Apple's iPhone draws hordes again, powers shares

Apple Inc’s new iPhone debuted with a splash around the globe, spurring thousands to queue around city blocks and snap up the last gadget unveiled during co-founder Steve Jobs’ life. Apple shares leaped 3 percent to close at a record after people thronged stores in Sydney, Tokyo, London, Paris, New York and San Francisco to get their hands on the iPhone 4S, ignoring criticism about the lack of a design revolution and reports of software glitches.

Fans in Sydney, Tokyo, Frankfurt and London made sure Jobs, who died last week, remained part of the iPhone 4S launch, with flower, candle and photo shrines erected outside stores. A black-and-white picture of the visionary leader in Covent Garden carried the line: “Let’s make a dent in the universe.” In New York and San Francisco, hundreds showed up as expected, but the mood proved more subdued than was typical on an iPhone launch day. “I have a lot of respect for how he led the company and so the turnout, and especially the preorder sales, is a mark of appreciation for him,” insisted Chris Centers, who was one of the people who lined up outside the store. One of the buyers also stopped by to lay flowers at the San Francisco store’s glass wall in honor of Jobs.

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One million Apple iPhone 4S pre-ordered

The new model looks similar to the previous iPhone 4, but has an upgraded camera, faster processor, enhanced security and voice-activated software, which lets users ask the phone questions. The voice software drew glowing reviews. Unveiled just a day before Jobs died, it was initially dubbed a disappointment, partly because it looked identical to its predecessor. But anticipation of the “Siri” voice software helped it set an online record in orders on Oct. 7. Rivals’ woes may have provided a boost. Research in Motion Ltd struggled for days to fix an international outage of its email and messaging services. Also, about one in four people who thronged Apple stores from Tokyo to San Francisco told Reuters they were ditching BlackBerries, discarding Nokias, or even giving up Google Inc Android-based phones, hoping for something better.

Apple CEO Tim Cook and his executive team hope the first device sold without Jobs leading Apple will protect the company against a growing challenge from the arch-rival Samsung Electronics Co Ltd. Analysts believe the South Korean company, which powers its phones with Google’s Android software, surpassed Apple as the world’s biggest smartphone vendor in terms of unit sales in the third quarter. Apple does not release sales on launch day, so gauging initial figures is difficult. But the company took more than 1 million online orders in the first 24 hours after the release of the iPhone 4S, exceeding the 600,000 for the iPhone 4, which was sold in fewer countries initially. Sprint Nextel Corp – joining Verizon and AT&T Inc in Apple’s roster for the first time – said on Friday it had chalked up a launch-day sales record for any device by around noon. AT&T said that by 4:30 PM on the east coast, it had activated a record number of iPhones in one day and was on track to double the previous record for iPhone activations on a single day. Jobs “made everything better and the products he released were thought through in such detail,” Duncan Hoare, a foreign exchange trader, said as a loud roar greeted the opening of an Apple store in London. “It was about the beauty of something and the simplicity.”

The iPhone – seen as the gold standard for smartphones – is Apple’s highest-margin product and accounts for 40 percent of its annual revenue. The newest iteration uses chips from Qualcomm Inc, Toshiba Corp and a host of smaller semiconductor companies, according to repair firm iFixit, which cracked the device open on Thursday. Despite the enthusiasm at stores, Friday’s launch was marred somewhat by widespread complaints on the Internet this week about problems downloading iOS 5, the latest version of Apple’s mobile software. There were also problems with iCloud, Apple’s online communications, media storage and backup service formally launched on Wednesday.

Users reported glitches such as losing their email access. Queues in Paris were smaller than those normally seen for a brand-new iPhone, with some fans there wondering if the somewhat underwhelming introduction put people off. But in London and elsewhere the lines were as long as ever. “Despite the initial disappointment that this wasn’t an iPhone 5, the reality is we’re still seeing the usual frenzy that we’ve got used to on launch day,” analyst Ben Wood at CCS Insight told Reuters. Analysts expect global sales of a few million phones on the first weekend, he added. Analysts point to several factors in Apple’s favor, including a $199 price that matches up well with rival devices and availability promised on more than 100 carriers by the end of 2011, far more than its predecessors.

Underscoring the enthusiasm for the new phone, Japanese mobile carrier Softbank Corp had to temporarily stop contract applications after its computer system was overwhelmed with more requests than it expected. Some analysts expect fourth-quarter iPhone shipments to reach 30 million or more, almost twice as many as a year ago. “I am a fan, a big fan. I want something to remember Steve Jobs by,” said Haruko Shiraishi, waiting patiently with her Yorkshire terrier Miu Miu at the end of an eight-block queue in Tokyo’s smart Ginza shopping district.

Reuters