Hordes Snap Up Apple’s New iPhone

Apple iPhone
Source: Reuters

Apple’s new iPhone made its hotly awaited debut on Friday, with buyers storming stores in Asia and queues forming in Europe and the United States.

Sales of the device, which combines a music and video player, mobile phone and Web browser, kicked off in New Zealand, where a 22-year-old student became its first owner.

“I’m going to put this on charge, have a play around with it and have a nice long sleep,” said Jonny Gladwell, who waited in freezing temperatures for around 60 hours to be the world’s first to buy the iPhone at a minute past midnight on Friday.

Guards in kevlar vests and helmets brandished shotguns and stood watch over 500 devices on sale in Hong Kong, a city that has seen its share of unruly crowds at major product launches.

Softbank, which sells the iPhone in Japan, said over 1,500 people lined up outside its flagship Tokyo store. Policemen yelled at passers-by to make room.

In cities such as London, New York, Boston and San Francisco, where Apple’s (NASDAQ: AAPL) first iPhone has been available since last year, more orderly queues formed outside stores as consumers sought to get their hands on the new gadget before it sells out.

“We ordered lots. We’ve seen the demand the first time, but we’re even blown away by this demand. I think it is unprecedented,” Steve Alder, O2’s U.K. iPhone director, said in London.

“We’ve got stocks coming in every week … I am confident that by the end of the summer, everyone will have one who wants one.”

With its latest device, Apple, the creator of the Macintosh computer and iPod, hopes to ride on burgeoning demand for smartphones, an area phone makers such as South Korea’s Samsung Electronics, Taiwan’s High Tech Computer and Finland’s Nokia are fighting to dominate.

The new iPhone supports third-party software such as games and instant messaging. Its e-mail capability squarely targets the market of Research in Motion’s Blackberry.

Joshua Deutch, 31, an IT consultant, said he waited until the iPhone could support his work e-mail before getting it, echoing comments from several people in the line of over 200 at the Apple store in New York’s trendy Soho shopping district.

“I couldn’t get it before. I’ve been wanting to access my corporate e-mail. A lot of people carry around 3 or 4 phones. I just can’t deal with that,” he said.

Apple shares, which had risen by nearly 4 percent over the last week in anticipation of the launch in 21 countries, were down 1 percent on Friday in a generally weak market. Apple shares often fall after huge product launches.

“It’s really what happens in the next month when the hype wears off or even in the next six months,” said BMO Capital Markets analyst Keith Bachmann, adding he thought the company could face some supply shortages.

The iPhone phenomenon

The first version of the iPhone was snapped up by 270,000 people within days of its June 2007 launch.

Analysts expect the new iPhone to draw as many as 10.5 million buyers worldwide this year and with 6 million of the older devices already sold, help Apple beat its target of selling 10 million devices by the end of 2008.

“The iPhone phenomenon is going to stimulate the adoption of smartphones. It will change the landscape, the way the iPod did for the MP3 player industry,” said Charles Guo, analyst at JPMorgan (NYSE: JPM).

In the United States, many consumers were excited by the iPhone’s promise of faster Web speeds and applications such as a friend tracker service. But some complained Apple’s online store, where consumers can download games and other software for their phones, was not working on Friday morning, apparently overwhelmed by demand.

“I really did want to see what the new phone was about. I’m hoping there is a big improvement from the old phone,” said Winston Yang, 37, a tech project manager outside the Apple store on Fifth Avenue in New York.

While most carriers are shouldering some of the cost of the phone for customers who sign long-running contracts — some are opening the phone to consumers who want to pay for calls in advance and charging those customers more for the device.

“Opening it up to prepay outside North America is very important … prepaid is the tariff of choice for most people in most parts of the world,” CCS Insight analyst Shaun Collins said.

Outside one Brussels store, where the iPhone is sold unlocked and without a contract beginning at 525 euros ($828), a queue, all men, was steadily building an hour before opening time on Friday.

Germain Merinero, a European Commission employee, at the head of the queue said he was not put off by the price.

“It’s a little toy and you pay what you have to,” he said.

But a midnight launch in Helsinki, the home turf of the world’s biggest mobile phone maker Nokia, drew a scant crowd, while outdoor bars nearby were booming with business.

Taste of the action

The next-generation iPhone is Asia’s first official taste of the touch-screen device previously available only in the United States and Europe.

[cob:Special_Report]The new iPhone offers faster Web access than the first and supports third-party software like games and instant messaging. The iPhone has also grabbed interest for its support of third-party applications from companies such as Oracle (NASDAQ: ORCL) and Salesforce.com (NYSE: CRM). Plus, its e-mail capability squarely targets Research in Motion’s (NASDAQ: RIMM) BlackBerry.

Many analysts doubt the device will be popular among mainstream customers in Japan, Asia’s largest retail market, because it does not support television services or electronic payment features widely used in the country.

Others point to a vibrant grey market for fakes or unlocked phones — hacked to work on the networks of other carriers — in China and southeast Asia, cannibalizing demand.

Outside of London’s Apple store, not everyone was infected by the hype. Looking at the hubbub surrounding the store, one passerby commented: “What’s the big deal?”

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