Apple’s iPhone makes it a magnet for technology enthusiasts


New York, Hundreds of gadget fans, or their paid stand-ins, lined up to be the first buyers of Apple Inc.'s iPhone, a music and video playing phone that seeks to reshape the mobile industry. Apple stores quickly became a magnet for technology enthusiasts to wait for the phones go on sale.

More than 400 people were lined up at the two Apple stores in New York City by mid-afternoon. Smaller clusters of customers waited at AT&T stores. AT&T is the phone's exclusive carrier for the next two years.

About 150 people stood outside a San Francisco outlet for a device that has whipped technology lovers into a frenzy usually associated with the launch of a new video game console.

"It's a gift for my wife," said Eric Brandon, 42, in New York. "It's a little expensive, but it's worth it because there is no other phone that's like it."

Some aimed to make a personal profit from the iPhone, which costs up to $600, by selling it or getting paid to wait. Others had been sent by family members or bosses keen on the bragging rights of being among its first owners.

"Some one is paying me a few hundred bucks to hold the spot," said Roy Fuller, 26, as he stood at an AT&T store in New York.

"I'm definitely a mercenary," said Kyle Laurentine in San Francisco. "I am 17-years-old and I don't need an iPhone. I have an iPod and a cell phone. Together they do the same thing."

The svelte iPhone is a gamble by Apple co-founder and Chief Executive Steve Jobs to build upon the company's best-selling iPod music player and expand the market for the company's software and media services.

The iPhone melds a phone, Web browser and media player. It received rave reviews from U.S. technology gurus who praised it as a "breakthrough" device that is "beautiful".

Apple aims to sell 10 million iPhones in 2008, which would amount to a 1 percent share of the global market. It has not given a sales goal for the device's launch.

Apple's 18,000 employees learned on Thursday they will get free phones, but not until the end of July.

"They want to extend the dominance they have in terms of their ability to create really elegant hardware and software integration," said Mark McGuire, analyst with research firm Gartner. "This is the next big business unit for them."

Shares in Apple rose 1.8 percent to $122.72 and have gained more than 30 percent since Jobs unveiled the phone in January. AT&T shares rose 0.6 percent to $40.97.

Apple is expected to sell the iPhone in Europe later this year in the run up to the holiday season. It has not disclosed the price or carrier, though speculation has mounted it may reach a deal with British-based Vodafone Group Plc.

Sales in Asia are expected to begin sometime in 2008. But the iPhone's effect has rippled through the wireless industry before even a single unit has been sold.

Rival Palm Inc. has said the iPhone could hurt demand for its Treo smartphone, at least in the short-term.

"It's likely that as people try (the iPhone) out, there may be some stall in our sell-through," Palm Chief Executive Ed Colligan told Reuters on Thursday.

The phone comes in two versions depending on memory capacity, and requires a two-year contract from AT&T for voice and data plans ranging from $60 to $100 a month.

Early reviews highlighted its large touch-sensitive screen and the full-blown Web browser, but expressed concern over the quality of AT&T's network and the phone's virtual keyboard.

What is less clear is whether sales will hold up once the initial excitement has waned.

Piper Jaffray said this month Apple could sell 45 million units in 2009, putting the iPhone on par in terms of revenue with its two key businesses, the Macintosh computer and iPod.

On Friday, Pacific Crest analyst Andy Hargreaves raised his revenue estimates for Apple, saying there appeared to be enough supply to meet initial demand and that it could roll out new versions by early 2008.

"We believe the company is positioned to add new digital media services that could add over $1 billion in annualized revenue at an above-average margin," Hargreaves wrote.


Source: Reuters