Most readers of this blog know that I’m a huge Apple fan.  So you won’t be surprised to learn that in spite of my ongoing battle with AT&T
I was lined up with hundreds of others outside an AT&T store in
Colorado Springs early Friday morning in an attempt to be one of the
first owners of the new iPhone 3G.

As we got closer to the assigned
hour (8 a.m.) the store manager kept walking down the line and counting
the people.  Each time she seemed to be more and more concerned.  A
rumor started circulating that the store had only 50 iPhones
available.  Sure that this wasn’t the case, I used my Blackberry to email my new friend in AT&T’s President’s office
and received an almost instantaneous response: "I would be shocked and
amazed if any store ran out on the first day.  My understanding is that
all stores including Apple stores, would be fully stocked. Let me know
if you find out otherwise."  I breathed a sigh of relief and assured
those in line around me that the rumor couldn’t be true…the highest
office at AT&T had told me we’d all be getting phones.

Once the line started moving and the first group of customers were
inside the store I decided to go up to the front of the line and talk
to a store manager myself.  A man who identified himself as the "Market
Manager" was standing at the door looking stressed…so I asked him if
the rumor was true.  He told me that he didn’t know how many phones
they had and if he did he wouldn’t be allowed to share that
information.  While this didn’t make much sense it satisfied me that he
hadn’t told anyone there were only 50 phones so I went back to my place
in line.

Then, at about 8:15, the police cars arrived.  Two squad cars sped up
to the front of the store and the officers got out and stood by the
entrance.  The store manager, a young women, came out and stood with
the officers beside her.  The crowd fell silent as she announced that
they had only 6 phones left.  They had started the day with only 40
phones.  She told us that any one else in line would be allowed to
place a "direct fulfillment" order and would receive their phones in
7-10 days.  Then she dropped the bombshell…she announced that they
were expecting another shipment of phones the next morning and they
would be available on a first come first served basis.  She suggested
lining up again on Saturday morning for a chance to get those phones.

I got on the phone to my contact at AT&T’s Office of the President
and he seemed shocked that any AT&T store had started the day with
so few phones. He asked me to hold while he called other AT&T
stores in the area to see if he could find a phone for me.  He came
back on the line after a few minutes and sheepishly admitted that every
store he had been able to reach was in the same boat.  They had each
started the day with less than 50 phones and sold out in less than half
an hour.  He then offered to check stores in a wider area for me…and
found out the same thing…they had sold out as well.  He assured me
that no one in his office knew that the stores were going to be so
short of phones.  Then he asked me to hold  while he called the Apple
Store in Denver for me…he came back on the line and told me that the
Apple store had huge lines but the store manager was sure they had
plenty of phones for everyone.

So, I decided to drive to Denver.  Two hours later when I arrived at
the Flat Irons Mall the line to get into the Apple Store was so long
that it stretched out of the air conditioned mall and into an outdoor
courtyard.  As I chatted with those in line a similar pattern emerged.
Pretty much everyone in line at this point had been at an AT&T
store that had run out of phones…no one was happy with AT&T.  But
here at Apple, things were different.

The
atmosphere in line was almost party like.  Even though most of those in
line with me had already had a disappointing morning there was a shared
anticipation of the payoff to come.  Apple store employees came by
every half hour or so with status updates and bottled water.  They
assured us they had plenty of phones and apologized that the line was
moving so slowly due to the AT&T activation process.  After I’d
been in line for an hour an Apple store manager came by with cold
Starbucks drinks for everyone.  It was really clear that the Apple
employees were happy to see us and understood that we were sacrificing
our day to be part of their product launch. 

I was in line for five hours before I reached the store entrance.
As I waited in the short line inside the store one of the managers came
up and asked if I was an existing AT&T customer.  I told him that I
was and briefly explained my unfortunate situation.  He asked me if
customer service had been able to sort out my problem since he had
heard stories from other’s in line who had the same issue and AT&T
customer service managers had issued them credits.  I told him that I
had been in contact with the "Office of the President" of AT&T and
that they refused to help me.  At this point the manager gave me a
heartfelt apology.  He told me that he was so sorry that AT&T
treated customers that way and that it was really unfortunate that
Apple’s partner for the iPhone didn’t value customers in the same way
that Apple does.  Here’s the thing…I believe he really meant it.  It
wasn’t patronizing…it was a heartfelt apology.  He then introduced me
to another employee and told that employee "look after this guy…he’s
had long day and he’s a really important customer."  Ten minutes later
I walked out of the Apple Store with two shiny new iPhones.

So here’s my rant:

Is it just me or did AT&T have weeks if not months to prepare
for the iPhone launch.  The fact that additional phones had already
been shipped with a scheduled delivery date the day after the iPhone
launch points clearly to a planned shortage.
Did AT&T really want all their stores to run out of phones on the
morning of the launch?  Did they think that "selling out" of the iPhone
would be good for publicity?  What about the hundred’s of customers who
spent hours in line only to discover that they were being used as pawns
in AT&T’s marketing strategy.

As Seth Godin points out in his post yesterday on Scarcity:
"The danger [with creating false scarcity] is that you can kill
long-term loyalty. You can annoy your best customers. You can spread
negative word of mouth. You can train people to hate your scarcity
strategy (Apple did all four this weekend)."  Unlike Seth I don’t blame
Apple for what happened.  The vast majority of folks in line at the
Apple Stores were people who had already tried to purchase an iPhone at
an AT&T store.  I think the blame lies firmly with AT&T…and
that’s why the only real problem with the iPhone is AT&T.

The day before the iPhone launch, after hearing my story, the manager of AT&T’s
"Office of the President" told me that he would love to help me but
even he had to follow policy and he refused to issue me a credit.  I
was hoping that if I was able to reach someone high enough at AT&T
that they would do what they all agree is the right thing and fix my problem.  However, he proved beyond a shadow
of a doubt that at AT&T policies comes before people.

In spite of this, because I love Apple, I took 12 hours out of my day to get my hands on a pair of iPhones.

Was it worth it? Yes, I love the iPhone…its probably the best
electronic device I’ve owned.  But after my ongoing challenges with
AT&T, unfortunately its bittersweet.

What can we learn from this?

We love Apple because we believe that Apple respects us as customers
and as people…we hate AT&T because their actions show they
don’t. 

So, how do your customers feel about you?

Update: Here’s a great post on Consumerist.com that illustrates how Apple bends over backwards to help customers who are having challenges with AT&T.