Oct. 14 (Bloomberg) -- Apple Inc. is poised to sell as many
as 4 million units of its new iPhone 4S this weekend as
customers around the world clamor for one of the last products
developed under Steve Jobs.
The device, available today in the U.S., Australia, Canada,
France, Germany, Japan and U.K., is projected to outperform last
year's introduction of the iPhone 4, which topped 1.7 million
units in its introductory weekend. For the iPhone 4S, most
estimates range from 2 million to 3 million, with Yankee Group
analyst Carl Howe predicting sales of as much as 4 million.
The release represents the end of Apple's era under Jobs,
who died this month after an eight-year battle with cancer. The
iPhone 4S has received mostly positive reviews for its voice-
recognition software, speedier processor and improved camera.
The device also provides Apple with fresh ammunition in its
fight against Google Inc.'s Android software, which will appear
on a host of new smartphones in the year-end holiday season.
'It's going to easily outpace any previous launch,' said
Charlie Wolf, an analyst at Needham & Co. in New York. It helps
that the iPhone is available on the three largest U.S. carriers
for the first time, which will bring in new buyers, he said.
Apple also has released an update to its iOS mobile
operating system, which customers can download to their existing
devices. The software comes with 200 new features and a Web
storage service for synchronizing photos, documents, music and
other files across different Apple gadgets.
Google Competition
While the iPhone is the best-selling single smartphone, all
of the devices running Google's Android operating system account
for more of the industry's sales. HTC Corp., Samsung Electronics
Co., Motorola Mobility Holdings Inc. and other manufacturers
have adopted the software. Google offers Android for free and
then makes money on mobile advertising and services. That
revenue now accounts for $2.5 billion a year, the company said
yesterday when it released quarterly results.
Apple's shares have jumped more than 10 percent this week,
boosted by speculation that the iPhone 4S will be a hit. The
stock closed at $408.43 yesterday, making Apple the world's most
valuable business. Its market capitalization now stands at
$378.7 billion, compared with $371.3 billion for the second-
ranking company, Exxon Mobil Corp.
'Memory' of Steve
About 25 customers were lined up outside Apple's Midtown
Manhattan store at lunch yesterday. In Australia, the first
country where the product went on sale, Jackie Guo, 25, and his
girlfriend, both students at Macquarie University, said they
lined up as a tribute to Jobs.
'It's the iPhone for Steve, it's for the memory of
Steve,' Guo said. 'It was the last product he worked on. He
pushed this company to become a viable company. His ideas are
better than others. They make the market more hungry for the
product.'
In Tokyo, about 80 people were lined up a day before the
debut and there were more than 800 people by 8 a.m. at the Ginza
district store.
Jobs's admirers have turned storefronts into makeshift
memorials, adding a solemn tone to the frenzy that accompanies
the company's product releases. Jobs co-founded Apple and
returned to the company after a 12-year absence, rescuing it
from near-bankruptcy.
Sell Out
'They are going to sell out,' said Yankee Group's Howe,
who is based in Boston.
High demand for the new iOS 5 software contributed to
glitches at Apple even before the iPhone 4S went on sale.
Customers downloading it to their older phones overwhelmed the
company's servers, making it harder to upgrade.
Apple hasn't said how many people were affected. The wait
time to get a call back from an Apple support representative via
the company's Express Lane service is much longer than usual.
Typically, an Apple rep will call back within a few hours. Now,
the earliest appointments aren't for days.
Trudy Muller, a spokeswoman for Cupertino, California-based
Apple, declined to comment.
The iPhone 4S will go on sale later this month in 22
additional countries, including Ireland, Italy, Mexico and
Spain. Apple didn't say when it will be available in China, a
country Chief Executive Officer Tim Cook has said will be
critical for the company's future growth.
Rush of Preorders
Apple said earlier this week that it had received more than
1 million preorders for the iPhone 4S. The three U.S. carriers
selling the device -- AT&T Inc., Verizon Wireless and Sprint
Nextel Corp. -- sold out as well. The demand puts Apple on pace
to sell a record number of iPhones in the quarter ending in
December, according to the analysts' reports. Gene Munster, of
Piper Jaffray Cos., estimates that Apple could sell more than 25
million iPhones this quarter.
The iPhone, first introduced in 2007, has become Apple's
top moneymaker, accounting for almost half its total revenue.
Sales from the new model won't be part of the fourth-quarter
financial results Apple is due to release on Oct. 18. Even so,
profit rose about 60 percent in the period to $6.9 billion on
sales of $29.5 billion, according to the average of analysts'
estimates compiled by Bloomberg.
The release of the iPhone 4S, along with new Android
models, should mean that smartphone users account for the
majority of U.S. mobile-phone customers for the first time, said
Roger Entner, an analyst at Recon Analytics LLC in Dedham,
Massachusetts.
Apple controlled 19.1 percent of the smartphone market in
the second quarter, according to research firm IDC, ahead of
Samsung, Nokia Oyj and Research In Motion Ltd.
Few companies can build excitement around a new product the
way Apple can, Yankee Group's Howe said.
'This is what they are good at,' he said. 'They know how
to make a big launch weekend.'
To contact the editor responsible for this story:
Tom Giles at tgiles5@bloomberg.net
