Apple Hits Redial

Late Steve Jobs may not have reinvented the mobile phone, but he has re-invented the way mobile phones are sold.
If you were looking for some quiet time last Friday amid the iPhone frenzy, the Parrot Cellular store in San Carlos, Calif., wasn't a bad place to be. While hundreds gathered a short drive away at Apple's flagship store in Palo Alto to plunk down $500 for one of the slick new iPhones--locking themselves into years of wireless service from AT&T--there was no rush at the local branch of AT&T's largest authorized dealer.
One customer arrived to special-order an iPhone. Two others stopped in with technical questions about their aging Nokia handsets. And at the stroke of six--when Apple stores were swinging their doors open to hordes of crazed gadget shoppers--a tiny, white-haired old lady wearing a huge pair of sunglasses shuffled up to the counter to ask for directions to the nearby firehouse. Yawn.
Welcome to the future of the mobile phone business.
Of course, shoppers were lined up outside of those AT&T stores that did have the phone. But the fact that many of the phones were sold at Apple outlets--and those who buy their phones from Apple's Web site may never have to set foot inside a store at all--is portentous. Apple chief Steve Jobs may not have reinvented the mobile phone, but he seems to have reinvented the way mobile phones are sold.
It's about time. Few experiences are more annoying than buying a wireless handset. First, you go to the store. Then you haggle with a sales representative over your rate plan. Finally, you sit and wait--sometimes for hours--while a salesman calls headquarters to activate your phone. Unless you're grabbing a sketchy pay-by-the-minute phone, you'd better plan on blowing an entire afternoon.
No longer. Apple's software allows users to grab their phone, take it home, fire up their computer, select a rate plan and they're done. Of course, there were some embarrassing glitches with the new scheme over the weekend. Some iPhone customers had to wait overnight for their phones to be activated, according to some reports. Some business users had to set up new, personal accounts to get their phones working. Users who were porting their numbers from other carriers also ran into problems. An AT&T spokesperson said late Monday the phone company had resolved most of the problems.
Nevertheless, Apple's grab-and-go scheme kept the lines outside Apple and AT&T stores moving fast all weekend. Analysts say Apple sold somewhere between 500,000 and 700,000 iPhones over the weekend. That helped send AT&T shares up 4 cents, to $41.89, in Monday trading, despite the high-profile glitches.
This, of course, is only the latest retail experience Apple has reinvented. Its iTunes music store has made buying music and video over the Internet a viable option for the non-technical. According to NPD Group, iTunes accounted for slightly more than two-thirds of the U.S. market for authorized song downloads in 2005 and 2006.
The business of selling software could be the next category Apple reinvents. The computer and gadget maker is already one of the largest distributors of Windows software--with more than 500 million downloads of its iTunes digital music software to Windows users. And once the software is loaded up with a user's credit card, it acts as a kind of tollbooth, allowing Apple to charge for sales of everything from movies to music to mobile phone service. But bits are bits, and selling music and movies is no harder than selling software. The question now isn't whether Apple will build on its retail success. It's how.

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