For spectators at the iPhone circus, two basic questions seem prevalent.
Will Apple Inc. sustain the brisk sales of its signature handset at AT&T Mobility here in the United States?
And, in the circus’ high-wire act, how will the iPhone fare overseas, as it rolls out in markets governed by markedly different factors?
Naturally, the answers-based on hard data-are only beginning to crystallize. Definitive statements await Apple’s quarterly reporting and market analysts’ interpretations. Late January to early February should see analysts emerging, like so many groundhogs, with that data in hand.
By then, there’ll be two solid quarters of U.S. data to go on. But perhaps the more interesting picture will be only starting to emerge from less than a full quarter’s data on iPhone sales in the United Kingdom, Germany and France. The iPhone went on sale in the U.K. and Germany on Nov. 9 and in France on Nov. 29.
“If there’s an analyst out there who’s not tracking this, they’re missing the boat,” said Ryan Reith at IDC, who tracks global markets.
Loathe to cite incomplete data, analysts at this point speak in terms of factors governing the three Euro-markets, incumbent handset vendors at risk and Apple’s brand cachet.
Interest in high-end devices in Europe is perhaps double that in the U.S., but Europeans enjoy more choices and Apple faces more competition, according to Paul Goode, a London-based analyst at M:Metrics.
Apple’s brand cachet in Europe is not as strong as in the U.S., Goode said. Among those who own a mobile phone and an MP3 player in the U.S., Apple enjoys 60% of the MP3 market. In the U.K., that figure is 40% and in continental Europe 20%.
“Apple doesn’t have the cult following and brand loyalty here that it does in the U.S.,” Goode said.
In terms of competition with incumbent handset vendors, about 50% of Europeans have postpaid service contracts and thus they can obtain devices such as Nokia Corp.’s N95 for “free.” The iPhone’s lack of 3G data speeds is “a concern” as one-third of those who’ve expressed interest in Apple’s phone already are 3G subscribers. The absence of HSDPA in particular-“3G on steroids”-hurts Apple, Goode said.
SE most likely to feel impact
A number of analysts cited Sony Ericsson Mobile Communications as the most likely vendor to feel the iPhone’s heat, with Nokia mentioned soon after.
Sony Ericsson’s consumer demographics for its popular Walkman handsets closely matches those interested in the iPhone, according to Goode. (That’s the disturbingly familiar young, tech-savvy male with high earnings.) Reith at IDC echoed that observation.
“If you’re looking to see who takes a hit from the iPhone, you look at the incumbents in the converged device space,” Reith said.
Vendors that won’t feel the heat, according to Reith: Research In Motion Ltd. and HTC Corp. RIM has the enterprise space nailed down and HTC has aggressively pursued the European market and is surging in HTC-branded sales on the Continent, according to IDC data.
Battle from within
According to Pete Cunningham, a London-based analyst with Canalys, the iPhone’s main competition is its closely related product, the iPod Touch, which offers similar functionality, without telephony or a service contract.
John Devlin, a London-based analyst with IMS Research, said that purely on a device-competition basis (factoring out price, contracts, etc.) the iPhone is up against the N95, the Viewty by LG Electronics Co., the W960 by Sony Ericsson and HTC’s Touch. iPhone buyers, Devlin said, appear prepared to purchase it as a second or even third device in their mobile arsenal.
iPod biz threatened
Apple’s move into mobile, Goode added, was “not voluntary.” As more consumers choose mobile handsets as their MP3 player of choice, Apple’s iPod business, particularly in Europe where it doesn’t enjoy brand dominance, is threatened.
And as Apple attempts to spread its handset around the globe, the company will encounter vastly different market conditions and operator business models, Reith said. That will require flexibility in negotiations, the analyst said. One size will not fit all.
“I would think Steve Jobs has an understanding of different operators’ business models across the globe,” said Reith. “Apple will focus on the mature markets first, where the replacement cycle is short and there’s a tendency to carry two devices.”
Industry buzz has the iPhone heading to Spain’s Telefonica next, Goode said. Telefonica is the owner of O2, the U.K. carrier that launched the device last month.
