Ironically, the iPhone launch seems to make Apple's rivals in the cellphone business optimistic about their own sales. Many cellular network operators and cellphone makers think the launch of the iPhone will spawn new demand for high-end phones, demand that the iPhone can't entirely satisfy.

The new Upstage, for example, is an ultra-thin device that offers music, Web surfing, and live video, but at $99, costs far less that Apple's $600 iPhone.