iPhone Hits the European Market

Apple’s iPhone has finally landed on European shores. November 9, the day when the iPhone hit the markets in Britain and Germany, saw fans gather outside Apple’s store on Regent Street in London, despite inclement weather, to lay claim to being among the first to get their iPhones in Britain.

Eager fans in Britain said they had been looking forward to the British launch of the iPhone right from the day Apple first launched the product in January 2007. 23-year old John McGregor, a student, braved the cold British weather as he waited to get his own iPhone. McGregor said there was no other device like the iPhone in the market currently.

A crowd of fans braving cold weather to be the first to pick up their iPhones is one thing. However, how popular the phone will be in Europe is still a matter of speculation. The phone’s spectacular success in the U.S., where Apple has been able to sell over 1.4 million pieces since the launch, is no guarantee of similar success in Europe.

For one, Europe is not Apple’s home turf. The markets in Europe are dominated by two rival companies – Nokia and Sony Ericsson. Together, these two companies control a majority of the market share in Europe. Besides, each has its own multimedia music phone, which means the iPhone would not be a new entrant phone here.

Also, buyers in Europe may not take too kindly to the fact that despite the hype and the cool looks, the iPhone actually lags behind some of its competitors in critical aspects such as data speed and specifications. In Europe, customers expect much more from their mobile phones than customers in the USA.

The Nokia’s N95 has a 5-megapixel camera compared to the iPhone’s 2-megapixel offering. The W960 from Sony Ericsson has higher data speeds compared to the iPhone. Downloads on the W960 happen over 3G networks; the iPhone, on the other hand, uses a patched up 2G technology called EDGE.

Elaborating on this aspect, Aleksandra Bosnjak, a media and technology analyst working with London-based StrategyEye Digital Media, said despite being a great product, Apple’s iPhone was way behind competition in the European market in terms of functionality.

However, the brand value of Apple becomes apparent from the fact that despite these seemingly negative comments from analysts, companies like O2 from Britain and T-Mobile from Germany have inked exclusive contracts with Apple that would enable them to make the iPhone available to their local customers.

Another problem Apple could face with regard to its iPhone in Europe is pricing. While the iPhone costs just $399 in the U.S., the prices are far higher in Europe - $439 in Germany and $565 in Britain. An 18-month contract would cost users in Britain between $74 and $115 a month, while users in Germany would have to pay between $72 and $130 a month. These rates do not include the cost of the phone itself.

Separate pricing for the handset could be a crucial issue, especially given the fact that operators subsidize on the phones to a large extent in Europe. As Jonathan Arber, an analyst at Ovum, a telecommunication consultancy in Britain puts it, the idea of a separate price for the handset is alien to European users, and that can have a critical impact on iPhone sales in Europe.

Another critical issue Apple will face would be in having a strategy in place to wean away customers from the phone services they are currently using. An analyst at M:Metrics, a mobile market research organization, says one-third of the users showing an interest in the iPhone already have a 3G phone. Arber also said that at least 40% of potential iPhone customers in Europe already own a phone with at least a 2-megapixel camera.

Apple is counting on the multiple offerings available on the iPhone to play a definitive role in ensuring European success. The iPhone has one major advantage over its competitors – a great user interface that is a combination of solid integration and ease-of-use.

The iPhone user interface has helped Apple reap rich rewards in the U.S. Apple is also banking on the curiosity factor to generate enough interest in the iPhone; interest that it hopes to convert into sales.

Even with all these strategies in place, breaking into and then possibly dominating the European market is not going to be easy for the Apple iPhone. A lot will depend on what the European mobile phone user prefers – great looks and user interface or killer specs.