iPhone News Updated

Apple’s New IPhone 3G Begins Selling in Tokyo to Lines, Waits

Apple’s New IPhone 3G Begins Selling in Tokyo to Lines, Waits

July 11 (Bloomberg) — Apple Inc.’s new iPhone went on sale today with crowds lining up outside stores in Tokyo and Auckland, New Zealand, as Chief Executive Officer Steve Jobs takes aim at Research In Motion Ltd.’s BlackBerry.

Minoru Hagiyama arrived at Softbank Corp.’s store on Omotesando, Tokyo, at 6:30 a.m. local time to find about 1,300 customers already in front of him. The first started camping out three days ago to buy the iPhone 3G, an update of Apple’s handset that works on speedier third-generation wireless networks.

“I haven’t owned a mobile phone in about five years, I just didn’t feel the need, but this is different,” said Hagiyama, 50, from Tokyo. “I don’t think of it as a mobile phone, more like a portable PC.”

The line-up of customers equipped with folding chairs, tarpaulins, packs of food and Apple laptop computers, stretched about 500 meters from the flagship store of Softbank, Japan’s third-largest mobile-phone carrier, which won the right to introduce the iPhone 3G in the nation.

The entrance to the store was besieged by reporters and camera crews, while helicopters circled overhead as an LED display above the door counted the minutes and seconds down to 7 a.m. when the handset went on sale.

Apple will start selling the new iPhone in 22 markets today, almost quadrupling the markets for the handset, which has better audio quality, lets users run software from outside developers and adds support for corporate e-mail systems. The handset has already seized second place in the market for Web-surfing handsets known as smart phones in the U.S.

“Apple will be one that does well since they are making it out to be so much more than a phone — other players seem to be playing catch-up,” said Romeo Dator, portfolio manager at the All American Equity Fund at U.S. Global Investors Inc. in San Antonio. “They will be a winner in the move toward smart phones.” His firm manages $5.5 billion, including Apple shares.

New Zealand First

The business-friendly features may help Jobs win more corporate customers from U.S. market leader Research In Motion, bringing him closer to his goal of selling 10 million iPhones this year.

Vodafone stores in New Zealand were the first in the world to sell the IPhone 3G at one minute past midnight local time. In Auckland, 22 year-old student Jonny Gladwell was rewarded for a 55-hour, mid-winter vigil by being the first person to purchase a handset.

“I’m going to go home, put this on charge, play around with it and have a nice long sleep,” Gladwell told Television New Zealand.

Apple, which sold the first iPhone in six countries, will introduce the 3G in 16 new markets, including Japan, Mexico and Spain. Jobs plans to offer the device in 70 countries later this year, compared with about 135 nations for Research In Motion’s BlackBerry. Piper Jaffray & Co. analyst Gene Munster predicts Apple may sell as many as 4.08 million new models this quarter.

IPhone Killers?

Apple, based in Cupertino, California, rose $2.38 to $176.63 yesterday in Nasdaq Stock Market trading. The shares had declined 11 percent this year before today.

Smart phones combine Internet and computer functions so users can surf the Web and check e-mail. The first version of the iPhone, released in June 2007 in the U.S., held the No. 2 spot behind the BlackBerry in the first quarter, according to Framingham, Massachusetts-based researcher IDC.

Phone makers have returned fire with less costly competitors. Sprint Nextel Corp. dubbed Samsung Electronics Co.’s Instinct handset an “iPhone killer” when it began selling the device last month for $130 with a contract. Palm Inc. sells the Centro smart phone for $99 with a carrier agreement.

Macintosh, iPod, iPhone

Jobs plans to turn the iPhone into Apple’s third major business alongside the Macintosh computer and iPod media player. Those businesses accounted for 78 percent of Apple’s $24 billion in sales in its latest fiscal year.

Apple is no longer tying distribution deals with wireless carriers to a cut of the monthly fees they collect. Instead, analysts expect its partners to buy phones from Apple for anywhere from $350 to $700 apiece. The carriers can then sell the 3G phone at any price, with a goal of recouping the handset’s cost by requiring that customers sign service contracts.

Apple will sell its largest model, with 16 gigabytes of storage, for $299 with a two-year service contract in the U.S., compared with $499 for the older version. AT&T Inc., the biggest U.S. phone company, provides iPhone service exclusively there.

Different Strategy

The device can run hundreds of third-party programs that Apple will deliver online through a new “App Store.” IPhone 3G users will be able to choose from among more than 500 programs from the App Store. Apple said yesterday that more than 125 of the programs will be free.

Customers will be able to download Internet content at least twice as fast as the older models using the 3G networks. The new iPhone also has a global positioning system and support for Microsoft Corp.’s Exchange corporate e-mail system.

“I truly believe this phone is best in class,” said Jeffrey Ng, president of New York-based Eastmedia Group Inc., who waited in line last year at Apple’s Fifth Avenue store to buy his iPhone. He’s planning on trading up to the new model. “The GPS and 3G speed I think is well worth it.”

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net; Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net.