LONDON-A handful of people queued overnight in the cold and rain outside Apple’s flagship store on London’s Regent Street to be among the first to legally buy an iPhone outside the U.S. when it went on sale at precisely 6:02 p.m. on Friday in the U.K. During the day, the queue grew to hundreds, and sympathetic Apple staff brought out cups of hot tea to keep up the spirits of the mainly male crowd.
Round the corner on Oxford Street, there were shorter lines at Carphone Warehouse and O2 stores, the exclusive service provider, where the iPhone also went on sale at 6:02 p.m. (the carefully-timed :02 kickoff doubled as an ad for the phone). Some Carphone Warehouse branches stayed open till 11 p.m. to satisfy customers hungry for the latest gadget and O2 employed more than 1,400 extra staff as sales assistants and at call centers to tackle the anticipated rush of sales.
The iPhone launched in its first two foreign markets, the U.K. and Germany, on Nov. 9. Throughout the weekend bloggers in both countries posted pictures online of customers buying iPhones in different cities. Germany was the first to offer sale figures, with a statement from Deutsche Telecom’s T-Mobile saying that more than 10,000 phones were sold the first day. In the U.K., Carphone Warehouse’s CEO Charles Dunstone hoped for similar sales in that country. Apple’s ambitious goal for the U.K. is to sell 400,000 iPhones by Christmas. The next launch market will be France on Nov. 29, in partnership with France Telecom’s Orange.
The U.K. in particular has been full of iPhone hype, with commentators enthusing about the tactile touch-screen and intuitive, user-friendly design. But it’s unclear whether Brits, used to free handsets and phone features like video and faster Internet speeds, will embrace the iPhone quite as enthusiastically as Americans have.
There has been a lot of negativity surrounding the iPhone launch. Critics have complained of a laundry list of drawbacks: the lowly two-megapixel camera, the clumsy text entry, the compulsory use of iPod headphones, no picture messaging, no video and crucially, the lack of high-speed 3G Internet access. When outside a Wi-Fi hotspot, the iPhone relies for Internet access on the relatively slow EDGE network, which is only available in 30% of the U.K.
But the biggest gripe is the price. The handset costs a whopping $540, plus buyers are locked into a minimum $70-a-month contract for 18 months-a total of at least $1,800. Apple has signed an exclusive deal with O2, which will pay 25% of revenues straight back to Apple in the hope that the iPhone’s popularity will tempt thousands of loyal Apple customers to its network or at least into its stores to browse.
Brits are used to getting even top-of-the-range phones for free with their mobile phone contracts, so Apple is taking a gamble that customers will prefer to pay a hefty price for an iPhone rather than take home a free Nokia Corp. N95, for example. Nokia phones are more popular in Europe than the U.S., and the Nokia N95 has a better camera than the iPhone, good video, and operates on the faster 3G network. There are also persistent rumors of cheaper iPhones with better Internet access coming next year, which may help people resist the urge to buy one before Christmas. And eBay is already selling “unlocked” iPhones which can be used on any network-although if you buy one of these you forfeit your guarantee and any rights to software upgrades.
Martin Bowley, chief executive of mobile content provider of Pitch Entertainment Group, believes the iPhone’s high price tag is a shrewd marketing tactic. He said, “Because you have to buy the iPhone, it puts a value on it and gives it a cachet. It’s aspirational.”
Outside Europe’s biggest markets, the rest of the world will have to wait until at least 2008 for an iPhone-at least a legitimate one. At trendy ad agencies in Brazil last month, young admen were already strutting around the office and Sao Paulo hot spots with iPhones that hackers had adapted to work on a local Brazilian cellphone network. In Asia, cheap counterfeit iPhones with fake Apple logos are rife in China and Hong Kong. Or instead of a cheap copy, Chinese can pay up to three times the U.S. price for gray market imports that are genuine iPhones but have been illegally unlocked and lack warranties or tech support.
Emma Hall and contributor Normandy Madden are reporters for Advertising Age, a sister publication for RCR Wireless News. Both publications are owned by Crain Communications Inc.
