In the heart of downtown San Francisco, Candace Locklear, a public relations director at SparkPR, stood in line at the flagship Apple store for about 11 hours on June 29 before she got her $600-plus iPhone. For her, it was worth it.

Not everyone was as familiar with the product’s 6-month lead time as wireless industry professionals and the nation’s mass media. “Everyone wanted to know what we were waiting in line for,” says Locklear, whose firm’s clients include EA Mobile, Trolltech and Fon. “We kind of became an information booth on the corner there.”

Locklear, 39, a diehard Mac fan, used the time mostly to socialize with other iPhone enthusiasts, but she also double-tasked in handing out water bottles with new labels plugging client TellMe Networks, the voice recognition company that Microsoft purchased in May. Given the amount of press at the launch site and her job, it was a no-brainer. Still, she had to take the day off from work. “I did this on my own extreme accord,” she says. “I wanted one four years ago,” when she and her friends would speculate on when Apple officially would make its move into the cell phone space.

She describes the wait in line as mostly “fun,” but they did hear a few comments from passers-by, some of whom were offended by the gall of people waiting in line for a consumer electronics product. A passing group of construction workers called out, “It’s just a phone!”

Just a phone? For the wireless industry, it marks a turning point of sorts if scores of industry insiders are any indication. There’s the wireless industry before iPhone and after iPhone. Or, perhaps more accurately, before Apple and after Apple, whose stock had gained about $47 per share from December to early July. After getting the device, Locklear says, “I felt like a better person because I had all my stuff in one place” – on a silky, smooth surface, no less.

TURNING POINT
While the full ramifications likely won’t be known for months, the advent of the iPhone is a pivotal event in the wireless industry. The amount of attention and curiosity surrounding the single device is unprecedented. The AT&T/Apple relationship is a major departure from most service providers and their device suppliers. It involves Apple, and it comes at a time when new 3G chips from Qualcomm are banned from the U.S. market.

Bloggers alternately praised and dogged the device, which was immediately dissected to determine which companies were supplying its innards, from the applications processor to the Bluetooth silicon. AT&T took its knocks for network slowness, but it made improvements to the EDGE network to add data capacity.

The activation snafus at launch could have resulted in a major backfire for AT&T and Apple, and the experience of one longtime wireless industry analyst, Iain Gillott, said volumes via his newsletter. Gillott was 47 hours into the activation process before a friend at AT&T helped get him on his way. At one point, he was so disenchanted that he figured it would take weeks of stellar performance for him to be impressed.

Soon after the product’s release, AT&T said it had resolved nearly all the activation issues and considered the issue behind it. In fact, the carrier was “ecstatic” about the launch. “It is clear that people are responding positively to this revolutionary device,” says AT&T spokeswoman Jenny Parker. Nearly all of its 1,800 AT&T retail stores sold out of the devices before the July 4 holiday while the carrier continued to restock supplies and offered to send iPhones directly to customers.

AT&T would not disclose how many units actually sold, and analyst estimates ranged from 325,000 to 700,000 that first weekend. Regardless, you can bet AT&T and Apple sold more iPhones in one weekend than Mohave Wireless counts among its subscribers. The tiny CDMA carrier based in Kingman, Ariz., has only about 250,000 POPs, and as a small carrier, it has struggled for years to get handsets anywhere near as snazzy as the iPhone.

“In Mohave County, I have a better network, but I can’t compete with them on handsets,” says Mohave Wireless Product Development Manager Michael Tumblin of his larger rivals. “What’s more important: the service or the phone or the plan or a combination of all?” While AT&T has an exclusive 5-year deal with Apple, one possible candidate for Mohave is the LG Prada, which has a sleek design and touchscreen. But it’s a safe bet the carrier won’t get that device until after a Verizon Wireless or Sprint Nextel launches it, and so far, that doesn’t appear to be in the near-term cards. “It’s very frustrating,” Tumblin says.

THE OTHERS
Other carriers can’t ignore the iPhone, spinning it as a category awakener rather than a death knell for their own music products. Still, they’re at a dicey stage considering the U.S. International Trade Commission (ITC) decision to ban 3G Qualcomm chips. Unless vetoed, overturned, stayed or otherwise settled, the ITC ruling in favor of Broadcom against Qualcomm will negatively affect Sprint Nextel and Verizon Wireless’ ability to answer AT&T/Apple with competing hardware, says Yankee Group analyst John Jackson.

The ruling affects Qualcomm chipsets that were not in the U.S. market before June 7, and it is highly unlikely that all or even most of the critical fourth-quarter models were in the channel before that date, he says. A second injunction hearing against Qualcomm in yet another Broadcom case is scheduled for August, which may effectively reinforce the provisions of the ITC case.

Still, Sprint long has had a reputation in the industry for its leadership in offering mobile music, and Verizon Wireless is no slouch either, having bumped up its offerings over the past year or so. Sprint offers at least 12 music-enabled devices with over-the-air (OTA) downloading to both the PC and the mobile phone. Verizon boasts that it also offers OTA, and the great majority of its customers access their music via their phones, something AT&T can’t yet offer. Verizon also offers more than a dozen music-capable devices, including the LG Chocolate.

Sprint announced its LG Muziq device, with the capacity to store 4,000 songs with a microSD memory card slot and FM transmitter, just a few days before the iPhone went on sale. “We welcome the dialogue and the benefit for us is folks already know of Sprint as a leader in mobile music,” says Sprint spokeswoman Michelle Leff. “Anything that turns up the volume in mobile music – that’s all good for us.” The majority of Sprint Power Vision device owners are using the Power Vision services, she says, and for the few who aren’t, it increases awareness.

To hear Verizon Wireless tell it, the iPhone is AT&T’s reaction to Verizon’s success in the multimedia marketplace, or a Hail Mary pass by AT&T, according to spokesman Jeffrey Nelson. Every week since the Macworld Expo conference in January, Verizon has sold incrementally more full music downloads each week. The same thing happened when AT&T became the sole sponsor of the “American Idol” text voting. Verizon’s customers now send and receive more text messages every month than AT&T’s customers.

A CHURN BLIP?
There could be a “little blip” in other carriers’ churn showing up in the third quarter, even if using the low-end estimates on the number of iPhone units sold, says Ken Hyers, analyst at Technology Business Research. “The question is, are these customers heavy data users right now? From an ARPU standpoint, does this really introduce a lot more people to data services? Maybe this changes how people use wireless data.”

The Yankee Group’s Jackson says it’s not clear whether it will be enough of a value proposition to wrest significant numbers of subscribers away from Sprint, Verizon or T-Mobile USA. Eighty percent of the would-be non-AT&T subscriber base are locked into a contract, and while some are paying the early termination fees, the addressable market is considerably smaller than the hype machine would have you believe, he says.

Another big question is whether the AT&T/Apple relationship will give leverage to other manufactures to get an iPhone-type deal with the operators. The largest handset supplier globally, Nokia has been trying for some time to put more pressure on carriers, offering unlocked devices, Hyers says. But so far, the entrenched model has changed very little.

Jackson says exclusive distribution of the iPhone with AT&T is a severe blow to Nokia’s Nseries and Sony Ericsson’s Walkman franchise aspirations in the United States, adding that Apple’s position is loosely analogous to Research In Motion’s (RIM) in the e-mail space.

Obviously, other manufacturers don’t have the iTunes connection or the ability to put as much marketing and advertising dollars into one device. They have to move higher volumes at various price points to maintain market shares. “I don’t think that’s indicative of a trend,” where somehow Nokia, Samsung and other manufacturers will start dictating features in phones, says Forrester Research Analyst Charles Golvin. “This is a unique attribute of Apple’s. I think that what Apple has always done extremely well is take complex technology and fairly complex experiences and make them more accessible to mainstream users, and I think they’re doing that here.”

THIRD PARTIES
Apple was pressured for months before the iPhone was released because it did not open up the device for the developer community. Then a couple weeks before its release, Apple said the iPhone will run applications created with Web 2.0 Internet standards. That sort of opened it up to third-party developers with a browser-based application, but there was no software developer kit (SDK) to go with it.

It probably wasn’t that Apple didn’t want application developers building third-party apps, but by keeping it fairly closed, that prevented unintended crashes on the phone, according to Fabrizio Capobianco, CEO of Funambol, which provides an OTA contacts application for the iPhone.

Capobianco predicts Apple will come around over time. “Apple cannot allow Microsoft or Nokia to have a monopoly of developers,” he says. “It would kill them. They need developers to build applications.”

Then there are the vendors that are itching to be incorporated on the iPhone or touchscreens like it offered by other manufacturers. Prevalent Technologies offers Phraze It, software that uses the alphabet and vowels to create an easier typing experience. Jeremy Goren, a vice president at Prevalent, says he has typed a 600-word document using the software. If Apple came knocking on Prevalent’s door tomorrow, “it would work well with the iPhone,” he says.

No doubt, so would a lot of other technologies and applications.