Thousands of tech faithful snap up first iPhones

By Scott Hillis and Sinead Carew

SAN FRANCISCO/NEW YORK (Reuters) - Thousands of U.S. gadget fans flocked to stores on Friday to be the first buyers of Apple's iPhone, a music-playing and Web-browsing device expected to shake up the mobile industry.

Crowds lined up at some of Apple's outlets cheered as their doors opened at 6 p.m. local time, while smaller groups waited outside AT&T stores. AT&T Inc. is the phone's exclusive wireless carrier for the first two years, which many early reviewers cited as the phone's biggest drawback.

"I haven't slept in a day and a half," said Grant Johnson, 41, an accountant from Brooklyn who was one of the first to walk out of Apple's Fifth Avenue outlet clutching the prize. "I need a nice hot shower and a bath."

Early hitches included a hiccup in AT&T's retail computer system that delayed some East Coast sales for 45 minutes, and a sluggish response from Apple's online store shortly after it began offering iPhones.

The iPhone melds a phone, Web browser and media player, and costs $500 to $600, depending on memory capacity. Technology gurus praised it as a "breakthrough" device, but questioned whether users would be unhappy with shortcomings such as its lack of a hardware keyboard and pokey Internet link.

The light, svelte gadget is a gamble by Apple Inc. co-founder and Chief Executive Steve Jobs to build upon his company's best-selling iPod music player and expand the market for its software and media services.

"They want to extend the dominance they have in terms of their ability to create really elegant hardware and software integration," said Mark McGuire, analyst with research firm Gartner. "This is the next big business unit for them."

Apple aims to sell 10 million iPhones in 2008, which would amount to a 1 percent share of the global market. It has not given a sales goal for the launch, but some analysts said it could sell up to 400,000 units in the first few days.  Continued...