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Between the Lines

Larry Dignan, Andrew Nusca and Rachel King

Why are Apple, AT&T untouchables on iPhone pre-order fiasco?

By | June 16, 2010, 2:21pm PDT

Summary: The iPhone-AT&T pre-order fiasco should have created some consumer backlash and revolt but Apple instead comes out smelling like a rose with 600,000 pre-orders submitted - despite AT&T’s shortcomings.

If this were any other company, this whole iPhone 4 pre-order fiasco that caused AT&T’s servers to buckle yesterday would be considered a complete train wreck. Consumers would be up-in-arms, demanding refunds, storming out of stores and swearing to not come back until these companies can get their acts together.

But this is Apple - and that means that the truly faithful will 1) keep trying, no matter the obstacles thrown at them and 2) forgive the shortcomings the moment they get a confirmation saying the order was successful. And the beauty of it is that this can pretty much happen without the PR team in Cupertino even having to think for a minute about “spin control.”

Also see: AT&T melts down again; will Apple ever learn?

Seriously, at some point yesterday, customers were reporting unauthorized access to other customers’ accounts - but nothing really came of that. Customers were reporting that their orders had gone through - and then were being cancelled. Customers were reporting multiple charges to their credit cards.

But today, no one is talking about that. The only headline that matters today is: “Apple pre-sells 600,000 iPhones; Far exceeds expectations.”

And with that said, those who were persistent and were able to submit a pre-order are suddenly among the elite group of consumers who will be first to get the phones in their hands when it ships later this month.

Oh, wait. It seems that, at some point today, that ship date was changed to July 14 - no explanation given. Oh, and the white iPhone you wanted? Yeah, that’s unavailable right now.

But, of course, none of this really matters, right? Apple and AT&T already have the money orders for those 600,000 devices - and it’s not like anyone is really going to ask for a refund cancel an order, right? I mean, what’s a few more weeks when you get to be the first among your friends to have the new iPhone?

Again, none of this would fly with any other company. Even AT&T gets a free pass from widespread customer revolt because it’s the only carrier in the country to offer the iPhone. It must be nice to be under that protective umbrella with Apple, huh?

I’m a Mac guy - so it’s hard for me to sit here and criticize Apple or its fan/customer base. But I’m also a stickler for customer service and Apple and AT&T have fallen short on that front in my opinion. But why should either of those companies care about my feelings about customer service, reliability of the network or even multiple credit card charges?

After all, when you have 600,000 pre-orders on the Day One, you can pretty much snub your nose at your critics. And, seeing how those 600,000 pre-orders will dazzle Wall Street when Apple reports its next quarterly earnings report - even though the phones themselves won’t be received by customers until the following quarter - everyone is happy, right?

I know I’m happy - happy, that is, to not be caught up in this iPhone craze.

update: As a reader points out, Apple wouldn’t necessarily book the revenue for these pre-orders until the product ships. That changes part of my argument, which I’ve adjusted in the post. It also changes the investor’s note from Piper Jaffray analyst Gene Munster, who adjusted his outlook for Apple to account for an uptick in the quarter when the product was slated to ship before the end of the quarter on June 30.

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Sam has been a technology and business blogger for more than 18 years.

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Sam Diaz

Sam Diaz has nothing to disclose.

Biography

Sam Diaz

Sam has been a technology and business blogger, reporter and editor at ZDNet, the Washington Post, San Jose Mercury News and Fresno Bee for more than 18 years. He's a member of the National Association of Hispanic Journalists and a graduate of California State University, Fresno.

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RE: Why are Apple, AT&T untouchables on iPhone pre-order fiasco?
skywin 25th Oct
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Great point. Took the words right out of my mouth! If it was Sprint the media would've had a coronary slamming them at every chance, etc. I hate the double-standard!!
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@rlconrad7

I don't know what the preparation for pre-sell was, but it obviously fell short of 600,000. What number, exactly, should they have prepared for? 1 million? 750,000?

All these bloggers are the same dolts that jump on top Android as the next big thing at every opportunity, that the iPhone market is saturated, that Apple is out of ideas... whatever. No one can seriously tell me they could have predicted the demand accurately.

As a consumer, suck it up. Soldiers are dying in Afganistan, the Gulf of Mexico is a toxic soup, and boohoo some people are ranting that they couldn't pre order. Nothing like the hardship of not being able the get an iPhone...
@croberts

Oh please! Bringing up Afghanistan and the Gulf Oil Crisis when talking about Apple iPhones? I think you're cruising the wrong site. Who said anything about entitlement? I couldn't care less about the iPhone, but to insinuate that just because people are complaining about poor business performance or practices makes them/us uncaring about important world events? Really pathetic.
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Very Nice!
dcristof 17th Jun 2010
@croberts, I have to agree; when one is in a panic about the fact you can't pre-order the next iPhone, they need to fall back and regroup. The world is more complicated than that.
@croberts - Lets see....
This has happened with EVERY iPhone introduction. How many is this? Four?
Yeah, couldn't be predicted. Or maybe it's part of the marketing. Nah!!
@croberts What a perverse justification for poor consumer trading and blatant abuse of a loyal customer base! Get a life buddy. Not everything Apple is crisp crunchy and juicy when you bite it.
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Master Joe Says...Wrong, Just Wrong
MasterJoe 17th Jun 2010
@croberts Soldiers are being killed overseas. Oil has spilled in a massive amount into the Golf of Mexico. This, however, has absolutely NOTHING to do with either of those things.

When you are a consumer, loyal or not, you want to buy something. Apple expected a massive rush to buy the iPhone, as soon as people were able. AT&T did as well. If either party says they did nto expect this kind of response, they are either lying to you, or really stupid (it's possible that the second is the case, but I can't say for sure). As another comment points out, this is not the first time this has happened. Just like every major iTunes release causing a BSoD on Windows, every iPhone release has been a problem. I actually recall an article that showed Apple monitors in some models to cause CANCER. San Fransisco (a city that really needs help) is planning to require mobile phone companies to display how much radiation their products emit. They're worried about that, and Apple sells a product which causes cancer, and no one even bats an eyelash? Granted, smoking will do that too, and we allow that, so I kind of get it (I'm an avid anti-smoking advocate, which I should admit to be fair in my point-of-view).

When the HTC Incredible had an issue with getting "hard disk full" errors, everyone went crazy. They were angry with HTC for not having a solution instantly. Twitter is taking some heat for outages, both recent and projected by Twitter themselves for the near future. Microsoft gets criticized on a daily basis, sometimes for no reason at all. But Apple? No, they are different. When Steve Jobs walked on wine, which had once been water, until he turned it into wine to begin with, everyone bowed to the company, and pledged their eternal and undying loyalty, no matter what. So, they may have gotten double charged on their credit cards. So they might have exceeded their limits, and been charged fees by their bank. So they might have received a confirmation and cancelation e-mail, and have no idea whether their order actually went through or not. So the ship date might have been pushed back (by the way, the reason for this is simple. It means a better third quarter revenue for Apple. The iPad in Q2, the iPhone 4 in Q3. That's my speculation, not a factual statement.).

Now, as mentioned already, this is not the first iPhone launch gone horribly wrong. How many times does it take, before you are expected to get it right? This is strike 4. Is this little league? Do we give them 10 strikes, and then walk them to first base anyway, so no one's feelings are hurt? Anyone who reads my posts will see that I am not a huge Apple fan, for a lot of reasons, and reasons that I can support. But, even if I were a huge fan of Apple, this would not fly with me. When it comes to customer service, just like the author of the article, I have an expectation. If it is just slightly below that expectation, I might *MIGHT* give them a free pass. This, however, isn't even in the same country. I agree with the author. It must be great to be Apple, and to be totally immune to criticism from your blindly loyal customers. To be honest, it really is a shame that things are that way in the tech industry.

--Master Joe
@masterjoe

"This, however, has absolutely NOTHING to do with either of those things."

It has everything to do with those things. The expectations of consumers should not trump common sense. I've seen some internet postings where the outrage expressed is so crazy you'd think they were complaining about something of actual importance.

Get a life people.
@croberts That maybe true.

But would it be okay for you when some company charge your triple for the same thing, even when the world is going down?
@croberts Oh please! Bringing up Afghanistan and the Gulf Oil Crisis when talking about Apple iPhones?

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mynet sohbet Aceleration. Well that's gonna give cinsel sohbet a little edge. Why? chat sohbet and sohbet odalari are ups for grabs and Chrome can appear on a HA executable and a normal one. Can IE9 do that.... not really...
@rlconrad7 I agree, but think it might be partly because of the pre-order thing. I have a Pre that I had to wait on, post launch, because they ran out at Sprint. No pre-order on that so I actually expected to get one. I have an HTC Evo raincheck in my hand as we speak, 2 weeks after launch. Again, no pre-order.
I think I would accept it better if they said June 4th, we will be taking pre-orders on the Evo. I would expect to wait a while before that became available. When June 4th is the launch and they are out of stock on the 5th, and still out on the 17th, somebody screwed up.
Maybe the pre-ordering allows Apple to lessen the chance of a post launch 'out of stock' black eye and buys them some slack on pre-launch issues. Just a hunch.
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This is just pathetic.
dgurney 28th Jun 2010
Who gives a crap about the pre-order problems? Seriously, "fiasco"? NO. Apple's decision to ignore warnings that their antenna design was seriously flawed constitutes a much bigger problem and a true fiasco.
@rlconrad7 I think MSFT ought to have an offering for very small or very low activity databases. I would like to experiment with sql azure; I'd like to host some very small databases on it. But I am not willing to pay $120 a year each, that's extremely cost inefficient. I know the primary focus for cloud computing has been scalability etc; but even if you don't need to scale, sql azure is great because it gives you a sql db in the sky. It's just too expensive for use with trivial apps. I don't see that it'd cost MSFT much if anything to host small and lightly used db in sql azure. The net result of the current pricing is that many who might otherwise use the service for little apps will bounce off the pricing; they'll never consider sql azure; it won't become a 'no-brainer' part of many application builder's toolkit friv
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Revenues not bookable until product ships
Peter Kretzman 16th Jun 2010
I may be incorrect about this, but a) I believe that the orders don't get charged to the credit card until they ship; and b) revenue can't be booked by Apple until the phone ships. Undermines part of your argument.
@Peter Kretzman Good catch, Peter - and thanks for bringing it to my attention. I've adjusted the post and added an update to reflect the changes.

-- Sam
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This is irrelevant...
Nsaf 17th Jun 2010
@SamDiaz Doesn?t matter when they report it..stay focused on the fiasco.
@SamDiaz Also, orders currently placed are for the 14th. Those who ordered for delivery 6/24 will still get their phone then. Your essay makes it sound like no one will get it till the 14th.
Amazing isn't it?
As hard as you Microsoft propagandists try to kill sales of Apple products, it's all for nothing. HAHAHAHA!!!
try harder, creeps.
Awwwww, poor Sam -- were you excluded from the cool kids' table again? The short of it is this: people who love Apple products (yep, I'm one of them) LOVE Apple products. That doesn't mean I wasn't as frustrated and even pi**ed off as everyone else at all of the pre-order problems yesterday, but at the end of the day my new phones were set for June 24th delivery and I'm happy.

It doesn't matter to me that the blogosphere and other tech writers are scratching their heads and trying to figure out the appeal, or that Apple haters think I'm a not-too-bright lemming who drinks Apple-flavored KoolAid. I've got a variety of technology that works well and pleases me aesthetically. If that makes guys like you crazy trying to figure us "fanboys" out, that's gravy.
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@Quilter Frog
In the vein of Homer Simpson, "Mmmmmm ... Gravy!"

Well, said. I am NOT a lover of all things Apple, but my iPods work well as does my Droid.
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What a wonderful problem for
arminw 17th Jun 2010
@Quilter Frog -- *any* business to have. So many orders coming in for a highly profitable product, that the ordering systems can't keep up. I bet that Microsoft wishes to have such a problem for their Zune or some of their other endeavors that have flopped in the marketplace. I'm sure this is a problem that the other cell phone makers wish they had. Even ZDnet wouldn't complain too much if their service were so loaded down by users with ad-revenue produced by such huge number of eyeballs.

Don't you think it is far better for a business to underestimate the demand for a particular product or should a company over-estimate the likely number of products they might sell and have the unsold merchandise rot on the shelf?
Aww. Poor Sammy ain't one of the lucky 600,000. sad
Now he's throwing a blogTantrum. ROFL
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ROFL
DestinyAmelie 16th Jun 2010
at your inane comment. @DonTrenton
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Seems like AT&T takes plenty of flack to me, some justified, some not (it's downright trendy these days). Honestly people might nit say this but with Apple's exclusive with AT&T, they get a PR meat shield out of the deal, as Apple fans and tech blogs are much more prone to hate on them for anything. I have personally been rocking a Blackberry Bold 9700 with AT&T, and I have experienced none of the issues that I seem to read so much about, and that is in Minneapolis, New York, LA, Chicago, San Diego, etc...so it is hard for me to personally believe that some of the issues that reporters cite as normal (see CNNMoney today...) as exclusively AT&T issues. In the hearts and minds of the Apple faithful though, they always will be.
There's certainly some truth to AT&T acting as a shield. The pre-order issue may be their fault, but recall that Apple's own servers melt down the day everyone gets their shiny new phone too. It's happened with every phone release. What makes it worse is that the software doesn't even say "it's too busy, try again later" it says something marvelous like "Error -235". What the %$#^ does that mean?

Having said that, the other vendors should be so lucky to have that kind of crippling demand.

I don't really see truth in the idea that these people who give Apple a pass are all Apple fanbois. OK, I know people who are serious Apple people. They stand in lines and put Apple stickers on their cars and stuff like that. They always get the newest Apple thing the day it comes out. But a lot of people buying iPhones are not those people, they're regular people who like cool stuff. They run Windows at home.

Let's face it: No matter what else you say about Apple, the iPhone is one hell of a nice device -- head and shoulders above everything else, Android included (although Android certainly has its high points). It's in strong demand because it is *good*, not because everyone is starry-eyed about Apple. The same has been true with iPods. There have been a lot of competitors but nothing that had the ease-of-use in terms of purchase or music loading. (It always amazes me how few companies spend the effort to do a good job on synch or migration. Microsoft is *unbelievably* bad at that.)

Personally Apple annoys me on a regular basis, I regularly want to smack Jobs up side the head, and I would give up AT&T in a heartbeat, but I love the phone. It's kind of a lousy phone, actually, but it's the best pocket-sized internet device on the planet. And, you know, that's pretty useful. My wife thinks so too, and she couldn't care less what the hot new Apple thing is.

jim frost
jimf@frostbytes.com
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@jimfrost I agree with everything you said, except the part of iPhone head and shoulders above everything else. I don't believe its a correct statement. There is nothing iPhone does that Android Evo or Incredible can't do. The ease of use that you're talking about is just you being used to it done the certain way, so anything else(even if its better) will make you feel that its not as easy to use. I believe thats why most of the people stick with certain phones(be it Apple, HTC, Motorolla, etc..), because they used to them, and not a lot of people like changes.
@jimfrost
you might be right about Apple; I don't know a thing about Apple products. However, you are totally wrong about Microsoft. I use and have used Microsoft media player to sync all of my music to Toshiba Gigabeat. All I have to do is select the music I want to sync. Media player loads it to the playlist area, and I click on start sync, and presto. A, B, C. Pretty easy to me.
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No AT&T troubles here.
vulpine@... 17th Jun 2010
@Geeknumberamillion: Maybe it's because I started on Cingular--before AT&T bought them out. They were the only service who could give me any cellular service at my home of the time and their reliability has always been exemplary--though I can't say the same for some of their subsidized products.

That said, unlike many of the anti-AT&Ters, my iPhone has given me far fewer problems than any previous cell phone I've used; never needing a battery replacement or, like my last phone, needing a complete phone replacement for frequent dropped calls. In other words, all the issues I'd come to expect as reasonably 'normal' for AT&T and cell phones in general got thrown out the window when I purchased my iPhone. I've now had it for 18 months (a 3G, not 3G(s)) and still get decent battery life on a charge and have yet to have a dropped call that I didn't cause myself.

If you ask me, AT&T itself is doing good and the iPhone itself has been an excellent device. I probably will be buying an iPhone 4, but I'll be waiting a few months until my current contract expires. Not because I have to, but because I want to.
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Err...
Jeremy-UK 16th Jun 2010
What exactly is your point? Apple's iPhone 4 is such a hot seller that AT&T totally failed to keep up with demand on the first day. Is this really worth a hissy fit? I think the only sane response is "fine, I'll come back once AT&T have their house in order". You probably want the iPhone 4, and quite frankly does it really make that much difference if you have it on day one (apart from bragging rights)?

Your reaction is as crazy as standing in line all day for something that in a couple of weeks will be an easy and swift purchase.

But as usual, there are as many "Anti-Apple Crazies" as there are "Pro-Apple Crazies". The reality, hard for you to swallow is Apple still have the hottest ticket in smartphones, too hot in fact for normal companies (like AT&T) to cope with early demand.

And no, I don't have an iPhone - mine is a Nokia (and no that shouldn't be taken as an endorsement).
@Jeremy-UK Seriously? They failed to keep up with demand for the first 1 minute. They aren't shipping any on their advertised ship date. And we are crazy?
I just don't get it. I'm not anti Apple. I tell my koolaid drinking friends if it is ever offered on Sprint, I'll check into it. My wife has one and frankly, I don't get it. My Pre did more than the 3G, other than the app store, for 1/2 the cell phone bill per month.
All the people that think their cool because of the phone they have are only cool to themselves. It's not envy that makes the rest of us scratch our heads, it's pity.
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Maybe you should read the article again.
vulpine@... 17th Jun 2010
@20kwfence: I believe that first 600,000 will receive their iPhones on time, if you read the article, it's orders subsequent to those who are likely to have to wait an additional 3 weeks. This is hardly any different from the way Apple handled the unexpectedly rapid sales of the iPad back in April and May. They haven't gone back on their promises yet, though they did delay the iPad release by 1 week and made it quite clear as to why.
@20kwfence Ah the Pre, well it was totally still born here in the UK, which is a shame (was interested). Nothing actually wrong with the phone - O2 (a telephone network) had delusions about the pricing, here in the UK you could get an iPhone on a similar deal, and given the momentum behind the App Store, you'd be a bit crazy not to.

The "fuss" over the iPhone is because the UI is fantastic (though the Pre has a fantastic UI too) and there are Apps for pretty much everything you'd want to do (it is no accident that Apple ads say "There's an App for that"). Add the cachet of the Apple brand and you've got a recipe for success.

As I understand it the 600,000 will ship in time, and it was AT&T who didn't keep up with the demand. I still don't see why this is a black mark against Apple.
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Grape Flavor-Aid
davebarnes 16th Jun 2010
n/t
"Consumers would be up-in-arms, demanding refunds, storming out of stores and swearing to not come back until these companies can get their acts together."

I don't understand your point at all. And I don't think you do either. All of the above actually happened yesterday. Take a look at the comments to most any article on the subject and you'll find people who stormed out of stores, threatened to buy a competitors phone etc., etc., etc. To be fair, no one "demanded a refund" because, duh, you can't demand a refund for a product that you weren't able to order.

Your article is worse than pointless. All the things you said people didn't do, they did. And today, in the light of a new day, many recanted. All of this is pretty normal human behavior. What exactly is it that you think people should have or should now be doing?
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Duh
DestinyAmelie 16th Jun 2010
He never said anyone demanded a refund. It was a what if, not a fact based comment. @Falkirk
Apple hasn't gotten a pass. What do you expect, a class action suit based upon not being able to buy a product? A class action suit based upon not being able to get your hands on the latest iBling the day it ships? Gimme a break. People were upset only because they were frustrated at not being able to procure the latest and greatest the fastest. Have a little brie with that whine.
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where was your outrage? When Ticketmaster crashes from server overload on sales for a hot concert, where is your outrage? Oh. Wait. Those companies aren't Apple.
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About this 600K number
omdguy 16th Jun 2010
According to Gizmodo, and others who have replied to their threads, this number may be horribly inflated, and worse than that, personal information may have been leaked as well during the ordering process:

http://gizmodo.com/5564262/apple-iphone-4-order-security-breach-exposes-private-information?skyline=true&s=i

I don't believe a single shred of information that comes from Apple as they are the KINGS of spin and BS!

It is ironic how Apple comes out looking like a good guy when in fact their network, their software and their partner can't handle a mere 600K orders. Stock exchanges do millions of transactions per hour, and yet, here is everyone plopping down $200 to be locked in for 2 years to this lousy provider and a company who locks down your device even after you have purchased it from them.

There's one born a minute I guess....
@omdguy

Lol. You're actually quoting Gizmodo? The National Enquirer of the Tech World?
There's one born a minute I guess....
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@omdguy: ... when you know they're still miffed at Apple for being exempted from the iPhone keynote?

Honestly, I'd believe Apple more than I would Giz... especially since, over the years, they've been more a 'rumors' site than a journalism one. Nearly every piece they write is opinion based on others' reports or, in the case of iPhone 4, essentially "possession of stolen property," a charge usually given to criminal 'fences' who then make a profit by reselling the item. In fact, the way they purchased the iPhone 4 from the 'finder' and disassembled it for analysis and disbursal could be viewed as both industrial espionage and possession with the intent to resell. Gizmodo is under criminal investigation for the way they handled the iPhone fiasco; do you really think they're going be unbiased on a report like this?
All they are doing is slamming AT&T for failure (Apple not so much). Frankly I am getting sick of the trend on here where 14 different bloggers write about the same subject only because it satifies their personal agenda and fuels commentators to argue.
Well if your the idiot that tried to get on the first day like the other million people than too bad for you! I myslef am waiting until this all dies down and probably even for the next version of this iphone4 in a year when they will fix all the glitches cause you know that will have some! Anyway...i guess i make too much sense and dont fall in line with all the fanboys trying to be the first on the block to get a hold of these. THey arent going anywhere...waiting doesnt matter. I guess though in this society we've made it so important to be the first!
@az49erfn

I know what you mean. I got to work at 6:30 and both AT&T's and Apple's site were very unresponsive and timing out and I heard that Best Buy was doing pre-orders so I took a break from work and drove to the nearby Best Buy and saw no line waiting for them to open and walked right in (I was a couple minutes before 10am) put in my pre-order. If there was a line or when I got in if there was a mob in the mobile phone section I would have went back to work and tried to order one in a few days or a week or two when the craziness calmed down. It's only a phone and while I like my iPhone and AT&T's network works well for me I am not about to get all worked up over it.
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@az49erfn:
Yeah.... my thoughts exactly. Apparently, it's somehow important to be the "first among your friends" to have the new iPhone. Guess I don't understand geek/dork mindset, but I can classify many things as "important" and being the first to get an iPhone isn't on the list.
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Let me fix your post for you:
DonTrenton 16th Jun 2010
@az49erfn
"Anybody that thinks different than me is an idiot!"
...about the fiasco on ZDNet.
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Apple
DestinyAmelie 16th Jun 2010
I am really taken aback at the nasty postings here. I didn't get my phone and I am fine with it. However, I am livid with AT&T, and with Apple for the continued relationship/launch they give this inept company when this seems to happen with every new iphone now. Customer service matters, and Apple is extremely arrogant about this. Actually, they are arrogant period, and though justified in many ways, it does not excuse the distain they seem to have for their ever faithful followers.
@DestinyAmelie

ROFL You're a tool and don't even deserve great tech like the iPhone.
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Message has been deleted.
lnuyyt Updated - 17th Jun 2010
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Your Apple Hate Is Strong...
BitTwiddler 17th Jun 2010
Even though this was an AT&T fiasco, the article is 95% Apple this, Apple that, evil Apple this.

Are there any grown-ups around ZDNet any more?

And no, I don't own a single Apple product short of an old iPod. No phones, no computers, no nothing.
Really like your blog content the way you put up the things I have read the topic with great interest and definitely will stick your blog routinely for other great posts.
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