End of iPhone exclusivity means boosted sales in Europe

Posted:
in iPhone edited January 2014
As exclusive contracts for the iPhone begin to expire throughout Europe, sales of Apple's handset have increased dramatically thanks to expansion to multiple carriers.



In the U.K., carrier Orange recently began selling the iPhone, after the exclusive contract with O2 expired. According to MarketWatch, the company sold 30,000 handsets in its first day of availability. Competing carrier Vodafone is also set to sell the iPhone in early 2010.



If the success of multiple carriers in France is any indication, both Vodafone and Orange should have high hopes for Apple's device. Earlier this year, the iPhone went multi-carrier in France after a government ruling nullified Apple's exclusive arrangement with Orange. Since then, it has been estimated that the iPhone has risen to as high as 40 percent market share of all smartphone sales in the nation.



France is now said to be the largest iPhone market for Apple in all of Europe, with 600,000 handsets estimated sold in the third quarter of the 2009 calendar year. That helped Apple sell a total of 7.4 million iPhones during the September frame, good for a 7 percent year-over-year increase.



Some analysts have even higher expectations for the iPhone in the U.K., as it has five major wireless carriers, compared to France's three. The fragmentation means that the iPhone was previously only available to about 29 percent of U.K. subscribers when it was exclusive to O2. Compare that with Orange in France, where Apple had access to about 47 percent of subscribers.



Apple's success with multi-carrier deals has led some to speculate that the Cupertino, Calif., company will not renew its agreement with AT&T in the U.S., set to expire in 2010. Recent rumors have suggested that Apple and Verizon are working towards a third-quarter debut of a CDMA-compatible iPhone next year.
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Comments

  • mactrippermactripper Posts: 1,328member
    Quote:

    As exclusive contracts for the iPhone begin to expire throughout Europe, sales of Apple's handset have increased dramatically thanks to expansion to multiple carriers.





    Smart of Apple to not repeat their mistake in the US in Europe as well.





    "Can you hear me now?"
  • desuserigndesuserign Posts: 1,316member
    That sales have increased is no surprise. What I really would like to see is a comparison of margins. Has Apple's profit per phone been effected?
  • bartfatbartfat Posts: 430member
    Quote:
    Originally Posted by MacTripper View Post


    "Can you hear me now?"



    How about "Get More Now" T-Mobile style...
  • quadra 610quadra 610 Posts: 6,566member
    Quote:
    Originally Posted by MacTripper View Post


    Smart of Apple to not repeat their mistake in the US in Europe as well.





    "Can you hear me now?"



    AT&T was no mistake. It was, in fact, a brilliant move by Apple.
  • ivan.rnn01ivan.rnn01 Posts: 1,822member
    This is how Apple appears to be different from Nokia. I can't say they smelled the crisis on time (what is not that difficult to imagine having in mind skills and virtues of their marketing and sales gang), yet they've chosen right markets.
  • roos24roos24 Posts: 170member
    Quote:
    Originally Posted by MacTripper View Post


    Smart of Apple to not repeat their mistake in the US in Europe as well.



    Apple's sole partnership with AT&T was hardly a mistake, far from that. Apple, having no experience in the phone business what-so-ever, needed a test bed, that would give them that experience all the while keeping full control over the hardware. Only AT&T understood the potential of the iPhone and was willing to give Apple what they needed.



    Now we are two years further and I believe that Apple learned a tremendous lot during these years. I am even starting to believe that they are comfortable letting go of part of their control, i.e. go with Verizon, even though I am still not sure whether it is Apple's goal to be number one. They just want to make products that people like, and ultimately, that will bring them there one way or another.
  • roos24roos24 Posts: 170member
    Quote:
    Originally Posted by Quadra 610 View Post


    AT&T was no mistake. It was, in fact, a brilliant move by Apple.



    You beat me with that remark. I am just a slow writer...
  • quadra 610quadra 610 Posts: 6,566member
    Quote:
    Originally Posted by Roos24 View Post


    Apple's sole partnership with AT&T was hardly a mistake, far from that. Apple, having no experience in the phone business what-so-ever, needed a test bed, that would give them that experience all the while keeping full control over the hardware. Only AT&T understood the potential of the iPhone and was willing to give Apple what they needed.



    Now we are two years further and I believe that Apple learned a tremendous lot during these years. I am even starting to believe that they are comfortable letting go of part of their control, i.e. go with Verizon, even though I am still not sure whether it is Apple's goal to be number one. They just want to make products that people like, and ultimately, that will bring them there one way or another.



    Exactly.



    I hope you don't mind if I expand on your points. I might end up restating some of them, though.



    It's about unrequited demand. It's a brilliant way of doing things. The creation of buildup, anticipation, to a *possible* move to more carriers.



    Exclusivity creates desirability, and in the iPhone's case, creates two years' worth of carriers jockeying for position in order to get their hands on the elusive Holy Grail of smartphones. It keeps consumers who can't have it with the hint, the faintest hope of it coming to other carriers. Keeps them interested. It's the same way with women. Give the man just enough to keep him asking for more - never give too much, too fast. Keep him wanting.



    So the iPhone never really becomes "old news." It remains something in demand and special. Its rarity feeds into its mystique. It's as big and new and fresh now as it was on release day.



    Further, limiting it to just one carrier for the time being allows (or allowed) Apple to test its powers over the typical carrier - how far it can push, and to what degree Apple is beholden to their policies. It also shows Apple just how desirable the iPhone is. How many people can they get to switch carriers just for the iPhone? It's a great way of measuring the pulse of the market with respect to your product's desirabilty. It also creates the impression that other carriers can "make a name" for themselves with the iPhone. Exclusivity = desirability.



    It also demonstrates that Apple doesn't "need" other carriers . . . the carriers need Apple. It's Apple saying "we don't need you - we're already shaking up the industry and setting records with only AT&T. But we might *let* you have the iPhone, because it is a privilege."



    Masterful.



    One thing to keep in mind: Apple always has a powerful, well-thought out strategy behind everything they do. They are fully aware of the consequences of limiting it to just one carrier. But they are also aware of the benefits.
  • blogorantblogorant Posts: 71member
    Quote:
    Originally Posted by AppleInsider View Post


    Apple's success with multi-carrier deals has led some to speculate that the Cupertino, Calif., company will not renew its agreement with AT&T in the U.S.



    Where is Apple located again? I never would have known from any of the articles posted on AI. Cupertino's population is just over 50K. How about San Jose, Silicon Valley, near San Francisco, California, US or no localizer at all.



    End Rant
  • teckstudteckstud Posts: 6,476member
    Quote:
    Originally Posted by Quadra 610 View Post


    AT&T was no mistake. It was, in fact, a brilliant move by Apple.



    It was their only move - they had no choice being rejected on their terms by Verizon.
  • teckstudteckstud Posts: 6,476member
    Quote:
    Originally Posted by blogorant View Post


    Where is Apple located again? I never would have known from any of the articles posted on AI. Cupertino's population is just over 50K. How about San Jose, Silicon Valley, near San Francisco, California, US or no localizer at all.



    End Rant



    Or China for that matter.
  • obsidi4nobsidi4n Posts: 5member
    It's funny, blogs like AI talk enthusiastically about the end of exclusivity in places like France and UK, and they don't know that in Italy, for instance, the iPhone is being sold by two major carriers from the get-go and by a third one from last July. That means 3 out of 4 carriers with the iPhone, you guys, and the fourth major carrier is expected to sell the iPhone in early 2010. That equals to 100% of customers, well above the measly, but good anyway, 49% in France.



    I just wonder why...
  • masternavmasternav Posts: 442member
    Quote:
    Originally Posted by MacTripper View Post


    Smart of Apple to not repeat their mistake in the US in Europe as well.





    "Can you hear me now?"



    The problem of course is that Europe does not equal US, except in some very superficial ways.



    "Europe" is (Albania, Andorra, Armenia, Austria, Azerbaijan, Belarus, Belgium, Bosnia/Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lichtenstein, Lithuania, Luxembourg, Malta, Moldova, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Russia, San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom, Vatican City State)



    or more succinctly: 48+ sovereign nations, each with their own laws and regulations for telecommunications carriers and device manufacturers. This fact alone makes "making the same "mistake they made in the US" highly unlikely, and frankly a PITA to deal with all these regulatory bodies.



    The issue here in the US, was that the laissez faire approach that the FCC took towards the build out of the wireless carrier infrastructure allowed Verizon and Sprint to set-up unique bandwidth and carrier technologies (especially compared to the rest of the world and ATT/Cingular/T-Mobile) that specifically precluded migrating from other carriers into their network or vice versa. If you wanted to change you have to buy a brand-new phone specific to that carrier, or a more expensive "universal" phone that had the necessary multi-band chipset (and very poor battery life) to allow moving from GSM to CDMA. The advantage that Verizon and Sprint wanted out of CDMA was that they could distribute cell towers more economically as CDMA technically has no cell size limit. That and the industry labeled CDMA as a 3rd generation or 3G technology. The trade off is slower data speeds and until recently no ability to use voice and data at the same time. That's why Verizon can have such a saturated coverage map, and why the infrastructure costs for ATT/T-Mobile are much higher, as well as the slower distribution of cell infrastructure to expand the GSM 3G services.
  • obsidi4nobsidi4n Posts: 5member
    Quote:
    Originally Posted by masternav View Post


    the laissez faire approach that the FCC took towards the build out of the wireless carrier infrastructure



    Agreed. That same approach is the cause of the stupid 1700Mhz spectrum being used by T-Mobile only.
  • solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by obsidi4n View Post


    It's funny, blogs like AI talk enthusiastically about the end of exclusivity in places like France and UK, and they don't know that in Italy, for instance, the iPhone is being sold by two major carriers from the get-go and by a third one from last July.

    [?]

    I just wonder why?



    Continuing what you?ve ben doing from the start is not news. Changing it is news.
  • teckstudteckstud Posts: 6,476member
    Quote:
    Originally Posted by obsidi4n View Post


    It's funny, blogs like AI talk enthusiastically about the end of exclusivity in places like France and UK, and they don't know that in Italy, for instance, the iPhone is being sold by two major carriers from the get-go and by a third one from last July. That means 3 out of 4 carriers with the iPhone, you guys, and the fourth major carrier is expected to sell the iPhone in early 2010. That equals to 100% of customers, well above the measly, but good anyway, 49% in France.



    I just wonder why...



    Italians always have the coolest phones whenever I've been there- now I see why.
  • extremeskaterextremeskater Posts: 2,248member
    Quote:
    Originally Posted by Quadra 610 View Post


    AT&T was no mistake. It was, in fact, a brilliant move by Apple.



    If it was so great they would have renewed the contract. Also Apple attempted to go with Verizon first. There was nothing brillant about going with ATT, their network is poor and they were Apple second choice.
  • obsidi4nobsidi4n Posts: 5member
    Quote:
    Originally Posted by solipsism View Post


    Continuing what you?ve ben doing from the start is not news. Changing it is news.



    That's a good point.



    But take this: sales were very good before and the phone was easily available. Right now with the third carrier it's darn hard to find an iPhone almost everywhere, they sell like hotcakes and a weekly shipment from Apple is done in a matter of hours, no joke. That's changing too.
  • maury markowitzmaury markowitz Posts: 298member
    I'm guessing numbers in Canada will be similar or even more dramatic.



    Every consumer I know that was tied into a contract with Bell or Telus immediately upgraded their phones. They used to be everywhere, now they're EVERYWHERE.



    Unless Android works out, and it hasn't so far, this is increasingly looking like the iPod dominance all over again.



    I am surprised how strong vendor lock-in is with these carriers. I switched carriers to get the phone, but I guess my usage makes that a possibility that other's don't have. I'm even more surprised to learn it's so strong in France, where I was led to believe the lock-in was much less.



    So it was the carriers all along? Interesting!



    Maury
  • maury markowitzmaury markowitz Posts: 298member
    Quote:
    Originally Posted by DESuserIGN View Post


    That sales have increased is no surprise. What I really would like to see is a comparison of margins. Has Apple's profit per phone been effected?



    Good question!



    My guess: component costs are falling faster than the contract periods. So no, no effect on the bottom line, roughly equal margins from day 1 to now.



    Maury
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