Analyst: iPhone 3G launch to cause chaos in Apple stores

The launch of the iPhone Classic in June of 2007 was the most successful product introduction in telecom history, in part because customers were able to activate the units at home via iTunes, Apple's online store.

The process did have some drawbacks for AT&T, however. Nearly two-thirds of iPhones sold in the U.S. were never activated but instead "unlocked" and used on various other networks. Now AT&T is mandating a traditional in-store activation process supporting a traditional subsidized phone sales model.

"AT&T has chosen what we believe is the most ridiculous, inconvenient, and ineffective process to activate the new iPhones,"Think Equity analyst Eric Kainer told clients today. "We believe the process will take at least as long as AT&T's 10-12 minute estimate per phone."

With long lines in the morning, Kainer expects prospective subscribers becoming unruly. AT&T stores may accept this, but Apple leadership may not be as "cognizant" or "understanding of this possibility," the analyst said.

A survey of Apple store employees taken on Wednesday by Think Equity revealed that Apple staff universally claimed not to know what the iPhone sales process entailed.

"Without a streamlined process... we believe there will be troubles in AT&T stores, and chaos in the Apple stores," Kainer said.

The new phone, slated to be released at 8am on July 11, will feature the media player and internet capabilities alongside calling that made its predecessor a success. It will also give users precise coordinates with a built-in global positioning system, and much faster download speeds with 3G network capabilities.

The original iPhone was only available in the United States and Europe, and the next-generation model is expected to go on sale in 70 countries by the end of the year.

Apple plans to sell its 8-gigabyte iPhone for $199 in the United States and the 16-gigabyte version for $299. The company, based in Cupertino, Calif., says it has sold about 6 million iPhones since last year. It hopes to sell 10 million by the end of 2008.