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Apple seems to be missing 1.4 million iPhones. Somebody should say we have them.
OK, we don't have all of them, but the Middle East showed up in a Washington Post article titled "iPhone Shortage: Runaway Gray Market in Emerging Markets to Blame". Seems the folks at the Post finally got wind the iPhone is selling like crazy here.
It actually came as a nasty shock to some, I think. Both the New York Times and Washington Post have been writing about what people here in Dubai have known for some time.
It was the Times that estimates that 1.4 million iPhones have gone missing, meaning that they haven't shown up on the official networks that they're licensed for. Even Apple has confirmed this to some degree. The company reported that 15 per cent of all iPhones sold in the last quarter of 2007, almost 250,000 units, where Awol. The Times places the majority of the iPhone in Asia.
This is costly information for Apple.
It's estimated the company will lose almost $1 billion in revenue from gray market iPhones, and AT&T could lose almost $35 million this year.
Better yet, because I predicted this would happen, Spanish telecom Telefonica is reported to be balking at Apple's 30 per cent cut of its networking revenue.
Why should they bother offering the phone exclusively when your customers will bring the unlocked version to you?
So what is Apple going to do? Who knows? When I called Buchanan, the public relations company for Arabic Business Machines, which represents Apple in the Middle East, I was told that Apple would only respond to questions about its annual results.
In other words: We're not going to talk to you. I then tried calling Alan Hely, one of Apple's international press contacts at its UK offices. I was promptly ignored.
The big question
The question we all wanted answered is: when will the iPhone be released here? Frankly, I don't think it's a question Apple has even considered yet. It's still working on how to roll the phones out in Germany.
One Bahraini business that deals with ABM told me Apple won't even consider launching the iPhone unless there is a regional iTunes store. That probably isn't going to happen anytime soon, either, since Apple lacks the licensing to any significant amount of Middle Eastern music.
So, is Apple ignoring the Middle East and Asia? No, Apple's a business and it's not usually stupid, but its inventive-if-stupid strategy to lock the iPhone to a specific network just isn't technologically feasible. That mistake is going to hurt Apple, and all the networks that have signed on with it.
The real tragedy for Apple is that a golden opportunity is being lost. The company sales of electronic devices are slowing in maturing markets, and the emerging markets are hungry for what Apple has to sell. Why Apple has prevented itself from selling to millions of customers is a question it had better hope it doesn't have to explain to stockholders.
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