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Grey marketers lead queues to buy new gadget

Eye reselling iPad 2 in overseas markets

Gulf News

San Francisco:  When Apple releases a product, the store lines are typically led by fanboys clamouring to be first with the latest gadget. At the downtown San Francisco store for the iPad 2 debut, the grey market got there first.

Dennis Ng, 20, said he was being paid $10 (Dh36.70) an hour to arrive before 5am on the day Apple began selling the device at its stores. He said he was in a group of about 35 mostly Chinese immigrants at the front of the line, waiting to buy the iPad for somebody else. Resales of new electronics in countries where they're not yet available feed the so-called gray market.

"I'm here waiting in line because I want to make some money," said Ng, who lives in San Francisco and works at a clothing store. He wouldn't identify who hired him. "Many of the Chinese immigrants you see here need work and money so they go through this associate group for side jobs and this is one we found."

The iPad 2 debuted on Friday in the US and it will be released in 26 other countries on March 25. Nations like China and Russia have to wait even longer, creating a market for people to import the device and resell it. According to a July estimate by Flora Wu, a handset analyst at BDA China Ltd., gray-market purchases accounted for almost half the iPhones sold in China. BDA came up with the estimate prior to the release of the iPhone 4 and the iPad in China.

The demand is changing the vibe at the front of the line. At the iPhone debut in 2007, those in line watched Star Wars, smoked cigars and got a surprise visit from Apple co-founder Steve Wozniak, said Kurt Collins, a self-described technology enthusiast. He said the people in line created a "community".

Sense of community

"This one is very much not that kind of community feeling," said Collins, who was in line behind Ng's group. "Normally you see a lot of tech enthusiasts and first adopters."

Apple Chief Executive Officer Steve Jobs has taken steps to rein in the gray market, including limits on purchases to two iPads per person. During the debut of the original iPad, Apple only accepted credit cards or debit cards to pay for new gadgets. It later stopped that policy to accept cash.

Amy Bessette, a spokeswoman for Apple, didn't respond to requests for comment.

The iPad 2 has a faster processor that speeds up performance and improves graphics quality, and front and rear cameras that allow for videoconferencing. It's also 15 per cent lighter and 33 per cent thinner than the previous model.

Prices are the same as for the original, starting at $499 for a base model with 16 gigabytes of memory.

Analysts at Gleacher & Co., Piper Jaffray & Co. and Rodman & Renshaw LLC are among those predicting the iPad 2 will outsell the original. Brian Marshall, a San Francisco-based analyst for Gleacher, estimated sales of 600,000 tablets this weekend alone.