Fans scramble for Apple's iPhone upgrade

NEW YORK/PARIS/TOKYO Thu Jun 24, 2010 5:17pm EDT

1 of 7. A customer tries out the new iPhone 4 at Apple Inc's store in the Ginza district of Tokyo June 24, 2010.

Credit: Reuters/Yuriko Nakao

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NEW YORK/PARIS/TOKYO (Reuters) - Apple fans lined up overnight by the hundreds outside stores in the United States, Europe and Japan to snap up the latest iPhone, setting a new benchmark in the fast-growing smartphone market.

It sold a record 600,000 in pre-orders in a single day last week and analysts expect upwards of a million sold in 24 hours: a record for a consumer electronics company and easily outstripping the pace of the last iPhone.

In midtown Manhattan, Apple employees and eager shoppers cheered as the doors of the flagship store allowed the first buyers in at 7 a.m. EDT. About 1,000 people thronged Apple's Santa Monica store.

Many had camped out for more than a day to pick up phones they had pre-ordered. As sales began, a line of hundreds more, who did not order online, circled an entire city block in New York.

First in line was Evan Wiendczak, a high school student from Boston who waited 48 hours to pick up his new phone. He said he was excited about the new design and video features.

And what's the first thing Wiendczak will do with the new device?

"I'll probably call my mother. She was very skeptical of the idea (of going to New York for a phone) when I told her. But I think she accepted it now," he said.

The iPhone 4 makes possible video calls, can handle multiple tasks simultaneously and has longer battery life than previous versions -- adding specifications that some rivals already have to its trademark design.

For the current quarter, which ends on Saturday, analysts expect Apple to sell 8 million to 9 million iPhones, including sales of older models. Analysts expect Apple to ship 10 million or more a quarter, as output ramps up to meet demand.

Shares in Apple edged 0.5 percent higher to $272.32 in afternoon trade on Nasdaq, after hitting an all time high of $275 this week.

BGC analyst Colin Gillis expects Apple to set a record for being the first company to sell a million smartphones in a single day. Hudson Square Research, which tracks product launches, expects more than a million moving in 24 hours.

APPLE'S PIE?

Apple sold a million units of the previous version of the iPhone -- the 3GS -- in its debut weekend in 2008.

Its latest salvo in the battle for the smartphone market, which IT research firm Gartner expects to grow 46 percent this year to more than 250 million units, comes as phones based on Google Inc's Android software gather steam.

Analysts estimate that Android's 4 percent of the market last year will rise to 11 percent this year, while Apple's share is seen steady at 14 percent.

Top phone maker Nokia's smartphone strategy has faltered recently, while BlackBerry maker Research in Motion -- due to report results later on Thursday -- has been losing momentum.

In Paris, Apple aficionados began gathering at lunchtime on Wednesday for a midnight iPhone launch at France Telecom's flagship Champs Elysees store.

"I've heard a lot of good things about it. I couldn't resist any more," said Virginie, a 27 year-old marketing assistant and first-time iPhone buyer, and one of the few females on line.

Security guards said the crowd was far smaller than for previous iPhone launches, but Delphine Emotte, head of France Telecoms' French operations, said the operator had wanted to do a special launch for the "Apple-maniacs."

In London, 27-year-old business consultant Alex Lee waited for 32 hours outside Apple's central London store. A Canadian who lives in Dubai, Lee made the trip just for the launch and said the wait was as important as the phone itself.

"It's a good bonding experience and you make lifelong friends," said Lee, who previously stood in line for the last iPhone version, the 3GS, without any intention of buying one.

SUPPLY SHORTAGES

The phone has become Apple's main growth driver, and is expected to become its biggest source of revenue. Some analysts estimate that more than two-thirds of iPhone sales come from outside its home U.S. market.

At the Apple store in Tokyo's Ginza shopping district, there were only enough phones for customers who had been waiting since at least a day before the launch.

"The hardest part was the heavy rain during the day yesterday," said Akira Nakazawa, an 18-year-old student who had been waiting since Tuesday to be the first of 500-plus people.

In Frankfurt, the Apple store opened two hours earlier than usual and limited the number of phones sold to two per person.

Supply shortages, worsened by a lack of LCD display panels, could cap initial sales and hurt Apple when it faces a slew of new competitors, especially high-powered handsets based on Google's Android.

"The Droids are coming and current demand for the iPhone 4 implies a titanic battle between Apple and Google is imminent," said analyst Jeremy Copp of industry tracker comScore.

(Additional reporting by Matt Cowan and Georgina Prodhan in London, Josephine Cox in Frankfurt, Courtney Hoffman and Gabriel Madway in San Francisco, Edwin Chan and Dana Ford in Los Angeles, Nathan Layne, Chris Meyers and Chisa Osaka in Tokyo and Tarmo Virki in Helsinki; Editing by Anshuman Daga, Sharon Lindores and Derek Caney)

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