Rumors — later proved false — that Apple’s (AAPL) newest retail outlet in Manhattan was going to open at 6 a.m. and give free MacBooks to the first people in line drew a huge crowd on Friday. Early arrivals braved snow flurries and freezing temperatures for up to 14 hours.

By the time the store finally opened, as scheduled, at 6 p.m., the crowd had swelled to more than 1,600, as hand-counted by Gary Allen of ifoAppleStore. His blow-by-blow report describes the moment the doors swung open:

At 6 p.m. the security team motioned the crowd into the store with the admonition, “Slow…slow,” and we moved forward. I looked to my right at the huge crowd watching our entrance, and then went inside to a deafening roar–clapping and yelling and music–to grab our T-shirts and poster tubes. Three stories above, staffers crowded the rail and rimmed the staircase to provide applause and excitement. As we entered we were handed a white T-shirt box and a black cardboard tube with the limited-edition poster. The Apple employees tried to tell us, “Check the tube top….” but it was nearly impossible to hear because of the noise.

On the inside of one of the tube plastic endcaps was a sticker indicating your prize–or nothing. The crowd mostly made for the third floor where you had to redeem their prizes, or they hung out on the ground floor. And then everyone spotted Mary J. Blige on the second floor, hanging out with Whoopi Goldberg. They both signed autographs and Blige posed for photos. It seemed that most people were more interested in the prizes and celebrities than the rest of the store, and there seemed to be little buying.

You can read his full account here.

Hundreds of photographers and several videographers documented the event, but none captured the madness better than the hand-held 4 1/2 minute video shot by Sidney San Martín and Matt Dowd and posted on YouTube. I’ve pasted it below the fold.

See also Inside Apple’s Meatpacking district store.

With its third retail outlet in Manhattan set to open tomorrow, Apple (AAPL) gave the New York press a preview this morning of what it bills as the metropolitan area’s largest Apple Store.

The renovated 1920’s building sits at the corner of 14th Street and 9th Avenue, on the border of Chelsea and New York City’s meatpacking district.

It’s a lovely spot, across a little triangular park from the Old Homestead Steakhouse (”the king of beef”). Morning light floods in over the squat towers of Our Lady of Guadalupe, and there’s a lightly trafficked Starbucks one block away.

The three story spiral staircase set in a sunny atrium is the retail space’s most distinctive feature, but inside it’s a classic Apple store.

The first floor is devoted to the Macintosh, with lots of machines to play with and plenty of room to park yourself under a sunlit window and soak in the free Wi-Fi. The second floor is filled with iPods, iPhones and accessories. The third floor is dominated by a 46 foot genius bar, low tables for kids, higher tables for adults, and two new Pro Lab tables for training the “creatives” who live in the area. (The store will stay open until midnight to accommodate their lifestyles.)

“We think of this as a really great neighborhood store,” says Ron Johnson, senior VP for retail, who, given Manhattan’s brutal real estate market, had to strain a bit to tick off superlatives. It’s not the largest Apple store in the world (London’s Regent Street outlet wins that prize). It’s not even the biggest in the United States (Chicago has a larger one). And although Johnson described the genius bar as “essentially the biggest” in the world, he acknowledged that it’s about four feet shy of the longest.

Still, none of that detracts from the appeal of the space or the likelihood of its success. Apple has had no trouble filling its two other Manhattan stores — in Soho (opened in 2002) and Fifth Avenue (2006) — especially with all the Europeans in town bargain hunting for Christmas gifts with devalued U.S. dollars.

And as George Slusher pointed out in The Mac Observer, Apple is nowhere near saturating the New York market. The Portland metropolitan area, with a population just north of 2 million, has three Apple stores. The five boroughs of New York alone, with four times as many people, could use a few more.

Doors to the meatpacking store open to the public Friday, Dec. 7 at 6 p.m. There are free black Apple T-shirts for the faithful who queue up early. Details and directions here.

UPDATE: China Mobile is now said to have denied Southern Daily’s report that talks with Apple have stalled. See here.

Instant analysis from The Mac Observer’s Apple Finance Board:

Pretty much as expected, everyone is playing hardball, but China Mobile just blinked by having to issue a denial that it had terminated discussions, thereby looking like the weaker hand. They’ll be furious at having to disclose their interest in this manner - it undermines their bargaining position and strengthens Apple’s with the other carriers like Unicom. –Tommo_UK

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Less than three weeks after the first reports that Apple (AAPL) was in talks with China Mobile — the world’s largest cell phone operator with 350 million subscribers — to carry the iPhone in China, negotiations have broken down, according to a report today in China’s Southern Daily newspaper.

This follows earlier reports that talks with China Unicom, the country’s second-largest carrier, had also failed. The sticking point in both cases: the revenue-sharing model that Apple insisted on — and got — in the U.S. and European market.

It’s impossible to say from the brief report today whether this door is firmly closed or could be re-opened. Henry Blodget has argued persuasively in Silicon Alley Insider that a China iPhone deal is inevitable. The Chinese market is so big that even if Apple got only a 1% slice of the pie, no revenue sharing and fire sale prices, it could see revenues of $600 million a year. A 5% market share at today’s iPhone prices could bring in $6 billion a year, even without revenue sharing. (link)

That there is demand for the iPhone among Chinese mobile aficionados is clear. Wired early this month reported on the lively trade in black market iPhones, known in China as the “Ai Feng” (”Crazy Love”). The devices are carried back into the country where they were originally manufactured by mules from Hong Kong and sell for as little as $474.

But Apple may need China more than China Mobile needs it. Earlier this week, Chinese wire services reported that rather than relying on the big Chinese distributors to sell the iPhone, Apple plans to open its own stores in China in 2008.

This promises to be a huge Christmas for Apple (AAPL) — what with new iPods, a new Mac OS, and the new iPhone — and the 200 or so Apple Stores will play a key part in moving the merchandise.

These retail outlets are cash machines. More than 100 million people moved through the stores in the fiscal year that ended in September, generating about $4.2 billion of the company’s $24 billion annual revenue.

The stores are also showcases, both for the company’s products — jewel-like devices that need to be seen and played with to be appreciated — and for its legendary commitment to service and support. The staff are unfailingly courteous and helpful, enthusiastic evangelists for the cause.

Sometimes, they’re a bit too enthusiastic. Witness the video below shot by a British user who braved freezing temperatures to attend the opening of the company’s new Exeter store last week. Matt Aiken, who has a blog called Lost in Tech, describes the scene:

about 15 minutes before the store opened the staff began to hype up the crowd running up and down like loonatics, shouting and whooping. All a bit to much for some of the more reserved people in the queue, the guy next to me threatened to pull a moonie if they didn’t shut up! The opening was done in a similar fashion - watch the youtube video I made below sorry it’s a bit jerky.

ADDENDUM: Piper Jaffray analyst Gene Munster and his staff spent six hours Thanksgiving weekend monitoring the traffic at “normal” sized American Apple Stores in the East and Midwest. Quantifying the “gravitational pull” the stores have on nearby customers, they report that “27% of people walking within 25ft of an Apple store entrance actually entered the store.” Muster concludes:

We note Apple stores are typically located in central, high traffic areas of a mall. Only a fraction of shoppers actually purchased anything from the Apple stores. The important point is this gravitational pull highlights that consumers’ future buying intentions could be shifting to Apple from PCs. If materialized, this shift should benefit Apple in 2008 and 2009.

For more detail from Piper Jaffray’s report, see AppleInsider here.

For the faithful, waiting long hours in line for a new Apple (AAPL) product has become one of those formative experiences they’ll be retailing to their grandchildren.

It’s “a bit like going to a rock concert,” Paul Waite told the London Times after sitting in the bitter cold outside Apple’s Regent Street store for 12 1/2 hours on Friday for a chance to buy an iPhone on its first day of sale.

For Apple, the queues have become an important marketing tool — one they carefully nurture and stage manage for maximum effect. The lines of eager buyers generate buzz, build customer loyalty and produce a flood of free publicity in the local media.

And they are totally unnecessary.

Rumors planted by Deutsche Telekom (which owns T-Mobile) of possible holiday shortages in Germany notwithstanding, there were plenty of iPhones in stock when the device made its European debut Friday at midnight. According to the AP, a crowd of 350 braved wind and rain to buy the phone at the Deutsche Telekom shop in Cologne, despite the fact that there were iPhones to be had without a wait at nearly empty T-Mobile shops across the country.

Likewise, a hardy band of a half-dozen hard-core fans shivered through the night outside London’s flagship Regent Street store — the advance party of a much-photographed and interviewed queue that grew to 300 by the time doors opened at 6:02 PM. (The time was a nod to Apple’s British carrier, O2 U.K.) Meanwhile, iPhones were in stock at more than 1,300 other Apple, O2 and Carphone Warehouse shops.

The fans, for their part, were stroked and coddled through the night by Apple and its corporate partners. Third in line (and first out the door with an iPhone, having waited 26 hours for the honor) was Tomek Jasinski, 20, an architecture student in London. He kept a running diary of his experience in his blog, where he reported that Apple employees provided free coffee (in free Apple mugs), Apple umbrellas and plastic bags to keep dry. The Cloud, whose network will provide free Wi-Fi for the iPhone, was even more generous, providing hoodies and hats and plying Jasinski and his fellow queue-holders with pizza, donuts and Starbucks hot chocolate.

As the crowds grew and the deadline approached, the media gathered in force — at one point, Jasinski counted 25 cameras. The BBC’s Rory Cellan-Jones described the scene at the end as “mayhem.” Just before the doors opened, he said, Apple staffers walked up and down the lines of people, “whipping them into a frenzy.”

Deutsche Telekom says it sold 10,000 iPhones in Germany between midnight and 5 p.m. Friday (link, in German). Apple sold 270,000 in two days after its U.S. debut.

UPDATE: Reader Jasper from L.A. helpfully points to dial-a-phone’s Mobile phone blog, which posted photos of deathly quiet O2 and Carphone Warehouse shops around London as Fleet Street zeroed in on the Apple store on Regent Street. There are nice photos of the mob scene inside that store at AppleInsider. For Fake Steve Jobs’ take, see his Secret Diary here.

[Photo of Jasinski, left, and friend © 2007 Tomek Jasinski. Reposted with permission.]

Apple’s (AAPL) iPhone makes its European debut Friday, starting with a special midnight event at T-Mobile’s flagship Telekom shop in Cologne, Germany. Sales in the U.K. start at 6:02 p.m. at Apple, O2 and Carphone Warehouse outlets.

The openings have been preceded in the U.K. by the usual Apple marketing drum roll: TV ads in heavy rotation, flattering reviews in the national media (the Telegraph) and the Web (Trusted Reviews), and an exquisitely timed change in policy. O2 announced a week before launch that it has scrapped plans to cap Web usage at 200 megabytes per month, and instead allow iPhone owners unlimited downloads.

Carphone Warehouse, Britain’s largest cellphone chain, says it expects to move 10,000 iPhones in the first four hours. O2 has estimated that, all told, Apple will sell 200,000 iPhones in the U.K. and Ireland before the end of the year.

Promotions in Germany have been more low-key. Ten days before launch, Apple watchers in Germany reported that the only visible signs that the iPhone was coming were posters in the windows of small T-Mobile shops and 6-foot displays with a countdown clock in big T-Mobile stores. Only in the past few days has the steady stream of junk mail promoting T-Mobile’s other cellphones been supplemented with a four-page iPhone flier.

Europeans have criticized the iPhone for offering 2.5G service rather than the 3G service to which they have become accustomed. To compensate, Apple has made arrangements for free Wi-Fi service through The Cloud in the U.K. and T-Mobile hotspots in Germany.

The iPhone, which sells for $399 in the U.S., will cost £269 ($565) in the U.K. and €399 ($587) in Germany. Both prices include 19% V.A.T.

France Telecom is scheduled to start selling the iPhone through its Orange subsidiary on Nov. 29.

Ever wonder why the staff at Apple (AAPL) retail stores is so effective at moving the merchandise? Alex Frankel has some answers. He took a leaf from Barbara Ehrenreich’s Nickel and Dimed and spent two years working undercover in entry level jobs at a series of national chains, among them UPS (UPS), the Gap (GPS), the Container Store, Home Depot (HD), Starbucks (SBUX) and finally Apple.

The result is a book called Punching In: The Unauthorized Adventures of a Frontline Employee. It’s due out from Harper Collins Nov. 20, but from the taste of it published in Fast Company, it’s clear he rates Apple above the rest.

A sampler:

Once on staff, I learned the difference between a gigahertz and a gigabyte, but more important, I saw that, like the iPod’s user interface, training of Apple Store employees has been carefully designed. A series of podcasts I listened to and watched showed that selling was all about the approach. I shadowed other workers as they executed the company’s three-step sales process. They explained to customers that they had some questions to understand their needs, got permission to fire away, and then kept digging to ascertain which products would be best. Position, permission, probe.

All this sets the employee’s on-the-job attitude. At an Apple Store, workers don’t seem to be selling (or working) too hard, just hanging out and dispensing information. And that moves a ridiculous amount of goods: Apple employees help sell $4,000 worth of product per square foot per month. When employees become sharers of information, instead of sellers of products, customers respond…. (link)

The cold Manhattan drizzle didn’t faze the faithful.

An estimated 400 to 500 sodden die-hard Apple (AAPL) loyalists waited under umbrellas up to three and a half hours outside the company’s flagship Fifth Avenue store for a chance to buy OS X Leopard on its first day of sale.

By the time the doors opened at 6:01 p.m. the line stretched — in places four or five deep — down Fifth Avenue, across 58th Street and all the way to Madison Avenue.

The rain-soaked customers were greeted in full pep-rally style by black-shirted employees who shouted and clapped as the crowd tramped down the glass-enclosed spiral staircase — and then gave them high-fives as they emerged a few minutes later brandishing their shrink-wrapped packages.

First in line was Bob Greenlees, 23, a student at the Cardozo School of Law. He had been waiting since 2:30 in the afternoon and was still as cheerful and excited as a child on Christmas morning.

“I missed the iPhone line because I was in Paris on my honeymoon,” he said, minutes before the doors opened. “But I watched the webcast.”

“That’s my crazy husband,” said Laura Greenlees, who waited outside with Bob’s computer backpack while he completed the purchase. He came out 15 minutes later with a free T-shirt and a $199 Leopard family pack that he said he would share with his wife and his parents.

The store, which is open 24 hours a day, was expected to have sufficient copies of Leopard to supply all comers — but not necessarily T-shirts. Apple had only stockpiled enough for the first 500 customers.

See also The Day of the Leopard and Leopard: The Reviews Are In

Amid all the controversy about those unlocked iPhones — and what Apple’s (AAPL) most recent software update did to them — it’s never been clear how many devices were actually affected. Based on the number of times their iUnlock software was downloaded, the iPhone Dev team put the number of unlocked iPhones, perhaps unrealistically, at several hundred thousand. Shaw Wu of American Technology Research insists the real figure is so small as to be “immaterial.”

Now we have the first estimate based on actual shoe-leather research and, not surprisingly, it falls between the two.

Having jumped 200% immediately after the Sept. 5 price cut, sales of iPhones at Apple’s (AAPL) flagship stores stabilized at about 142 per day, up roughly 56% from 91 per day before their price dropped $200, according to a report issued today by Piper Jaffray.

Analyst Gene Munster and his team of researchers spent 12 hours counting sales in Apple stores in New York, Chicago and San Francisco in late September and compared their findings with 50 hours spent in Apple stores in July and August. Their results are summarized in the table below: