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iPhone 3G S Launch Subdued by Apple Standards

Not even the mop-tops from Liverpool could sustain Beatle-mania forever, and so it goes with the iPhone 3G S today as smaller-than-expected crowds gather to buy the next smartphone in Apple's popular series.

Early reports indicate that, as expected, Apple (NASDAQ: AAPL) faithful arrived during the wee hours at stores to buy the new smartphone, with Apple flagship stores in major cities seeing long lines.

In Silicon Valley, Both Apple Stores and stores for AT&T, Apple's exclusive carrier for the iPhone even had some fans camping out overnight so they could get their new toy the first thing in the morning.

But while many AT&T (NYSE: T) stores reported selling out quickly today, some said they had received only 60 or so units for the launch. Meanwhile, Apple stores appear to have enough inventory to meet demand, according to a number of stores contacted nationwide by InternetNews.com.

Elsewhere, the rush for the latest iPhone fell short of the fervor of past years when the first two iPhone models went on sale.

In San Carlos, Calif., just south of San Francisco, at least one store showed a remarkable reversal of fortune. There had been a waiting line more than 50 feet long outside the San Carlos AT&T Store for iPhone 3G launch in 2008. This year, the store opened an hour early to find just a few people waiting, all of whom got phones.

A store rep reported there were plenty of iPhones for both pre-order customers and non-pre orders as well.

Major overhaul

One possible reason for the quieter launch may have been Apple and AT&T's focus on preorders, for which AT&T reported nearly sold volumes earlier in the week.

"We are very pleased with the turnout," AT&T spokesman Mark Siegel told InternetNews.com. "We encouraged lots of people to pre-order, which provides convenience for the customer. They can either have it shipped directly to them or they get an e-mail saying when they can come pick it up, and that was successful for people who didn't want to stand in line waiting."

The quieter debut comes in spite of a slew of new features ushered in with the new iPhone 3G S, which Apple unveiled last week at its annual developers' conference.

The phone, priced at $199 for a 16GB model, features a faster processor and better battery life. The 3G S also includes lots of new features courtesy of Apple's upgrade of its operating system to version 3.0 -- such as cut-and-paste and multimedia messaging (MMS).

Wide range of sales projections

While Siegel declined to provide sales figures or numbers on how many AT&T stores sold out of the iPhone 3G S, Piper Jaffray analyst Gene Munster is predicting that about 500,000 units will be sold this weekend, roughly half the number of iPhone 3G models that were sold after that device launched in July 2008.

Still, BroadpointAmTech analyst Brian Marshall told InternetNews.com he expects Apple and AT&T to sell a million iPhone 3G S units during its first quarter.

In addition to the quieter response to the launch today -- that is, quiet by Apple-fan standards -- the introduction of the iPhone 3G S has not been without drama.

[cob:Special_Report]Controversy erupted over AT&T's lack of immediate support for MMS and tethering features new to the 3G S, as well as over its upgrade pricing plan for existing customers.

After the carrier mollified customers by altering its price structure, Apple and Palm engaged in a public dust-up over the Palm Pre's iTunes sync feature.

Today's debut of the iPhone 3G S also takes place in a very different market than during the introductions of the previous iPhones. For one thing, rivals are working aggressively to steal customers away from Apple, with new products that look to capitalize on iPhone-like features, such as application stores and touchscreens.

The Palm Pre, which went on sale two weeks ago, has received generally positive reviews and is seen as Palm's Palm (NASDAQ: PALM) best chance to cut into Apple's market.

BlackBerry maker Research In Motion (NASDAQ: RIMM) meanwhile is expected to release an updated model of the BlackBerry Storm, the company's first touchscreen smartphone. The enhancements are expected to make it still more competitive with the iPhone.

Also on tap for release this year from Samsung, HTC, Acer and Motorola are handsets running on Android, Google's open source mobile platform.

InternetNews.com Senior Editor Andy Patrizio contributed to this article.