Apple Sparks European iPhone Buzz

Without a 3G version, Apple may find itself at a loss in drawing customers away from local cell-phone giants such as Nokia (NOK), the world's largest cell-phone maker, as well as Sony Ericsson, a joint venture between Sony (SNE) and Ericsson (ERIC). These companies hold just a sliver of the U.S. market but are dominant in Europe.

Since the beginning of the year, Nokia, for one, has shipped several multimedia phones in Europe that offer Internet surfing and navigation, music playing and video recording.

But Apple products are gaining popularity in Europe as the company opens stores across the continent. Sales of the company's iPod portable music player and songs from its iTunes online music store have also gone a long way in introducing consumers to Apple.

iTunes is available in the local languages of roughly two dozen countries across the world, including many European markets where cell phones have been ubiquitous for years.

The cell-phone market, however, is unlike other markets in which Apple operates. The company's iMacs are much more distinct than competing personal computers, and no digital music device rivals the iPod. But there many established players in the cell-phone market and an even greater number of alternatives to the iPhone.

What's more, prices on cell phones fall much faster than on products in other segments of the tech sector.

"We are very much beginners at this, and so every day there is something to learn," said Apple's finance chief Peter Oppenheimer, referring to the cell-phone market during the company's last conference call.

Apple learned a big lesson when it outraged customers by slashing iPhone prices just two months after the device debuted. Similar gaffes may leave it more bruised in the hyper-competitive European cell-phone market.

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