Apple's iPhone 4S goes on sale

— -- A faster iPhone with better software and an improved camera went on sale Friday as hundreds of buyers camped out for hours to be among the first to get one.

About 200 people were at Apple's Fifth Avenue store in Manhattan as the iPhone 4S went on sale at 8 a.m. Steve Wozniak, who created Apple with Steve Jobs in a Silicon Valley garage in 1976, was first in line at a store in Los Gatos, Calif.

Many said the event resembled a remembrance to Jobs, who died last week.

Demand for Apple's new iPhone, combined with buyers' hunger for rival devices, could push worldwide smartphone ownership above the 50% mark for the first time ever.

Pre-orders for the phone from carriers AT&T, Sprint and Verizon are as good as sold out; and online orders from the carriers and Apple are backed up, with delivery promised by the end of the month at the latest.

The only way to get one now is to shop in person which means standing in line in many places.

Una Chen, a 24-year-old banker in New York, said she was just happy to swap out her BlackBerry Bold for the new iPhone, particularly after a BlackBerry outage affected her phone this week.

"It's not good to have a phone and not be able to use it," Chen said.

The iPhone is far and away the best-selling and most used smartphone, according to Roger Entner, an analyst with Recon Analytics. With the release of the iPhone 4S smartphones will account for half of all cellphones, up from 43% today, says Entner.

Smartphones typically offer more robust Web browsing, email, data and media streaming abilities.

Apple says more than 1 million iPhone 4S pre-orders came in on the first day of sales. Selected Wal-Mart, Target and Best Buy stores, along with local Apple resellers, will also offer the iPhone.

Pricing begins at $199 (with a two-year contract) for the model with 16 gigabytes of storage. Apple has dropped the price of the predecessor iPhone 4 to $99 (with a contract); the iPhone 3GS is free with a contract.

There are more than 128 million iPhones in use worldwide, according to Apple. The second most popular smartphone is the Samsung Galaxy S, with 10 million phones in use, Entner says.

The iPhone 4S upgrade offers an improved camera, faster processor and a voice-activated personal assistant Siri which can find weather and traffic information, and set meeting times, among other things.

Apple historically has released new iPhones in the summer, but by "waiting until October, it's really increased even more pent-up demand," says Entner. "Lots of consumers were waiting for a new iPhone, and really want it."

Gene Munster, an analyst with Piper Jaffray, predicts sales of between 2 million to 2.5 million phones this weekend, compared to 1.7 million for the iPhone 4 launch in June 2010.

"The product may not sound as exciting as the previous iPhone, but many people are eligible for their upgrade," Munster says. "And they're ready for a new iPhone." Sprint customers are getting their first chance to buy an iPhone.

The launch comes a little more than a week since the passing of Apple co-founder Steve Jobs, which sparked fan tributes at Apple Stores and headquarters in Cupertino, Calif.

Because the iPhone 4S sports only minor improvements from the iPhone 4, and no hardware upgrade, Munster predicts an all-new iPhone 5 could come much sooner — perhaps by next summer.

"Apple will get the consumer's dollar either way," he says. "Folks who can't wait will buy the iPhone 4S; the ones who can will get the iPhone 5 next year. Either way, Apple gets paid."

Wozniak came out to the California store even though he already had two new phones on the way. He told television station NBC11 on Thursday that while he waited for the store's opening Friday morning, he planned on getting caught up on his email and chatting with fans.