Analysts: 3G iPhone Activation Sure to Incite ‘Chaos'

As Apple Inc. (AAPL) and AT&T Inc. (T) prepare for Friday’s launch of the new 3G iPhone, some analysts predict chaos will ensue thanks to a new, seemingly awkward, activation process.

A year ago, a large number of Classic iPhone buyers didn’t activate their devices on AT&T’s network – instead, they apparently sent them overseas where they were unlocked and used on rival networks. AT&T hopes to avoid that scenario with the 3G model. This time, subscribers must activate their phones in an AT&T or Apple store. Analysts for investment firm ThinkPanmure called the approach “the most ridiculous, inconvenient, and ineffective process” in a July 10 memo to clients.

That’s because subscribers likely will have to wait twice as long as AT&T’s projected activation process of 10-12 minutes per phone, analysts wrote.

“With long queues likely for the expected 8 a.m. launch, we expect prospective subscribers becoming unruly, although, we believe AT&T leadership accepts this possibility.”

AT&T would have been better off allowing buyers activate their new iPhones on in-store terminals or in their homes, said ThinkPanmure researchers.

Still, it’s almost a surety that consumers won’t let the new activation process interrupt their plans to buy the 3G model. AT&T has slashed the price of the iPhone from last year’s starting point of $599 to $199 for the new device. This will put the iPhone in more peoples’ hands, ThinkPanmure analysts said, especially when considering the original version was hard to find in the second quarter of 2008.

Research firm ChangeWave agreed. In fact, it’s predicting the 3G iPhone to have a “tsunami-like impact” on the consumer smart phone market. A recent ChangeWave survey showed that iPhone continues to gain market share and looks to surpass second-place Palm, while BlackBerry maker Research In Motion (RIM) will retain the top spot. Fifty-six of respondents who plan to buy a smart phone this summer said they’re getting an iPhone. ChangeWave said that was a 21-point leap from its previous survey.

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