Faster, cheaper iPhone to draw crowds around globe

The new iPhone attracted hordes of buyers when it went on sale yesterday in more than 20 countries, helping Apple Inc. to handily beat its target to sell 10 million of them by the end of this year.

The much-anticipated smartphone has faster web links than the first iPhone, supports third-party software like games, and is being heavily subsidised by many phone carriers, with some even giving it away to attract new subscribers.

Atlantic Equities analyst James Cordwell said Apple may sell more than a million new iPhones in the first weekend, partly because it is selling in so many more countries than the first one, which was only available in six.

Some 270,000 people bought the first iPhone in the few days after its launch in late June last year, after many US customers had lined up for days outside its stores. AT&T, the sole US carrier, will shoulder much of the cost for the latest phone to halve the price.

"They're going to bring users in droves to this product," Deutsche Bank analyst Chris Whitmore said. He sees Apple burying its own 10 million sales target by selling about 10.5 million of the new high-speed iPhones this year, having already sold more than 6 million of the first one to date.

Mr Whitmore said price and distribution were two key reasons why the new device, which plays music and supports corporate e-mails, would outsell its predecessor.

While some analysts expect the new phone to sell best in the US and Western Europe, consumer excitement in new markets such as Hong Kong, Japan and New Zealand appeared to foretell strong demand in other markets too.

"The key is less likely to be demand and more likely to be supply," said Atlantic Equities' Cordwell. In Hong Kong, Hutchison Telecommunications was flooded with 60,000 online applications over the weekend from consumers hoping to buy the 500 phones on sale there.

In New Zealand, which will be the first country to sell the phone due to its time zone, people started lining up outside a Vodafone store on Tuesday, according to a local paper.

02, the UK arm of Telefonica, said its website was overwhelmed with early orders after being hit with 13,000 orders per second during the peak, according to a spokesman who said it had sold out in a few hours. Carphone Warehouse Plc, a UK phone retailer, said interest for the latest iPhone is 10 times higher than for the first device. Neither company gave specific sales figures.

T-Mobile, owned by Deutsche Telekom, said it has received orders for several thousand iPhones in Germany alone, where the cheapest iPhone will sell for €1. It also plans to offer it in the Netherlands and Austria.

Investors will be particularly interested in demand in Japan, where consumers have a strong penchant for advanced mobile devices. Some see the plan by Japan's number-three mobile service provider, Softbank, to sell the iPhone as a big threat to market leader NTT DoCoMo as Apple fans were already lining up in Tokyo two days before launch.

But many analysts are sceptical the device will be popular among mainstream customers as it does not support television services or electronic payment features widely used in Japan. However, Mitsubishi UFJ Securities analyst Shinji Moriyuki said Softbank stores were getting 50 to 100 enquiries a day per store about iPhones, compared with up to 30 a day before the launch of DoCoMo's popular 906i device series. Research firm Enterbrain said 6.7 per cent of 1,200 people it surveyed in Japan wanted to buy an iPhone immediately, while 35.7 per cent were interested but undecided.