Apple's iPhone 3G S Poised To LaunchApple's iPhone 3G S Poised To Launch

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Apple iPhone 3G S

Buzz and demand are high for the iPhone 3G S, but Apple may have a tough time replicating the success of the launch of the iPhone 3G.

Most analysts indicate that the iPhone 3G S is more of an evolutionary, rather than a revolutionary, improvement of the lineup, but it does offer more hardware improvements than the 3G model did. The new touch-screen handset looks nearly identical to previous versions, but it has a beefier processor, a better camera, more storage space, a digital compass, and a coated screen that is supposed to resist scratches.

But few expect the device to have the same sales figures as the iPhone 3G, which sold more than a million units in its launch weekend. Piper Jaffray's Gene Munster predicts Apple will ship about 500,000 iPhone 3G S units this weekend, while RBC's Mike Abramsky forecasts shipments of as many as 700,000 units.

While the new handset is facing some stiff competition from the likes of the Palm Pre, the next Android phone, and a sequel to the BlackBerry Storm, one of the biggest competitors to the iPhone 3G S may be Apple itself.

The company has lowered the price of the iPhone 3G to $99 with a new two-year contract, and at least one analyst believes this could be a more compelling buy for first-time iPhone users. Existing iPhone 3G owners will see increased functionality with the recently released iPhone 3.0 software, which may delay handset upgrades.

"For those who have been sitting on the fence and have iPhone envy, the 3G version will be good enough," said Gerry Purdy, chief analyst at Frost & Sullivan. "Many people won't feel like the improvements are enough to pay a premium to upgrade, and they'll just get the software. The software is so good, too, that that it will be enough of an improvement."

Another hindrance to the iPhone 3G S is that many die-hard iPhone fans are not eligible for the upgrade pricing. Users who bought the iPhone 3G last year had to sign a new two-year contract in exchange for a subsidy on the handset, and AT&T is charging some users a $200 premium to get the new iPhone. While the carrier recently altered this upgrade policy for users who spend more than $99 a month, there are still many customers who can't get the new iPhone at the entry-level price.

Even if it doesn't match its own track record, Apple and AT&T are still likely to have a hit on their hands with the iPhone 3G S. To put things in perspective, the Palm Pre broke Sprint Nextel's sales records during its release weekend, and analysts estimate it sold as many as 55,000 units. Apple and AT&T will likely surpass that sales figure in the first day with the launch of the 3G S.

The improved camera on Apple's new smartphone should be a major selling point. While multiple smartphones have a more robust camera than the iPhone, Apple's handset is the most widely used phone for Flickr. The latest iPhone has a 3.2-megapixel camera and software that enables users to automatically focus on a subject by touching it on the screen. The ability to record, edit, and upload videos directly from the handset will also appeal to the "digital lifestyle" crowd, Purdy said.

Apple's iPhone 3G S goes on sale Friday at Apple and AT&T stores at 7 a.m. The 16-GB model will cost $199, and the 32-GB version will be $299.

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