Breathtaking O₂ incompetence reduces iPhone 3G launch to farce

Cambridge has one Apple Store (in the seemingly Bioshock-inspired Grand Arcade), one O₂ shop, and two Carphone Warehouses.

Having decided that it’s finally time to replace my venerable Motorola RAZR V3, and never having been to an Apple product launch before* (albeit one at a local store) I decided to try my luck at the Apple Store itself – which turned out to have been a good idea for all of the wrong reasons…

I arrived at about 7:45am to find a small queue of about ten people in front of the Apple Store, which had black drapes across its Windows. Looking down the the O₂ store at the other end of the street, it looked as though this much smaller store had a much larger crowd outside. At 8am there was whooping and clapping (although I wonder whether this was the Apple Store staff themselves), the drape came down and the doors opened. The O₂ queuers at the other end of the street looked on in consternation as people started to file in to the Apple Store – one-upmanship on Apple’s part?

In any case, the start of the queue moved down to the banks of iMacs where their order was processed, and everyone else formed a queue down the side of the store. I was number two in the queue after a friendly Finn.

Time passed…

I noted to the Finn that it was odd how, after a good half-hour or so, no-one had actually left the store yet – and the only iPhones in evidence were the demo units being passed around like candy by the Apple staff. These poor people, at least a couple of whom had travelled up from the Regents Street store in London at 4:30am this morning, were starting to have to improvise – even they finding it an impossible task to generate that much enthusiasm over a telephone for that period of time. One of the two store security guards, and elderly Indian gentleman (who would presumably be handy for moral support in case that the situation ever arose where security was actually required) came over and asked me “So this is what… all about a phone?” with a resigned shake of his head.

The staff broke out the headsets and speakers, and began to perform product demos to the captive audience. It was now about 9am, and some people had been queueing for over two hours. Number of iPhones sold: zero.

And then the inevitable announcement that everyone had been expecting: O₂‘s sales system crashed at pretty much 8am as stores all over the country attempted to place their first purchase, and haven’t come back since. The stock is in store, and certainly in the Apple Stores there is enough that there is no way that they would sell out (or so they are saying) – but it’s impossible to complete the sale on a single one of them.

Store staff took names and queue positions, and promised to hold-back stock for the requested model. I walked out to get some well-earned breakfast, and then returned at 10am to confirm that they’d still not been able to sell a single unit, and that O₂‘s sales system was still completely unresponsive.

I decided to call back later…

I’m now hearing that it is the credit-checking system that has failed, although this hasn’t been confirmed.

By the time I left the store, 20% of launch-day’s opening hours had already passed without a single sale being made – if this sort of fiasco doesn’t convince Apple to change carriers at the earliest opportunity (or, much more realistically, to drop the single-carrier monopoly – something that could probably be done in the very short-term) then I can’t imagine what will. The damage to the all-important first-day sales by the inability to actually sell any units has got to be a huge embarrassment. More to the point, after the farce of the crashing and sold-out pre-ordering website, why hasn’t O₂ learned? Heads have to roll over this…

When it comes down to it, the mobile phone business is a classic example of where the Free Market has failed: because the limited number of carriers have a monopoly, they can dictate terms, which they do in the form of fixed contracts. How badly this doesn’t work is demonstrated by the way that over recent years, contracts have actually become longer and more expensive – my first contract was £15 per month on a 12 month contract with Orange, and now they don’t have anything below £35 per month for 18 months. Part of this problem is that Pay-As-You-Go customers don’t expect any level of service, and so don’t miss it. Contract customers are locked-in to an expensive contract which they can’t (easily) break, and so there’s no profit in providing decent support and infrastructure – so long as the customer can make calls, then they can be kept with the network with offers of free handsets or reduced line-rental. This can lead to the situation where gross levels of incompetence can build up within departments of the company because they don’t care (enough) to fix anything… leading directly to the situation we have today.

Will I get an iPhone? Yes, eventually. Today? Hopefully. Would I touch O₂ with a bargepole unless forced to by Apple? Not a chance. And Apple, especially, will be taking notice of this.

* I did attend Steve Jobs’ keynote at Macworld New York 2002 in person, but the excitement seems more palpable when you’re actually just about to get your hands on the new toys in question…