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By Poornima Gupta and Peter Schwartzstein
SAN FRANCISCO/LONDON (Reuters) - Apple Inc fans queued around city blocks
worldwide on Friday to get their hands on the new iPhone 5, pointing to a
strong holiday season for the consumer device maker despite grumblings about
the mapping app in the new smartphone.
The iPhone 5 -- thinner, lighter and with a 4-inch screen -- went on sale in
stores across the United States, Europe, Asia and Australia, with mobile
carriers reporting record demand that looked likely to stretch Apple's supply
capacity.
"The line for the iPhone 5 was 70 percent greater than the line for the iPhone
4S despite Apple taking two (times) as many online pre-orders," said Piper
Jaffray analyst Gene Munster. He expects Apple to sell 8 million of the new
smartphones over the weekend.
The long lines of excited buyers prompted optimism on Wall Street. Deutsche
Bank raised its target on Apple stock to $850 from $775, saying "demand
indicators are tracking very strongly."
The iPhone is Apple's highest-margin product and accounts for half of the
company's annual revenue. Apple shares were up 0.5 percent to $702 in afternoon
trading in New York.
JPMorgan estimates the phone could provide a $3.2 billion boost to the U.S.
economy in the fourth quarter - a boost almost equal to the whole economy of
Fiji.
Apple's rival and component supplier, Samsung Electronics Co, tried to spoil
the party, saying it plans to add the iPhone 5 to its existing patent lawsuits
against Apple.
Apple began taking pre-orders for the iPhone 5 last Friday and booked more than
2 million orders in the first 24 hours - double the first-day sales of the
previous iPhone, the 4S. Shipping time for online orders is three to four
weeks.
Prices for the iPhone 5 start at $199 for a 16 GB model and range as high as
$399 for a 64 GB model.
As Apple began delivering the new phone, struggling competitor Research in
Motion, which makes the BlackBerry, had to admit that it was once again having
service problems in Europe, the Middle East and Africa.
The iPhone 5 supports faster 4G mobile networks and also comes with a number of
software updates, including Apple's new in-house maps feature, which is based
on Dutch navigation equipment and digital map maker TomTom's map data.
But not everyone was impressed. Some users criticized the maps feature for a
number of geographical errors, missing information, and a lack of features.
And not everyone was thrilled with Apple's success.
Hundreds of French iPhone fans lining up at Apple's main store in Paris got an
earful from disgruntled store employees and others protesting against Apple
policies.
Marching in front of the Paris store were about 20 former staffers of
independent Apple distributors that closed after struggling to compete with
Apple's own stores. Joining them were three Apple store employees striking to
protest Apple's refusal to offer staffers meal vouchers and a yearly bonus of
an extra month's pay - perks that are standard for many French workers.
In San Francisco, Apple store worker Cory Moll, who is seeking to start a union
and is the founder of the Apple Workers Retail Union initiative, stood outside
the main downtown store with a placard showing his support for the French
workers and those who assemble Apple products in Asia.
The line of buyers at the store wound around several blocks.
A FLINTSTONE PHONE
The launch drew crowds of customers at Apple stores worldwide.
Hundreds of people lined up around the block at Apple's store on New York
City's swanky Fifth Avenue.
Kadijah Perez, 26, a Bronx resident, had not heard about the map issues. She
said she wanted to use the phone for navigation, adding, "Hopefully, they'll
just fix it."
In Annapolis, Maryland, customers settled in lawn chairs waiting for the Apple
store in Westfield Annapolis Mall to open. A man walking by quipped: "I'm
beginning to believe (Mitt) Romney. The economy is bad. People are starving."
Waiting in line for anything was a first for Annapolis resident Robert
Delarosa, 37, who skipped buying the iPhone 4 due to bad reviews but is now
tired of his iPhone 3GS.
"I'm stuck with this old 3GS, a Flintstone phone," he said.
In London's central Regent Street, about 1,300 people lined up to buy the
iPhone 5, nearly twice as many as showed up for the previous iPhone.
The iPhone 5 "is both the fastest and biggest selling iPhone to date on our
network. Pre-order sales are up more than 50 percent compared to the iPhone
4S," a Vodafone UK spokesman said.
In Germany, 19-year-old musician Okan Yasin had waited since lunchtime on
Thursday to be at the front of the queue at the Frankfurt Apple shop. Proudly
holding a sign saying "Ich bin Nummer 1" (I am Number 1), he said:
"I just need to have it. I know that the new iPhone from a new features
perspective hardly has anything extra to offer. But I just needed to be here.
It's the hype, man!"
In Australia, about 600 people queued around the block at the Apple store in
Sydney, the first in the world to hand over an iPhone 5 to a buyer. Customers
were limited to buying a maximum of two phones.
In Tokyo, the lines stretched several blocks.
"It's thin and light. I've used Samsung before, but the operation, the feeling,
of the iPhone is better," said Wataru Saito, a semiconductor engineer who had
been queuing in Tokyo since mid-afternoon on Thursday - with his suitcase, as
he had a flight to catch on Friday.
In Hong Kong, people carrying rucksacks filled with cash waited outside the
city's main Apple store, hoping to snap up phones for resale. Staff there
chanted "iPhone 5, iPhone 5."
Most of those waiting were fans already hooked on Apple's earlier iPhones and
best-selling iPad tablet computers.
"I feel like if I leave it at home, I go a bit crazy," said James Vohradsky, a
20-year-old student who queued for 17 hours with his sister. "I can't do my
normal day without it."
Vohradsky said the iPhone 5's lack of a mobile payment chip was "a bit of a
letdown." Apple did not embed Near Field Communication (NFC) technology, used
to turn cellphones into mobile wallets, into the new smartphone.
RUNNING OUT
There was concern that not enough new phones were available to meet demand.
Softbank and Singtel, Singapore's biggest mobile phone operator, said demand
had exceeded previous offerings from Apple and there was worry the company
would not be able to keep up.
Japanese carrier KDDI Corp said it had already run out of the new phone, and
Australia's Telstra Corp Ltd reported online orders sold out in a record 18
hours. Telstra said it was discussing bi-weekly restocking with Apple.
Apple plans to sell the new phone in 100 countries by the end of the year,
ramping up competition in a smartphone market that has already reached fever
pitch.
Apple is up against phones that run on Google Inc's Android software, which has
become the most-used mobile operating system in the world, while Samsung has
taken the lead in smartphone sales.
(Additional reporting by Thuy Ong in Sydney, Venus Wu and Stefanie McIntyre in
Hong Kong, Kevin Lim in Singapore, Harro Ten Wolde in Frankfurt, Gwenaelle
Barzic in Paris and Kate Holton in London, Sinead Carew in New York, Tim Kelly
in Tokyo and Medina Roshan in Annapolis.; Editing by Angus MacSwan and John
Wallace)