Apple's iPhone crowds signal record debut for handsets

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Customers are reflected in the window of Apple Inc.'s Covent Garden store as they wait in line to enter during the launch of the iPhone 5s and 5c smartphones in London, on Sept. 20, 2013. Photographer: Matthew Lloyd/Bloomberg

Apple Inc. (AAPL) is poised to announce record opening-weekend sales as throngs of excited customers waited through long lines in Sydney, Tokyo, London and San Francisco to pick up the latest iPhones.

Sales for the iPhone 5s and 5c started yesterday with crowds in Sydney and extended through stores in the U.S., Canada, China, France, Germany, Hong Kong, Japan, Puerto Rico, Singapore and the U.K. In London, the line at the Regent Street Apple store stretched for a mile.

The demand has analysts predicting Apple will sell 6 million to 7.75 million iPhones over the weekend, topping last year's debut-weekend record of 5 million. The projections, along with limited supplies of gold iPhone 5s models, shows pent-up demand for Apple gadgets and also underscores how the Cupertino, California-based company has maintained customer loyalty -- even as sales and profit growth slowed and shares fell amid competition with Samsung Electronics Co. (005930) and others.

"The lines at all the stores were very good," said Walter Piecyk, an analyst at BTIG LLC in New York, who estimates Apple will sell more than 6 million handsets over the weekend. "The strong turnout was very positive for Apple."

Ben Reitzes, an analyst at Barclays Plc, said sales may top 7 million, while Citigroup Inc.'s Glen Yeung predicted as many as 7.75 million. Apple typically puts out a press release the Monday after iPhone sales begin.

Scarce supplies

Whether Apple can surpass the 5 million smartphones sold during last year's iPhone debut depends on whether there is enough supply, said Piecyk, noting there were many sellouts.

Natalie Kerris, a spokeswoman for Apple, said demand for the new iPhones was "incredible" and that they were sold out or in limited supply at some stores.

Yet Apple's stock fell 1 percent to $467.41 in New York yesterday. The shares have slid 12 percent this year, compared with a 20 percent gain for the Standard & Poor's 500 Index.

In New York, many iPhone models were gone after customers lined up around the block to get into Apple's flagship Fifth Avenue store. In Munich, about 2,000 gathered to buy the new handsets. Apple Chief Executive Officer Tim Cook and other executives visited customers at stores in Palo Alto, California, near the company's headquarters.

"I started lining up five days ago," said Sachihisa Saishiki, 45, who has camped outside the Tokyo store at least six times previously. "I was with a group of 10, and we took turns going out for food, going back home to take showers. I spent time sleeping out here, too, lying down on a cardboard box," he said after buying a gold iPhone 5s.

This was also the first time Apple rolled out its flagship product for sale in China on the same day as elsewhere, abandoning the usual three-month delay, as the company seeks to lure new customers in the world's largest mobile-phone market.

China debut

"Last year, if you wanted an iPhone 5 right after the launch, it was very expensive because you had to buy one that had been brought in from Hong Kong or the U.S.," said Max Zhang, a 20-year-old student, among the roughly 50 people waiting at the Wangfujing store in Beijing. "Now that I can buy it directly in the Apple Store, it's cheaper," said Zhang, who bought an iPhone 5s

While Apple didn't radically change the iPhone's design, the addition of new colors proved popular. The gold model emerged as the hottest seller, with Apple saying on its website that online orders of those models won't ship until next month. The white-silver and black-gray models could ship within 10 days, Apple said.

"It's the one distinct model where you can tell it's the new one," said Vincent Villalba, 25, of New York, who began waiting in line at the Fifth Avenue store at 3 a.m. to get a gold version.

New features

The crowds show how Apple's strategy of building carefully-designed products that integrate hardware and software has come to dominate the technology industry. As shoppers were snapping up iPhones, Blackberry Ltd. -- whose keyboard-wielding phones once were the handset of choice -- announced it was cutting 4,500 jobs.

The iPhone 5s features a new fingerprint reader, camera and faster processor. It costs $199 to $399, depending on the amount of memory, with a two-year contract. Without a contract, the phone costs at least $649.

For the less-expensive iPhone 5c, Apple took last year's iPhone 5 and mostly repackaged it in a new plastic casing that's offered in five different colors. It costs $99 to $199 with a two-year contract, or $549 without one.

"Visited Retail Stores in Palo Alto today," Cook said in his first post on Twitter yesterday. "Seeing so many happy customers reminds us of why we do what we do."

Software flaws

This week, Apple also released the new iOS 7 mobile operating system for iPhone and iPad. Some customers experienced long delays downloading the software, which includes sweeping graphical changes such as a new look for e-mail, camera, text messaging and other applications. Apple also is fixing a security flaw regarding the passcode lock screen in iOS 7, said Trudy Muller, a spokeswoman for Apple.

With the iPhone debut, Apple's performance in China is particularly important given the size of the market. Analysts have questioned whether the price of the iPhone 5c -- more than the equivalent of $700 because of tariffs -- will be too expensive for Chinese customers.

A survey of 25 of the earliest consumers at the Beijing store found 22 of them were there for the more expensive 5s model, compared with three for the 5c.

On par

"Tim Cook is now finally treating China as important as the U.S.," said Tony Yu, 28. The local government bureaucrat woke up at 2 a.m. and drove more than 300 kilometers (186 miles) from Qinhuangdao to be at the Beijing store by 6 a.m. "It costs me about one month's pay, but it's worth it."

In some places, there was so much excitement over the new iPhones that people started camping out in front of Apple stores days ago, evoking scenes from earlier product introductions -- even though the gadget is now six years old.

At Tokyo's Ginza area store there were about 800 people, including some dressed as Batman and Apple co-founder Steve Jobs in a face mask, jeans and black turtleneck.

At the Paris Opera store, dozens of people had gathered by 7:30 p.m. the previous night, prepared to wait even with a weather forecast for rain. Some had blankets and chairs.

Regent Street

Outside Apple's Regent Street store in London, the line was about 1 mile (1.6 kilometers) yesterday morning. Said Alkadi, a 52-year-old dentist, had flown from Jordan to buy new iPhones for his kids because they will only go on sale in the country later.

"They can't wait that long," he said. "When I get home I will be dancing in the street because I completed the mission!"

Every iPhone release is critical for Apple because the product accounts for about half its revenue. Since the iPhone 5 started selling last year, the company has faced increased competition from rivals including Samsung, which has become the world's largest maker of smartphones by offering customers a wider variety of designs and prices. IPhone sales have trailed the broader smartphone market the past two quarters.

Samsung uses Google Inc.'s Android operating software, which accounted for 79 percent of worldwide smartphone shipments last quarter, compared with 13 percent for Apple's iOS, according to research firm IDC. While reviewers such as the Wall Street Journal's Walt Mossberg and Bloomberg's Rich Jaroslovsky praised the iPhone 5s, they wrote that Samsung's devices offer close competition.

Apple fans in New York got similar advice. "Buy an Android!" a passing motorist yelled at the shoppers lined up at the Fifth Avenue store.

Loyalists weren't fazed. "I'm a huge Apple fanboy, there's no other way to put it," said Joe Engo, who added that he has used the same American-flag folding chair to wait in line to buy every iPhone on opening day since 2007.

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