Apple's iPhone Lines Don't Disappoint

iPhone Release
CNBC.com
iPhone Release

To say that Apple's iPhone 3GSis living up to its advanced billing is an understatement.

Outside this flagship Apple store in San Francisco, the line has stretched a few hundred deep consistently for the last several hours. Apple even offered free coffee and bagels for those here. A nice touch.

And from the moment the doors opened to the time of this filing (9:10aPDT), the door counter tells me 354 people have been let into the store to buy their iPhone 3GS. Not bad for two hours of operation!

Adam Jackson was first in line and he got here at 11pPDT last night for the honor. And while sales have been brisk and steady all morning long, the same can't be said of Apple's Fifth Ave. store in New York City where computer problems slowed sales and sign-ups for some customers.

iPhone Release
CNBC.com
iPhone Release

Meantime, it's a festive scene. I've seen the co-founders of Smule, Yelp, Open Table and others meeting and greeting those here.

And they're spotlighting one of the key reasons for the near euphoria surrounding the iPhone, since it is more a platform than merely a smart phone. The Apple App store with its 50,000 applications and more than 1 billion downloads, trounces the competition.

Research in Motion for one reported last night as part of its earnings that its software download service had seen 15 million downloads so far.

But RIM did report some troubling developments for Apple investors. Not only did it sell nearly 8 million Blackberrys last quarter, but 80 percent were bought by non-business customers, and that's the heart of Apple's iPhone market. If Apple were able to report that 80 percent of its iPhone sales went to the enterprise, that would gargantuan news. So the RIM announcement is significant.

Still, RBC and Piper both project a half million iPhone 3GS handsets to sell this weekend, about half as many 3G's that sold a year ago in its first weekend out, but still a blockbuster product.

Line outside of Apple Store
CNBC.com
Line outside of Apple Store

Ralph De la Vega, the CEO of AT&T Mobile was on our air earlier this morning and he sees big things coming for iPhone. He said, "We have exceeded all expectations in pre-orders. We actually have hundreds of thousands of customers that have ordered their iPhones and will be coming in to pick it up from the stores today or perhaps getting it delivered to their homes so we’ve enhanced the process to minimize the lines but the demand is exceeding our expectations."

That's the kind of thing investors like to hear. Now the pressure's on Apple - and AT&T - to come up with a way to keep this momentum going.

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