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Let's say you spent the holiday weekend pouting that you didn't find an iPhone under your Christmas tree in your New York City residence. However, if you then tried to buy the Apple (Nasdaq: AAPL) smarthpone yourself through AT&T's (NYSE: T) Web site, you might have thought you were permanently on Santa's "naughty" list.
The tech blogosphere was buzzing Sunday with news that AT&T had quietly suspended online sales of iPhones for anyone with a New York City ZIP code. If you plugged in a ZIP from any of the five boroughs into AT&T's online iPhone store, you received a notice stating, "We're sorry, there are no packages & deals available at this time. Please check back later."
The confusion was compounded by several different reasons given by various AT&T representatives as to why the online sales were suspended. The Consumerist blog, which broke the story, reported that a customer service representative said the reason was because New York was "not ready" for the iPhone and didn't have enough cell towers. However, other tech blogs were told by customer service that the suspension was an attempt to cut down on online sales fraud.
A third reason was supplied Monday by AT&T corporate spokesperson Fletcher Cook. "We periodically modify our promotions and distribution channels," Cook told MacNewsWorld. "The iPhone is available in our New York retail stores and those of our partners."
Network Issues the Real Reason?
All of this comes as AT&T deals with more fallout about the strength of its network in several key markets and its ability to support sales of the uber-popular iPhone -- along with all the data usage that comes with it. As of late Monday morning, Cook had not responded to an email follow-up question from MacNewsWorld asking if the company's decision had anything to do with network issues.
The company has very recent experience in dealing with blog-driven outrage over its network: Dec. 18's Operation Chokehold, a semi-serious (and apparently unsuccessful) attempt organized by a tech blogger to clog the network with iPhone data usage.
The reasons given at various stages of the story raise their own questions: If network quality is the issue in New York City -- as AT&T executive Ralph de la Vega recently admitted -- then why are iPhone sales still going on in physical outlets like Apple and AT&T stores?
New York isn't the only city with highly publicized network problems. San Francisco is also cited as having issues, yet plugging in Bay Area ZIP codes onto AT&T's online store results in quoted prices for new and refurbished iPhones.
Also, if it really is all about online credit card fraud, are any other phones offered by AT&T being targeted in New York? How widespread is this particular problem?
Perhaps the biggest question: Given the different answers supplied by various company representatives, was AT&T's public relations department caught flat-footed during a holiday weekend?
Every Move AT&T Makes
"It just seems like a bad move because of the way that Apple is so closely followed," 451 Group Research Director Chris Hazelton told MacNewsWorld. "Any move will be scrutinized. It seems like a good way of highlighting the problem."
The carrier is reportedly considering limits on data usage on its network, although Hazelton says the company is pulling back on speculation that it might offer tiered pricing plans based on that usage. AT&T, he suggested, might consider being upfront with customers and admit that network issues are behind the move to suspend online iPhone sales. "[AT&T] could say that this is such a powerful and popular product that they're having trouble servicing it, but they're trying. If you said that, people would give you a break."
Given the phone's popularity, there very well may be online fraud problems that result in phones being stolen at some point during the delivery process, Hazelton noted. However, again, that would require complete disclosure to maintain customer credibility.
"Tell us what the problem is," he said. "People want to know what's going on. This is a form of advertising, maintaining the image for this product and how you deliver it -- especially when you have that network capacity issue. People may fall back on that because they have nothing else."
