The iPhone goes on sale, finally

Despite the rush to buy, no sell-out of phones

As hundreds lined up in front of the Apple store in midtown Manhattan cheered, the first buyers of the long-awaited, much-coveted iPhone emerged, holding small black bags over their heads.

In less than an hour, the line had nearly evaporated, with some successful shoppers claiming the store had "thousands" of iPhones waiting inside.

Media coverage -- CNBC set up stationary cameras in New York, Chicago and San Francisco, and left them running to feed a live stream on its Web site was heavy -- but there were no immediate reports of major problems as the first iPhones went on sale shortly after 6 p.m. EDT. Two hours later, there had been no reports of sell-outs as sales of the phones began as each U.S. time zone hit 6 p.m.

Lines at AT&T stores were generally shorter than those at Apple's own stores, perhaps because the formers' policy was one iPhone per customer; Apple allowed buyers to purchase up to two each. Apple's online store, as expected, was shuttered and displayed the traditional "We'll be back soon" message, saying the store would re-open at 6 p.m. PDT.

It did, with the online store touting the device on its home page. Buyers also found that shipping times for both models, when bought from Apple online, were two to four weeks.

There were glitches, however. CNBC reported that computers in the AT&T retail network had slowed under the load, with outright failures at some stores. An AT&T spokesman told CNBC that the incidents had nothing to do with the company's cell phone network.

And in Philadelphia, where Mayor John Street had camped out in front of an AT&T store beginning at 3:30 a.m., passers-by asked him why he wasn't at his desk and pressed him about the city's crime rate. "I'll tell you one thing, Mayor," Barbara Jendrzejewska, a former city worker, told Street, according to WCAU, the city's NBC affiliate. "If you took a poll right now of about 50 or 100 people, I swear to God those people would not be happy with you sitting out here. This, to any taxpayer, would be considered personal."

Street left the line around 11:30 a.m. when another passer-by quizzed him about the city's homicide rate. "How can you sit here with 200 murders in the city already?" a young man asked the mayor, according to the Philadelphia Inquirer. FBI statistics released earlier this month said Philadelphia had the highest murder rate among the nation's 10 largest cities in 2006.

Later, Street returned to the line and eventually was among the first to exit the store with an iPhone.

In other media coverage, Apple co-founder Steve Wozniak held court at the Apple store at San Jose's Valley Fair Mall, rolling up early this morning on his trademark Segway, and later gave television and phone interviews. At the University Avenue Apple store in Palo Alto, Calif., blogger Robert Scoble reported that among those in line was Bill Atkinson, one of the first Mac software developers and the creator of MacPaint, one of the two applications (the other, MacWrite) bundled with the 1984 Macintosh.

On eBay, 8GB iPhones were being offered via BuyItNow as for as much as US$1,995, although there were scores available for lower prices; the lowest appeared to be US$750, a US$151 surcharge over the US$599 retail price.

Elsewhere across the nation, celebrities were among the Apple fans waiting for their chance to get an iPhone, first unveiled by Apple CEO Steve Jobs way back in January.

At the Apple store in the SoHo section of New York, a carnival atmosphere prevailed throughout the afternoon, building to a climax with a crowd of hundreds counting down from five just before 6 p.m. In the last hour before doors opened, a man was even heard selling spots close to the front of the line to those who were closest to the back.

Amid whoops and hollers, movie director Spike Lee was the first to walk into the store, saying he was there for charity. A Brooklyn, charity called Keep a Child Alive grabbed first place in line earlier in the week, using its position to publicize its plans to auction an iPhone on eBay and use the money for charity.

"They asked me to be a part of it," Lee said. He noted that the charity did the "hard part" waiting in line all week in front of the store, and said he felt lucky to be part of the effort.

Actress Whoopi Goldberg was second in line. When asked what she was doing there, she commented on the media crowding around her, saying "I don't really know at this point." When asked whether she was going to buy a phone, she said yes.

Meanwhile, at an AT&T store in downtown Boston, Craig Henry took a sick day from work to snag second place in a line of 65 people.

"I have a Motorola Q and a BlackBerry, but this lets me get rid of the phones and the iPod," Henry said. "I'll sell it [the iPod] to you if you want."

Apple has said it wants to sell 10 million units worldwide by 2008, but Jobs warned Friday that the company may not have made enough iPhones to meet demand for the launch. In fact, that goal is modest by Apple's own standards; the company sold more than 10 million iPods during the first quarter of 2007 alone.

Other factors that could lead to slow sales are consumer wariness about the iPhone's battery life, the utility of its virtual keyboard, and its high price. The phone comes in a 4GB model for $499 and an 8GB model that sells for US$599, and requires a two-year AT&T service plan. The plans, just announced last week, range from US$60 per month to US$100 per month.

However, Apple officials argue that the iPhone will win converts with its touch-screen interface and combined functionality of a mobile phone, iPod music player and mobile Internet browser. The company says those features will differentiate it from other smartphones like the Motorola's Q, Palm's Treo, the Research in Motion BlackBerry, Samsung Electronics' BlackJack, the Sony-Ericsson W900-series, Nokia Corp.'s N-series and the Prada from LG Electronics.

To handle the expected rush of customers, Apple extended the hours in its 164 U.S. retail stores until midnight. But the majority of customers are expected to buy the phone at one of the 1,800 AT&T retail shops, which also pushed their usual 8 p.m. closing time back to 10 p.m.

The iPhone will go on sale in Australia next year.

With reports from Elizabeth Montalbano and Ben Ames, of the IDG News Service.

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