Thousands of tech faithful snap up first iPhones

Thousands of US gadget fans flocked to stores on Friday to be the first buyers of Apple's iPhone, a music-playing and Web-browsing device expected to shake up the mobile industry. Crowds lined up at some of Apple's outlets cheered as their doors opened at 6 pm local time, while smaller groups waited outside AT&T stores.
AT&T Inc is the phone's exclusive wireless carrier for the first two years, which many early reviewers cited as the phone's biggest drawback. "I haven't slept in a day and a half," said Grant Johnson, 41, an accountant from Brooklyn who was one of the first to walk out of Apple's Fifth Avenue outlet clutching the prize. "I need a nice hot shower and a bath."
Early hitches included a hiccup in AT&T's retail computer system that delayed some East Coast sales for 45 minutes, and a sluggish response from Apple's online store shortly after it began offering iPhones.
The iPhone melds a phone, Web browser and media player, and costs $500 to $600, depending on memory capacity. Technology gurus praised it as a "breakthrough" device, but questioned whether users would be unhappy with shortcomings such as its lack of a hardware keyboard and pokey Internet link.
The light, svelte gadget is a gamble by Apple Inc co-founder and Chief Executive Steve Jobs to build upon his company's best-selling iPod music player and expand the market for its software and media services.
"They want to extend the dominance they have in terms of their ability to create really elegant hardware and software integration," said Mark McGuire, analyst with research firm Gartner. "This is the next big business unit for them."
Apple aims to sell 10 million iPhones in 2008, which would amount to a 1 percent share of the global market. It has not given a sales goal for the launch, but some analysts said it could sell up to 400,000 units in the first few days.
What is less clear is whether sales will hold up once the initial excitement has waned. Piper Jaffray said this month Apple could sell 45 million iPhones in 2009, which would put it on par in terms of revenue with its two key businesses, the Mac computer and the iPod.
Many analysts say Apple's share price could rise 30 percent in the coming year if the phone catches on, but some cautioned that the shares are already richly valued. Talk of the iPhone rippled through the wireless industry before even a single unit had sold.
Ed Colligan, chief executive of rival Palm Inc, told Reuters on Thursday that sales of its Treo smartphone could "stall" in the short term as people try out the iPhone. Apple is due to sell it in Europe in the run up to this year's holiday season. It has not disclosed the price or carrier, but speculation has mounted it may reach a deal with Vodafone Group Plc Asian sales are expected in 2008.
Friday's launch, which whipped tech lovers into the sort of frenzy usually associated with a new video game console, was seen as a test of wider US demand for the sort of advanced phones that are already popular in parts of Asia and Europe.
Judging by its first customers, the iPhone seemed to draw an older generation of gadget geeks rather than young fans who may have been put off by the price.
Although a service contract costing at least $1,400 over two years was widely thought to be mandatory, AT&T revealed to Reuters late on Friday that buyers with bad credit can obtain prepaid service, meaning they pay up front for call time. Some early buyers aimed to make a profit on the iPhone by selling it or getting paid to wait.