Carrier app stores still alive and growing

The assumption was that the iPhone App Store harkened a tidal shift to phone (or operating system) centric app stores. Many assumed that this also rendered obsolete attempts by mobile network operators to create their own walled gardens.

Apparently two of the four major European operators, Orange and Vodafone, didn’t get the message. The Orange Application Shop (announced last month) and the unnamed Vodafone application store (announced Tuesday) are two examples. (Apparently the Vodafone store will also apply to Verizon Wireless in the US.) Both T-Mobile and Telefonica also have app store experiments.

Each of the app stores has its own APIs, own billing systems, own markets. Of course, this is in addition to the app stores from Apple, Google, Microsoft, Nokia, RIM, Samsung and others — each with its own APIs, devices, billing and so on.

The proliferation of app stores reminds me a lot of music stores: Apple created the iTunes Music Store and everyone wanted to have their own store. Now many of them are gone.

However, there’s actually a better argument for multiple music stores than multiple app stores. Once upon a time, we had thousands of LP (later CD) stores. If the online music stores were all distributing DRM-free MP3 files, then consumers could buy songs from different stores and different days and have them all work together.

However, a fragmentation of MP3 distribution would increase buyer power and thus increase competition (and price competition) between suppliers. This competition could commoditize MP3 distribution — putting the less efficient dealers out of business — or put pressure on music publishers to increase promotions or cut prices.

iPhone's world tour

Rumors of the June 9 announcement of the 3G iPhone keep building. Normally Apple (used to) pre-announce by 30 days to fill the channel, but because the 2G iPhones have disappeared from the channel, it suggests that the new phone will be available for sale within 24 hours.

Beyond AT&T in the US and its three partners in Europe, Apple has added Rogers in Canada and America Movil (owned by the man richer than Bill Gates) in Latin America. Its existing partners, Vodafone and (this morning) Orange, have announced plans to sell the iPhone outside their home countries in places like Australia, Austria, Belgium, India, Switzerland and now Africa/Middle East.

Not all of the deals are exclusive for the national markets, and it’s unclear what’s happening with the revenue share. That these are sales coming in the future implies they’re waiting for the 3G phone.

But still no major Asia deals, as I’d predicted back in January. Does this mean the Apple brand does not provide the buyer power necessary for cutting a favorable deal in Asia? That there’s no point of killing gray market sales until the 3G phone is available in quantity? Or that that part of the world is just not interested in Apple’s combination of iPod, web browser and Wi-Fi?

EU carriers pay dearly for iPhone exclusive

This morning, Steve Jobs unveiled the iPhone that will ship in the UK on Nov. 9. As rumored since July, the iPhone is exclusive to O2. With an initial price of £269 and an 18-month contract, that works out to a £899 commitment ($1795) vs. $1799 over 24 months for the US phone after the price cut (but everything in London is more expensive).

There were a few interesting developments. Unlike in the US, the iPhone will not only be sold by the carrier and by Apple, but by a third party store, Europe’s Carphone Warehouse.

Somewhat surprisingly, it’s still only 2.5G, which Jobs blamed on the power consumption of 3G. (Is this inherent to 3G, or just the current implementations?) Despite all this, the interest crashed O2’s online stores, as buyers rushed to be the first to get an iPhone: the 1,500 visitors a second meant “the website has had more hits today than we normally do in a week.”

As predicted, the world’s largest carrier Vodafone refused Apple’s terms, and so Apple went with other carriers — O2 in the UK, Orange in France and T-Mobile in Germany; Jobs reportedly will be making the other announcements over the next two days. Interestingly, these are all the former national monopoly phone companies (BT spinoff O2 is now owned by the Spanish Telefonica monopoly).

The London Times reports O2 will give Apple 10% of the revenue from the iPhone, while the Guardian put it at 40%. (I suspect that’s for data revenues or profits, not the gross). Telefonica’s CEO aggressively fought to get the deal away from Orange and T-Mobile (both with big UK operations).

Also odd is that in June Orange sounded angry at Apple’s control of the music download market, but now (according to Le Figaro) is willing to pay Apple more than 10% of revenues for exclusive rights in France.

The Guardian said that the carriers were annoyed at getting pitted against each other to pay Apple the highest possible price — exactly as Apple did with Verizon and Cingular in the US. Students, what would we call this?

Photo from SlashGear.

Technorati Tags: Apple, iPhone, Orange, O2, Steve Jobs, T-Mobile

Apples and Oranges

As the US rollout of the iPhone approaches, Apple still has not announced its overseas strategy — whether the planned December intro in Europe, or any release elsewhere in the world.

Apple is notoriously secretive, but the (plausible) rumors are that Apple will choose a single pan-European carrier and thus (as in the US) a phone locked to one carrier. Bloggers on April 21 and May 6 have claimed Vodafone is a “lock” (all pun intended).

I find more plausible the recent posts that suggest that Apple is debating between Vodafone and Orange. This is consistent with Apple’s US strategy, where it got the two leading carriers to bid against each other. Maybe Vodafone has the broadest reach, but they are also the global carrier most trying to commoditize handsets. No single Vodafone action would undercut its strategy more than carrying the Apple-branded iPhone with some subset of Apple restrictions, while Apple is not going to let any carrier dictate terms without getting a competing proposal.

Most plausible is the speculation that the iEuroPhone (EuroIPhone?) will support 3G. Still, the best (if least substantive) commentary was last week on Wired:

Has anyone else noticed the amount of insane speculation over this product? All over the web we hear every day that people won't buy it because of battery life issues, a poor touch screen experience or any other manner of nonsense.

You can't buy one. It doesn't exist yet. Why on Earth are people debating non existent problems with a non existent device?

Let's just wait and see, shall we? It's only six weeks more.

On a related note, UBS is predicting 850,000 iPhones will be sold in the first 4 months, 2.1 million total in calendar 2007, and (if you extrapolate) more than 8 million iPhones in 2008. Given there were only about 145 million handsets sold last year in the US, those numbers confirm to me that Apple expects significant overseas sales in 2008. But then, any predictions of iPhone sales prior to its launch are merely speculation.

Technorati Tags: Apple, iPhone, mobile phones, Orange, Verizon