Apple’s launch goal: 22 countries, 1 day: Impressive if successful; all eyes on Friday

FEW ARE CERTAIN whether Apple Inc.’s simultaneous, 22-country launch of its 3G iPhone this Friday is unprecedented in the industry.
But many observers, cognizant of manufacturing logistics, regulatory-approval and carrier-testing hurdles, will watch closely to see how well the Cupertino, Calif.-based company pulls off this feat. Most agree that, given confidentiality agreements in general and Apple’s penchant for secrecy in particular, there’s not much visibility into the process.
“Even if a global launch is routine for Nokia, it’s still quite impressive for Apple, which isn’t just launching a phone in these markets — it’s entering (most of) these markets with a phone for the very first time, simultaneously,” said Avi Greengart, analyst at Current Analysis.
8.8M units this year
The widely held mantra of “under-promise, over-deliver” — dubbed the “Oppenheimer Effect” at Apple, for CFO Peter Oppenheimer’s penchant for the stock-boosting approach — means that Apple’s reputation is on the line.
Apple probably needs a first-run of 1 million to 2 million units to supply the score of carriers scheduled to sell the product this Friday, said iSuppli Corp. analyst Tina Teng. iSuppli projected 8.8 million units of the 3G iPhone will ship in the remainder of this year. (By comparison, Nokia’s N95 device has sold 10 million units since its launch in March 2007, Nokia said.)
If successful, Apple would meet its 10 million-unit goal for the 18 months the handset has been on the market and Wall Street’s expectation that it will sell 10 million units overall this year.
To achieve this, Apple will have had to finesse the design, hardware and software of its game-changing handset — with 3G speeds and GPS added to the new iteration — and drive a ruthlessly efficient supply chain to its contract manufacturer — widely believed to be longtime partner, Taiwan-based Hon Hai Precision Industries Co., aka Foxconn. And meet all regulatory and carrier-testing hurdles, analysts said.
An AMR Research report on the supply-chain prowess of the world’s top companies in 2007, incidentally, ranked Nokia Corp. No. 1. No. 2, according to AMR? Apple. That’s the front end of a process that culminates, for Apple, in clearing a dizzying matrix of other hurdles.
“Probably the bigger hurdle — more than the logistics of getting units shipped across the globe — is meeting the regulatory certifications and carrier testing required for handsets,” said Dave Carey, president of Portelligent Inc., a teardown specialist.
Clearly, those multi-pronged processes had passed some critical point by the time Apple CEO Steve Jobs announced on June 9 that the new iPhone would be available on July 11, according to Francis Sideco, analyst at iSuppli.
For AT&T Mobility in the U.S., that process probably has been smoothed by the initial launch of Apple’s EDGE iPhone last year, Sideco said. But many of the countries launching the device this week belong to the European Union, which must certify that the device indeed adheres to its bandwidth designations, meets SAR emission standards and restrictions on hazardous material content.
Confidence abounds
Carriers’ interoperability testing is perhaps the most complex task to accomplish and that may take a month or two, according to Teng. Even small differences in service offerings among different carriers can bring bugs to light, said Sideco. Add the complexity of service activation and a 22-country rollout remains an eye-opener, he said.
“Can Apple blitz 22 countries at once, or will this require a gradual rollout, with soft launches for a number of markets,” Sideco asked rhetorically. How tight is this initial launch?”
On the other hand, Sideco readily acknowledged that Apple is devoted to over-delivering.
“Apple knows how to get product out the door and when they name a date, there’s a sense they’re pretty sure,” Sideco said.
Likely, then, much of the certification and testing work was largely done by the time Jobs took the stage at his annual developers conference in June to announce the device’s launch.
The implication is that the process for “Phase II,” as it were — the rollout of the device across another four dozen countries “later this year,” possibly to include behemoth markets such as China and Russia, according to Jobs — may be underway as you read this article.
Sustaining the buzz
The geographic diversity of those markets is far greater than Friday’s rollout, Shiv Bakhshi, director of mobility research at IDC, pointed out. And that may require a staggered rollout, one country at a time — not just for logistical reasons, Bakhshi said, but also to generate that trademark Apple “buzz.” Inventory management is critical to seed the market, but Apple probably doesn’t need to meet total demand.
“If I were Apple, there’s no need to glut the market,” Bakhshi said. “If demand exceeds supply, that’s always good for the company. Particularly in China and Russia, the iPhone may be a niche, elitist, in-demand play.”
Bakhshi noted that, by comparison, Nokia has far more experience in the global handset game.
Nokia said last week it has more than 100 handset models active in its portfolio today, shipping to more than 150 countries, with 50 new device launches each year and the No. 1 brand in Europe (according to the European Brand Institute) and in Asia (according to Synovate) last year.
“For a newcomer, this launch is very impressive,” Bakhshi said. “But Nokia has gone through all this before.”
In light of Nokia’s vast portfolio and geographic reach, there are two schools of thought on Apple’s future in the handset industry, Bakhshi said.
“The trick is either to create a differentiated portfolio, or innovate on a single platform,” the analyst said. “The new GPS capability, for instance, is just a placeholder. Future innovation lies in the development of location-based services.”