Apple's Dangerous Contempt

But in the most affluent markets of Europe and Asia, consumers are used to getting 3G access in high-end phones. Also, high-end buyers there are typically heavy text-message or mobile-email users. Smart phones in Europe and Asia typically offer music players and high-end cameras along with a wide range of third-party applications.

Using both a BlackBerry and an iPod is common in America, but this is rare in Europe and extremely rare in Asia. In those markets, this niche is already filled with smart phones. The 100 million consumers there won't easily be retrained to do without what they already take for granted.

Every controversial design decision made by Apple flipped in favor of a narrow, parochial vision geared toward affluent U.S. consumers. There is not an iota of a global strategy in its game plan.

Timing Trouble

Apple can undoubtedly sell a few million of its new phones in the U.S. market in a flash, but it will have tough sledding outside its domestic market. Most hot phones are launched simultaneously in Europe and Asia, which are the two biggest phone markets in the world, and the Korean companies quickly follow those debuts with savvy knock-offs.

For instance, Motorola's (MOT Quote) Razr debuted for Christmas 2004. By summer of 2006, LG and Samsung launched slimmer phones with better specs in Europe and Asia. It is no coincidence that Motorola's phone margins suddenly disappointed in the third quarter of 2006 and seem to be in a free fall now. The Korean counterattack machine gutted the Razr's profitability in just about six quarters.

Apple announced the new phone in January 2007 yet won't start selling it in Asia until 2008. That is a rookie mistake, one among several that Apple has committed. The $20 billion added to Apple's market cap by giddy U.S. investors will evaporate once the global competition starts.