IPhone Launch Day Arrives

After six months of unprecedented hype, thousands of people Friday will get their hands on the iPhone, the new cell phone that Apple Inc. is banking on to become its third core business next to its moneymaking iPod players and Macintosh computers.

By early evening Thursday, short lines of eager customers were camped out at Apple and AT&T stores across the nation. The gadget, which combines the functions of a cell phone, iPod media player and wireless Web browser, will go on sale in the United States at 6 p.m. Friday in each time zone.

At Apple's flagship store in New York City, the trickle of customers that began queuing up since Monday grew to about 50 people late Thursday, ready to brave yet another rainy night on the pavement of Fifth Avenue, outside the only 24-hour Apple store.

"It's pretty miserable sleeping in the rain, but it's worth it," said a tired David Clayman, who was second in line at the store and had gotten a total of eight hours of sleep over four days, awakened at times by TV camera crews shining bright lights in his eyes. The Chicago resident vacationing in New York planned to buy two iPhones -- one to resell to raise money for a charity and another as a gift for his father.

The gadget with a 3.5-inch touch-screen display, 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 propelled 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.

And despite the handset's price tag of $499 for a 4-gigabyte model and $599 for an 8-gigabyte version, on top of a minimum $59.99-a-month two-year service plan with AT&T Inc., the phone's exclusive carrier, some bullish Wall Street analysts have predicted sales could hit as high as 45 million units in two years.

"That's nuts. Over-hyping this thing just puts it at risk of being seen as a failure," said Rob Enderle, an industry analyst with The Enderle Group. "Apple will break (sales) records for a phone of this class, 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."

In all likelihood, however, Enderle and other analysts think Apple will grow its iPhone sales, refining its models and improving its software features -- much as it did with the iPod, which has fueled record profits for the trendsetting company.

Apple introduced the original iPod in 2001, but sales of the portable player did not skyrocket until a few years later, after the company debuted sleeker, smaller models and iTunes jukebox software that allowed the iPod to work with Windows-based PCs and not just Macs. Apple has now sold more than 100 million iPods, dominating the portable music player market.

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.

Even a gadget-loving person like Gene Cram, who owns a BlackBerry Pearl smart phone from Research in Motion Ltd., and sometimes also uses an older Palm Inc. Treo phone or his Motorola SLVR, said he's going to wait for customer reviews before investing in what appears to be the latest must-have piece of techno-wizardry.

"It'll be interesting to see how well it really works," Cram, a flight instructor, said Thursday at a cafe next door to the Apple store in Burlingame, where lines hadn't yet appeared.

Apple has not disclosed how many iPhones will 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.


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