Why Waiting On An iPhone Deal In Europe Hurts Apple - InformationWeek

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8/24/2007
05:40 PM
Richard Martin
Richard Martin
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Why Waiting On An iPhone Deal In Europe Hurts Apple

So now France Telecom, parent company of Orange France, has gone from "Non non" to "Oui oui" on talks with Apple about becoming one of the European carriers for the red-hot iPhone once it (finally) makes its way to the Continent. Leaving aside for the moment the question of which operator(s) will get the privilege of offering the 365-Euro touch-screen wonder, here are three reasons that the long

So now France Telecom, parent company of Orange France, has gone from "Non non" to "Oui oui" on talks with Apple about becoming one of the European carriers for the red-hot iPhone once it (finally) makes its way to the Continent. Leaving aside for the moment the question of which operator(s) will get the privilege of offering the 365-Euro touch-screen wonder, here are three reasons that the longer these negotiations play out, the worse it is for Apple.1. "There's always time to make a bad deal." My wife likes to say this, quoting a former boyfriend who's a Hollywood power broker. Frankly I'm never quite sure what it means but I think it applies to the Euro-carriers in this case. Apple has all the leverage on its side right now; the more time that elapses between the U.S. release and the eventual deal for continental distribution, that advantage inevitably erodes. Steve Jobs obviously thinks otherwise, but we all know what a megalomaniac Jobs is.

2. "It's all about the network, stupid." In brief, Europeans will not be willing to settle for the "2.5G" speeds at which the U.S. version runs on AT&T's Edge network. After a slow start, 3G connections are increasing rapidly in Western Europe, with more than 10% of the total mobile customer base represented by 3G connections. "Apple wouldn't dare consider offering an Edge or GSM phone in Europe because the more sophisticated consumers there would just as soon reject a non-3G device in favor of handset alternatives from other providers," says Carmi Levy, senior VP for Strategic Consulting at AR Communications Inc.

European customers will insist on broadband capability -- and Jobs will be forced to go along. Stringing out the negotiations only strengthens the operators' hands in terms of network speeds as 3G conquers the Continent.

3. "What have you done for me lately?" Americans tend to forget how fast the mobile device world has advanced in Western Europe and East Asia, until they get over there and notice all these stylish people walking around with all these sleek, ultra-fast handsets. Nokia, Samsung, and upstart vendor HTC have all released new models -- often with converged features and slick interfaces to rival the iPhone -- in Europe before bringing them to the States, often in dumbed-down form. The gap between the iPhone and rival devices won't seem so vast in Copenhagen or Berlin as it does in Boise or Culver City.

Jobs' chance to strike an unprecedented service-revenue-sharing deal in Europe is now, not three months from now. But I'm not sure he realizes that.

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