Apple Inc.'s iPhone hits store shelves on Friday in a consumer spectacle that has whipped gadget fans into a frenzy over a device that challenges business as usual in the mobile phone industry.
The product, which melds a phone, Web browser and media player, deepens Apple's transformation from a maker of stylish-but-niche computers into a consumer electronics powerhouse already known for its iPod music and video players.
The svelte, glassy iPhone is a gamble by Apple's co-founder and chief executive, Steve Jobs, aimed at expanding the market for the company's software and media services.
Jobs's reputation as a technology trendsetter rests on whether the iPhone can do for handsets what the iPod did for digital music: unify a fractured and confusing market with a slick, easy-to-use product.
They want to extend the dominance they have in terms of their ability to create really elegant hardware and software integration, said Mark McGuire, an analyst with market research firm Gartner.
This is the next big business unit for them.
Anticipation is running at levels usually reserved for the arrival of rock superstars or new video game consoles.
Customers are pitching camp outside Apple stores, major newspapers have plastered their front pages with iPhone stories for days, and no tidbit has been too small to report for the galaxy of enthusiastic tech blogs.
I just want to be the first one playing with it, said Jose Sanchez, a 22-year-old shoe-store employee lined up outside Apple's Fifth Avenue store in New York.
The phone comes in two versions priced at $500 and $600 depending on memory capacity, and requires a two-year contract from AT&T Inc., with voice and data plans ranging from $60 to $100 a month.
Early reviews have highlighted the large touch-sensitive screen and the full-blown Web browser, while expressing concern over the quality of AT&T's network, the Apple phone's virtual keyboard and lack of features such as picture messaging.
The iPhone is already making itself felt in the industry before even a single unit is sold.
Rival Palm Inc. said it could post a small loss and lower revenue this quarter due to slow sales and fears that the iPhone could hurt demand for its Treo smartphones.
It's likely that as people try (the iPhone) out, there may be some stall in our sell-through, Palm Chief Executive Ed Colligan told Reuters on Thursday.
Apple looks set to sell lots of phones when the device hits shelves at 6:00 p.m. in each U.S. time zone on Friday.
We're building a fair number of them, but we may not (meet demand), Jobs told the Wall Street Journal in an interview. We've taken our best guess, but it wouldn't surprise me at all if it ain't enough.
What's less clear is whether sales will hold up once the initial burst of excitement has waned.
Apple's shares have risen 30 percent since Jobs unveiled the phone in January, though the stock has fallen 2.5 percent over the past five days.
Jobs has targeted sales of 10 million units in 2008, which would give Apple a 1 percent share of the global market and at least $5 billion in revenue that will be recorded in quarterly increments over two years.
Piper Jaffray said this month Apple could sell 45 million units in 2009, putting the iPhone on par in terms of revenue with its two key businesses, the Macintosh computer and iPod.
(Additional reporting by Sinead Carew in New York)