A new gadget from Apple is typically cause for a sales jolt, but demand for the latest redesign of the company’s popular iPhone has been off the charts. AT&T, the smartphone’s U.S. carrier, suspended sales of the device on June 16 after more than 600,000 early orders strained company computers. Some calls to Apple’s service line weren’t answered because of heavy volume.
What accounts for such demand? Performance upgrades and a sleeker look, analysts say. The thinner, square-edged, flat-back design is the first cosmetic overhaul for the three-year-old smartphone. While speedier, the iPhone 4 will sport a 5-megapixel camera, videoconferencing capability, and an outerbody antenna that should improve call reliability — a common complaint among current iPhone customers.
“The phone is sleeker and thinner,” says Adam Leach, principle analyst for Ovum, a London-based technology research firm. “The current model is starting to look a bit old.”
With 50 million iPhone users, many orders are coming from fans who want to upgrade, says Charles Wolf, senior analyst for Needham & Co. He expects a large percentage of the iPhone 4’s initial sales to be upgrades. As the phone expands into overseas markets, he says, Apple will see more first-time buyers. AT&T, the largest U.S. wireless carrier, also boosted sales by allowing any iPhone customer eligible for an upgrade in 2010 to buy the new phone at the lowest price — $199 for the 16GB model or $299 for the 32GB. That will lock iPhone customers into two-year contracts this summer, just as many analysts and others expect that Verizon Wireless will eventually become a carrier for the Apple device. “It’s a smart move for AT&T,” Wolf says.
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In a June 17 report, Morgan Stanley predicted that the number of iPhone users may surpass 100 million in 2011. “We see the iPhone installed base…