As Apple prepares to unveil the next version of its iPhone on June 9, fans will be focused on how much better the new device is than its predecessor. It will likely be able to run on speedier wireless networks, it may boast improved navigation services, and it's expected to support a batch of new software tools and features made by third-party developers.
But amid the speculation around what the new device may or may not do, it's easy to lose sight of a theme central to Apple's larger strategic objectives. The new version of the iPhone will do more than perhaps any other device in history to fuel Apple's ability to reach international markets.
Bigger Seller than BlackBerry?Until now, Apple (AAPL) has officially launched the iPhone in only six countries: the U.S., Britain, France, Germany, Austria, and Ireland. But Apple's recent agreements with wireless carriers around the globe will bring the iPhone into an additional 64 countries by the end of the year. The two latest deals, announced June 4, are with Telefnica (TEF) in Spain and Softbankin Japan (BusinessWeek.com, 6/5/08).
The first iPhone has catapulted Apple into the lucrative U.S. market for so-called smartphones, which handle an array of advanced services including Web surfing and e-mail. Market research firm IDC pegs Apple's share of the U.S. market for smart wireless phones at 19%, behind Research In Motion's (RIMM) BlackBerry, which has a 44% share, and ahead of Palm's (PALM) 13% share. When it last disclosed sales, Apple had sold 4 million iPhones globally, and analysts expect the company will report sales of about 1.5 million to 1.7 million iPhones in the quarter that ends on June 30. Apple's goal is to have sold 10 million units by the end of 2008.
By enabling the iPhone to run on so-called third-generation, or 3G, networks, Apple makes the device more appealing to a global wireless customer. Within months, the phone will be officially available in key European markets like Italy, Spain, and the Scandinavian countries. Countries as varied as Australia and Uruguay are also on the docket.
Some analysts say Apple may sell 40 million or more iPhones by the end of 2009. If that prediction pans out, iPhones will outnumber BlackBerry devices, even if RIM sells the handsets at an accelerated pace. RIM had 14 million subscribers at last count and added 6 million in fiscal 2008. That track record would make the iPhone the most successful single product in Apple's history, based on adoption rates. It took the vaunted iPod four years to break the 20-million-unit mark.
Ready Market WorldwideThe iPhone stands to make Apple a more global player. In each of its last three fiscal years, sales to the Americas accounted for about 48% of the total, while Europe accounted for about 22%. "Apple must do three things if it is to be successful internationally," says Neil Mawston, an analyst with Strategy Analytics in Britain. "Expand its brand, expand its product portfolio, and broaden its international footprint."
Of course, Apple needs to do more than just make the iPhone available in more places. The iPod is still bought mainly in the U.S. According to Mawston, 60% to 70% of iPods have been sold through Apple-owned retail stores, and 70% to 80% of those are in the U.S.
The good news for Apple is that there's already demand for the iPhone in countries where it's not yet officially available.
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