Apple’s international rollout : New approach needed for ‘world-beater’?

“TBA” – to be announced – is a classic, buzz-building tool for Apple Inc.’s iPhone rollout, as in last week’s word that the device will launch in Canada at Rogers Communications Inc.
Apple’s expansion from AT&T Mobility to a truly global presence, however, appears to fall into the TBD category.
Many Apple watchers are confident the company will achieve its initial goal of selling 10 million devices by the end of this year. And the company has not articulated market-specific or quantitative goals for its presumed intent to march through Europe and Asia.
Still, first-quarter data and price breaks on iPhones at two Euro carriers raise the question of whether Apple’s expansion plans beyond the U.S. are on track.
Last month, Apple reported it had shipped 1.7 million iPhones, down from 2.3 million shipped in the seasonally hot fourth quarter.
A seasonally tepid first quarter typically sees drops in shipment volumes of about 14% across all vendors, according to analyst Tero Kuittinen, a RealMoney.com columnist. Apple’s first-quarter dip was 26%, leaving it dependent on AT&T Mobility for about 80% of carrier-specific shipments, he said.
In mid-April, T-Mobile Germany and 02 in the United Kingdom slashed their prices on the device, prompting speculation that the operators needed to juice sales or clear inventory ahead of a 3G iteration.
Add the somewhat underwhelming sequence of international launches and seemingly credible reports that China Mobile had broken off talks over Apple’s demand for a slice of resulting data revenue.
“When you have less than 1% market share, you should grow between fourth quarter and first quarter,” said Kuittinen. “Apple screwed up its European expansion by attempting to strike exclusive deals carrier-by-carrier, country-by-country. Major operators balked at Apple’s demands and it lost opportunities in Spain, Italy and Russia. That China Mobile said it dropped talks is a signal.”
Ben Wood, analyst at CCS Insights, concurred. Apple’s international expansion has “stalled.”
“Apple needs to rethink its approach,” Wood said. “Apple’s secretive and U.S.-centric approach has resulted in some missteps.”
Analysts Rob Enderle at Enderle Group and Kevin Burden at ABI Research concur that the iPhone’s EDGE speeds may not appeal to savvy Europeans familiar with 3G-based services and that early adopters may be followed by “pragmatists,” in Burden’s words, to produce the next spike in iPhone sales.
“For a premium-priced device, they have performed very well,” said Enderle.
A 3G model, a shift away from exclusive operator deals based on revenue-sharing and possible price cuts or subsidies appear inevitable and all three factors should drive sales – and international market expansion – going forward, Enderle said.