France's Orange may be next to cut iPhone price, eat losses - reports

Posted:
in iPhone edited January 2014
Apple is in talks with its exclusive French wireless carrier, Orange, to lower the price of the iPhone in France following disappointing sales, Les Echos is reporting.



The newspaper said Apple is urging the carrier to adopt a subsidized pricing model after selling only 100,000 of the touch-screen handsets during the first four months -- a run rate just north of 825 units per day.



Although Orange's parent firm France Telecom reportedly denied that it would cut pricing, Apple's two other European wireless partners were recently compelled to instate significant cuts on their own iPhone offerings.



In a move allegedly aimed at clearing inventory of the current generation handsets ahead of 3G models, O2 this month dropped the price of the 8GB iPhone in the UK to 169 pounds from 269 pounds, while Germany's T-Mobile slashed the same model by 300 euros to 99 euros.



A report published Friday by UK's Times Online suggests that those European carriers will be forced to absorb the brunt of the cuts, which will translate into "significant losses."



"O2, which sells the phone in the UK, and T-Mobile, the German distributor, are said to have significantly overestimated the number of first version iPhones that would sell in Europe," the publication said.



The report cites Morgan Stanley analyst Katy Huberty as largely blaming the European mobile executives for the misstep, as they became over-excited as and got caught up in hype following the US iPhone launch last June:



"They had since had to take steps to shift stock on which they would now make a loss in order to clear the shelves for the new 3G iPhone, which is expected to be in greater demand in Europe than in the US because of the more advanced phone networks."



Citing its own sources, the Times also reported that Apple has placed an order with its Asian suppliers to produce 200,000 of the new 3G iPhones by the end of May, rising to 2 million - 500,000 per week - in June.



"With a four week lead time between production and placement, that would leave [Apple chief executive Steve Jobs] free to launch the device during an annual developers conference at which he usually speaks," the publication said.
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Comments

  • Reply 1 of 304
    teckstudteckstud Posts: 6,476member
    The article forgets to mention the much debated notion here on AppleInsider that all the low French and European iPhone sales are due to them being purchased here in NYC due to the exchange rate difference. They need to factor all those missing AT&T phones into the picture.

    Remember: The French and europeans plan their vacations around buying an iPhone!
  • Reply 2 of 304
    cnocbuicnocbui Posts: 3,613member
    Katy Huberty is a numpty.



    The reason the iPhone has failed to sell well in Europe is because it is way too expensive for this market. And the reason for that is Apple saddled it with the baggage of it's own greed.



    The only failure of the managers she chastises was their lack of guts to tell Apple where exactly they could stick it. NONE of them should have agreed to Apples greedy ways, they should have declared Europe an iPhone free zone.



    The European market is predominantly pre-paid, and becoming more so at a steady rate. Apples model of dipping it's piggy snout into the call revenue stream does not fit well with a pre-paid market.



    I feel sorry for the European Network operators. They have been well and truly suckered if they are having to wear the full cost of the unsold inventory discounting.



    The iPhone failing in Europe so spectacularly has put a big on my face - love it!
  • Reply 3 of 304
    cnocbuicnocbui Posts: 3,613member
    Quote:
    Originally Posted by teckstud View Post


    Remember: The French and europeans plan their vacations around buying an iPhone!



    Er, no we don't.
  • Reply 4 of 304
    samabsamab Posts: 1,953member
    Quote:
    Originally Posted by teckstud View Post


    The article forgets to mention the much debated notion here on AppleInsider that all the low French and European iPhone sales are due to them being purchased here in NYC due to the exchange rate difference. They need to factor all those missing AT&T phones into the picture.

    Remember: The French and europeans plan their vacations around buying an iPhone!



    Most of these "missing" iphones were bought up by organized businesses to be shipped to China --- not to Europe.
  • Reply 5 of 304
    Quote:
    Originally Posted by cnocbui View Post




    The iPhone failing in Europe so spectacularly has put a big on my face - love it!



    Don't know why you'd celebrate the so-called "failing" of the iPhone in Europe. How exactly does that benefit you, as a consumer?



    More of the same baseless complaints about Apple and the iPhone: "it's too expensive!" "they're greedy!" "it's overhyped!" Simple solution for all the complainers: don't buy it. It's a choice, remember?



    Obviously, for a lot of consumers, the iPhone represents a strong value. Even in France, 100,000 users have bought the dang thing.



    Any way you slice it, the iPhone has been a success. In some places it's been a more spectacular success than in others--but everywhere it's been a success, in that it's one of the hottest selling new phones ever introduced in each respective market.
  • Reply 6 of 304
    galleygalley Posts: 971member
    Quote:
    Originally Posted by teckstud View Post


    Remember: The French and europeans plan their vacations around buying an iPhone!



    That's not quite true. Europeans visit the U.S. to see an endless sea of strip malls. Of course, while they are there, they might stop at the AT&T Store.
  • Reply 7 of 304
    MacProMacPro Posts: 18,372member
    Quote:
    Originally Posted by Galley View Post


    That's not quite true. Europeans visit the U.S. to see an endless sea of strip malls. Of course, while they are there, they might stop at the AT&T Store.



    Hopefully our lovely beaches here in Florida too and our rental condo number is ....
  • Reply 8 of 304
    frankiefrankie Posts: 373member
    Quote:
    Originally Posted by cnocbui View Post


    Er, no we don't.



    Hey cnocbui-totally off topic...



    I'm coming to Ireland for my first time in 2 weeks! Any must-see things that most tourists don't know about as well as must-avoid things where 1,000s of tourists go? I'm staying in a small town in the Southwest. Any info is appreciated!
  • Reply 9 of 304
    MacProMacPro Posts: 18,372member
    Quote:
    Originally Posted by frankie View Post


    Hey cnocbui-totally off topic...



    I'm coming to Ireland for my first time in 2 weeks! Any must-see things that most tourists don't know about as well as must-avoid things where 1,000s of tourists go? I'm staying in a small town in the Southwest. Any info is appreciated!



    The Guinness Brewery, The Jameson's Distillery and did I mention the Guinness Brewery?

    (I know you have to pop over the border to NI)
  • Reply 10 of 304
    samabsamab Posts: 1,953member
    Quote:
    Originally Posted by slicedbread View Post


    Don't know why you'd celebrate the so-called "failing" of the iPhone in Europe. How exactly does that benefit you, as a consumer?



    More of the same baseless complaints about Apple and the iPhone: "it's too expensive!" "they're greedy!" "it's overhyped!" Simple solution for all the complainers: don't buy it. It's a choice, remember?



    Obviously, for a lot of consumers, the iPhone represents a strong value. Even in France, 100,000 users have bought the dang thing.



    Any way you slice it, the iPhone has been a success. In some places it's been a more spectacular success than in others--but everywhere it's been a success, in that it's one of the hottest selling new phones ever introduced in each respective market.



    It benefits the consumer by killing the "full priced, crippled handset with a long contract" business model.



    It is a choice --- and consumers have spoken.



    It's not a success --- anywhere. AT&T activated 900K iphone in Q3 and then activated 900K iphones in christmas Q4. You know there is a problem when the busy christmas season did absolutely nothing to the sales number.
  • Reply 11 of 304
    ouraganouragan Posts: 429member
    Quote:

    The report cites Morgan Stanley analyst Katy Huberty as largely blaming the European mobile executives for the misstep, as they became over-excited as and got caught up in hype following the US iPhone launch last June





    These executives are victims of Steve Jobs' Reality Distortion Field. It's a pity that phone carriers have to pay for Steve Jobs' mistakes.



  • Reply 12 of 304
    SpamSandwichSpamSandwich Posts: 31,417member
    Quote:
    Originally Posted by samab View Post


    It's not a success --- anywhere. AT&T activated 900K iphone in Q3 and then activated 900K iphones in christmas Q4. You know there is a problem when the busy christmas season did absolutely nothing to the sales number.



    Surely you jest. The providers miscalculated demand. Obviously they were not thorough in their research about the actual level of customer demand in each country. In the US sales have been solid, and the next gen iPhone should put Apple back on track to meet their sales goals.
  • Reply 13 of 304
    deanbardeanbar Posts: 108member
    Quote:
    Originally Posted by cnocbui View Post


    Katy Huberty is a numpty.



    The reason the iPhone has failed to sell well in Europe is because it is way too expensive for this market. And the reason for that is Apple saddled it with the baggage of it's own greed.



    The only failure of the managers she chastises was their lack of guts to tell Apple where exactly they could stick it. NONE of them should have agreed to Apples greedy ways, they should have declared Europe an iPhone free zone.



    The European market is predominantly pre-paid, and becoming more so at a steady rate. Apples model of dipping it's piggy snout into the call revenue stream does not fit well with a pre-paid market.



    I feel sorry for the European Network operators. They have been well and truly suckered if they are having to wear the full cost of the unsold inventory discounting.



    The iPhone failing in Europe so spectacularly has put a big on my face - love it!





    You are spot on, and I agree with everything you say, except your last sentence. I am disappointed the iPhone is languishing, but this is purely down to Apple's greed. Until they fall in line with the European model, instead of the other way round, they will continue to do so.



    @ slicedbread - yes, we know people have choices - "don't buy it" - but the reason people are posting here is to comment on the reasons why. It's not good enough to just say "don't buy it", otherwise how else are you going to overcome the poor sales if you don't properly analyse the reasons?



    Apart from having a product that customers want (which an iPhone surely is), any marketing research for that product should identify different market conditions in any country. I had similar responsibilities for researching various overseas market territories years ago, and Apple have screwed up on this one.



    I want to see the iPhone and Apple do well, but they need to make some adjustments quickly.
  • Reply 14 of 304
    samabsamab Posts: 1,953member
    Quote:
    Originally Posted by SpamSandwich View Post


    Surely you jest. The providers miscalculated demand. Obviously they were not thorough in their research about the actual level of customer demand in each country. In the US sales have been solid, and the next gen iPhone should put Apple back on track to meet their sales goals.



    In the US, sales have been solid --- because they were bought in the US and then shipped to China. Which means that American demand is not that great to begin with.
  • Reply 15 of 304
    merdheadmerdhead Posts: 587member
    Wow, so much negativity toward Apple. I think the iPhone has been a success, if only from a marketing point of view. The hype aside, it's established Apple as a serious player in the high-end phone business. Now they just need to sort out their sales strategy and hardware. US consumers, with less choice in phones and a history of greater control by phone companies aren't phased by the fairly draconian terms of purchasing the iPhone. I can understand Apple trying it on with a novel model for maximising its revenue since it had such a well-received product (someone should remind cnocbui that Apple cannot be greedy since companies don't have emotions, also I think the pricing was mainly motivated by trying to maintain the phone's image as a premium product), but I think they've now established the limitations of that outside of the US. Much of the rest of the world has much more choice in phones and less inclined pay the Apple premium.



    The release of the 3G phone in June will bring Apple to some sort of parity with other high-end phone manufacturers. Now Apple needs to adopt more flexible sales strategy. I think they will keep the same deal in the US given their exclusive deal with AT&T, but I can see them having a more conventional approach in the rest of the world, more tailored to the local markets. In many cases that will entail wholesale pricing and heavy subsidies without kickbacks to Apple.
  • Reply 16 of 304
    samabsamab Posts: 1,953member
    Quote:
    Originally Posted by merdhead View Post


    Wow, so much negativity toward Apple. I think the iPhone has been a success, if only from a marketing point of view. The hype aside, it's established Apple as a serious player in the high-end phone business. Now they just need to sort out their sales strategy and hardware. US consumers, with less choice in phones and a history of greater control by phone companies aren't phased by the fairly draconian terms of purchasing the iPhone. I can understand Apple trying it on with a novel model for maximising its revenue since it had such a well-received product (someone should remind cnocbui that Apple cannot be greedy since companies don't have emotions, also I think the pricing was mainly motivated by trying to maintain the phone's image as a premium product), but I think they've now established the limitations of that outside of the US. Much of the rest of the world has much more choice in phones and less inclined pay the Apple premium.



    The release of the 3G phone in June will bring Apple to some sort of parity with other high-end phone manufacturers. Now Apple needs to adopt more flexible sales strategy. I think they will keep the same deal in the US given their exclusive deal with AT&T, but I can see them having a more conventional approach in the rest of the world, more tailored to the local markets. In many cases that will entail wholesale pricing and heavy subsidies without kickbacks to Apple.



    If O2 managed to activate 200K iphones in about 3 months --- for a population of 60 million people in England. Then it has done a little better than AT&T activating 900K iphones in the christmas quarter --- for population of 300 million people in US.



    The iphone is not even a success in the US.
  • Reply 17 of 304
    cnocbuicnocbui Posts: 3,613member
    Quote:
    Originally Posted by slicedbread View Post


    Don't know why you'd celebrate the so-called "failing" of the iPhone in Europe. How exactly does that benefit you, as a consumer?



    Schadenfreude old bean, pure schadenfreude!



    No seriously, it benefits me as a consumer because if it bombs over here, Apple have three choices:



    - Price it realistically, in which case I might get one.

    - Take their ball and go home, in which case I lose nothing as I am not remotely interested at the current price.

    - Continue as they have been, in the hope the 3G iPhone is a hit (it won't be). Again, I lose nothing and will continue to ignore the device.



    So, I have nothing to gain from the staus quo, but might if Apple are forced to change their pricing.





    Quote:

    More of the same baseless complaints about Apple and the iPhone: "it's too expensive!" "they're greedy!" "it's overhyped!" Simple solution for all the complainers: don't buy it. It's a choice, remember?



    For many users in Europe, phones are FREE. The iPhone may be great value in the US, but it isn't in the context of the European market.



    We haven' been buying it! Tens of millions of us haven't - we know it is our choice and have been exercising it accordingly.



    Quote:

    Obviously, for a lot of consumers, the iPhone represents a strong value. Even in France, 100,000 users have bought the dang thing.



    Those numbers indicate it has tanked big time. The population of France is 64 million - 100,000 is a joke!



    Quote:

    Any way you slice it, the iPhone has been a success. In some places it's been a more spectacular success than in others--but everywhere it's been a success, in that it's one of the hottest selling new phones ever introduced in each respective market.



    Rubbish. The Nokia N95 is probably out selling the iPhone 100:1 in Europe. Sales of the iPhone in Europe have been weak and slow, not record setting.
  • Reply 18 of 304
    Quote:
    Originally Posted by ouragan View Post


    These executives are victims of Steve Jobs' Reality Distortion Field. It's a pity that phone carriers have to pay for Steve Jobs' mistakes.







    No, they are just stupid and greedy. If the relationship with AT&T is similar, they all had to pay wholesale to Apple, and now they are stuck with the extra inventory and they are going to lose money.



    They knew that there was the possibility that they may not sell due to price, 2 year contract and 2G, they decided to ignore it. They gambled and lost. All businesses have risks.



    If I sell chocolate covered maggots and you decide to distribute them and they don't sell well to your clients, is it my fault or your fault for not knowing the taste of your clients?
  • Reply 19 of 304
    sapporobabysapporobaby Posts: 1,079member
    Quote:
    Originally Posted by cnocbui View Post


    Katy Huberty is a numpty.



    The reason the iPhone has failed to sell well in Europe is because it is way too expensive for this market. And the reason for that is Apple saddled it with the baggage of it's own greed.



    The only failure of the managers she chastises was their lack of guts to tell Apple where exactly they could stick it. NONE of them should have agreed to Apples greedy ways, they should have declared Europe an iPhone free zone.



    The European market is predominantly pre-paid, and becoming more so at a steady rate. Apples model of dipping it's piggy snout into the call revenue stream does not fit well with a pre-paid market.



    I feel sorry for the European Network operators. They have been well and truly suckered if they are having to wear the full cost of the unsold inventory discounting.



    The iPhone failing in Europe so spectacularly has put a big on my face - love it!



    Great point. As an American currently working here in Europe and having lived here before, I can understand the European mentality better than those who simply think Apple can do no wrong. I applaud the Finnish operators that told Apple to go shove it. No 3G, no sales in Finland. Bottom line. Also, the eff'd up revenue sharing model that Apple came up with puts all the operators at risk as Nokia and SE can now demand the same. Considering Nokia probably (I do not have hard data so don't ask me for it) sells more high-end phones in a week than Apple sells iPhones in a month, the last things the operators want to do is share revenue with Nokia. Apple has a decent product. The iPhone is more iPod than phone, but it does the iPod thing pretty well. As a phone, it is truly suited for an American market that is pretty immature at the moment. A product like the iPhone will surely help bring the US carriers online with their European counterparts. Apple needs to wake up and smell the coffee. The dismal sales in Europe are an indication that branding and locking the phone is not the way to do biz here.
  • Reply 20 of 304
    SpamSandwichSpamSandwich Posts: 31,417member
    Quote:
    Originally Posted by samab View Post


    In the US, sales have been solid --- because they were bought in the US and then shipped to China. Which means that American demand is not that great to begin with.



    Some phones went back to China. China is not the majority of iPhone sales. You are uninformed.
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