Crowds Turn Out For Lastest Version Of Apple's IPhone
June 19 2009 - 12:01PM
Dow Jones News
Apple Inc. (AAPL) unveiled Friday its latest iPhone to
healthy-sized lines at its flagship stores on both U.S. coasts.
The release of the iPhone 3G S, the third version of Apple's
popular smartphone, comes amid rising competition in the smartphone
market. However, early reports of strong iPhone pre-orders and
steady streams of customers into Apple stores suggest consumer
interest in the iconic smartphone remains high.
In general, the lines were calmer this year than in the past and
proceeding at a good pace. Early purchasers said the phone's
activation - which had hampered previous iPhone releases - was
quick and painless Friday.
Piper Jaffray analyst Gene Munster predicted earlier this week
that Apple would sell 500,000 new iPhones this weekend, which would
be less than the million 3G versions sold last year on its launch
weekend. The difference is that the new 3G S is being released in
fewer countries and offers less dramatic changes, Munster said.
RBC Capital analyst Mike Abramsky had similar numbers,
projecting between 500,000 and 700,000 shipments of the new 3G S
over the first weekend, down from the 1 million 3G shipments last
year.
Apple declined to comment. A spokesman for AT&T, the sole
iPhone service provider in the U.S., said the phone giant had sold
"hundreds of thousands" of new iPhones through its preorder process
before the launch, exceeding its expectations.
AT&T shares, however, are not reacting to the news, down
four pennies to $24.09. The stock, down 15% this year, has been
relatively flat this month.
On the other hand, Apple shares - up 59% in 2009 through
Thursday - are adding 2.2% to $138.90 Friday.
The newest iPhone includes, among other things, a faster
processor, which makes downloading information quicker; at least
twice as much memory; a sharper camera; and the ability to record
video. The iPhone 3G S is priced at $199 for 16 gigabytes of memory
and $299 for 32 gigabytes.
Apple continues to sell its previous iPhone, the 3G, but lowered
the price to $99. That phone comes with eight gigabytes of
memory.
Len Tannenbaum waited 25 minutes to buy his first iPhone in New
York Friday after hearing his friends praise previous iPhones. The
48-year-old went with the 16 gigabyte version because he wanted to
have enough memory for video and music. The computer technician and
longtime PC user said he eventually may switch to Mac computers,
based on his experience with the iPhone.
Management consultant Matthew Mascari was drawn to the new 3G S
because of its speed and because "my old iPhone died, so I didn't
have a choice." The 25-year-old waited a half-hour in line at the
Apple store on Fifth Avenue in New York.
At 11 a.m. EDT, 64 people were in the iPhone reservation line at
the Fifth Avenue store, waiting to pick up their preordered iPhone,
while 35 others - without such a reservation - waited to get into
the store.
In San Francisco, meanwhile, lines lasted for an hour, and Apple
store employees were passing out snacks of trail mix and bagel
bites.
Alan Yan, who works in the information technology industry, said
he is going to give his current iPhone to his father and buy a new
one.
"It's everything the iPhone should have been on day one," Yan
said.
In both locations, the lines were said to be shorter than a year
ago, when the 3G version was launched, and more subdued.
Overall, Apple has sold more than 21 million iPhones in the past
two years. The phone's popularity is due, in part, to its touch
screen, smooth user interface and rapidly growing App Store, which
includes 50,000 software programs and enhances the phone's
ability.
In recent months, Apple has faced rising competition. For
example, Palm Inc. (PALM) last month introduced the Pre, a
touchscreen smartphone with a pull-out keyboard that many have
compared favorably to the iPhone. In addition, Research In Motion
Ltd. (RIMM) has established its own application store.
Thursday, on RIM's earnings conference call, co-Chief Executive
Jim Balsillie said the recently launched BlackBerry App World is
seeing tremendous interest, with 15 million downloads of
social-networking programs, like Facebook.
-By Ben Charny and Jerry A. DiColo, Dow Jones Newswires;
415-765-8230; ben.charny@dowjones.com