Apple iPhone goes on sale with smoke and cheers

At the flagship Apple store on Manhattan's Fifth Avenue, a line of hundreds encircled the block ahead of the 8 a.m. opening. Many of them were already owners of the first iPhone, suggesting that Apple is preaching to the choir with the new model, which updates the one launched a year ago by speeding up Internet access and adding a navigation chip.

Thanks to subsidies by the carrier, the price has also been cut substantially to $199 for the cheapest model in the United States.

Alex Cavallo, 24, was in line at the Fifth Avenue store, just as he had been a year ago for the original iPhone. He sold that one recently on eBay in anticipation of the new one. In the meantime, he has been using another phone, which felt "uncomfortable."

"The iPhone is just a superior user experience," he said. The phone also proved a decent investment for him: He bought the old model for $599 and sold it for $570.

Outside an AT&T store in Atlanta, more than hundred people had lined up.

Edward Watkins, a 34-year-old engineer and avowed "techno nut," said he didn't mind paying an extra $10 a month to the carrier to upgrade his phone.

"I'd pay an extra $30 or $40 a month for that. It's a smoother running phone. It's driving a Beamer as opposed to a Chevy Metro."

Fueled by bags of Doritos, three games of Scrabble and two packs of cigarettes, 24-year-old grad student Nick Epperson stayed up all night for a phone, after selling his old one online. When asked why he was waiting in line, he responded simply "Chicks dig the iPhone."

The new phone went on sale today in 22 countries. In most of them it was the first time any iPhone was officially sold there, though several countries have seen a brisk grey-market trade in phones imported from the U.S.

On the Japanese market, the iPhone's capabilities are less revolutionary, where people have for years used tech-heavy local phones for restaurant searches, e-mail, music downloads, reading digital novels and electronic shopping.

The latest Japanese cell phones have two key features absent on the iPhone -- digital TV broadcast reception and the "electronic wallet" for making payments at stores and vending machines equipped with special electronic readers.