Consumers keep iPhone sales up despite slump

With investors reducing their expectations, inflation intensifying, rumours of ba-nk failures spreading, and a weak labour market, it is vital for American consumers to reflect on whether this is a typical economic downturn or a new global economy where the rules of the game have shifted.

Some financial analysts are beginning to ponder whether this is a "transformational" economy where traditional relationships are no longer valid in determining expectations of future economic growth.

But apparently, not all consumers are convinced that careful spending and downsizing should rule their family budgets in today's weak economic environment.

Just look at the long lines that formed at Apple and AT&T outlets across the country on July 11, when Apple introduced the iPhone 3G.

The new phones are priced at $199 (8GB model) and $299 (16GB model) for eligible existing customers as well as new ones.

Less emphasised in marketing materials is the mandated two-year contract with a minimum monthly plan starting at $70 a month. That adds up to at least $1,680 for the entire contract period, not counting the phone.

Sales reached 1 million units over the opening weekend - an impressive increase from the 270,000 first-generation iPhones sold during its first two days in June 2007.

It took 74 days for sales of that phone (priced at $599) to top 1 million despite a robust stock market, with the Dow Jones Industrial Average nearing 14,000.

Now the Dow is limping along just above 11,000, but that has done little to deter America's iPhone fanatics.

"People want access to their world. The 3G device becomes the centre of their world enabling them to carry access to the world in their pocket," says Mark Siegel, a spokesman for AT&T.