Details emerge of iPhone 3G international launch

Weak Dollar, Strong Pricing

AppleInsider has learned that, somewhat unsurprisingly, the iPhone 3G will be more expensive in parts of Europe relative to the US when compared in US dollars. While the new model was publicly announced with a dramatic $199 price tag along with a two year service plan from AT&T here in the US, sources familiar with the details of Apple's European mobile carrier partners have indicated that the new iPhone will be priced at 199 Euros in parts of Europe, like Spain.

Thanks to the weak US dollar, at current exchange rates that works out to a little more than $310 in US currency. That pricing premium is nothing new, as Apple's Mac and iPod products in Europe are commonly priced the same in Euros as identical models of Apple's American products are in US dollars, making them a bit more than 50% more expensive outside the US.

Apple is not unique in this type of international pricing. Other American consumer electronics products have a similar price premium in Europe despite the strength of the Euro to the US dollar. And across the board, European prices for everything from food to clothing are similarly about the same in Euros as they are in dollars in the US, in part because EU countries add tax into the advertised price, while states that charge sales tax in the US add it on top.

The end result is that travel to Europe is very expensive for Americans and conversely, Europeans can bargain hunt in the US with a highly favorable exchange rate. That reality has caused a significant number of Europeans to buy their iPhones while visiting New York or San Francisco, causing inventory shortages in the US while Apple's European iPhone retail partners saw a more tepid demand.

The Man with the Plan

Apple is apparently taking international exchange rate pricing pressures into consideration in the iPhone 3G rollout, requiring that domestic iPhone purchases be activated with AT&T in the store at the time of sale. This will make it unattractively expensive for Europeans to buy iPhones in the US for export.

Now that Apple has "signed, sealed and delivered" iPhone distribution contracts with mobile providers in nearly every major market, the company doesn't have to leave the door open to grey market unlock scalpers, who have helped sell a significant percentage of iPhones to international users. The article "Does the iPhone Shortage Herald an Impending 3G Release? Probably Not" profiled Apple's inventory challenges and the unlocked iPhones being sold for more than $730 in Bangkok.

While pundits fretted over "missing iPhones" supposedly lost to a crisis of overseas unlocking, Apple executives expressed the idea on several occasions that unlocked phone sales were not a problem for the company and only indicated strong demand for the iPhone overseas. Now that Apple has official distribution deals internationally, it has no need to allow grey market sales.

Flat Rate or No Date

iPhone sales quickly grew to become the second largest selling phone platform in the US, but also rose to the top web browsing client in America. Web server tracking logs also indicate extremely broad distribution of the iPhone worldwide, a factor that no doubt helped Apple sell foreign providers on signing up to offer the iPhone.

Sources close to Telefonica, Apple's Spanish iPhone partner, indicate that Jobs leveraged that worldwide iPhone demand to push mobile providers to offer a flat data rate, something that many international telcos were loath to do. They would prefer to sell data by the kilobit, which not only adds up to bigger bills but is also easier to load balance on the network.

Since Apple doesn't make a per-kilobit commission, it would rather have its customers on a flat rate than encourages data use and shows off the differentiation of the iPhone as a mobile web browser and email device. While individual plans in every launch country have not yet been officially released, sources indicate Apple had demanded all international carriers offer a flat rate for unlimited data, although those plans are often more expensive than AT&T's iPhone deal in the US, perhaps as high as 90 Euros per month.

The Big Launch, Part Two

After orchestrating a media circus at last year's iPhone launch that involved long lines of giddy customers, dramatic retail store closings that involved an interior makeover, and Disneyland-style retail employee theatrics to welcome buyers, Apple appears to be aiming to top its own record for the most spectacular launch of a consumer electronics product.

In Spain, Telefonica's office building in the shopping mecca of Madrid's Gran Via is getting quietly rebuilt in a first floor makeover planned around the July 11 launch of the iPhone 3G. Windows displays have been gutted in the prime retail space, and its animated video screen signage is not yet functional (below). Apple is withholding any comment on launch events, apparently in an effort to prevent the story from getting old before the launch itself occurs.

With that launch now just two weeks away, Telefonica and Apple's other international partners are scrambling to set up a flawlessly executed media extravaganza set to explode just prior to the iPhone 3G going on sale.

You Want WiFi With That?

Telefonica is also rolling out WiFi hotspots that offer iPhone users a custom web page to log in using their mobile number (below). This echos the deal between AT&T and Starbucks to offer iPhone users free WiFi access in the US, a deal that was prematurely advertised, then backtracked upon in a bungled rollout that appears to have been originally intended for embargo until the iPhone 3G launch.

When attempting to connect to Telefonica's WiFi public hotspots in train stations and other locations, existing iPhone users in Spain are presented with the option of logging in with their phone number to access their account. However, there are no current iPhone service plans being offered by Telefonica or its Movistar mobile brand in Spain.

The web page text reads:

"Beinvenido a la pagina de Registro inicial de su iPhone movistar en el servicio Zona WiFi de Telefonica. Por favor, indroduzca su numero de telefono. Di los datos con correctos, empezara a navegar immediatamente y no se la requeriran en futuros accesos. Si no tiene contractado el servicio iPhone Movistar y quiere accedar al serviceo Zona WiFi de Telefonica, pulse aqui."

In English: "Welcome to the initial registration page for Telefonica Movistar WiFi. Please enter your phone number. If the information is correct, you will be able to browse immediately and not require future access. If you do not have a Movistar iPhone service contract and want to access Telefonica Movistar WiFi, click here."

The combination of a flat rate mobile data plan and free access to public WiFi hotspots run by Apple's partners will help position the iPhone as more than a basic smartphone, targeting its value as wireless mobile Internet platform. The mounting details of Apple's international launch of the iPhone 3G also calls to mind Bill Gates' 2003 email (unearthed by Todd Bishop of the Seattle PI and recently cited by the Daring Fireball) referencing the planning Apple invested in setting up the original iTunes Store. "Steve Jobs’s ability to focus in on a few things that count, get people who get user interface right and market things as revolutionary are amazing things," Gates wrote.