Everyone Wants It, But Not Everyone Wants to Be First

Know how to spot an optimist? You might look for someone carrying an iPhone. Only a month has passed since Apple's launch of its first cell phone. But since then, the gadget—which costs $499 to $599 and includes a digital music player and a Wi-Fi Internet terminal—has been nitpicked by Monday-morning quarterbacks, cracked open by hackers and fallen short of some investors' expectations. First were complaints about the phone's shorter-than-expected battery life and problems activating service with AT&T, the exclusive carrier. (AT&T said only a small percentage of customers encountered problems.) Then hackers revealed security vulnerabilities in the iPhone's e-mail function and figured out how to get around paying AT&T for the use of certain features.

All of which has given pause to potential buyers like Sebastian Ischer, a 30-year-old film editor in New York who now plans to wait to buy an iPhone. "I don't want to be that guy with the $600 phone that doesn't even work well," he says.

Apple isn't acknowledging anything close to disappointment. Announcing big gains in its quarterly earnings thanks to record sales of computers, CEO Steve Jobs crowed last week in the company's earnings release that "iPhone is off to a great start." Well, maybe not as great as he'd hoped. Apple reported sales of 270,000 iPhones during its first two days on the market, far below what some analysts had predicted. Still, it was better than the paltry 146,000 subscribers AT&T said had activated service—an announcement that sent Apple shares tumbling earlier in the week. (AT&T said the difference between the number of phones sold and the number of new subscribers is because some buyers waited to sign up.) Apple said it expects to sell 1 million iPhones by September and 10 million by the end of 2008, and the news seemed to cheer investors. Never underestimate the power of Steve Jobs's optimism.