Much Ado About Apple’s iPhone

PARIS, May 20 — Few mobile phones have created more buzz before becoming a reality than Apple’s iPhone — even in Europe and Asia, which will not see the talked-about handset for many months.

Apple says that sales of iPhones will begin in the United States in late June, in Europe later this year and in Asia next year. But the company has been silent on how the iPhone will be distributed in Europe, prompting speculation about operator alliances and retail partnerships.
The approach in the fragmented European market is widely expected to be different from the one employed in the American introduction, which is AT&T’s exclusively.
For European and Asian mobile service providers, the stakes could be high because of Apple’s strong brand loyalty.
Almost half of current iPod owners would consider the iPhone as their next mobile phone, according to a survey of 2,000 Europeans by Canalys, a research firm based in Reading, England. And an online poll conducted in April by the British online publisher Shiny Media found that 25 percent of those surveyed would be willing to switch service providers to own an iPhone.
A determining factor in which mobile carriers offer the iPhone in Europe will be whether it includes the “third generation” mobile network technology that service providers across the Continent have spent so much money to license and build. Apple has said its United States handsets would not employ 3G technology.
If iPhones in Europe support 3G, the two most likely beneficiaries would be 3, a Hutchison Whampoa mobile network that has 3G licenses in Austria, Britain, Denmark, Ireland, Italy, Norway and Sweden, and T-Mobile, which has 3G licenses in Austria, Britain and Germany, analysts said.
“Both these operators are the most forward-thinking in how 3G telephones should be brought to consumers,” said Carolina Milanesi, a mobile phone analyst for Gartner in London. “They have the appropriate and futuristic business models necessary for the iPhone already in place.”
Ms. Milanesi cited 3’s new X-Series package, which offers a flat rate for data transmission. T-Mobile, meanwhile, has abandoned the “walled garden” approach to selling services that requires customers to use proprietary products, choosing instead to use the Internet itself and Google as service and content providers, Ms. Milanesi said.
The largest service provider in Europe is Vodafone, but Ms. Milanesi said that Vodafone’s underlying business model might not dovetail easily with the Apple universe. Vodafone uses its own service, Vodafone Live, to sell songs to mobile phone users, and iTunes from Apple could be viewed as a direct rival.
If the iPhone does not initially support 3G in Europe, Apple may combine a range of service providers, said Thomas Husson, an analyst for Jupiter Research in Paris.
That would require Apple to balance the discounts operators give on the phones against Apple’s own sales. “Too large an operator subsidy would kill Apple’s own highly profitable retail sales,” he said.