OT: Bad Apple - European buyers be careful!

uwe_r

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  • Background:
As some of you might have read, Apple and it's German exclusive partner T-Mobile have to sell the iPhone unlocked under a temporary injunction (after competitor Vodafone sued T-Mobile, claiming illegal business practises). It is important to keep in mind, that the court has not decided yet if the mandatory bundling of a product from one and the service from another company do constitute a vertical cartel. The next hearing is on Thursday this week and the court may confirm or lift the injunction - both is in the cards. Besides this ongoing claim, another competitor (debitel) has complained to the public office in charge of telecommunications regulations, claiming that this bundling by T-Mobile is in violation of regulatory terms - as per the latest information, the regulator is still awaiting T-Mobile's response.

To scare people away from buying the unlocked phones, T-Mobile (obviously after consulting with Apple on the issue) has started to sell the phone unlocked for 999 EUR (1,482 USD, not a typo) vs. 399 (592 USD) for the unlocked version. Selling of unlocked phones started on the 21st of November, after the injunction became valid on the 19th of November. Customers having bought the device on November 19 or 20 can demand their phones to be unlocked for free (as they have not been given a choice).

The unlocking process involves T-Mobile staff entering the iPhones IMEI code into a database on purchase. T-Mobile will fax (yes, fax!) the daily list to Apple, Apple will then enter the numbers from the fax into their database. Once this is done (as per T-Mobile within 24 hours), people can activate the iPhone from iTunes without a T-Mobile SIM being required. After that, the full functionality of the iPhone (obviously except for visual voicemail, which is only available with the special T-Mobile tariff) will be available and any GSM SIM should work.

Pardon the lengthy introduction - just to make everybody interested aware of the situation.
  • Bad Apple:
Dozens of people wait for activations since more than 48 hours and get passed between Apple and T-Mobile hotlines without receiving any support.

Several people have purchased legally unlocked iPhones and while the activation did work, various provider and network independent features do not work (among them such unneeded things as accepting an incoming call or reading SMS).

Several people reporting on the Internet (two of them I know personally) have been hung up on by Apple support (after paying them 1482 USD for a non-working device), a friend of mine was driving almost 380 miles (back and forth) from Switzerland to buy 3 iPhones, 3 Bluetooth headsets and a couple of cables and docks, spending almost 5,100 USD. Apple is so far obviously unwilling to help him. There are several identical reports from people from Sweden, Denmark, The Netherlands, Austria and Germany. I am willing to believe there are some liars and complainers among them, but certainly not all.

Apple deletes or locks support questions dealing with these legally unlocked phones from legal purchasers and customers from Apple Discussion forums - I have witnessed several cases now. I do not know if they simply forgot to brief the forum staff, that legally unlocked phones are available now and that these discussions are legit, or if they have been briefed to delete these discussions (both is possible). Anyhow - giving people paying through the nose no support on the phone and deleting their legit questions from a support forum is bad style.

While I personally have been lucky (my 1,482 USD iPhone does work perfectly) - this behaviour of Apple is intolerable and discriminating. I have always been for Apple (for decades) - but playing the "sore loser" and boycotting paying consumers is plain embarrassing. It makes me doubt future business with this company - a business partner that develops such a behaviour when being confronted with legal rulings might not be serious enough to be considered after all.

Rant off...

Cheers,
Uwe
 
Stupid stupid stupid Apple more like.

It's stories like this (and there are several around) that completely kill Apple's reputation overnight.

If they'd actually sell the thing as a phone, available on any network, and weren't so anal about "the rules", then this thing would be flying off the shelves. Sure, for a phone, it's still very very very overpriced, but people would still pony up the cash. These days, any hint of freedoms restricted, and people think the company are evil and shy away, IMHO.
 
i am speachless.
i live in italy, and i am raving for it to arrive here as well.

i just hope before it does (march 2008, it seems) this will be settled against apple, and the iphone will be freely available without the contract.

even if i think apple got BIG money to get hooked up to a single carrier like this, i still think this is madness. this is the first time i feel really disappointed by apple, and i think many will be feeling like i do.
--
Roberto (equipment in my profile)
http://spino.smugmug.com
 
uwe_r wrote:
(my 1,482 USD iPhone does work
perfectly) - this behaviour of Apple is intolerable and
discriminating.
You paid $1482 for a phone? Are you crazy?
 
And Uwe is a very calm voice of Apple. I respect that if he post something is screwed up - it's really screwed up.
 
Apple is dislplaying how troubled can be the transition from a computer company, run in strict monopoly (stricter than Microsotft, actually) to consumer electronics.

The "locked" iPhone issue derives from Apple's 10% royalty on all iPhone-generated traffic, either data or voice. Clearly carriers entering distribution agreements do not want early operator switching - would you ?

Second and most important point: the iPhone is built around the EDGE technology, which is an enhanced GSM mainly adopted in the US, but skipped by European operators in favour of UMTS.

At least in Italy and the UK, EDGE networks are very underdeveloped and run at an awfully slow 384 kbps bandwidth - as opposed to UMTS's 1800 kbps and HSDPA's 3600 kbps. As a result, iPhone web browsing and data download will be a lengthy and costly pain.

My prediction is that European early adopters (like the ones currently lining up to get their overpriced iToo gadgets) will give Apple numbers as to roll out the "real" UMTS iPhone, likely to surface by end 2008.

Edge iPhone will be nice, but expensive and short lived. Just rave with this info in your mind.

Best regards,

M

--
Greets from Rome

Mauro

http://www.pbase.com/m_ben/
 
hi mauro.

i know we are just speculating at this point but according to lost of rumors the UMTS version could arrive in the first quarter of 2008.

anyway, as much as i like the gadget, i am certanly not willing to pay a fortune to have it! ;-)
Apple is dislplaying how troubled can be the transition from a
computer company, run in strict monopoly (stricter than Microsotft,
actually) to consumer electronics.

The "locked" iPhone issue derives from Apple's 10% royalty on all
iPhone-generated traffic, either data or voice. Clearly carriers
entering distribution agreements do not want early operator switching
  • would you ?
Second and most important point: the iPhone is built around the EDGE
technology, which is an enhanced GSM mainly adopted in the US, but
skipped by European operators in favour of UMTS.

At least in Italy and the UK, EDGE networks are very underdeveloped
and run at an awfully slow 384 kbps bandwidth - as opposed to UMTS's
1800 kbps and HSDPA's 3600 kbps. As a result, iPhone web browsing and
data download will be a lengthy and costly pain.

My prediction is that European early adopters (like the ones
currently lining up to get their overpriced iToo gadgets) will give
Apple numbers as to roll out the "real" UMTS iPhone, likely to
surface by end 2008.

Edge iPhone will be nice, but expensive and short lived. Just rave
with this info in your mind.

Best regards,

M

--
Greets from Rome

Mauro

http://www.pbase.com/m_ben/
--
Roberto (equipment in my profile)
http://spino.smugmug.com
 
look like more than some are willing to jump headlong to pay a fortune for a probably short-lived toy.

Tried one in NY at a party, not really impressed. The owner spent the whole night enlarging and rotating photos to get "ooohs" from people (alas, no foxies got glued). Soft keyboard is difficult to use and likely absence of third party software a serious limitation. No idea on "real world" battery duration.

A 40 euro GSM phone wrapped with a 100 euro MP3 player and a 50 Euro screen. VAT and Apple griffe make up for the balance of price.

I'm just waiting for Apple to become more reasonable on iPhone (UMTS / HSDPA, 32 Gb hd, open to 3d party software, same price as in the US - they are coming from China, aren't they ?)

Cheers,

M

--
Greets from Rome

Mauro

http://www.pbase.com/m_ben/
 
You paid $1482 for a phone? Are you crazy?
While the answer is yes :-) - it really does not matter in my case at this time. I had money put aside for the 1D MkIII, but decided to wait for the AF problems to be solved - now I decided to skip the 1D altogether and get the 1Ds MkIII in January; that left me with too much income for 2007 to be written off taxes (my income tax is 52%). So, it was either 2 iPhones (me and in-house government) or money out of the window...

Other than that - Apple's calculation is really at least bordering on sheer greed. Nobody knows Apple's deal with the carriers, but if I assume 20 USD on average per phone/month (which is already way too high, IMHO) the total income they would have from an AT&T phone is 880 USD after 24 months. If I add our 19% VAT, that is 1,047 USD (roughly 700 EUR), 700-750 EUR would be a regular price for a high end mobile (e.g. the Nokia N95 unlocked and unbranded costs about that much from most carriers - you can get it a lot cheaper in electronics stores).

iSuppli ( http://www.isuppli.com/news/default.asp?id=7308 ) estimated a total production cost (materials and labour) of 281 USD for the 8 GB iPhone in January 2007 - Flash memory prices have declined since then. Normally, if a company enters a new market, you would assume they will at least be somewhat reasonable and not put all development and research cost in the very first product, but asking 1482 USD for a 281 USD (or less) device, and then leaving honest buyers without support is not acceptable. The dubious people that sell hacked phones on eBay for 500-700 USD will normally at least assist buyers. If Apple would apply the same calculations to computers, they would be long gone...

Cheers,
Uwe
 
Apple deletes or locks support questions dealing with these legally
unlocked phones from legal purchasers and customers from Apple
Discussion forums - I have witnessed several cases now.
That is not the first time. I remember when people had problems with their Apple CRTs, discussions were also deleted. This happens time and time again on the Apple support forums.
 
Other than that - Apple's calculation is really at least bordering on
sheer greed. Nobody knows Apple's deal with the carriers, but if I
assume 20 USD on average per phone/month (which is already way too
high, IMHO)
With Telecom Italia Mobile, one of the largest GSM carriers in Europe, Apple's request was 10% of total traffic generated out of iPhones. Given an average revenue per client (ARPU) of around 60 euros per month, maybe more for iPhone users due to higher potential data download, your 20 euros estimate is really on the high side.

Even 10% is quite high, that explains in part why iPhone is not present everywhere in Europe. As an example, assuming a 50% Revenues / Ebitda ratio (typical for TIM historically), a 10% royalty would eat up 20% of iPhone users Ebitda - a massacre...
iSuppli ( http://www.isuppli.com/news/default.asp?id=7308 ) estimated a
total production cost (materials and labour) of 281 USD for the 8 GB
iPhone in January 2007 - Flash memory prices have declined since
then. Normally, if a company enters a new market, you would assume
they will at least be somewhat reasonable and not put all development
and research cost in the very first product, but asking 1482 USD for
a 281 USD (or less) device, and then leaving honest buyers without
support is not acceptable. The dubious people that sell hacked phones
on eBay for 500-700 USD will normally at least assist buyers. If
Apple would apply the same calculations to computers, they would be
long gone...
I do not know where iSupply gets its figures. In the consumer electronics industry, materials costs (excluding manpower, depreciation, interest and taxes) has to be within 10% of final price to ensure product profitability. I would assume iPhone's total production cost more in the 100 usd area, or even less. If you backtrack from retail price and cut out the margins ladder (retailer, regional distributor, Apple, Apple's chinese suppliers) you should come to the same conclusion. Apple is a listed company and has to comply with sectors benchmarks.
M

--
Greets from Rome

Mauro

http://www.pbase.com/m_ben/
 
Especially since you can buy them here in the USA, for $399, and unlock them in ten minutes to work on T-Mobile.
 
At least in Italy and the UK, EDGE networks are very underdeveloped
and run at an awfully slow 384 kbps bandwidth - as opposed to UMTS's
1800 kbps and HSDPA's 3600 kbps. As a result, iPhone web browsing and
data download will be a lengthy and costly pain.
While I accept that it may be different in other countries , here in the UK even the cheapest £35 monthly tariff includes unlimited data useage over the Edge network and unlimited access to 'The Cloud' Wi-Fi hotspots of which there are apparently more than 7000 throughout the UK .

Accordingly , while I used to use my Treo 650 very sparingly for email and web browsing because of cost , I find that I now use my iPhone all the time to check email and to access the web .

One issue that does strike me as odd is that you can get push email if you have a Yahoo account but not with a mac.com email account !

I'd have thought they'd have given their own email the best service ...
--
With kind regards

Derek.
 
As just reported by the Spiegel (major German magazine) - Apple is really playing foul here: The unlocked phones are not unlocked - they will work with other providers, but in the country in which they were purchased only (that explains the problems foreign buyers have been reporting). In other words - you pay 1,482 USD and cannot even use local SIMs when travelling abroad.

T-Mobile has knowingly sold the device to people presenting non-German passports, that is deliberately accepting 1,482 USD for nothing. Gee, that hearing on Thursday will be interesting for sure. If Vodafone's lawyers are worth a dime, T-Mobile and Apple will be toasted.

Cheers,
Uwe
 
At the risk of sounding like a fanboy trying to defend the indefendable, my first reaction to the higher pricing for unlocked was one of respectful acknowledgement.

Perhaps I've been brainwashed, but I believe I 'get it' about the iPhone. It is not just another cell phone. It is customised technology, customised UI and customised services, beautifully, thoughtfully and innovatively integrated.

To achieve this requires a high degree of control over the whole front to back experience. User and feature centric hardware and software interfaces working smoothly and seemlessly between front end interactions and back-end provider services. The only sensible, commmercially viable way to get that product to the market was via a trusted and controlled group of suppliers/investors, no?

An unlocked iPhone phone talking to service provider systems that can't support these customised interfaces is not an iPhone. It is simply a touchscreen cell phone with a built in iPod, made by Apple. So it is simply not sensible (and likely impossible) at this point to provide truly unlocked but fully functional iPhones. So when faced with legal restrictions forcing them to sell unlocked inferior versions, what options were available for their response?

I do not see the outrageous pricing as motivated by greed. I see it as a clever deterrent-focussed response to the legal requirements, to prevent sub-standard iPhones being mistaken for genuine iPhones.

I even have a little sympathy (albeit limited) regarding the support forum trying to segregate (kill) threads relating to unlocked phones, but that is countered by it clearly being still an Apple product and the users clearly being entitled to support. Perhaps the unlocked model should have a different name; the Apple Cell Phone, or iPhone and iPhonePro.

However, just to show I am not singing the entire Apple bible, I openly admit that I too have received shockingly poor support from Apple customers services. This is muted slightly in that I have similar experiences with Sony, Microsoft, Panasonic and various others. It just seems to be something a lot of large consumer electronics companies have trouble getting right.

-Najinsky
 
To achieve this requires a high degree of control over the whole
front to back experience. User and feature centric hardware and
software interfaces working smoothly and seemlessly between front end
interactions and back-end provider services. The only sensible,
commmercially viable way to get that product to the market was via a
trusted and controlled group of suppliers/investors, no?
In a nutshell: No.

There is only one single provider dependent feature in the iPhone - and that is visual voice mail, not a single other feature requires anything non-standard. So, whoever can live without visual voicemail (obviously 100% of the world's population, as nobody invented it earlier), can use the phone with any GSM carrier - absolutely everything does work the same, not similar or some like it... the same.

The user interface and applications are implemented in software - everything happening on the GSM network is according to standards. If it would not be following standards, it would not receive regulatory approval and could not be sold at all.

Do not believe all that distorted Apple yaddah - this is a plain simple GSM phone with a nice enclosure and a gorgeous GUI - nothing more.

Cheers,
Uwe
 
Perhaps I've been brainwashed, but I believe I 'get it' about the
iPhone. It is not just another cell phone. It is customised
technology, customised UI and customised services, beautifully,
thoughtfully and innovatively integrated.

To achieve this requires a high degree of control over the whole
front to back experience. User and feature centric hardware and
software interfaces working smoothly and seemlessly between front end
interactions and back-end provider services. The only sensible,
commmercially viable way to get that product to the market was via a
trusted and controlled group of suppliers/investors, no?
That's funny...

...The truth is in fact the opposite.

I run my iPhone on T-mobile USA, the only feature I don't have is the Visual Voicemail connected to AT&T. However the third party application list (which is growing by the day) makes the iPhone a much richer and personal experience.

I choose how it looks, I choose my own sounds, I choose my own apps.

At the touch of a button... VoiceNotes, a Pedometer, SubwayMaps, GPS Location Estimation, Email the full 1200x1600 photos recorded by the camera, not the 640x480 ones that the iPhone app downsizes to....and the list goes on.

With a standard locked iPhone I get poor reception, locked into a 2 year contract, and as you ironically pointed out....just an iPod with a phone.

Can you imagine if you bought a Mac and had to use iPhoto instead of loading up CS3?

:-)

Perhaps the pending SDK will change things, but i doubt it.
 
Derek,
At least in Italy and the UK, EDGE networks are very underdeveloped
and run at an awfully slow 384 kbps bandwidth - as opposed to UMTS's
1800 kbps and HSDPA's 3600 kbps. As a result, iPhone web browsing and
data download will be a lengthy and costly pain.
While I accept that it may be different in other countries , here in
the UK even the cheapest £35 monthly tariff includes unlimited data
useage over the Edge network and unlimited access to 'The Cloud'
Wi-Fi hotspots of which there are apparently more than 7000
throughout the UK .
With the word "bandwidth" I was referring to wireless network speed, which is around 384 kilobits per second in an Edge-layered GSM network and 1800 kilobit per second in a UMTS network (3600 if HSDPA-layered).

Quantity of data you can download depends on contract. I understand you can get unlimited access to wireless data network. I am wondering if you also have unlimited download capacity or you are limited to a certain type of data (like mail).

--
Greets from Rome

Mauro

http://www.pbase.com/m_ben/
 

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