2nd WSJ UPDATE: Apple Starts Selling iPhone 5 in Stores
09/21/2012| 12:40pm US/Eastern
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--iPhone 5 goes on sale in nine countries
--Sprint Nextel reports constrained inventory in US
--New map app prompts complaints
(Updated to include additional details from San Francisco, New York and Sprint Nextel, beginning in paragraph four.)
By Ian Sherr
Huge lines on Friday welcomed Apple Inc.'s (>> Apple Inc.) latest iPhone at stores in the U.S. and eight other countries, despite a widening controversy over the handset's mapping features.
The iPhone has powered Apple to become the world's largest company by value, and the newest version--dubbed iPhone 5--is seen as critical to the company's continued success. The iPhone 5 features a larger screen, faster networking capabilities, a more powerful processor and an updated operating system, which includes new mapping software that replaces the popular Google Maps.
IPhone 5 preorders began last week, with 2 million units sold within the first day, but the phone first appeared in stores Friday. In a scene that played out similarly around the world, hundreds of consumers waiting for the phone were greeted by employees clapping their hands when doors opened at 8 a.m. local time.
At an Apple store in downtown San Francisco, customers lined the length of one and a half city blocks. In front was 24-year-old Charlie Hufnagel, who was hired to wait in line for $1,500 through a website called TaskRabbit, where customers can hire the company's contractors to run errands like pick up groceries or deliver a singing telegram.
Mr. Hufnagel plans to purchase an iPhone 5 for himself with his proceeds, in part because he cracked the screen on his iPhone 4 after he initially got in line on Monday. "I feel like it's a sign," he said.
In New York, some customers at Apple's Fifth Avenue store were going back in line after buying the two handsets allotted per person, saying they wanted more for friends and family.
Meanwhile, lines were shorter at the stores of the phone's U.S. wireless carriers in midtown Manhattan, where only a couple dozen waited. Despite the smaller crowds, there are concerns about the number of new iPhones available at the carrier stores.
Already, a Sprint Nextel Corp. (S) spokeswoman said the inventory of new iPhones at the majority of Sprint-branded retail stores on the East Coast are seriously constrained or sold out. The spokeswoman added that customers can add their name to a wait list for iPhone 5 at many such stores by buying a $50 Sprint gift card, which could be applied to the price of the phone.
Verizon Wireless said iPhones remain available at its stores nationwide. AT&T declined to comment.
Brian Marshall, an analyst at ISI Group, said he expects between five million to eight million iPhones to be sold over this first weekend, with total sales limited mainly by supply constraints. The bottleneck in producing the iPhone is its screen, he added, and though he expects Apple to focus its supplies on its own Apple Store shops, he expects the entry-level iPhone models to sell out quickly and potentially remain hard to find throughout the holidays.
Sales of the iPhone 5 began in Australia, where some waited as long as 68 hours for the smartphone. Enthusiasm was so high in Australia that online betting site Sportsbet.com.au was taking bets for how long the line in Sydney would be and what would be the most popular apps downloaded.
Todd Foot, representative of mobilephonefinder.com.au, claimed to be the first person in the world to purchase an iPhone 5 Friday morning, after waiting in line since Tuesday. He said he had already detected flaws with mapping features in the iOS 6 mobile operating system that comes with the phone.
"Apparently it's not 100% accurate, in fact the shop across the road here is the Darrell Lea store and that's actually listed as the Apple store at the moment, through their own maps software, so it's a bit of a joke going around," Mr. Foot said.
Users world-wide have complained about Apple's new map app, pointing to misplaced labels for businesses and landmarks, cities with missing roads and erroneous features like a fractured river in Ann Arbor, Mich.
An Apple spokewoman said Thursday that the software would get better as more people use it, adding that the company is working hard to make the customer experience "even better."
After Australia, the iPhone hit stores in Japan, Singapore, Hong Kong, France, Germany and the U.K., finishing in the U.S. and Canada.
In Paris, customers queuing outside the flagship store were joined by a French union calling for better pay and working conditions for Apple employees. Workers distributed fliers saying they're demanding a bonus of a month's pay, as well as cleaner toilets and better air conditioning. "Apple is neglecting us, even as it cares for its brand," Mr. Bordage said.
Officials at Apple didn't return calls and emails seeking comment.
"They're being mistreated," said Sylvain Gautier, one of the first customers in line. "Apple has to negotiate with them to protect its brand." But those concerns didn't stop Mr. Gautier from waiting 26 hours to buy two new iPhones. "I wanted to be the first Parisian," he said, as he walked out the store amid cheers and chants.
The scene outside some Apple stores had a carnival-like feel. In Japan, some of those who waited were dressed in homemade gear, such as sandwich boards fashioned to look like Phones.
Investors also have been excited by the new phone, pushing shares of the Cupertino, Calif., company to all-time highs this week. The stock recently rose $5.73 to $704.40, valuing the company at about $660 billion.
Apple is charging $199 for the entry-level iPhone 5 if customers sign up for a new two-year contract with their carriers. Prices are similar in other markets around the world. Apple said it is rolling the iPhone out more quickly than in the past and the device would be available in 100 countries by the end of the year.
The new iPhone comes amid heightened competition from new phones that are powered by Google Inc.'s (>> Google Inc) Android software and Microsoft Corp.'s (>> Microsoft Corporation) Windows system. Among specific handsets, Samsung Electronics Co.'s (SSNHY, 005930.SE) Galaxy devices have become the biggest challenger to Apple's products.
Kevin Tse, a 26-year-old working for an advertising company, bought an iPhone 5 for himself and one for his girlfriend in Hong Kong. A few months ago, Mr. Tse bought Samsung's flagship Galaxy SIII smartphone, but decided to buy the iPhone 5 because he was attracted by the major changes made to the new model.
He took out his Galaxy SIII from his pocket and said "I will see which one is the better phone."
Many buyers are attracted to the iPhone's ease of use and its ability to communicate with other Apple devices. Sean Pan, 41, who was waiting in line in San Francisco, said he tried a tablet device running the Android mobile operating system but returned it after a week because it didn't connect well with his family's Apple products.
"I tried moving away from Apple, but I keep getting sucked back in because the devices work well together," he said.
--Contributing to this story were Cynthia Koons and Andrew Critchlow in Australia, Yoree Koh in Tokyo, Juro Osawa in Hong Kong, Lilly Vitorovich in London, Sam Schechner in Paris, Lars Ophuels in Frankfurt, and Thomas Gryta and Drew Fitzgerald in New York.
Write to Ian Sherr at ian.sherr@dowjones.com
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