Apple's poor planning becomes expensive
- TAGS:Apple, Applestore, employees, iPhone, lines
- IT TOPICS:Macintosh & Apple, Mobile & Wireless, Personal Technology
The 3G iPhone will be a success. This achievement has been a forgone conclusion since before it was even announced. However, the way in which Apple chose to launch the 3G iPhone will cost it and its customers' bottom lines much more than it needed to.
First, let's start with Apple. They chose to have the employees at the store activate the iPhones and sign up for the plans this time around instead of having the customers do this themselves. This was likely in response to up to a third of the previous models heading off to 'unlock land.' The downside is that it adds 20 minutes to the checkout procedure. So Apple, in a best case scenario, has to pay an employee an hour's work to sell three iPhones....and that is if all is going well. We know that the scenario was far from the best case. At one million iPhones and $10/hour employees (both wild estimates), that is $3 million wasted dollars...pocket change really though.
Sure, AT&T employees could also be selling iPhones. However, AT&T ran out of iPhones only a few hours into the sales on Friday. When I visited an AT&T store in the hot Manhattan afternoon, it was a ghost town. They had about 10-20 employees ready to sell iPhones but no stock to sell. They reluctantly told me to head around the corner to the 8 hour line at the Apple Store.
The same is true of Europe. They have even less inventory there. O2 was sold out before they even went on sale.
Someone in Apple logistics should be fired.
And that brings me to the cost to Apple customers. Let's say Apple sells a million iPhones this week. Not impossible the way the lines are looking but obviously those lines are very slow. People have had to wait anywhere from 1-7 hours to pick up their iPhones. Giving a relatively generous estimate of two hours per customer for waiting, that is two million man hours wasted waiting in line that didn't have to happen. That is over 83,000 24-hour days of wasted time. Yep, 12,000 weeks or 3,000 months in line. That is almost 250 years! Oh, and at $10/hour, that is $20 million.
Ouch! We could have probably put a man to Mars with that kind of manpower. Unfortunately we could have (and did) also spend it chatting to an Apple fanboy in front of us on line.
For the record, I still haven't got my 3G iPhone yet. I've checked out the line at the local Apple store a few blocks away all weekend but the line just won't die. My wife and I will get one of these when and if it does.
So what should Apple have done?
- More points of sale. AT&T stores have no iPhones. This is a no brainer. Share your inventory with your partner and let them help you sell these things. Your customers will thank you.
- Heck, Apple has partners at Best Buy and Radio Shack selling iPods and also selling mobile phone service. Putting them together isn't rocket science. That is about a billion more points of sale. Apple wouldn't have the lines but would have the numbers in terms of sales and eventually profit.
- Have a rolling release. Start selling white 16Gb iPhones on Wednesday, black 16Gb iPhones on Thursday and everything on Friday. That way everyone isn't there on day one. Added bonus, you sell a lot more high margin 16Gb iPhones to the crazies.
- Instead of making your customers wait for a plan/activation, sell the iPhone for its real price - $599. If the customer signs up with AT&T within 30 days the credit card is only charged the $199-$299. Easy. Using this model, Apple could also sell it online, making it easier for people who don't want to drive 500 miles to the nearest Apple or AT&T store.
- Um, don't release the iPhone 2.0 firmware to the older iPhone users the same day that you have the biggest activation needs. Bonus, don't release the iPod 2.0 firmware update on the same weekend. That poor activation server never had a chance.
In a few weeks, we won't remember all of this hassle. Most people don't remember that AT&T was having issues activating iPhones during the first weekend last year. This year's problems will all be memories soon enough. The financial cost, however, won't go away.
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