RealTime IT News

Apple: 1M New iPhones Sold, Apologies for Snafus

It's a mixed bag of news for Apple.

The company today announced that it had sold one million iPhone 3G S units over the weekend -- topping early estimates by industry observers. But the company is also doing damage control by issuing credits to customers experiencing activation delays.

"Apple today announced that it has sold over one million iPhone 3GS models through Sunday, June 21, the third day after its launch," Apple said in a statement today. "In addition, six million customers have downloaded the new iPhone 3.0 software in the first five days since its release."

But problems began immediately for some after the new iPhone went on sale Friday, with bloggers reporting that Apple (NASDAQ: AAPL) servers couldn't handle the volume of traffic, which resulted in delays for customers wanting to activate their new phones.

Apple on Sunday began notifying customers with an e-mail that they may experience additional delays for another two days due to "system issues," according to reports.

To placate disgruntled consumers, the company is offering affected customers a $30 iTunes Store credit for "the inconvenience this delay has caused."

"We hope you will enjoy this gift and accept our sincere apologies for the inconvenience this delay has caused," the letter from Apple said.

Meanwhile, Apple is celebrating the iPhone 3G weekend debut, issuing a statement from CEO Steve Jobs, who is expected to return from medical leave soon after undergoing a liver transplant earlier in the year.

"Customers are voting and the iPhone is winning," Jobs said in a statement. "With over 50,000 applications available from Apple's revolutionary App Store, iPhone momentum is stronger than ever."

And while the million-unit sales tally exceeded analysts estimates of a toned-down launch, the iPhone 3G S launch was not without some controversy that went beyond the activation issues.

After Apple announced the 3G S at its developer conference, concern arose over exclusive carrier AT&T's lack of immediate support for MMS and tethering features new to the 3G S, as well as over its upgrade pricing plan for existing customers.

Then, after the carrier mollified customers by altering its price structure, Apple and Palm engaged in a public spat over the Palm Pre's iTunes sync feature.

The iPhone 3G S is also facing competition from rivals like Palm (NASDAQ: PALM), BlackBerry maker Research in Motion, and others that are working aggressively to steal customers away with new products sporting iPhone-like features, such as application stores and touchscreens.

The Palm Pre, which went on sale two weeks ago, has received generally positive reviews and is seen as Palm's Palm (NASDAQ: PALM) best chance to cut into Apple's market, with a slick design and Internet-friendly features.

BlackBerry maker Research In Motion (NASDAQ: RIMM), meanwhile, is expected to release an updated model of the BlackBerry Storm, the company's first touchscreen smartphone. The enhancements in the Storm 2 are expected to make it still more competitive with the iPhone in the consumer market.

Also on tap for release this year from Samsung, HTC, Acer and Motorola are handsets running on Android, Google's open source mobile platform.

Apple had not returned calls for comment by press time.