Business | Technology
iPhone roll-out in Europe is a marketing nightmare
The court-enforced move by T-Mobile to sell an unlocked iPhone - albeit perhaps only temporarily - in Germany is another setback in what is proving to be a tricky roll-out for Apple across Europe.
- Financial Times
- Published: 01:31 November 24, 2007
London: The court-enforced move by T-Mobile to sell an unlocked iPhone - albeit perhaps only temporarily - in Germany is another setback in what is proving to be a tricky roll-out for Apple across Europe.
Deutsche Telekom's mobile unit was forced to suspend the exclusive sales policy Apple has imposed on operators for its much-hyped phone in each national market following a legal challenge from rival Vodafone.
The German unit of the UK operator claims that restricting use of the iPhone to the T-Mobile network is against German competition law. Vodafone won a temporary injunction and the companies are expected to thrash the issue out in court more thoroughly within the next two weeks. T-Mobile said it remained confident its original deal with Apple would hold up in court.
In the meantime, T-Mobile has put a 999 euro ($1,480) price tag on the unlocked phone, which would work on any network, in an apparent attempt to put off most would-be buyers.
The German debacle follows a delay of the iPhone launch in France, where consumer protection laws similarly prevent the locking of the iPhone to a single mobile operator, in this case Orange, which won the exclusive deal with Apple in France.
Apple is understood to have originally planned a simultaneous launch in the three biggest European markets: UK, Germany and France, but the French launch was postponed to November 29, nearly three weeks after the other two territories, as details were ironed out. Orange is also expected to offer an unlocked iPhone for about 999 euros.
The legal wrangling highlights some of the challenges Apple faces in breaking into the highly competitive mobile phone market. "This is an example of the complexity of selling mobile phones versus mass-market consumer goods. Apple possibly underestimated the complexity of selling phones in Europe," says Ben Wood, analyst at CCS Insight.
Sceptical
However, analysts were sceptical about whether being forced to sell unlocked phones would have any lasting impact on Apple or mobile operators.
Operators battled each other ferociously to secure exclusive deals for the iPhone, which is seen as a powerful way to attract new customers.
Losing exclusivity will cause some disappointment and T-Mobile, Orange and Apple may all potentially lose out on some of the profits from the Apple-imposed revenue-sharing contracts. There could also be some disruption to sales.
"This is a calculated move by Vodafone to disrupt sales at a critical point in the sales cycle. We know from the US launch that the first six weeks were critical in driving up volumes, and this is creating just a little chaos at just that time," Wood said.
However, the high price of an unlocked phone - 999 euros compared with 399 euros for a phone with contract - may mean few customers actually take this option. Also, German iPhones will have been tailored to work best with the T-Mobile network.
For Apple, the sales of unlocked phones may represent just an acceleration of its eventual strategy.
"It was always understood that Apple would eventually open out the iPhone to other networks further down the line," said Carolina Milanesi, analyst at Gartner.
"They could not continue the exclusivity route forever if they wanted to drive up volumes.
"This might just make them do it sooner than planned."
Customers in Germany and Britain lined up to buy the iPhone earlier this month as it debuted there, with Apple looking to replicate the success that the combination cell phone, music player and web browser had seen in the United States. Apple hopes to sell 10 million iPhones in 2008, helped by its launch in Asia next year.
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