "garbage" from PC users then that of Mac users!

Mac=TRASH

[luvwknd69]

Well, what''s to say? Apple/MacIntosh is garbage that is why, in 30 years, have not been able to secure anything more than 12% market share...at their height! Right now they are at a measly 8%!

Apple = Garbage
Apple Fans = Idiots

[anecdote1]

Now, let us all gather back here in 20 years, compare notes, and see what is what at that time.
Thank You
BC Kelly
Tallahassee Fla
Posted by BC_Kelly at 04:09 PM

I can''t commit to that date. I may be standing in line for hours waiting to buy apple''s latest nonfunctioning gizmo....

[anecdote1]

Posted by SistaTee at 12:04 PM

LOL!!! Your posts are getting funnier everyday!

[sistatee-2009]

The biggest "glitch" with the new phone, is that it sends your name, address, social security number and bank account numbers to Romanian identity thieves.

[hissteps4u]

MY BLACKBERRY IS MUCH MORE FUNCTIONAL AND RELIABLE Just because it does not have a touch screen does not mean I am out any real user interface enjoyment so what.

I-Phones are over rated such is the fickle Must Have generation of folks who desire to have the latiest toys regardless if they work or not.

I wont be replacing my blackberry any time soon and likely never. If the touch screen is the only attraction my blackberry can do everything else with ease and effectiveness! If only my fingers were smaller I could type faster LOL

[anecdote1]

Posted by Dementus at 09:53 AM

You waited in line two hours for an iphone?

[dementus-2009]

I am wishing to inform you of a grave error in reporting the issues with activating and purchasing the new iPhone. As someone that had waited 2 hours after having been able to grab my iPhone box I wish to inform you that it was not an issue on Apple''s end. What had actually occurred was during the AT&T activation process, which must be completed before you can finish your purchase of the phone, the AT&T servers were overloaded and often crashed out (about 2 out of every 15 people could purchase with no error). The salesperson who had been helping me with my purchase had infact needed to scan at least 3 different iPhone boxes to activate one of them with AT&T. After having spent time on the phone with AT&T service support my working phone had been de-activated leaving me with no phone. So while discussing this issue with the AT&T support the problem suddenly fixed itself when they had informed me that in the next few minutes I should see a correction to this issue.

[anecdote1]

Geeezzz! I''d stand in line for 12 hours waiting to buy a piece of technology that doesn''t work just to be the first to have one.

[stick1770]

It''s what you get for being the tool that waits in line for hours for the first of anything. Joke is on you because few care what kind of phone you''re on when you cause an accident trying to log onto the web in traffic or IM someone while putting on makeup and driving.

[floydzepp2]

Of course it has bugs, It a Steven Jobs rainbow dust and Barbra Streisand POS. Apple still live in 1985. Heck, iPods die after 2 years.