iPhone: European fire sales spreading to France
Hard on the heels of a 75% price cut in Germany and 100 pounds (37%) off in the U.K. comes a report out of Paris that two high-level executives at Orange, the iPhone's wireless carrier in France, have flown to Cupertino to figure out what to do about the excess inventory piling up on their shelves.
Under a headline that reads "L'échec de l'iPhone pousse Orange et Apple à renégocier" ("The iPhone's failure forces Orange and Apple to renegotiate"), Les Echos reports that Orange executive director Louis-Pierre Wenes and marketing director Alice Holzman met with Apple COO Tim Cook earlier this week to hammer out a deal that could lead to a French price cut in the next few weeks.
The sticking point in the negotiations, according to Les Echos: Apple wants Orange to subsidize the cost of the device, as it does all its other models; Orange wants Apple, in return, to sharply reduce or drop entirely the cut it demands of each sale.
The meeting was the latest attempt to sort out the trans-Atlantic inventory imbalance has developed in advance of the second-generation iPhone (or iPhones), now widely expected to arrive in June. While the first-generation continues to sell briskly in the U.S. and has been in short supply in Apple stores for several weeks, European sales are reported to have slowed significantly in advance of the so-called 3G model.
On Friday, the London Times quoted Kathryn Huberty, an Apple (AAPL) specialist at Morgan Stanley, saying that the European carriers had become over-excited by iPhone hype last June, ordered too many, and are now facing "significant" losses on unsold stock.
Apple sold 3.71 million iPhones in the U.S. last year. According to Strategic Analytics, its European partners sold 350,000 through December, considerably less than the 500,000 to 600,000 they had hoped to sell, and only 300,000 in the first quarter of 2008.
Why Apple can't just re-balance its inventory by redirecting Europe's unsold iPhones to Apple stores in the U.S. that could use them is a mystery that has even Apple analysts scratching their heads.
"It remains puzzling that iPhone availability has been very scarce in Apple’s US stores, yet seemingly plentiful everywhere else,” Stanford Bernstein’s Toni Sacconaghi wrote earlier this month. "One explanation might be that because iPhone’s supply shortage came at quarter’s end, Apple chose to ship most of its iPhones to the channel, where units would be recognized as sold during the quarter, rather than re-building inventory in its US stores." (see here)
Is he right? Is Apple manipulating its shipments to dress up its Q2 report? We'll likely find out on Wednesday, when Apple reports its quarterly earnings and releases numbers on its domestic and overseas iPhone sales.
"what is wrong with these hostile itards? They jump all over everyone who says anything not completly praising."
"I think the iPhone needs a higher res camera."
That would be an example of a comment that wasn't completely praising.
"I think another problem is that many Europeans will not touch the iPhone until it gains 3G support, as I believe most networks in Europe are already 3G and customers don’t want to downgrade their bandwidth. Hopefully the 3G iPhone comes this summer as expected."
That would be another example of a comment that wasn't completely praising.
The comment I was reffering to was.
"In Europe we do not need a rubbish phone like that."
Having used a lot of phones and PDA's and being frustrated at them all, I really appreciate the iPhone. It has been one of the most useful things I have ever owned and a major leap forward from any other PDA/Cell phone I have ever used. When somebody that obviously doesn't own one and obviously isn't a Mac fan in any way comes on and says "In Europe we do not need a rubbish phone like that." I will write a smart alex comment back every time.
Your "nuff said Iphones suck" was a poor example of somebody not completely praising the iPhone. I took it as somebody being hostile and jumping all over somebody "like of heyenas" as you called it, but didn't come up with a catchy slogan like itard to insult you back. I'll have to work on it and get back to you.
what is wrong with these hostile itards? They jump all over everyone who says anything not completly praising. Whether its Joe from N.Y. citing legitimate complaints about the iphone or Elmer Dewitt. You guys jump all over them like of heyenas. Iphones dont sell in Europe because consumers are smart enough to buy here with the weak dollar and Europe has way better phones nuff said Iphones suck.
"In Europe we do not need a rubbish phone like that…"
Rubbish phone, LOL! I use the iPhone because it IS the best phone on the market. Some phones might have a better gps, G3 or a higher res camera etc, but all other phone's SUCK when you compare the software and user experience. RIMM is scrambling to come up with an answer to the iPhone and their first attempt at an iPhone copy failed miserably. The second generation iPhone is coming in June and it's coming after the business market that RIMM owns now and RIMM is scared to death as they should be.
"Well, I still don’t have a cell phone, and from all of the worthless conversation I hear CONSTANTLY going on around me about 99.99% of those who have ‘em, don’t need ‘em. And prolly about 98.99% shouldn’t be allowed to have ‘em."
LOL… I suppose there would be a lot less meaningless conversations going on if you had to communicate using smoke signals like you must be using.
i have a touch, it has given me screen crashing problems several times, if listening to music and try to use Safari – Safari would crash. then the whole thing froze and went black twice. inexcusable for an item that cost $400 and is less than 6 months old. i even had to send it back to Apple for reformatting. with that said, i like my touch very much and happy to have it.
even though my touch has frustrated me several times, i am anxious to buy an iPhone 2.0. 32gb, phone, music, video, 3g network – for whatever it's worth, quality interactive video games, MSFT exchange, weather, stocks, email, SMS, IM service, hopeful 3 mp camera, and endless new SDK programs coming – why would i not want this? all it needs is removable battery, break from ATT, and better international service plan.
i'm excited about the new iPhones this summer and will definitely buy one. i think many people are holding on buying one now, to get one in 3-4 months. makes no sense to buy one now when you can wait and get a better one soon.
anecdotal info: in my office in France, US purchased unlocked iPhones outnumber locally purchased iPhones 2 to 1. Of 6, 4 are unlocked and 2 were bought at Orange.
Primary reasons: cost difference with the exchange rate and carrier loyalty. It's unsurprising that US sales are through the roof and lackluster in Europe. Current exchange puts an iPhone at around 277€ vs 399€.
There are another 4-6 people waiting on a 3G model.
"3G CrybabiesWhen you get the 3G model and it’s just not that much faster that the EDGE model…,"
Um, Ellen, Edge runs at around 300kbps and 3G runs at around 7Mbps. Anyone that downloads porn on their phone will tell you faster is better.
"I’ve been waiting on the 3G to come out so that I can get a 2G at a discount…,"
Rob, if you can find a 2G model of anything I would be high suspicious of it BECAUSE IT DOESN"T EXSIST!!!!
Jake? I want to introduce you to something I like to call Lithium, (used to treat Bi-Polar people for those who don't know, and Jake obvisouly suffers from it)
Now, Apple was thinking they could bowl over the European market like they did the US market but in Europe everyone can buy whatever phone they like and use it on whatever carrier they like so why give up that freedom of choice and choose a substandard carrier like Orange just to use a paticular model phone? The fact that Apple is not selling as well overseas has nothing to do with the quality of the phone and everything to do with the poor business model they choose to use.
Seems very simple. Apple needs to keep iphones understocked in the U.S. so scalpers don't get them and sell them to Europe for a 60% profit. They are playing the exchange rate game with inventory.
In Europe we do not need a rubbish phone like that…we have at least 10 phones on the market that are better than the I-Phone…Nifty touchscreen but on a cell phone i rather get the LG touch screen than the I Phone no UMTS etc. etc. just a phone that is not ready for the european market just too many things missing…and why buy an I-Phone if you can get a RIMM?Unless you are an Apple freak…!!!kind regards from Germany
Well, I still don't have a cell phone, and from all of the worthless conversation I hear CONSTANTLY going on around me about 99.99% of those who have 'em, don't need 'em. And prolly about 98.99% shouldn't be allowed to have 'em. Mark this: Coming soon to a web site/newspaper/radio near you: "Today in downtown, city of your choice, three women pounced on & whipped the shit out of a fourth who just wouldn't SHUT UP!" "Today a gangbanger in, cit of yr choice, crawled out of her demolished vechicle and wasted the woman on her phone that totalled her car. The woman had just called her lawyer." "Girls from the H%$Gschool posted cell phone footage to Glueyatodatube of them whipping the crap outta their close frien' and confidant jus' fer fun." Oh, right, the last one all ready happens dang near everyday.
Check out EBAY. Thousand of iphones are being sold a day. They are all getting 20+ bidders and are all being sold.
It has to be Ebay's hottest ticket.
The Euro is 1.6 to the dollar; you can buy and iphone in the US for about 50% of the price you would pay in Europe and you can use it on any carrier. Come on guys!
Also, the reason why people don't walk into AT&T is that you need to get and AT&T contract.
Maybe they cannot bring them back to US because they already paid import duty. Not to mention the cost.
Seems pretty obvious.
I've been waiting on the 3G to come out so that I can get a 2G at a discount. Of the 4 or 5 people that
i know with an Iphone, none of them have ever complained about the Edge network being too slow.
A week or so ago I went into the glass cube apple store in NYC for the first time to google an address. Even with the "concierges" checking people out on the floor and five or more registers open, the check out line was 50 or 60 deep on a Saturday afternoon. Any retailer or consumer products company would die to have Christmas Eve 365 days a year like that. Most customers appeared to be oversea tourists cashing in on the worthless dollar and walking out with large bags of apple goodies. I suspect that there are far more iPhones overseas than apple ever could have imagined as some other posters note–they just didn't plan on how they would get there with a plunging USD.
@ellen: this is a bs! i'm from italy and i have 2 phones: an umts and an edge….if i put my nokia e65 and the iphone on the internet the difference is quite big! (iphone with edge connection of course…). Furthermore i've have a 3g sim card and prepaid contract…..so i'm really waiting for the 3g iphone, as ALL of 3g users in europe! in addition to this remember that the new 3g iphone would mount oled technology and other tips that would make it better than this first version!
finally…if i buy from apple store, and i ship it to italy by 2 days express dhl, i pay for it 310(or less) euros….so we all have a real convenience in buying in the usa due to this weakness of the usd!and remember that there (in the us) is easier buying it without the contract!
as far as the amount of unlocked iphones in foreign countries… im an american in australia and have seen unlocked iphones pretty much everwhere ive seen them.
as a matter of fact, 2 of my friends bought one after i showed them the demo. not even a week later, my mate 'bumps' into his cars mirror and cracks the screen. still works, but the glass is shattered. dont know what 'bumps' is, so take that with a grain of salt 
To Pat S,
The reason is simple — Apple uses "shipment" numbers in the SEC filings. Go and look it up yourself — shipment doesn't mean actually sold to the carriers yet.
Wall Street cares about the actual units and ASP (average selling price).
It's simple. The US dollar is in the toilet. Every US-based international company there is wants to sell their goods OUTSIDE the united states, then convert that foreign income to cheap dollars. That is also what is floating the US stock market these days – foreigners buying cheap us stocks because they are priced in the sinking stinking dollar.
Maybe it's not Apple's inventory. Did you ever think that the European carrier actually purchase the phones from Apple and then sell them? Dress up the Qtr. Give me a break. The income from Iphone is taken over 2 yrs so a few 100 thousand phones is a rounding error on this qtr. The Mac sales are the story this qtr. If the 2nd generation Iphone is not selling well by the end of the year then you can talk about channel stuffing, but the claim is a bit ridiculous when the product has only been on the market in Europe for a few months. Where do you get your numbers for Fy08. I would call it a guess, but maybe toni told you.
The truth is that anyone who pays 400 for a phone is a moron. Quit worrying about your stupid images and buy practical. You fall for this stupid marketing scheme and watch apple flaunt their ability to fleece you ego maniacs.
"I think another problem is that many Europeans will not touch the iPhone until it gains 3G support,"
that and the fact that a lot of europeans use prepaid phones and the iphone unless it's unlocked only comes with with a data plan
Joe, NY, NY
I manage an AT&T store in NY and we still stock them, the iphone is the least returned item in our store
Joe is an outright liar. Right there in black and white for the world to see. Obviously, we're dealing with someone of low IQ and no dignity.
3G CrybabiesWhen you get the 3G model and it's just not that much faster that the EDGE model, you'll all be crying that Apple somehow screwed you over. You need to realize that 3G networks have latency issues that will prevent these phones from running multiples faster than the current model. Just realize it. Don't take it out on Apple later. OK, DeWitt?.
DeWitt's Reality Distortion Field
He'll do anything he can to damage Apple's shareprice. Don't know how he can claim impartiality. Must have something against the company or Steve Jobs. iDunno…
Joe in NY – you are full of BS… every single point you make is dead wrong!
1. I've dropped my phone 3 or 4 times and still works great – nothing broke.
2. Everyone I've spoken with likes the keyboard – it takes a little time to get used to but it works great!
3. Who are you kidding! Never froze in 9 months of use…
And lastly – AT&T stores are still carrying the phone… get a life!
ex ped: Thanks Mike for setting the record straight. You're right on every point except perhaps for No. 2. There are people in this world who prefer the BlackBerry keyboard.
I think another problem is that many Europeans will not touch the iPhone until it gains 3G support, as I believe most networks in Europe are already 3G and customers don't want to downgrade their bandwidth. Hopefully the 3G iPhone comes this summer as expected.
Let's me see here …
If I were going to purchase an iPhone in Europe, it'd cost me around Euro 399.
In the States, I would pay $399.
At $1.60 to 1 conversion rate, I can purchase the iPhones at a 60% discount.
We've become the Land of Inexpensive Apple Products.
RE Apple inventory.
The dollar v Euro disparity has Europeans coming to NY (and other port of entry places) to buy apple products. Put yourself in the decision making capacity of Apple, wouldn't it be wise to reduce inventory in NY (and other entry ports) and shift inventory to Europe, thereby forcing Europeans to purchase apple products in Europe.
Lol, About time someone woke up to this. Every AT&T store I go in has voluntarily stopped stocking the Iphone due to customer complaints. They cite three major issues:
1.) Drop it once, it's done. The screen will crack on any little impact.
2.) No one likes the virtual keyboard. They buy it and return it for a keyboard style phone.
3.) The thing freezes every time you try to do anything with it.
I have an Itouch, and the combination of 2&3 makes me want to induce #1 on my own.. lol.
PED you clearly are not paid to write useful, factual, objective information about Apple. Instead it is painfully obvious that you are merely writing inflammatory, speculative junk, typically with a negative bias, in order to pull eyeballs to the site.
I understand that to compete with the wild writings on other blogs and message board you must type salacious nonsense but it really is sad to see.
People, moreover, investors that are interested in Apple may shy away from the stock simply by reading your unfavorable blather. That would be okay if Apple was like say Crocs or Krispy Kreme or Enron, but you are typing negative information about a phenomenal company.
It is not your business to "speculate" on Apple's business model. Sure you can "comment" on some of the non-traditional elements, but you take it a step further and actually theorize on the process and draw negative conclusions long before the real conclusions are made by Apple.
The worst part is that it is surely to the detriment of the reader. As I said, Apple is a great company with a great stock to track it and some investors having read your FUD may stay away, therefore missing out on a great investment opportunity.
I ask you to think about this before you type your next article, that you should be doing so with the intention of helping readers opposed to furthering your agenda or that of your publisher.
well, many of those iphones sold in USA are being used in Europe and ASIA at the moment. There are about 1.4 millions of those hacked iphones around the world. also in country like Gemany, France and England.
If you go to Europe, you will be very surprised by the amount of hacked iphones you see circulating.
i would not say tha the iphone is a failure in Europe. it is just that most of the iphones circulating in europe were bought in NYC.
You do not have seen so many French and Italians at the apple stores in NYC as you could see for the past 6 months. they are all buying apple products at almost half the price they would pay in Europe.
Sales in USA are brisk and inventory are low, also because Europeans and Asian are buying them in mass.
i-phones are selling fast in US because ASIA market are selling it. You can buy unlock i-phones in Asia with same competetive price in Apple US.