Even before Apple’s iPhone 3G hit stores across most of Europe on July 11, the highly anticipated phone had already faced a number of problems. On July 7, a rush of UK consumers seeking to pre-order the phone with carrier O2 took the company’s website down. “We’ve never seen a mobile device create such excitement,” says Ronan Dunne, O2’s England Director.
As consumers prepare for the launch of the iPhone, Apple and its partner telecommunications companies, such as Orange in France and T-Mobile in Germany, are seeing the same spikes in demand. This marks a change from the first-generation iPhone, which had only modest success in the Old World. When it was launched last November, Europeans were less enthusiastic than their American counterparts, mainly because the iPhone’s price was high and it was relatively slow, the second generation of mobile technology, had left it lagging behind. compared to 3G phones like those from Nokia and Sony Ericsson.
Now, improvements in the iPhone 3G, including GPS and help with faster connections, could attract more European consumers. By lowering the price of the base 8GB memory model to around $199, Apple launched the phone directly into the mainstream mainland market, where consumers are used to heavily subsidized devices.
THE CALL OF MUSIC AND VIDEO
The multimedia applications of the iPhone 3G, including access to music and video from Apple’s iTunes Store could also help boost sales. Indeed, Europeans have accepted mobile media faster than their American counterparts. “The improvements to the iPhone have brought Apple into a more competitive playing field, on a level playing field with its rivals,” said Tony Cripps, principal analyst at telecommunications consultancy Ovum in Britain.
However, Apple is not going to grab the whole market. Nokia and Sony Ericsson remain firmly entrenched in Europe, and even with its reduced price, the iPhone is still on the higher end of the price scale. According to British researchers from Strategy Analytics, the iPhone will only gain 2% of the mobile market in Western Europe by the end of 2008, estimating its sales at nearly 2 million units.
That would be a big improvement, says Neil Mawston, department director of global wireless technologies at Strategy Analytics. But it figures only from 20 to 30% the share of European consumers considering only buying the iPhone 3G during their next phone renewal. “The price is much closer to the mainstream market, but it’s still relatively expensive,” he says.
How expensive is the iPhone 3G in Europe? Consider the pricing schedule offered by T-Mobile in Germany. Like most torchbearers, he sells the iPhone with an annual subscription. For consumers spending €45 per month, the 8GB model will cost around €270. But the customer ready to add 140€ per month for a mobile telephone service can obtain an iPhone 3G at a main price of 1.50€. In France, where the new iPhone launches on July 17, Orange is offering the 8GB model for €145 on a monthly subscription basis that ranges from €77 to €235.
That might not sound too boring to the US consumer (who will pay $199 a month for an 8GB model, plus $40 and $80 taxes), but the price could still limit the iPhone’s launch in Europe, where Phone carriers often offer competing products for free, such as the Nokia N95. And while consumers have shown strong interest in Apple’s new phone, Carolina Milanesi, research director at UK-based consultancy Gartner, believes that is unlikely to translate into additional sales. “The price of many of these subscriptions is still very high,” she explains.
Analysts also warn that despite the big improvements, the iPhone’s specs won’t measure up for some European consumers. Its built-in camera, for example, only has 2 megapixels of resolution, while Sony Ericsson recently launched a phone with an 8.1 megapixel camera. Also, the iPhone cannot record videos yet. In addition, its rivals are rapidly equaling its memory capacities. “The device is a bit behind in some aspects of the technology,” says Gartner of Milanesi.
THE ANSWER TO THE CRIES OF CONSUMERS?
\None of this should matter to consumers who fall in love with the user-friendly interface and touchscreen of the iPhone. The phone’s ease of use, along with its premium apps and fast internet, are a boon to the wireless web. According to M:Metrics, a mobile phone market research company, 80% of iPhone owners in Britain, France and Germany regularly surf the web from their mobile phones, compared to 11% of iPhone users. other ordinary telephones. This translates into higher revenues for operators.
The combination of a lower price and better performance may well revive the iPhone’s popularity in Europe. After all, consumers badly need a device that combines traditional voice services with 21st century multimedia mobile entertainment. The iPhone 3G could be what they want, the question is whether they are willing to pay for it.