O2 has admitted that its online ordering system failed this week - on strength of orders reaching 13,000 per second at points on Monday morning.

In an email to customers, the company sends its apologies to existing iPhone users who tried to take advantage of the company's advance upgrade deal earlier this week. Under the deal, registered iPhone owners were able to contact O2 to place an order for an upgrade, which would be fulfilled on Friday when iPhone 3G ships.

The email carries a host of interesting statistics - not least confirming Apple to have been aware of the level of demand in the UK, while also being able to supply only a "small proportion" of the iPhones O2 thought it needed for the UK market.

"We also used the registration data to keep Apple up to date on the phenomenal interest and to support our orders for the phones with them. We have been working continuously with them to get as much stock for the UK as possible. Unfortunately, they have only been able to supply a small proportion of the number of phones we asked for, because they are launching simultaneously in 22 countries. We are confident that over time we will start to get sufficient volume to meet demand, but it is likely that stock will be in very short supply for some weeks to come."

O2 clarified that its online upgrade offer sold out within hours, stressing the network took as many orders from O2 customers as it did in total from other networks.

On the creaking website, O2 adds:"We had invested heavily to add a huge amount of additional capacity, 250 times its normal rate, and back-up systems. We tested this carefully in advance. The massive simultaneous crush exceeded even our worst case assumptions. Demand was at 13,000 orders per second. Frankly, we have to admit we just weren't prepared for this unprecedented level of demand. No website is."

If you're expecting to pick up an iPhone this Friday, then most O2 and Carphone Warehouse shops will open at 8.02am. iPhones will be sold on a first come first served basis. Both O2 and Carphone Warehouse have now confirmed to us that they will sell the iPhone 3G to both new customers and existing iPhone owners looking to upgrade, we are waiting for Apple to also confirm this following earlier reports that the Apple Store would only sell to the iPhone 3G to new customers.

Expect shortages, O2 warned: "The amount of devices will vary depending on the store but will be on average a few dozen iPhones in each O2 or CPW store. We are expecting early queues and, like the online site, are expecting to sell out very quickly."

O2 will be receiving deliveries from Apple roughly once a week for the foreseeable future but it will be several weeks before stocks increase.

"We will continue to work closely with Apple to get as much stock as possible for the UK. We will also continue to use the principle of first come first served as stock becomes available for both online and in our stores as we feel that is the best way to be fair and equitable to the many tens of thousands of customers desperate to get one, O2's sales director, Stephen Shurrock explained.