Apple's iPhone a tougher sell in Europe?

Apple's learning fairly quickly that Europe is a very different place, especially when it comes to mobile phones.

The iPhone went on sale Wednesday through wireless carrier Orange in France, marking the third European country to carry the phone within its borders. The launch also marked the debut of the third pricing strategy for the iPhone in the three countries: France, Germany, and the United Kingdom.
It appears that at least for a while, the iPhone is going to move more slowly for Apple in Europe. Orange said hopes to sell 100,000 iPhones by the end of 2007, and 400,000 to 500,000 in total by the end of next year, according to several reports Tuesday. Apple wants to sell 10 million iPhones next year in total, after expanding to Asia some time in 2008.

Was Apple blasé about the challenges it faces in Europe? The device's debut in one of the most hotly contested mobile phone markets in the world has been a little chaotic, with last-minute changes to pricing plans that don't appear to have been part of the plan.

Orange, the "exclusive" carrier of the iPhone in France, offers three payment plans. You can purchase an iPhone for 399 euros ($592.78) and sign up for one of the special "Orange for iPhone" plans, which range in price from 49 euros a month to 119 euros a month depending on usage. You can buy an iPhone for 549 euros if you want to use one of Orange's other rate plans. Or, you can buy an iPhone for 649 euros ($964.20) with no plan.

The only company that can sell you an iPhone in France is Orange (Apple doesn't have any stores in France) but it sure as heck isn't going to be the exclusive carrier. French law requires that carriers offer their customers the option of an unlocked phone. That will cost you 100 euros today, but if you're willing to wait six months, you can have it unlocked for free.

So French shoppers who want an unlocked iPhone today will pay the equivalent of $1,112,77, which is actually a significant bargain over what their German neighbors are being asked to pay for a key to other networks. After a legal challenge from rival Vodafone forced its hand, T-Mobile agreed to offer an unlocked iPhone in Germany for the equivalent of $1,478 (at last week's exchange rate).

At least in U.K., Apple's one-phone, one-carrier strategy is still in place. O2 and Apple have yet to release any sales figures, although O2 said it was its "fastest-selling" launch. No matter what, however, any expectations for lines and hoopla similar to what happened stateside on iPhone Day did not materialize in Blighty.

Simply put, Europe is different. Entering the European mobile phone market from the United States is like getting called up to the majors after just a few months in the minors.

One of the many things I've heard from U.S. iPhone owners is that many of them were relatively new to smartphones, especially the idea of getting e-mail and anything more than a real basic stripped-down Web page on their phones. They bought the iPhone because of its user interface, not because it was a data phone, although they quickly grasped what they had at their disposal.

And they didn't care that they'd be locked to AT&T for two years, because two-year wireless contracts are the norm in this country. Maybe that will change in upcoming years following Verizon's announcement earlier this week that it will open up its network, but it will take a long time before all of us are using our phones that way.
It seems Apple didn't anticipate the difficulties it would have selling the first generation iPhone to European customers and carriers under the same terms and conditions that AT&T and O2 were willing to accept. That situation could very well change next year, when Apple is expected to unveil a 3G phone that would be much more attractive for both consumers and carriers.

But how could Apple possibly have expected that it would be able to sell locked, exclusive iPhones in Europe going into the launch? A German judge quickly imposed an injunction after Vodafone aired its complaints (which were opportunistic, to be sure). But from that swift action it would appear the law regarding locked cell phones wasn't exactly murky, although the carrier said it would attempt to "clarify" the issues.
Likewise, from the pricing discrepancies, it's hard to imagine that the current situation was part of the original plan. A German citizen living on the French border could cross the old Maginot Line and pick up an unlocked iPhone at a 150 euro discount, and then use it with any German carrier, without having to pay any sort of additional import tax. Perhaps the T-Mobile and Orange "exclusive" deals don't transfer as much revenue to Apple as the company gets from AT&T, which is likely the reason behind the steep premium to be paid for an unlocked iPhone.

As always, we have to remind ourselves that this is very early days for Apple in this market. It has very little experience marketing mobile phones and even less experience negotiating tough deals with carriers, who still rule this industry.

Just look at Apple's early dance partners. AT&T's Stan Sigman told attendees at Macworld earlier this year that he signed an exclusive (and expensive revenue-sharing) deal with Apple to distribute and promote the iPhone without having even seen the device. O2 was so eager to be the exclusive iPhone carrier in the U.K. that it allowed Apple to throw in a free subscription to The Cloud--a U.K Wi-Fi hotspot aggregator that offers access to more than 7,000 hot spots--even though that almost guaranteed that iPhone users would do any heavy data action over Wi-Fi and deny O2 a cut of that revenue. Not exactly a bunch of Red Auerbachs, there; Apple must have gotten almost everything it wanted from those two carriers going into the negotiations.

Of course, Apple has one very powerful negotiating chip: a sweet product. I've been to several conferences and conventions this year about the smartphone industry, and Apple's user interface and design prowess has come up in every single one--the CTIA Wireless conference devoted an entire session to it.

The entire wireless industry is trying to figure out what to do about Apple's iPhone. But Apple has to do a better job figuring out how to navigate the complicated minefield that is the international wireless industry. A strategy that works in this country won't necessarily work in other places; just ask Dell, Disney, or the National Football League.
source: news.com
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Orange iPhone plan details revealed

The iPhone will be arriving in France on November 29th, just under a week away, and we're beginning to hear quite a few more details about Orange and the iPhone. iPhone plan pricing seems to be a big concern, but fortunately some digging on Orange's website has revealed the plan and pricing details for the iPhone, which have also been covered in English by MacScoop.

As with most other iPhone plans, Orange's rates seem to be pretty competitive. Plans are priced at €49, €59, €79, and €119, which will get you either 2+2 (daytime + nights and weekends), 3+3, 5+5 or 8+8 hours of calls. The plans also include 50, 100, 150, and 1000 SMS messages, respectively. All four of the plans offer unlimited EDGE data usage and Visual Voicemail, and the plans also let you use Orange's WiFi hotspots for 10 hours a month (100 hours for the €119 plan).

All of those prices are for a two-year contract; reducing the length to a year will cost roughly another €4,5 a month. People have also been wondering about Orange's price premium for unlocked iPhones, which is apparently going to be €100 if you want to unlock your phone before six months of your contract have elapsed. That €100 isn't bad compared to what T-Mobile is charging, so I suspect we'll see at least a few French iPhones leaving the country. And as usual, we'll be hearing more about the launch in the next few days, so stay tuned.
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iPhone & iPod Knockoffs in China

In Beiing we found a lot of electronics knockoffs. These weren't the extra-runs-at-the-same-factory variety, but instead an entirely different product with similar hardware and branding. I saw "Sony" cameras, "Nokia H-Series" phones, fake iPhones, and fake iPods. Several times the people behind the counter thought that they were the real deal and didn't understand my reluctance to purchase anything.

The iPods were especially impressive. They had very similar casing (though the navigation wheel is really just 5 buttons). The iPhones on the other hand looked nothing like the original except for the basic shape of the device. All of these knockoffs had completely different hardware.

We also spotted real iPhones. They were all hacked and came pre-installed with iLang, an iPhone app that adds support for Chinese. While the knockoffs were in the $80 - $200 range (without haggling), the real iPhones were more inline with US prices. Wired has an article on these unlocked iPhones and provides the back story of how they came to China.
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Preliminary French iPhone details surface

Unofficial reports have indicated what French iPhone customers can expect from the wireless plans that Orange will be offering in conjunction with the impending release. MacGeneration reports (1 | 2) that the data will be virtually unlimited – for services such as visual voicemail, emails and internet – but Orange says that it reserves the right to limit the data plan to 500MB per month. The company supposedly has upwards of 20,000 handsets available for the launch, which it will have the most stock through its stores on the Champs d'Elysées, in Lyon Cordeliers, and the Marseille Orange Center, with the number of handsets being between 500 and 1000 per shop, while the vast majority of its other stores having between four and 30. Pricing for plans will range between 50 and 120 Euros.


Orange will be reportedly allowing users to unlock their iPhone within the first six months of the contract for 100 Euros, with free unlocking thereafter. The carrier is working hard at optimizing its products and services for the upcoming launch, with the web portal having undergone some maintenance to comply with the iPhone. While Orange's video service and Unik plans are not yet available for the device, the company should be refining them shortly after launch.

The AppleCare for the iPhone will not be available right away, and any warranty replacements will be handled through Apple, rather than Orange. The Bluetooth headset, dual dock, AC adapter, and the iPhone stereo headset will be available at launch.

The official launch is set for November 29th, with some early-bird events happening from 6PM to 10PM on the 28th. Curiously, Orange may not have the visual voicemail infrastructure ready in time for the launch, with a tentative late-January estimate of when it will be done.

The British launch of the iPhone lead to the O2 CEO saying that the iPhone was the fastest selling device the company has ever seen, seeing upwards of 8000 activations within the first 24 hours. The German release saw 10,000 handsets sold on the first day, with shuttles carrying many eager customers to Cologne, from Munich, Berlin, and Hamburg.
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Apple iPhone secretly invading your privacy?

The game of tag between Apple, Inc. (NASDAQ: AAPL) and those ingenious hackers who want to turn the iPhone into the modern-day Swiss Army knife has reached a new levels of sorts. Some of those wondrous hackers are now saying that the iPhone sends information back to Apple about each iPhone owner's habits regarding phone use, web surfing and digital media choices.

Although some of the things Apple hackers say can be construed as a little over the edge, this one may be entirely plausible. The main mantra out of this newer revelation is this: why isn't Apple disclosing such facts to each and every iPhone user? How it collects data, when it collects it, and where does it go?

If each iPhone is collecting a decent amount of data about many of the popular facets of usage for each customer and sending that information back to Apple, a few lines in a terms of service agreement aren't going to cut it. Apple's apparent privacy breaches here could give the iPhone a bad rap in some circles, although I doubt it's enough to dent sales in any measurable way.
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Under pressure, T-Mobile unlocks iPhone in Germany

T-Mobile will sell an unlocked version of Apple's popular iPhone in Germany while it fights a legal challenge from rival Vodafone, the company said on Wednesday.

The move comes two days after a court granted an injunction requested by Vodafone mandating that T-Mobile either sell an unlocked version of the iPhone or withdraw the product from the market.

Vodafone contends German competition law prohibits an operator from selling a locked phone with a two-year contract. At midday Wednesday, T-Mobile announced it will sell an unlocked version of the iPhone for €999 (NZ$1,970). T-Mobile sells a locked 8GB iPhone in Germany for €399 (NZ$787) including 19% value-added tax.

However, T-Mobile is appealing the injunction and will withdraw the unlocked version if the company prevails, said Klaus Czerwinski, a T-Mobile spokesman, based in Bonn. T-Mobile is also considering filing for damages against Vodafone.

"We think the law does not apply to this situation," Czerwinski said. "We are still going to court."

The unlocked version means that users can put in a SIM (Subscriber Identity Module) from another operator and subscribe to a different — and perhaps cheaper — service plan.

European consumers are used to getting free or heavily subsidized phones if they sign up for a long-term contract, but those handsets usually won't work on other networks. Unlocked phones command a higher price.

Apple's strategy of securing agreements with just one operator has rankled many interested in the iPhone. The iPhone's relatively high price and 18- to 24-month service contracts caused hackers to find ways to break the software locking the phone to one operator. Apple has been patching its software to nullify the hacks.

Vodafone said users who opt for the unlocked version will miss out on some of the features that are exclusive to the company's network, such as the iPhone's Visual Voicemail, which lets users select and listen to messages, Czerwinski said.

By the end of next month, Vodafone will have the only nationwide EDGE (Enhanced Data Rates for GSM Evolution) network coverage throughout Germany, Czerwinski said. EDGE enables download speeds between 70K bps (bits per second) to 135K bps.

The iPhone can use EDGE and Wi-Fi networks but lacks 3G (third-generation) capabilities. Vodafone contends its flat-rate data traffic package is the most competitive in the German market since the iPhone uses a lot of data.

Vodafone was among several operators vying to be the iPhone's sole supplier in Germany but lost out to T-Mobile. T-Mobile said it sold 15,000 iPhones when it went on sale in Germany on Nov. 9.
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T-Mobile says to sell iPhone without contract

FRANKFURT - Deutsche Telekom's T-Mobile will allow customers in Germany to buy Apple's iPhone without having to sign a T-Mobile contract after rival Vodafone obtained a court injunction against it.
T-Mobile said on Wednesday it will offer the iPhone without a T-Mobile contract for 999 euros ($1,478) at its shops.

It will also allow those customers who bought an iPhone since November 19 to unlock the device free of charge so it can be used with other SIM cards. However, that will not enable customers to make use of all the functions that the music-playing and Web-browsing device offers.

T-Mobile has an exclusive deal with Apple to sell the iPhone in Germany, where Apple has no stores. Until now, customers had to sign up to a 24-month T-Mobile contract costing a minimum of 1,176 euros in order to buy the 399-euro phone.

A German court granted Vodafone a preliminary injunction this week preventing T-Mobile from locking the iPhone's SIM card to T-Mobile when making a sale.

T-Mobile said it will comply with the injunction until the situation has been clarified by a court.

Vodafone had hoped to win exclusive rights to sell the iPhone in Europe but lost out to T-Mobile in Germany, Telefonica's O2 in Britain and France Telecom's Orange in France.

In Britain the iPhone costs 269 pounds ($555) on top of an 18-month contract costing a minimum of 35 pounds per month. It will go on sale in France at the end of the month.

German mobile phone operator Debitel has also lodged a complaint with Germany's telecoms regulator about T-Mobile's iPhone deal arguing it was not acceptable to link the use of the iPhone exclusively to T-Mobile's network.

A spokesman for the federal network agency said it had asked T-Mobile to respond but declined to give details.

(Reporting by Mantik Kusjanto and Nicola Leske; editing by Paul Bolding)
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D Telekom to sell iPhone without contract

Deutsche Telekom was on Wednesday forced to start selling the iPhone in Germany without obliging customers to sign a mobile phone contract with T-Mobile, following a court injunction brought by Vodafone of the UK.

The German operator said the iPhone would cost €999 without a contract with immediate effect, compared with €399 for a handset with a subscription from T-Mobile, its wireless division.
Customers who bought an iPhone from November 19 could also have the SIM-card on their phones, which “locked” the handset to Deutsche Telekom’s network, removed, the company said in a statement.

The change in sales strategy is a blow to Deutsche Telekom which waged a fierce battle with rival operators this year to win an exclusive deal with Apple of the US, which makes the iPhone.

The device went on sale in Germany on November 9 but the companies changed sales plans on Wednesday to comply with a court ruling.

Apple has entered exclusive deals with leading mobile operators in several countries to sell the iPhone, on condition that the phones are dedicated to one network and the US company gets a share of revenues from subscriptions.

However, national laws in some countries prevent the US technology company from entering into such exclusive contracts.

Vodafone’s German subsidiary won a temporary injunction on Monday night that barred Deutsche Telekom from forcing iPhone buyers to sign a contract with it.

Vodafone argues that locking the handset to a specific network could be against German law.

The German operator said it would continue to offer the handset for €399 plus a minimum two-year contract with T-Mobile, starting at €49 a month. It added that some iPhone functions would still only be available with a T-Mobile subscription.

The company also pledged to fight the court decision. A spokesman for Deutsche Telekom said it planned to appeal against the decision before a deadline on Friday, after which it normally takes up to two weeks for the court to reach a final decision.

“We are confident that courts will back us. We had this assessed by our lawyers beforehand,” said a spokesman for the company, confirming comments by Philipp Humm, head of T-Mobile in Germany.

In France, where the iPhone goes on sale next Thursday, Apple chose to sell the iPhone through France Telecom’s Orange mobile phone subsidiary. But national laws barring the locking of phones meant the US company had to offer devices that can work on any network.

The iPhone will cost €399 with an Orange subscription. Prices of an unlocked phone will be announced next week, but are expected to be similar to those in Germany.

A spokesman for Vodafone in Germany said the company was not pursuing similar issues in any other countries.
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So is a €999 'unlocked' iPhone a good deal for a UK customer?

The basic O2 iPhone contract is £269 plus 18 months at a minimum of £35 over 18 months (please note, even after the minimum term of the contract has expired you cannot get the iPhone unlocked from O2 even if you leave the network). So that's £899 or €1247.

So, an unlocked iPhone is cheaper. Errr, no. If you actually want to use the iPhone as a phone (and if you don't then why not just buy an iPod Touch?) you will need to have some sort of deal with a network, so an unlocked phone WILL cost more than just the €999.

If you only want to use the iPhone as a iPod and basic phone you could go with pre-pay or a cheap contract deal such as - ironically - O2's SIMplicity at £15 a month.

The average pre-pay customer spends about £10 a month which over the 18 months you would otherwise sign up for with O2 works out at £900 including the cost of the iPhone. As for SIMplicity over the same period it works out at €999 (£720) + £15x18= £990. Both options are more expensive than the basic O2 iPhone contract (OK - the pre-pay option only by £1).

Of course if you want to use the wi-fi/GPRS internet access services on the iPhone then you will need a data bundle on your phone service, whether that be pre-pay or some cheap contract option, or a contract with a hotspot operator like The Cloud or BT or T-Mobile, which will make it even more expensive to run an unlocked iPhone.

I am quite willing to be proved wrong but my view is if you're a few months into an 18 month or two year contract with some other operator and really (and I mean really) desperately want an iPhone and would otherwise be willing to pay a severance charge to jump ship to O2, then yes, it probably is worth your while to buy an unlocked phone and put your current SIM in it.

For everyone else, at the €999 price of an unlocked phone I just can't see the maths adding up. Which, I suspect, is the idea...
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