Apple gives cost of iPhone service, first fans show up

By Sinead Carew

NEW YORK (Reuters) - Apple Inc. said on Tuesday its hotly anticipated iPhone could cost as much as $3,000 with a required two-year service contract, but a handful of eager fans still lined up early to spend their money.

A small clutch of gadget enthusiasts staked out spots in front of Apple's store on New York's Fifth Avenue, days before the iPhone goes on sale on Friday evening 6 p.m. local time.

Plenty of potential iPhone consumers have said they would wait for Apple's next versions of the device to buy it, hoping for a lower price and faster network connection.

But industry analysts expect the first iPhone to sell quickly, at least in its initial months. Jessica Rodriguez, a 24-year-old student from the Bronx, seems to agree with them.

"I love everything Apple, and this is going to be something that goes down in the history books of cell phones," she told Reuters.

Rodriguez showed up on Tuesday morning with a chair, a sandwich and a large iced tea, taking the fourth place in line and braving an expected heat spell in the city.

Rodriguez plans to switch to iPhone's exclusive carrier, AT&T, just to use the device, and she will give her current Sprint Nextel phone to her mother.

"My dad thinks I'm crazy, but then he saw the commercial and said, 'I want it,'" she said of her 76-year-old father.

David Clayman, a recent university graduate who starts a technology consultant job in July and was third in line, said he hoped to buy several devices, one for his father's 50th birthday and a second to auction off for his favorite charity.

AT&T said it would limit each person who turns up at its stores to buying just one phone. Apple has not said if it will follow the same policy.

Apple shares have gained more than 30 percent since the company unveiled the phone in January, as investors hope that sales of the device will outstrip even its best-selling iPod music player.

Apple shares, which have been volatile in the weeks ahead of the launch, fell back 2.6 percent to $119.15 on Tuesday after it disclosed the wireless costs, while AT&T was up 14 cents rising to $39.22.

WAITING GAME

Buyers of the iPhone must commit to a two-year contract with AT&T. The device combines a wireless phone, music, video and Web browsing, and will be sold exclusively through AT&T for at least two years.

Apple and AT&T on Tuesday outlined three iPhone rate plans that will be available, from $60 per month for the most basic to just under $100 per month for more talk time. AT&T said iPhone customers could also choose other AT&T service plans listed on its Web site.