Apple's expectations high for iPhone
Saturday, June 30, 2007
The company has set a target of selling 10 million units worldwide by 2008.
SAN FRANCISCO -- Techies, exhibitionists and luminaries -- even the co-founder of Apple Inc. and the mayor of Philadelphia -- lined up Friday to be among the first to get the company's coveted iPhone.
Will it be worth the wait? For many, it didn't seem to matter.
"I just love getting new stuff," said retiree Len Edgerly, who arrived at 3 a.m. Friday to be first in line outside an Apple store in Cambridge, Mass. "It's the best new thing that's come along in a long time. It's beautiful."
Even Steve Wozniak, the ex-partner of Apple CEO Steve Jobs, showed up at a Silicon Valley mall at 4 a.m. aboard his Segway scooter. He helped keep order in the line outside the Apple store at Santa Clara's Valley Fair Mall.
The other customers awarded the honorary first spot in line to Wozniak, who said he planned to buy two iPhones Friday even though he remains an Apple employee and will get a free one from the company next month. He said the device would redefine cell phone design and use.
"Look how great the iPod turned out," he said. "So who wants to miss that revolution? That's why there's all this big hype for the iPhone."
Apple is indeed banking that its new, do-everything phone with a touch-sensitive screen will become its third core business next to its moneymaking iPod music players and Macintosh computers. The gadget went on sale in the United States at 6 p.m. Friday in each time zone.
Bumps in the road
Apple's media blitz wasn't without its glitches.
On NBC's "Today" show, co-host Meredith Vieira ran into problems trying to get the iPhone to work, laughing that "this is why gadgets drive me crazy."
With a team of Apple representatives hovering off-screen, Vieira was supposed to receive a call from co-host Matt Lauer in London. The iPhone -- billed by Apple as the most user-friendly smart phone ever -- displayed the incoming call, but she couldn't answer it.
Apple spokeswoman Natalie Kerris declined to comment.
In Philadelphia, Mayor John F. Street was among those waiting in line at an AT&T store when he was asked by a 22-year-old passer-by, "How can you sit here with 200 murders in the city already?"
Street, according to The Philadelphia Inquirer, told the man: "I'm doing my job."
The mayor then left, telling an aide to hold his spot until he returns later in the day. Earlier, Street said he liked trying new technology and the iPhone would allow him to work outside the office.
"We don't have to be sitting in city hall to be conducting city business," he said.
At Apple's flagship store in New York, the line snaked around the block as would-be customers brought a dog, an inflatable couch and good spirits, despite little sleep.
"I was too amped up to sleep," said Pablo Defendini, 28, a graphic designer. "Apple has a knack for creating very easy-to-use products. Their touch in the cell phone market is long overdue, I believe."
The gadget, which Apple CEO Steve Jobs has touted as "revolutionary," has been the focus of endless anticipatory chatter and has been parodied on late-night TV. Since its unveiling in January, expectations that it will become yet another blockbuster product for Apple has pushed the company's stock up more than 40 percent.
Apple itself has set a target of selling 10 million units worldwide by 2008, gaining roughly a 1 percent share of the cell phone market. It's expected to go on sale in Europe later this year and in Asia in 2008.
The handset's price tag is $499 for a four-gigabyte model and $599 for an eight-gigabyte version, on top of a minimum $59.99-a-month two-year service plan with AT&T Inc., the phone's exclusive carrier.
For those currently using another cellular provider, there's also the cost of switching carriers. Edgerly, the Massachusetts retiree, planned to spend $75 to break his existing cell phone contract with Verizon Wireless.
The steep price tag didn't stop Tom Watson, who held No. 55 in the line outside an Apple store at Seattle's University Village mall.
"It's definitely more money than I've ever spent for a telephone," he said.
Some bullish Wall Street analysts have predicted sales could hit as high as 45 million units in two years.
"That's nuts," said Rob Enderle, an industry analyst with The Enderle Group. "Over-hyping this thing just puts it at risk of being seen as a failure.
"Apple will break (sales) records for a phone of this class," he said, "but selling tens of millions of units so quickly is going to be tough. First-generation products always have problems that you don't know about until the product ships."
More likely, Enderle and other analysts said, Apple will grow iPhone sales by refining its models and improving the software features -- much as it did with the iPod, which has fueled record profits for the company.
But unlike its foray into digital music players, Apple faces competition in cell phones from deep-pocketed, well-established giants, such as Nokia Corp. and Motorola Inc.
Apple has not disclosed how many iPhones were available at launch. But analysts expect it will sell out by early next week -- between sales rung up at retail stores and online through Apple's Web site, which has been a major distribution outlet for other Apple products.
In San Francisco, the queue outside the Apple store swelled to about 125 people Friday, with people sleeping on mattresses and cardboard and reclining in folding lawn chairs.
Lavon Smiley, a 36-year-old city bus driver, was one of several lingerers who said they avoided telling friends about waiting in line for fear of being ridiculed.
"I know my friends are going to be on me if they see me," he said. "They'd think I'm crazy for waiting for an iPhone. ... But when I show them the iPhone, they'll have a whole different attitude."