Currently, it appears the the iPhone 3G will not support iTunes activation, instead requiring in-store activation. Additionally, it's reported that the phone will only be available for purchase in-store, with no online sales. If this is the case come July 11th, the Apple and AT&T stores are going to be a madhouse. In-store activation, coupled with required in-store purchase, will certainly slow things down drastically. However, at this point, I simply can't imagine that the iPhone won't be available online and allow some manner of at-home activation. The economics of not allowing these things just don't add up for me.

The most compelling reason I've heard for this is that now that AT&T is subsidizing the iPhone, they have an obvious incentive to prevent it from being unlocked for use on another network. In-store activation will force every phone that leaves an Apple or AT&T store to be activated for the AT&T network, locking it in unless an incredibly expensive early termination fee is paid.

However, AT&T has said that they'll penalize users who don't activate within 30 days. If in-store activation is required, why would this be needed? This seems like a perfect way to allow at-home activation, without worrying about unlocking. They'll have your credit card information from the original ($199) purchase, and can simply bill the difference (an additional $400, it seems), and even assess a higher penalty. In this manner, they can avoid paying for subsidized phones, and customers can be in and out must faster, perhaps simply signing a simple contract indicating that they promise to activate the phone on AT&T.

As far as the at-home activation goes, it needn't be through iTunes (though I see no reason why it shouldn't be). Cell phones have been sold online and activated upon receipt by simply calling in, often with the cell phone itself, for years now. The idea that one of the most popular cell phones of all time will be made less convenient to purchase than the average $50 handset just seems ridiculous.

Even if Apple and AT&T believe they can ignore the likely-disastrous launch day experience that will occur if all phones must be activated in-store, I'm still left to wonder how anyone would purchase an iPhone as a gift. One of the most popular phones of all-time will certainly also be one of the biggest gifts of the 2008 holiday season. Will gift-givers be forced to simply buy a gift card? It seems unlikely, to me.

Two additional things are worth noting. First, Apple is currently instructing employees to tell customers "I don’t have any details at this time about activation". I'm not sure how they would benefit from failing to warn customers that activation may slow things down come July 11th, but I can certainly Apple's desire for secrecy preventing them from announcing details of a convenient activation plan. Underscoring this is the second thing worth remembering: the original at-home iPhone activation wasn't announced until June 26th, 2007, just 3 days before the iPhone went on sale.

I certainly don't know what will happen on July 11th, or after that, but I'm sure that both Apple and AT&T want to sell as many iPhones as they can. Any sensible plan for this includes both online and gift sales. I believe we'll see both of these made possible, either at launch or soon after.