New iPhone shows Apple still gets it

European customers already can get that bundle of features if they buy a 3G phone from another maker, such as Nokia (NOK, news, msgs). The lack of both these features and the speed that enables them explain why Apple has had relatively few iPhone sales outside the U.S. The existing iPhone went on sale in Europe only on Nov. 3 and hasn't been available from most European operators. Providers offering the iPhone, in fact, have just 155 million subscribers, 71 million of those coming from AT&T.

But the 3G iPhone has led to a major expansion of the addressable market. For example, in early May, Vodafone Group (VOD, news, msgs) and Telecom Italia Mobile (TLEBF, news, msgs) signed on to launch the new iPhone. That's an additional 175 million potential customers from those two companies alone.

Spain's Telefonica (TEFOF, news, msgs) and the wireless division of Japan's SoftBank (SFTBF, news, msgs) signed on in the first week of June. Other launches to expect within the year, according to RBC Dominion Securities, include Canada's Rogers Communications and, the biggest prize, China Mobile (CHL, news, msgs), with 392 million subscribers.

Seeking a boost overseas

Apple is counting on growth from outside the U.S. to kick in during the company's third quarter to achieve its very ambitious target of selling 10 million iPhones in 2008. By that quarter, sales from new international markets could make up about 25% of iPhone sales.

But Apple is counting on the new iPhone to deliver overseas growth in more than just iPhone sales. Ideally, the iPhone also would help Apple increase sales of its personal computers outside the U.S.

Although Apple's share of the personal computer market in the U.S. grew to about 7% at the end of 2007, and RBC Dominion Securities projects Apple's share of that U.S. market will hit 9.6% by the end of 2008, it has had much less success in selling globally. Apple's share of the global personal computer market has indeed climbed, but RBC projects it will reach just 3.5% by the end of 2008. That's up from 2.9% at the end of last year, but it's still a tiny share of the global market.

Apple clearly wants to duplicate in overseas markets its U.S. strategy of introducing hot consumer products, such as the iPhone and iPod, and building a network of destination stores as a way to put its line of Macintosh personal computers on the minds of potential buyers. Getting the iPhone into the hands of as many overseas customers as possible is critical to the success of that strategy.

A new corporate player?

Apple has to date been spectacularly unsuccessful in penetrating the corporate market -- so unsuccessful that it had really stopped trying in recent years. But this new iPhone could change that.

This month, Apple will deliver a software upgrade that lets existing and new iPhones access corporate e-mail systems using Microsoft's Exchange. The upgrade also will let users run customized iPhone applications to track inventory, record expenses and perform other corporate tasks. That builds on increasing enthusiasm for Apple's products in the corporate world: The Yankee Group found that 87% of the 250 companies it surveyed had some Apple product as of the end of 2007. That's up from just 48% two years ago.

Continued: Apple's PCs

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