Apple

T-Mobile Netherlands is telling customers that the iPhone 3G's reception problems are Apple's fault.

(Credit: CNET)

T-Mobile's Netherlands division is blaming the iPhone 3G's reception issues on Apple.

In a company blog posting Tuesday morning spotted by a forum contributor at MacRumors, T-Mobile Netherlands threw the iPhone 3G under the bus, blaming Apple for the problems its customers have been experiencing connecting to 3G networks in that country. Complaints have been cropping up in the U.S. as well about the iPhone 3G's performance on AT&T's network.

"The 3G coverage of T-Mobile is as good as the competition, there can therefore not lie. We suspect that it is a hardware / software specific issue of the iPhone itself," T-Mobile Netherlands said, according to a Google Translation of the post. A former colleague fluent in Dutch translated the second part of the first sentence as saying "so that should not be the issue."

The Google translation of another part of the blog is hilarious, and I'll just post it for amusement: "We therefore recommend to the software updates from Apple in the eye. This you get through iTunes." As you might have guessed, Apple is not delivering software updates through the eyes of iPhone 3G users: my former colleague translated that first sentence as "We advise customers to keep an eye on Apple's software updates."

This is obviously a bit self-serving of an argument for T-Mobile, and they don't exactly back it up. But their willingness to acknowledge the issues in a public forum--as well as blame Apple for the problems--sets them apart from the rest of the wireless industry currently offering the iPhone 3G. Again, it's unclear just how widespread the iPhone 3G reception problems are, but they are being reported all over the globe, and I've never received as much e-mail from Apple customers about a single product issue (even before asking for submissions) as I have over this one.

An Apple representative did not immediately return a phone call seeking comment, but I'll update if I hear from the company.

Steep price cuts to the iPhone in Europe are a sign that carriers overestimated demand for Apple's first smartphone, according to a report.

O2, the iPhone's U.K. carrier, and T-Mobile, its German carrier, both cut the price of the iPhone by a significant margin this week, in a move seen by many as a prelude to the debut of a 3G iPhone within the next couple of months.

Before the 3G iPhone arrives, carriers will need to clear their shelves of the current EDGE model, which will look pedestrian next to the faster model. An O2 representative told our sister site Crave U.K., in an utterly predictable statement, that the price cut was not a prelude to a 3G launch.

Apple CEO Steve Jobs introduces the British press to the iPhone last year.

(Credit: ZDNet U.K.)

The Times Online cites Morgan Stanley analyst Kathryn Huberty as predicting that the carriers will take a loss on the discounted handsets. It seems that strong demand for the iPhone in the U.S. was not replicated in Europe, where consumers are more familiar with sophisticated phones and high-speed cellular networks.

The report also said the 3G iPhone would be "radically different" than the current model, which would be the first time I've heard that contention. Possibilities for the new iPhone, according to the Times Online, include a clamshell model with a larger screen or a slider with a QWERTY keyboard, both of which would indeed be quite a departure from the current design for the iPhone.

Apple may one day have plans to build a clamshell iPhone, as evidenced by a recent patent application, but it seems unlikely that the company would change the style so quickly. Of course, in 2005 Apple dropped its best-selling iPod--the iPod Mini--to introduce the iPod Nano, and that worked out pretty well.

Despite sitting out the CTIA 2008 conference, Apple's iPhone business had an eventful week.

After a brief shortage, it's getting easier to find iPhones at Apple's stores.

(Credit: CNET Networks)

Today, on "This Week in iPhone," we'll address two significant developments. Apple stores around the country are starting to recover from an iPhone shortage, while T-Mobile has cut the price of the iPhone in Germany by 300 euros.

First up, the supply concerns. Apple acknowledged the shortage and told The New York Times that it was working to get iPhones into its retail stores as fast as possible. The cause of the shortage still hasn't emerged, but speculation that a 3G iPhone would be arriving sooner than expected has cooled.

One reason, advanced by Sanford Bernstein's Toni Sacconaghi, is that all the newly arriving iPhones are the regular models, not 3G versions. If Apple really was gearing up to launch a 3G model in the near future, it probably wouldn't build inventories of the older models. Sacconaghi thinks that Apple ran into a production issue, and made the decision to allocate the iPhones it had on hand to AT&T's stores, because it can count iPhones shipped to channel partners as sales. Remember, the first quarter just ended last week.

But, Sacconaghi doesn't think the shortage really cost Apple all that much business. "We believe the impact to Apple's overall iPhone sales has been minimal so far, and is likely to be modest unless the shortage persists or worsens," he wrote in a report.

Meanwhile, T-Mobile is running a special on iPhones until the end of June. You can now get an 8GB iPhone in Germany for 99 euros ($154.78), if you choose a hefty service plan. Several analysts think this means the 3G iPhone launch is therefore timed for the end of June, which would make some sense given the identical target date for the iPhone 2.0 software.

Editor's note: This story initially incorrectly reported the discount that a German iPhone customer could receive by crossing the border and purchasing a unit in France. It's 250 euros.

Apple's learning fairly quickly that Europe is a very different place, especially when it comes to mobile phones.

The iPhone went on sale Wednesday through wireless carrier Orange in France, marking the third European country to carry the phone within its borders. The launch also marked the debut of the third pricing strategy for the iPhone in the three countries: France, Germany, and the United Kingdom.

Apple CEO Steve Jobs introduces the iPhone to the U.K.

(Credit: Crave UK)

It appears that at least for a while, the iPhone is going to move more slowly for Apple in Europe. Orange said hopes to sell 100,000 iPhones by the end of 2007, and 400,000 to 500,000 in total by the end of next year, according to several reports Tuesday. Apple wants to sell 10 million iPhones next year in total, after expanding to Asia some time in 2008.

Was Apple blasé about the challenges it faces in Europe? The device's debut in one of the most hotly contested mobile phone markets in the world has been a little chaotic, with last-minute changes to pricing plans that don't appear to have been part of the plan.

Orange, the "exclusive" carrier of the iPhone in France, offers three payment plans. You can purchase an iPhone for 399 euros ($592.78) and sign up for one of the special "Orange for iPhone" plans, which range in price from 49 euros a month to 119 euros a month depending on usage. You can buy an iPhone for 549 euros if you want to use one of Orange's other rate plans. Or, you can buy an iPhone for 649 euros ($964.20) with no plan.

The only company that can sell you an iPhone in France is Orange (Apple doesn't have any stores in France) but it sure as heck isn't going to be the exclusive carrier. French law requires that carriers offer their customers the option of an unlocked phone. That will cost you 100 euros today, but if you're willing to wait six months, you can have it unlocked for free.

So French shoppers who want an unlocked iPhone today will pay the equivalent of $1,112,77, which is actually a significant bargain over what their German neighbors are being asked to pay for a key to other networks. After a legal challenge from rival Vodafone forced its hand, T-Mobile agreed to offer an unlocked iPhone in Germany for the equivalent of $1,478 (at last week's exchange rate).

At least in U.K., Apple's one-phone, one-carrier strategy is still in place. O2 and Apple have yet to release any sales figures, although O2 said it was its "fastest-selling" launch. No matter what, however, any expectations for lines and hoopla similar to what happened stateside on iPhone Day did not materialize in Blighty.

Simply put, Europe is different. Entering the European mobile phone market from the United States is like getting called up to the majors after just a few months in the minors.

One of the many things I've heard from U.S. iPhone owners is that many of them were relatively new to smartphones, especially the idea of getting e-mail and anything more than a real basic stripped-down Web page on their phones. They bought the iPhone because of its user interface, not because it was a data phone, although they quickly grasped what they had at their disposal.

And they didn't care that they'd be locked to AT&T for two years, because two-year wireless contracts are the norm in this country. Maybe that will change in upcoming years following Verizon's announcement earlier this week that it will open up its network, but it will take a long time before all of us are using our phones that way.

Unlocked iPhones are available through official sources in France and Germany, and there's nothing Apple can do about it.

(Credit: CNET Networks)

It seems Apple didn't anticipate the difficulties it would have selling the first generation iPhone to European customers and carriers under the same terms and conditions that AT&T and O2 were willing to accept. That situation could very well change next year, when Apple is expected to unveil a 3G phone that would be much more attractive for both consumers and carriers.

But how could Apple possibly have expected that it would be able to sell locked, exclusive iPhones in Europe going into the launch? A German judge quickly imposed an injunction after Vodafone aired its complaints (which were opportunistic, to be sure). But from that swift action it would appear the law regarding locked cell phones wasn't exactly murky, although the carrier said it would attempt to "clarify" the issues.

Likewise, from the pricing discrepancies, it's hard to imagine that the current situation was part of the original plan. A German citizen living on the French border could cross the old Maginot Line and pick up an unlocked iPhone at a 250 euro discount, and then use it with any German carrier, without having to pay any sort of additional import tax. Perhaps the T-Mobile and Orange "exclusive" deals don't transfer as much revenue to Apple as the company gets from AT&T, which is likely the reason behind the steep premium to be paid for an unlocked iPhone.

As always, we have to remind ourselves that this is very early days for Apple in this market. It has very little experience marketing mobile phones and even less experience negotiating tough deals with carriers, who still rule this industry.

Just look at Apple's early dance partners. AT&T's Stan Sigman told attendees at Macworld earlier this year that he signed an exclusive (and expensive revenue-sharing) deal with Apple to distribute and promote the iPhone without having even seen the device. O2 was so eager to be the exclusive iPhone carrier in the U.K. that it allowed Apple to throw in a free subscription to The Cloud--a U.K Wi-Fi hotspot aggregator that offers access to more than 7,000 hot spots--even though that almost guaranteed that iPhone users would do any heavy data action over Wi-Fi and deny O2 a cut of that revenue. Not exactly a bunch of Red Auerbachs, there; Apple must have gotten almost everything it wanted from those two carriers going into the negotiations.

Of course, Apple has one very powerful negotiating chip: a sweet product. I've been to several conferences and conventions this year about the smartphone industry, and Apple's user interface and design prowess has come up in every single one--the CTIA Wireless conference devoted an entire session to it.

The entire wireless industry is trying to figure out what to do about Apple's iPhone. But Apple has to do a better job figuring out how to navigate the complicated minefield that is the international wireless industry. A strategy that works in this country won't necessarily work in other places; just ask Dell, Disney, or the National Football League.

Would you pay more money just so you could have an unlocked iPhone?

T-Mobile is going to charge the equivalent of $1,478 for an unlocked iPhone in Germany, after deciding Wednesday to comply with a preliminary injunction issued by a court at the request of Vodafone, a rival carrier. The carrier will continue to challenge the court's decision, but it seems that locking phones to a specific carrier is against German law.

(Credit: CNET Networks)

According to T-Mobile's Web site, "numerous functions remain exclusively available to T-Mobile customers with a Complete rate plan." The only feature that the company singles out as missing, however, is the visual voicemail. T-Mobile also says it has a more complete EDGE network than its rivals, but those looking to switch to Vodafone or other carriers may not care so long as they get data access in their city or town.

It will be interesting to see how much value people place on an unlocked iPhone. According to Reuters, a locked iPhone in Germany will cost you $2,330 over the life of a two-year contract: $1,740 for the service plan and $590 for the iPhone. T-Mobile said it will still offer that deal for iPhones locked to its network, and that the special iPhone rate plans are 40 percent cheaper than the "comparative use" of another data-enabled phone through T-Mobile.

To many, cell-phone unlocking is a matter of personal freedom, in that they bought a device and want to use it with whatever service provider they choose. After all, we aren't hooked to Comcast or AT&T's broadband networks for 24 months after we buy a new PC or Mac. But there's probably quite a few potential customers who don't care and just want to jump on the iPhone train for the cheapest possible fare.

One thing is probably certain: half the mobile phone resellers on the planet just booked flights to Germany. Unlocking iPhones wasn't too difficult a process before, but it did involve modifying software and was subject to retaliation from Apple in the form of software updates, such as the infamous OS X 1.1.1 update. A clean, straight-from-the-factory unlocked iPhone could command a higher price than one that had been jail broken and unlocked using the current methods.

Still, will it command upwards of $1,500 in order to make resale worth the effort? I have no idea, but there's no way in hell I'd pay even close to that much for a phone without 3G data networking or GPS just so I could run it outside of a particular carrier's network. And then I'd still have to pay some carrier how ever much a month, at least $50, to make it work. Even assuming that somebody offers me that cheap a data plan, I'd wind up paying $2,678 over two years, as compared with the $2,330 I'd pay over the life of T-Mobile's two-year contract.

That, of course, is probably not a coincidence. T-Mobile might have to offer an unlocked iPhone, but there's apparently no requirement as to how much they have to charge for it. And if Apple struck the same kind of revenue-sharing deal with Deutsche Telecom, T-Mobile's parent, as it did with AT&T, the companies have to come up with some way to make sure Apple gets its cut.

Apple and Orange (ha!) will also have to offer an unlocked iPhone for the French market to comply with that country's telecom laws. The phone will go on sale next week, and will command a "premium" price, according to the International Herald Tribune.. Now maybe we have some idea of just how much a premium, but will people be willing to pay?

Apple will take its keynote show on the road to London next week, with speculation mostly centered on the carriers for a European iPhone.

The company sent out invitations to a Tuesday press conference, but didn't specify the topic. "Mum is no longer the word," was the tagline attached to this invitation, stirring up talk across the pond that Apple is ready to announce its plans for European iPhone sales. The company has previously said that it wants to start selling iPhones in Europe by the end of the year.

Apple could shed more light on its plans for iPhones in Europe next week.

(Credit: CNET Networks)

The Times Online reported that Peter Erskine, CEO of wireless carrier O2, didn't quite confirm that his company was about to start carrying the iPhone. However, he told reporters that Apple's insistence on receiving a share of the carrier revenue from calls made with the iPhone--as Apple does with AT&T--is actually a good thing for the wireless industry, apparently practicing for calls with his shareholders later this year.

Previous reports had indicated that O2 would be the U.K. carrier of the iPhone, but O2 representatives would not comment Thursday to The Times Online. The Financial Times had also reported that Apple had chosen T-Mobile's network in Germany and Orange's network in France, but it's not clear whether Tuesday's event will be just about the Brits.

Apple's forays into Europe will be very interesting, given the quality and quantity of mobile phones in that market. It's likely to produce the first 3G-based iPhone, and it's likely to be a much tougher go for Apple amid stronger competition and choosy shoppers. The company plans to enter the Asian market--also way ahead of the U.S. mobile phone industry--in 2008.

The famous quote "there are no second acts in American lives" is attributed to F. Scott Fitzgerald. According to BrainyQuote.com, he also said, "his was a great sin who first invented consciousness. Let us lose it for a few hours."

The convoluted story of NTP and evolution of the American patent system is enough to drive a man to drink. Having beaten the literary metaphors well into the ground, let's ponder NTP's second act on the tech industry stage.

As you may have heard, NTP is once again feeling litigious. Last week it sued the four largest wireless carriers in the U.S. (no love for you, MetroPCS) alleging that without a license to NTP's patents, they really shouldn't be allowing us all to use smart phones that can send and receive wireless e-mail.

NTP owns patents for a wireless e-mail system that it never developed. The company managed to extract $612.5 million from Research In Motion by successfully convincing a jury that RIM infringed on the patents, and then playing defense for four years while the appeals process ran its course. Now it's coming after the carriers, arguing in its complaint that the services those carriers offer violate NTP's patents, and it deserves damages, royalties, and the right to bring wireless e-mail service in this country to a halt unless the carriers license its patents.

Craig Merritt, a lawyer with Christian & Barton in Richmond, Va., who is representing NTP this time around, did not return multiple calls requesting more details on NTP's thinking.

For several reasons, I think the sequel is going to be a little harder to produce than the original.

The Holy Grail of a patent case is an injunction. If you're a company that makes a product that someone has infringed, you want the court to force the other company to stop selling that product. If you don't make a product, you want the injunction to force the infringer to the bargaining table, to pay up in order to keep their business alive. That was the crux of the NTP-RIM case; Judge James Spencer stayed the injunction pending the appeals process, and after exhausting all avenues RIM had no choice but to settle to avoid the messy aftermath had it been imposed.

But the guidelines for imposing injunctions have changed, after a successful challenge by eBay. Two months after RIM settled with NTP, the Supreme Court ruled that courts should no longer impose injunctions as a matter of course following patent infringement trials. Before that ruling, if you were found to have infringed on someone's patent, in order to avoid the injunction you needed to prove that it would cause some sort of disaster that would harm the public. The ruling now allows the courts more leeway on whether to grant the injunction or just award damages.

Also, in good part because of NTP, the winds are changing on patent law. This year has seen two important developments in an easier interpretation of the "obviousness" test and the passage of the Patent Reform Act by the House of Representatives. This case could drag on for years, and patent law could be very different by the time it reaches a conclusion.

That brings me to the third point: time is no longer on NTP's side. It is currently appealing the preliminary ruling of the Patent Office that its patents--and all the claims within them--are invalid. In the mid-1980s, before Campana received his patents, Norwegian telecom company Telenor published documentation describing a wireless e-mail system. And the Patent Office thinks that is prior art that invalidates the Campana patents.

NTP's appeal of that decision could drag on for years, and it's free to assert its patents during that appeals process. But if it wants to make one last score with the Campana patents, it has to do so soon unless it can convince the Patent Office and the appeals courts that the Telenor publications were somehow unrelated to the Campana patents.

If NTP can convince a jury to rule in its favor, it will still be entitled to damages even if the patents are later struck down. That's probably why Spencer has stayed NTP's patent-infringement lawsuit against Palm pending the resolution of the Patent Office process, and might likely do the same with these cases.

So in the end, as usual, it all comes down to money. A long time ago, this stopped being about the little guy, the independent inventor steamrollered by an evil corporation bent on stealing his hard work and laughing all the way to the bank. The Campana family and its partners scored around $400 million off RIM, if the lawyers involved took a third of the proceeds. That's still probably enough to settle in Gatsby's East Egg, even at today's prices.

This will be a very interesting case to watch. Are the patents valid? Will the carriers blink? Can NTP once again convince a jury that it deserves royalties for having (supposedly) invented the concept of wireless e-mail? Can I really write 85 more stories about patent law without my head exploding?

Remember NTP? They're back.

The holding company that brought BlackBerry Nation to its knees in 2006 is once again on the advance, this time filing suit against AT&T, Verizon, Sprint and T-Mobile. The suit was filed last week (PDF) in Richmond, Va., home to the last round of legal tussling between NTP and Research In Motion, maker of the BlackBerry.

Way back in 2002, NTP won a jury verdict that RIM infringed on patents held by the late Thomas Campana for a wireless e-mail system. RIM tried several times to overturn that verdict on appeal but never prevailed, and in March 2006 the companies settled for $612.5 million. The settlement came despite the fact that the U.S. Patent and Trademark Office issued final office actions invalidating most of NTP's patents at issue in the case. NTP is appealing that decision, in a process that could stretch on for years.

This time around, NTP is going after the wireless carriers. Eight patents are cited, five of which were argued in the RIM litigation. The argument this time seems to be that because hardware makers like RIM and Nokia have licensed the patents in question from NTP, the carriers should have to have a license as well. NTP wants ongoing royalties as well as damages from the carriers.

Craig Merritt, a lawyer with Christian & Barton in Richmond who is representing NTP, did not immediately return a call seeking comment on his client's current thinking with regard to its patents and the wireless carriers.

Campana, who died in 2004, was issued several patents for a wireless e-mail system but never brought a product to market. NTP, the company formed to enforce those patents, has also sued Palm in a case that has been stayed pending the PTO re-examination process.

A call to the U.S. Patent and Trademark Office seeking an update on the re-examination process was not immediately returned. Patents are often re-examined at the request of the patent holder as a way of receiving a confirmation that the patents are valid before asserting them at trial. But the PTO and RIM initiated re-examination hearings in 2005 with the belief that the patents in question were invalid. The initial finding of the PTO (called a final office action) was that the patents were invalid because of prior art.

However, that's a preliminary decision. NTP can appeal those decisions to an appeals board at the PTO, and then to the U.S. Court of Appeals for the Federal Circuit, where NTP has prevailed already in the RIM case. And if NTP manages to secure a jury verdict in its favor before the patents are formally invalidated, the wireless carriers would still be on the hook for whatever damages are awarded by the jury.

UPDATED 4:34 p.m.--Brigid Quinn with the PTO called back with an update on the status of the re-examination process. After the office actions were issued, NTP filed responses to each of those actions. Over the last couple of weeks the original PTO examiner who issued the office actions has filed his own responses to NTP on each of the patents in question, and now NTP has two months to submit another reply to the PTO examiner's latest arguments.

After that, it goes to the appeals board, who can either hold a hearing or make a decision based on the filings, Quinn said. The appeals board is made up of a panel of three patent experts who were either former PTO employees or from outside organizations.

Apple has chosen T-Mobile, O2, and Orange as its European launch partners for the iPhone after wrangling a revenue-sharing agreement, according to the Financial Times.

The four companies are set to announce their partnership by the end of the month, the report said. The deals would require the carriers to share 10 percent of all revenue from voice and data services over the iPhone with Apple, according to the report. Apple has a revenue-sharing agreement in place with AT&T, the exclusive iPhone carrier in the U.S.

No new details surfaced in the report about the type of iPhone that would hit Europe, but most industry observers think Apple has a 3G model in mind for across the pond. T-Mobile provides mobile service to Germany, Orange operates in France, and O2 is based in the U.K.

Apple has said it wants to launch the iPhone in Europe by the end of this year. Tim Cook, the company's chief operating officer, mentioned that Apple wants to start in Europe with "a few major countries," and France, Germany, and the U.K. probably fall into that category.