Image: Apple iPhone 3G; Samsung Instinct
Apple Inc.; Samsung via AP
The new iPhone 3G, left, due out July 11, is compared by Sprint to the Samsung Instinct, right, at the carrier's Web site. The recently released Instinct is considered by some to be the strongest competitor to the iPhone.
By
msnbc.com
updated 6/27/2008 9:05:53 AM ET 2008-06-27T13:05:53

The smartphone wars — and hype — appear to be in full heat. Two weeks before the second-generation iPhone goes on sale, the Samsung Instinct, dubbed a potential iPhone “killer,” looks like it’s appealing to buyers’ instincts.

The phone, sold by Sprint, the nation’s third largest wireless carrier, went on sale June 19 to existing customers and June 20 to new customers. The company said Thursday that the Instinct is “breaking records for the initial launch of any Sprint product.”

While Sprint did not release sales figures, it said the popularity of the phone “has led to temporary shortages” at some Sprint stores, and that the company and Samsung “are diligently working around the clock” to get more phones out.

John Garcia, Sprint’s wireless division president, said in a statement that in the “first few days of availability, many Instinct devices were purchased by existing customers” wanting to upgrade their phones.

“They won’t comment on specific numbers … on the other hand, I have no doubt that it has been selling very well,” said Avi Greengart, Current Analysis’ research director for mobile devices.

“The Sprint rep I talked to was visibly exhausted. She said that her team has been working like mad all week moving inventory around to try to keep stores in high-demand areas from selling out completely.”

For weeks before the Instinct’s release, Sprint heavily promoted the phone at its Web site, at one point with a side-by-side iPhone comparison called “See Instinct defeat iPhone.” That wording has since changed to “Instinct vs. iPhone.”

And, in an effort appropriately called “Sell out!” Sprint is offering to pay customers $20 if they prominently feature their Instinct in a video placed on YouTube. Sprint dubs it “Hollywood-style product placement for the small screen.”

The company said on its Web site it is also going to offer a $10,000 “grand prize” contest tied to home videos made using the Instinct.

Price war
Sprint upped the smartphone ante last week when it announced the Instinct’s price at $129.99, lower than that of Apple's new iPhone, which is carried exclusively by AT&T Wireless.

The new iPhone, which goes on sale July 11, is available in two versions, an 8-gigabyte model for $199, and a 16-GB phone for $299, a $200 price cut from the current iPhones.

Both the new iPhone and Instinct are 3G, or third-generation, wireless devices, to allow for faster e-mail access and Web surfing.

Initially, Sprint planned to price the Instinct around $300. After the new iPhone and its lower pricing were announced June 9, Sprint said the Instinct would retail for around the same price as the iPhone.

The recent price cut to $129.99 puts the Instinct in a more affordable range, especially for first-time buyers of smartphones, which also can handle video, music and other programs.

The lower-end of the price range for such phones is $100, after rebates and signing a two-year contract with a service provider.

J.D. Power and Associates said recently that $208 is the average reported price for smartphones, which are increasing in popularity as the devices and data plans decrease in cost.

Combined data and voice plans for both the iPhone and the Instinct start at about $70 a month.

In 2006, smartphones accounted for 5.1 percent of all mobile phones shipped in the U.S., and last year that number more than doubled, according to IDC Research.

Other contenders in the fray
Still to come this summer from Research In Motion, maker of the popular BlackBerry smartphones, is the Bold 9000, which will be RIM’s first 3G BlackBerry.

There are also several other smartphones out, or due out in months ahead that resemble the iPhone. Among them: LG’s Voyager and Vu, the HTC Touch Diamond, Sony Ericsson Xperia X1 and Samsung’s Glyde.

The Instinct is a touchscreen phone, as is the iPhone. Neither has a physical keyboard, something that may be a deciding factor for some buyers.

David Lichtor, of St. Paul, Minn., said he was planning to get the new iPhone for himself and his wife and two sons. A Verizon Wireless customer, he wound up staying with the carrier and buying the LG Voyager, at a cost of about $200 per phone after rebates and re-upping with Verizon Wireless for another two years.

The Voyager, he said, "has a wonderful, full keyboard with keys you can actually use. This satisfied my wife ... the phone is (also) touchscreen, which satisfied my kids."

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