The Bay Area's iPhone 3G launch

SAN FRANCISCO AND EMERYVILLE, Calif.--Apple's iPhone 3G just made its debut on the West Coast, and CNET News reporters Erica Ogg, Josh Lowensohn, and yours truly brought offered live updates from our perches in downtown San Francisco and Emeryville, just across the Bay Bridge.

I was at the Stockton Street Apple store in downtown San Francisco, Erica was at the AT&T store a few blocks away at 3rd and Market streets, and Josh was checking out the Bay Street Mall in Emeryville, which has both an Apple store and an AT&T store.

The following is the live blog from the scene as it happened.

EMERYVILLE, 7:01 a.m.: There are lines at both Apple and AT&T. AT&T's is slightly shorter, but still about 100 deep. Apple's is probably closer to 150 and has a coffee cooler set up. Interesting: almost everyone in line has and is using an iPhone already. Also, I see just two police units and one mall security guard for the entire scene so far. Might be more later.

Apple has a black curtain over its window, and the AT&T store does not. I also only counted 5 AT&T employees in sight. Apple will probably have at least two times as many employees on staff, but there could have been more in the back.

7:33 a.m.: Far more women and slightly older demographic in the AT&T line. It's also been stretched across the street instead of around the building--Gap (whose doors the lines are blocking) might be upset.

SAN FRANCISCO AT&T store, 7:35 a.m.: I'm here at the AT&T store on Market and 3rd streets, and the overwhelming worry of the 75 people in line right now is: Will there be enough phones? AT&T has had a spokesman out here, suit, tie and all, since 5 a.m., and he assures me that they will have enough phones for everyone, if not today, then they will do a backorder and send a phone to your house in at least 7 days. Unlike the few people in line at the Apple store yesterday, most of the folks in line here have never owned an iPhone before.

Sommer Mao, 24, of San Jose, is first in line. He got here at 3:50 a.m. today, which means he's first AND he didn't have to camp. Nice. Mao will have to pay $499 for choosing to upgrade his plan early. And he, like most here I quickly surveyed, plans to get a 16GB black iPhone. In fact, 9 in 10 plan to purchase a 16GB iPhone, and most will choose black, they say.

Employees here are milling about excitedly, chatting with the customers, handing out forms and tiny golf pencils to the people in line. All in all, a very different scene than last year's original iPhone launch.

SAN FRANCISCO Apple store, 7:45 a.m.: There are about 250 people in line for the iPhone 3G at the downtown San Francisco Apple store, most of whom got here in the pre-dawn hours. Marketers hawking start-ups and swag are everywhere, to the bemusement of most waiting in line. The line stretches down Stockton Street, around onto O'Farrell, but hasn't yet reached Powell, the terminus of last year's line just before the doors opened.

Based on several pre-launch interviews, Apple better have brought a lot of 16GB models. People are about evenly divided between the black model and the white model, which surprised me a bit. Most people in line are current iPhone owners looking to upgrade, but there are a few who are switching from other carriers to AT&T. I haven't found anyone yet who is an AT&T customer paying the $399 or $499 upgrade price. 15 minutes to go.

EMERYVILLE, 7:49 a.m.: More AT&T empoyees just showed up. The people in the front of the line at that store have only been here since 5 a.m. At Apple, the folks at the front of the line started camping out at 3:30 a.m., and had their little brother hold down the fort until they got there. Also, a guy is selling his coveted No. 4 spot for $100.

Speaking of money, I've now talked to half a dozen folks who are either taking time off work to be here or hoping they get in on time. Like March Madness, iPhone launch day could end up having a negative economic impact because of employee truancy.

Most I've talked to in the front of the line already have iPhones. Many say they're selling the old ones either on eBay or Craigslist. One person told me they sold theirs for $150, while we've been seeing some go on eBay for over $500. Now would be a great time to get a deal if you don't mind the slower speed.

SAN FRANCISCO AT&T store, 7:54 a.m.: With six mintues to go, the line has stretched to 114 people now. And at least three different marketing groups are buzzing around the line. Two of the three are pushing their iPhone applications, on sale in theiPhone App Store.

SAN FRANCISCO Apple store, 7:58 a.m.: Apple store employees are starting the same line of cheering that accompanied last year's entry into the store. The press frenzy is much smaller this year, but still crowding the sidewalk as commuters try to make their way up Stockton Street. The first customers are entering the store, about 30 at a time.

EMERYVILLE, 7:58 a.m.: Fifteen out of 20 people I talked to are getting black 16GB models. Seems like white has fallen out of favor with the Apple digerati. One person I talked to said he was worried about scrapes and discoloration like what happened with his first generation white Macbook (uh, have they ever owned a shiny black Apple product?!). Apparently some people are willing to forgive, but not forget.

Not a cheer to be heard yet..but the doors are about to open.

SAN FRANCISCO Apple store, 8:03 a.m.: The first customers have entered the store, and are being processed by Apple employees. One line stander said that Apple employees were canvassing the line overnight, telling them that 200 employees were on hand for this morning's launch. We sent a CNET photographer inside to get some pics of the maiden voyage of the iPhone 3G. Tom Merritt from CNET TV is going to check out where the line is right now, we'll let you know when he gets back.

SAN FRANCISCO AT&T store, 8:20 a.m.: The doors swung open at 8 a.m. on the dot, and 14 people, one for each service representative, were allowed in. The employees clapped and cheered for the first customers. But the cheering quickly died as the long signup and purchase process began to drag on. The first guy in line, Mao, waited 16 minutes before he left with his phone. And he wasn't the first to actually make a purchase. That honor went to Carlos Cavenecia, 34, of San Francisco. He snuck away with a white 16GB version, which he paid $299 for, he said.

SAN FRANCISCO Apple store, 8:22 a.m.: CNET News' Greg Sandoval, who stood in line to buy an iPhone 3G, is reporting that the computer system is down inside the Apple store, and employees don't know when it will be back up. Transactions can't be completed at this time.

Apple PR declined to comment on the delays with the computer system.

Dale Larson, the first person in line, emerged from the store at about 8:20 a.m. without an iPhone 3G. The SF police were making him move his tent, and he said he was going back in, but right now he's ranting about the process and the delays.

EMERYVILLE, 8:24 a.m.: Letting 20 people in at a time. Apple has about 40 employees working, although many are simply standing around. They're also now handing out water to people in line. It's Smart water, Steve Jobs' brand of choice for keynotes.

First person in line still hasn't left. Rumors of a systemwide server crash.

Apparently mall security here was not letting people line up overnight. That's why getting here in the early a.m. would have given you a top spot. The first person in line has still not left. People in line are beginning to look anxious/irritated.

SAN FRANCISCO AT&T store, 8:25 a.m.: AT&T invited me and another reporter inside the store to check out the action, and there are definitely more employees/AT&T brass/flacks than customers in the store at one time. Terry Stenzel, AT&T's vice president and general manager for the Northern California region, said they were expecting about 100 people this year on launch day. That was already exceeded five minutes before the store even opened.

"It was crazy last year," said Stenzel. Noting that this year's launch is much more subdued, he added, "But we're hoping it will be as crazy as last year" today.

SAN FRANCISCO Apple store, 8:33 a.m.: CNET's Kara Tsuboi reports from the Palo Alto, Calif., store that the computer system is down there as well. The national network for Apple appears to be down. It's not clear what the problem is exactly. Sandoval reports that systems are starting to come back up in San Francisco. No one has yet to emerge with an iPhone 3G.

SAN FRANCISCO AT&T store, 8:35 a.m.: Though Apple's computers are apparently down and not allowing any transactions to be processed, AT&T's are humming along just fine.

Some customers are reporting that the transaction process is taking up to 30 minutes because of slow iTunes servers, but their phones are indeed being activated. Seems a bit hit and miss now.

EMERYVILLE, 8:44 a.m.: First person in line just walked out with iPhone (16GB black). Every computer in the store is being used as an activation center. The second guy in line was just seen milling about the store--waiting for an Apple employee to work activation juju. The Apple line now stretches approximately four blocks.

Many people are simply holding their phones...looking, but unable to use. Word on the street is that AT&T is letting people leave without activating.

I ran into one guy who had just jailbroken firmware v2.0 using the iPwnage tool.

SAN FRANCISCO Apple store, 8:45 a.m.: CNET's Greg Sandoval just emerged from the Apple store with 16GB black iPhone 3G, apparently the first person to obtain an iPhone at the downtown San Francisco Apple Store. He said the computers were down for about half an hour. At 8:17 a.m., the Apple network crashed. The employee working with Sandoval rebooted several times, and the system finally came back up at about 8:36 a.m. Another employee was heard saying "this is frustrating" as she tried to reboot.

Sandoval will post a first-person account of his experiences later today.

Apple has starting letting the next batch of iPhone customers into the store, about 10 to 15 people, and about 50 minutes after the first people entered the store. The computers are starting to come back online, apparently, but some of the first people in line are still in the store.

Other folks are starting to trickle out with iPhones. All told, the process has taken the initial iPhone waiters 45 to 50 minutes.

SAN FRANCISCO AT&T store, 8:58 a.m.: In an hour, it appears the AT&T store has processed about 30 people total. The line has now stretched to 140 people, and those in the back are very worried they won't be able to get one today.

A guy is in his twenties just entered the store, approached a group of AT&T employees and loudly asked, "Hey, I'm looking for a Palm Treo?...Ha, kidding!" The stunned employees just looked at him. Even when he began cracking up at his own joke they just stared. Geez, guys, lighten up!

EMERYVILLE, 8:59 a.m.: Just checked in at the AT&T store where things seem to be moving far smoother except there's a big problem--only a reported 60 handsets are left in stock.

The line is about half the size of Apple's, but people are likely to move over to Apple when AT&T runs out of stock. Also worth noting is that there are only five computers in the store.

In the AT&T line, the 14 of the next 15 folks to go in were planning to buy the black in the 16GB flavor, although inside the store I overheard one AT&T customer get a look at the white display model and say "This is sexy as hell."

SAN FRANCISCO Apple store, 9 a.m.:Greg Sandoval reports that not a single iPhone has actually been activated. Apple is apparently letting people buy the iPhones and activate them at home. Another person who emerged from the store confirmed that report. His iPhone is not actually activated, and he can't make calls. This means Apple apparently "unbricked" the iPhones, as was rumored, but the phones will be activated at home, just like last year. There's no other way to say it, this is a disaster for Apple.

SAN FRANCISCO AT&T store, 8:58 a.m.: The last two customers I spoke to said they had to leave without activating their phones.

SAN FRANCISCO Apple store, 9:08 a.m.: Another batch of line waiters, maybe 15 to 20, has entered the Apple store, to muted applause from the Apple employees. A little less than a block of Stockton Street has entered the store to this point, probably 75 or so people.

EMERYVILLE, 9:10 a.m.: Rumor now is that only 20 handsets remain at the AT&T store here.

Worth noting is the starkly different treatment for media/press between Apple and AT&T. At Apple, I was asked to request permission to enter the store as media by leaving a request on the message machine on Apple's special media hotline--from which I have not heard back. AT&T, on the other hand, let me come in without even checking for any credentials and let me talk to customers and staff freely (although most were furiously busy with transactions).

I've also noticed further demographic differences at the AT&T store. Most people leaving are couples--both leaving with phones. Apple in comparison has many "lone wolves."

SAN FRANCISCO Apple store, 9:15 a.m.: Adam Jackson just left the Apple store with two iPhone 3Gs, a white 16GB one for himself, and a black 8GB one for his wife. As he tried to get the two phones activated on his AT&T Family Plan, the plan was somehow separated into two individual plans. Jackson's phone has not been activated, and he was told by Apple store employees that he could activate it at home with the new version of iTunes. However, he'll have to go back to the AT&T store to iron out the problems with his Family Plan.

One gentleman who has been in line since 5 a.m. just got close to the door of the Apple store. People in line seem frustrated, but calm, and many of them were unaware of what was causing the delays. Perhaps 100 people have entered the Apple store since 8 a.m., but most of them are still inside, awaiting activation and/or processing.

SAN FRANCISCO AT&T store, 9:18 a.m.: Some are being told they'll have to go home and tether their phone to iTunes later. "It's hit and miss," said AT&T spokesman John Britton here. He blamed the problem on the device being launched in 22 countries simultaneously. "It's not surprising there's an incredible demand on the infrastructure."

A couple in line since 5 a.m. just left after waiting at the register for 1 hour 15 minutes, which is definitely much longer than anyone else I've seen here. Rick and Julie Lindstrom, who left with their phones but were told to tether them to iTunes later, said some of the trouble was deciding on what their new phone numbers would be.

Either way, it was far longer than they expected. "We heard (the purchase process) would be 15 minutes," said Rick. "But I thought it would be 30," Julie added.

Editor's note: Erica Ogg is out of laptop juice and is signing off for now.

EMERYVILLE, 9:18 a.m.: Customers are getting in and out of the AT&T store in about 20 minutes. I saw our first fight break out with some line cutters. People are very angry.

I've also seen Apple ferry some customers over to the AT&T store with an Apple employee as a liaison. This is most likely due to a special account or problems with activation, but the two customers I saw doing this were out 10 minutes later.

I'm getting a line report that the AT&T store here only got 300 handsets.

SAN FRANCISCO Apple store, 9:32 a.m.: Ian Fung of San Francisco just emerged with a white 16GB iPhone 3G. He reports that the initial problem was caused by AT&T's servers going down, which meant that the phones could not be activated on AT&T accounts. That issue was apparently fixed, but then Apple's network went down, knocking out the second step of the activation process--connection to iTunes. That is apparently still causing problems inside this Apple store. It's not clear how widespread those problems are. People who were able to get registered with AT&T, but not activated, are being told to go home and activate their iPhones via iTunes, just like last year. However, one of Fung's companions reported hearing from a friend at home that the iTunes servers are swamped right now, making that activation process very difficult.

EMERYVILLE, 9:44 a.m.: The AT&T store here just ran out of the 16GB flavor and has a limited amount of the 8GB left. I'm also told the two people who had cut in line were kicked out of the line by AT&T staff earlier, sending the woman in the group into tears.

Apparently the couple had left their son in line to hold down the fort while they ran errands. When they came back at approximately 8:30 a.m., they tripled their presence in line, angering those behind them.

SAN FRANCISCO AT&T store, 9:30 a.m.: An AT&T employee the store had 60 phones left in stock, with 150 people still waiting out on the sidewalk. She told me that right after a man who was about 40th in line left with his purchased phone. That would indicate that this AT&T store had only 100 in stock total, and jibes with what AT&T's Stenzel told me earlier, that they expected roughly 100 customers to come through this store today.

SAN FRANCISCO Apple store, 9:45 a.m.: Apple just let about 20 people into the store, the first group admitted in about 30 minutes. Apple employees, still required to clap as customers enter the store, are clealry less enthusiastic with each passing group. Security guards are not letting people into the store who aren't interested in the iPhone, despite leaving the first floor of the Apple store clear of any customers.

EMERYVILLE, 10:02 a.m.: Things have quieted down a lot on the AT&T side. There are now just 30 people in line who will apparently be getting their hands on the 8GB model of which the store purportedly has about 100 left in stock.

Those looking to get the 16GB model have either left to join the still colossal Apple line or have done fulfillment orders with AT&T to get the phone shipped to them at the store. The rep has been reassuring people that they can cancel their order any time before it ships if they're able to get their hands on the device somewhere else first.

Also, someone tried to purchase their dog a second iPhone, which the AT&T employee would not allow. Good to know in case you plan on doubling up your order. Humans seem to work better (unless you cut in line, that is.)

SAN FRANCISCO Apple store, 10:04 a.m.: An Apple employee just came out to talk to the people in line. He's claiming the in-store activation process is back up and running. Movement is still very slow, however, both in terms of people coming out of the store and people going in. One guy I talked to this morning at 7 a.m. at the corner of Stockton and O'Farrell has just made it within about 10 people of the door.

EMERYVILLE, 10:11 a.m.: The AT&T store here just stopped letting people order 16GB phones through their fulfillment program since the handset is listed as backordered, meaning stock in AT&T's warehouses has run short.

An overwhelming number of people I talked to are going for the cheapest iPhone plan, which runs at $69.99 a month. Many said the new plan offers fewer minutes than their existing plan on AT&T or another carrier. One woman I talked to said she thought she would be making fewer calls since it was her first phone with a data plan.

SAN FRANCISCO Apple store, 10:44 a.m.: Dale Larson, the first person in line, has finally emerged from the Apple store with an iPhone 3G. "It took a long time to go through the process," he says, deadpan, to a cluster of reporters who swarmed around him. Larson, in response to the problems, was actually given a free 16GB black iPhone by Apple, who told him that the problems were AT&T's fault.

Larson says that the Apple store employees were on the phone with Apple corporate for two hours discussing the problems. He doesn't think anyone else was given a free iPhone, but if anybody's heard of free iPhones being given out, let us know.

Larson said despite all the problems, the Apple store employees were very courteous and understanding.

10:43 a.m. Darin Archer of San Francisco just emerged with a 16GB white iPhone 3G. He had a devil of a time trying to purchase a phone because he had a small corporate discount attached to his personal account, a problem that plagued my colleague Declan McCullagh when he tried to activate his original iPhone last year. Archer was the 34th person inside the San Francisco Apple store, but then was was sent over to the AT&T store to process his account. When he got to the AT&T store, representatives there told him that Apple should have been able to activate the account, and sent him back with instructions to have the Apple folks call AT&T. After that was successful at around 10 a.m., almost two hours after Archer entered the store, he then had to wait 40 minutes for Apple to activate his iPhone.

After all that, however, he left the Apple store at 10:42 a.m. with an activated iPhone, and text messages from his friends started pouring in.

SAN FRANCISCO AT&T store, 11 a.m.: AT&T was completely out of iPhones, but was taking sign-ups from customers who could come back later and pick up their device when more come back in stock. In all, the store had 130 phones.

That's it for now from San Francisco. But be sure to click here for CNET News' complete iPhone 3G coverage.