iPhone Comes to Europe - First Take

Michael Gartenberg | September 18, 2007, 08:05 AM

I'm sure Thomas, Ian and Mark will have a lot to say as they're covering things live but here's a few thoughts in the middle of the night here in SF.

Nothing seems to have changed in the iPhone hardware wise in the move overseas but it does set the stage for Apple to make inroads beyond it's US home turf. The launch in Europe will start in the UK with 02. Cost is 269 pounds. WiFi music store will be there as well.

The move will bolster Apple's ability to meet the goal of 10,000,000 phones over the first year of launch. Major difference in the retail channel as Apple doesn't have nearly the same number of stores that it has in the US makes sense for them to deal with the folks they're dealing with.

The real question is what comes next for the iPhone... after the launch and the real story starts.

1. There's an interesting capacity gap between the iPod touch and the iPhone raising some questions about when we might see a 16gb iPhone. While it's not critical for Apple to have that capacity in a phone in the near term, an offering in that range would allow for higher ASPs and of course, higher margins.

2. 3G, it's hard to imagine anyone other than Apple able to launch a premium high end handset without 3G and no doubt something we will see in the iPhone line over time. In the meantime, there's no doubt some folks will gripe over the lack of 3G but it's really not EDGE vs. 3G since the iPhone shines over WiFi and works OK over EDGE.

3. Even at $399, the iPhone is a bit too expensive for mass market adoption. It will be important for Apple to evolve the iPhone line into a family of products with different features, form factors capacities and most importantly, price points. An Apple branded phone with a selling price of $99 would no doubt resonate well with consumers and create the mass market draw Apple needs longer term.

4. Exchange Integration - If Apple is serious about getting business users on board with the iPhone, they're going to need to license the Exchange ActiveSync Protocol from Microsoft and make the iPhone a first class Exchange client. While Microsoft will still have the edge in providing leverage to the Enterprise market in the form of management tools and shared Windows APIs, Apple could become a more credible player just by getting into the Exchange eco system beyond IMAP support and become the cool alternative for business users looking for more than what RIM can provide in terms of Blackberry devices.

With the introduction in Europe, the next phase of the iPhone launch is complete, European wireless needs and attitudes are different than the US and it will be interesting to see how well the iPhone does in the first 30 days in Europe. iPhone, however, isn't just about launch it's about what comes afterward over time.

This is not a sprint for Apple but rather a marathon. Apple has already demonstrated that while not early to market, they are a powerful and relevant force with the ability to capture the mind share of consumers. As we know, mind share often leads to market share.