Are Apple and AT&T failing on iPhone activation?

Updated

It looks like Apple has hit some serious problems with the U.S. launch of the iPhone 3G. I just left the crowd outside the Apple Store in downtown San Francisco, where the first person in line — Dale Larson, a mobile consultant who has been camping out since Wednesday night — came out of the store reporting that he couldn’t activate the phone, and that Apple stores across the country have the same problem.

A few minutes later, another customer came out, having apparently purchased an iPhone successfully, but without activating. Due to technical problems, it sounded like Apple was scrapping its plans for in-store activation of the required AT&T plans. However, my roommate Tony Tulathimutte tells me he’s in line right now, and Apple is activating phones again. I’m still trying to find out the latest news but until then here are two videos that we recorded through Qik. The first shows Larson explaining his problems to the press, noting specifically that without the in-store activation, last year’s iPhone launch went much more smoothly. Unfortunately, the sound is terrible, so you may have to just imagine what he’s saying. Sorry. The second shows members of the VentureBeat crew, including Tony, writer MG Siegler and business manager Jacob Mullins entering the Apple store shortly after I left.

Update: As noted by our first commenter and other sites, Apple is having problems with downloads of the new iTunes version 7.7, which includes the iPhone App Store, and of the iPhone firmware. That means first generation iPhones that update today are being “bricked,” i.e. rendered nonfunctional. There are also reports from other Apple stores that Apple is letting people buy their iPhones without activation, although I hear that activation is working now.

Update 2: MG Siegler here. Just got back from the “frontline” aka the Apple Store. I can assure you, the iPhone activation process is still not working. I have an iPhone 3G in my hand, the only problem? It’s not activated.

Update 3: Anthony again. Because I’m sure everyone was wondering, I did indeed decide to break my one-day iPhone boycott. I went out this morning just to enjoy the vibe and help give out donuts and coffee (we beat Apple to the refreshment-distribution punch by an hour or so, by the way), but the excitement convinced me that I had to make the leap now. All the problems sure killed the buzz, though, and I figured I couldn’t take the whole morning off. Tomorrow it is.

Anyway, keep an eye out for MG’s more comprehensive post on Apple’s difficulties coming soon (here), plus more coverage — including photos of the team in brand-new VentureBeat T-shirts — later in the day.