Apple's 3G iPhone Faces Challenges Overseas (NewsFactor)
Mark Long, newsfactor.com 15 minutes ago
Apple's red-hot iPhone is currently unavailable from the company's online stores in the United States and the United Kingdom, fueling speculation that the company is reducing its inventory in advance of the rollout of a new 3G model. Some industry observers speculate that the slowdown is intended to help Apple avoid customer complaints about buying an older model just before the new 3G iPhone hits the store shelves.
According to Fortune, Apple's Worldwide Developers Conference in San Francisco on June 9 will feature a presentation by Chief Executive Steve Jobs. His keynote address would allow Apple to time the 3G iPhone's release to coincide with the anniversary of the product line's introduction in late June of 2007, the media outlet said.
Europe's Free Phone Barrier
The 3G iPhone could potentially reap big sales in overseas markets, especially in Western Europe, where operators are desperate to move their installed base to 3G, noted Gartner Research Director Carolina Milanesi.
"First they want to get people interested in using more data, and 3G delivers a better user experience," she said. "Operators also want to move people to 3G on the voice side, where they have more capacity and can offer their services at a lower cost," she added.
Gartner forecasts that 3G shipments in Western Europe will rise from about 92 million units this year to more than 112.5 million units in 2011. But Apple will have to work hard to achieve wide-scale penetration -- especially in Western Europe, where handset prices will remain "a bit of an issue," Milanesi observed.
"Customers in Europe are not used to buying unsubsidized phones on a contract," Milanesi said. "For example, you can get an $800 Nokia N95 for free on a contract when you sign up for 24 to 36 months at about $70 per month," she said. "Right now, Apple's iPhone costs about 99 euros ($153) from T-Mobile under a similar contract," Milanesi added.
The extent of the 3G iPhone's success story in Europe will ultimately depend on how Apple and the carriers elect to promote it, Milanesi observed.
"The competition will be higher" if the 3G iPhone is targeted at first-time buyers or those "who are simply looking to replace a phone," she explained. Moreover, in Europe "there are high-end devices comparable to the iPhone -- and sometimes even superior to iPhone technology -- that come for free under subsidies," Milanesi added.
Triple Asian Growth Ahead
On the other hand, the 3G iPhone should do well in European countries such as Italy, where Wi-Fi hot spots are not widely available as a high-speed data alternative. "Having a 3G option will definitely help here because users cannot fall back on Wi-Fi to improve their experience," Milanesi explained.
Gartner also reports that 3G shipments in the Asia-Pacific are poised to more than triple from 35.58 million units this year to more than 117 million units in 2011. "And there's a lot of potential for the iPhone in India, where as many as a million unlocked iPhones are already in the market," Milanesi noted.
Moreover, handset subsidies are less of an issue in Asia than they are in Europe, Milanesi said. But she cautions that Apple has its work cut out for it in Asia, where market participants in many countries have control over only one part of the channel.
"We need to see what Apple does to make sure it gets to the broadest possible addressable market, through distributors as well as operators," Milanesi explained.