Originally Posted by TenoBell
This is a pretty interesting turn of events. Not the most graceful change of strategy for Apple. It seems Apple will have to give up revenue sharing in Europe. People in the UK, France, and Germany will be free to buy an Italian phone and use it on which ever carrier they choose.
I don't see a problem with the partnerships. When launching a new product or entering a new market its a common business practice for companies partner. It helps give the product a supportive base as it gains brand recognition and market penetration.
There is certainly no problem with these partnerships where they are beneficial for Apple and the customer. I do think though that Apple underestimated the greed of the carriers. Neither T-Mobile in Germany, nor Orange in France, nor O2 in Ireland did make any effort to come up with really attractive tariffs. O2 in the UK did better and the numbers reflect it clearly.
In Germany they may have sold around 100,000 - 150,000 iPhones officially (which is far below the iPhone's potential in a market that rich) and assumptions are that for every official iPhone there are at least 2 in-official ones in the country. Internet forums are crowded with people discussing problems with jailbroken/unlocked phones and multi-page instructions how to fix certain errors using Terminal, SSH and other tricks that will only scare away the average user and eat up Apple's reputation of delivering reliable products that simply work. People reading those will not care to differentiate between official and in-official problems. And now they have to lower prices to clear stock - this takes away from the "perceived value" of the product and does ultimately have an effect on future pricing and pricing in countries not even on the list yet. Even if the iPhone is and will certainly remain to be a well-deserved success overall, I think there is no denying that this strategy resulted in non-materialization of revenue and marketshare. Now having people still paying a lunatic tariff for another 23 months, while others get huge discounts, a new 3G model or simply enjoy their unlocked phone and third party apps... you do not really generate user satisfaction with such a mess and having x "classes" of users. No, Apple did not force a single individual into any of this, but if they would have just sold their device like any other phone maker and stood away from negotiating strange deals with providers, the overall reputation and adoption in Europe would be better. The iPod became the hottest selling player despite its premium price because it worked, looked good, and was hassle-free, you could buy music from iTunes or just use your own CDs or MP3s from other sources - no handcuffs. Whoever told Apple to change a working strategy has not done them a favour (IMHO).