It's Countdown Time For iPhone: Will Buyers Come?

How many intrepid consumers will descend on AT&T and Apple stores this Friday for the long-awaited launch of Apple's iPhone?

No one can say. Some analysts are speculating that the turnout could be disappointing, at least in relation to the expectations created by the massive hype around the product that combines the functionalities of a cell phone, iPod, smartphone and portable Web browser.

Still, given Apple aficionados' passion, the "cool quotient" of being among the first wave of owners, and the strictly-enforced, first-come, first-served policy that's fanning the flames, the stores are bound to have their hands full.

As the exclusive wireless carrier for iPhone, with 1,800 stores involved in the launch to Apple's 160, AT&T isn't taking any chances.

"AT&T is really the channel -- the one that's ultimately going to drive the sale" during the launch and beyond, sums up Michael Megalli of Group 1066, a marketing and product development consultancy.

AT&T has been gearing up for months for what chief executive Stan Sigman has termed "the largest commercial product launch in the history of electronics," and preparations during the final countdown are intense.

Corporate memos to stores, leaked and posted on tech sites around the Web, have provided detailed instructions for crowd-control tactics such as line-forming strategies and stanchions.

Memos also detail the D-Day logistics: Launch time is 6 p.m. All stores will close between 4:30 and 6 p.m. for final set-up and staff preparation, and stay open until 10 p.m. (One memo indicated that this is also the plan for Apple's stores.)

AT&T Wireless employees have received extensive training -- an average of six hours per employee, or 100,000 total hours of training, according to one executive's statement.

About 2,000 temps have been hired and trained to assist with crowd control, greeting and managing the flow of customers, and handling technical glitches.

Initially, online sales of the iPhones will be limited to Apple's site, the better to drive consumers into AT&T-owned stores, where they can be pitched on the company's other products and services at the same time they're buying an iPhone and an AT&T wireless plan.

AT&T "local dealer" or franchise stores won't have the iPhones for the launch, but that doesn't mean they won't be in on the action. AT&T has also advised these dealers to make the most of the opportunity to sell other handsets and offerings to iPhone-seekers who stray into their stores -- perhaps first showing the consumer how to buy an iPhone on Apple's site.

Advertising support began early this year, including a 30-second teaser spot on the Academy Awards broadcast in February, which drew about 40 million U.S. viewers. According to Nielsen Monitor-Plus, Apple spent $10.4 million on iPhone advertising in major media in the first three months of 2007 -- a mere warm-up for the blitz unleashed this month, including four TV commercials that can also be viewed on Apple's site. Though heavily dominated by Apple and bearing its unmistakable, minimalist style, the commercials are co-branded with AT&T.

AT&T is also betting that its heavy, ongoing marketing for the rebranding of Cingular back to AT&T Wireless will create synergistic impact for the iPhone.

After signing with Apple last July, the company accelerated the rebranding in preparation for the product's launch. The interiors of AT&T-owned Cingular stores have now been rebranded, and the company expects to wrap up the hugely complex and costly name-change process, including exterior store signage, by year's end.

Ad campaigns driving home the "Cingular is now AT&T" message have been running for months, and it's probably not coincidental that a new one was unveiled just last week. AT&T's solution for preserving Cingular's brand equity: The "X" logo has been replaced by the AT&T globe, but Cingular's signature orange color continues as a prominent element in the promotions.

AT&T had already spent about $5 billion in total on the rebranding by the end of last year, and it's expected to spend another $2 billion by the time it's finished completely phasing out the Cingular name at the end of this year, according to mobiletracker.net.

To further whet demand for the iPhone, Apple waited until this month to announce that YouTube content will be viewable on the device.

Despite all of the marketing, clever PR and consumer- and media-generated buzz, some tech mavens say that iPhone sales, at least in the launch stage, could be hampered by the product's high pricepoints: $499 for the 4GB model and $599 for the 8GB model, with a two-year contract and an as-yet-unrevealed cost for the service plan. (AT&T memos do indicate that iPhone users will be able to buy its FamilyTalk plan.) Not to mention the penalties involved in canceling existing, non-AT&T wireless contracts.

Will the younger market segments that are so critical to Apple's success be able and willing to spend this kind of money? Might they hold off, waiting for Apple to launch cheaper generations of the product? How many well-heeled mature consumers will be willing to battle crowds to get their hands on the devices this week? More important, how many will feel compelled to spring for iPhones and their service plans in upcoming months?

AT&T has reported that over a million people signed up on its site to receive email updates on the product. A recent M:Metrics Inc. survey found that two-thirds of consumers with high interest in the iPhone say that they'd switch carriers in order to use the product. Further, a study by ChangeWave found that one quarter of all potential smartphone buyers intend to buy the iPhone at launch.

IDC/Market Insight's research, meanwhile, found only 10% of respondents willing to pay full price for the iPhone and sign for two years, while 18% said they'd be inclined to buy the phone if it were priced under $299.

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