Europe Cuts to Apple's Core

French news organization Les Echos is reporting that France Telecom's (NYSE: FTE  ) Orange may soon join Deutcshe Telekom's (NYSE: DT  ) T-Mobile and Telefonica's (NYSE: TEF  ) O2 in cutting prices for the iPhone.

Actually, it's worse than that. Les Echos is reporting that the iCrew in Cupertino wants France Telecom to subsidize current models to boost demand. Orange has sold just 100,000 handsets in the first four months of the iPhone's release in France, the newspaper reports.

Tepid demand. Falling prices. Time to sell Apple (Nasdaq: AAPL  ) , right? Right?!?

Don't be too sure. France Telecom has denied that price cuts are forthcoming. But, even if they are, no one should be surprised. Foolish colleague Dave Mock all but predicted as much in September.

What's most interesting to me is that, according to the report, it's Apple that is asking for the changes. That could be for two reasons. Either Apple needs to boost sales to meet its goal of selling 10 million handsets in 2008 or a 3G model is nearing completion and it's time to clear inventory.

My guess is the latter, for all the reasons Dave provided three weeks ago and one more: Europe's carriers want 3G. It's the network that allows them to sell more data services and, thereby, earn more profits from iPhone subscribers.

Expect Apple to accommodate them. For all of the iPhone's appeal -- and there is plenty -- Apple isn't a retail powerhouse overseas. There, unlike here, it's entirely dependent on partners who've done business with Samsung, Ericsson (Nasdaq: ERIC  ) , and Nokia (NYSE: NOK  ) for decades.

It'll take more than a sleek design and hip image to change that.

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