updated 03:25 pm EDT, Fri April 18, 2008
Europe Low iPhone Sales
Europe's iPhone carriers may face a significant financial hit from sub-par iPhone sales in the region, says a report from UK's The Times. Speaking to Morgan Stanley analyst Katheryn Huberty, the paper hears that temporary price drops at T-Mobile in Germany and O2 UK are likely to incur "significant" financial losses as the phones sell below cost. Carriers are expected to recover much of this through monthly fees, with T-Mobile altering its discounts depending on subscription rates, but are still anticipated to suffer to some degree.
While Orange has not joined the efforts and is allegedly under pressure from Apple to discount the iPhone's price in a subsidized model, all three European carriers have allegedly sold well below expectations. Total continent-wide sales reportedly reached the 330,000 mark where the providers together had estimated between 500,000 and 600,000.
The price cuts are already recognized by analysts as an attempt to clear stock ahead of a 3G iPhone release in mid-year, as both are due to end sometime in June. A handset with faster Internet access is considered critical to Europe, where 3G networks have been active for a longer period of time and higher-end phones are more likely to use the technology.
Huberty also suggests that further price drops may be helped along by shorter-than-expected exclusivity deals. The researcher believes that Apple's signed contracts with carriers are just two years long and will expire once Apple is no longer dependent on sharing carrier revenue. Once the company can rely on app sales and ads, there will purportedly be less incentive to depend on shared carrier revenues, allowing Apple to shop the phone to multiple providers in a single country. While still unconfirmed, a two-year plan would let Apple supply the iPhone to T-Mobile USA in July 2009 and key European carriers before the end of the same year.
As part of its article, the Times also cites sources who say the next iPhone will be "radically different" than the existing version, though doesn't go into details and appears to primarily speculate about possible form-factor changes for the device.