Apple 2.0

Covering the business that Steve Jobs built

Europe's $1,478 iPhones

November 21, 2007: 11:24 AM ET

picture-6.jpgOne of the questions left unanswered when Apple (AAPL) finally sealed the deal with Orange to market the iPhone in France -- where it's illegal to sell a phone that's locked to a particular carrier -- was how much customers who wanted to buy the device without a contract would have to pay.

Now we know, thanks to a court in Hamburg, Germany: a premium of 600 euros, or $880, which brings the total price of an unlocked iPhone to 999 euros or $1,478 (including 17.5% V.A.T.). iPhones sold with a two-year T-Mobile contract will cost 399 euros (about $590).

T-Mobile, Apple's German partner, had been served on Monday with an injunction temporarily blocking it from selling locked iPhones. Deutsche Telekom, which owns T-Mobile, is appealing the court order, but said this morning that it will comply -- and it announced its new price points.

Orange has not yet announced prices and rates for France, where the iPhone goes on sale on Nov. 29, but will presumably follow T-Mobile's lead.

French law prohibits tying the purchase of one product to the purchase of another -- a cellphone to a particular carrier's service plan, for example -- which was one of the sticking points that delayed Orange's deal with Apple. According to today's New York Times, several European countries have similar laws on the books, including Belgium, Italy and Finland.

Germany's laws are less clear, but it was on the strength of the rules on the books that Vodafone on Monday won a temporary injunction.

The $880 premium is high, but not totally unexpected. Piper Jaffray analyst Gene Munster has estimated that Apple gets $18 a month from AT&T, or $432 over the life of a two-year contract -- revenue Apple would have to give up if it were forced to sell unlocked iPhones in the United States.

T-Mobile and Orange also lose the monthly fees they were expecting when they negotiated what they thought were going to be exclusive contracts with Apple.

$880 minus $432 equals $448. Sounds like they basically split the difference.

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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