A lot has been written about Dell’s third-quarter earnings report, but what caught the eye of analyst Shaw Wu of American Technology Research was its disappointing gross margin: 18.5%, down 150 basis points from 20% a year earlier.

“Controversial and confusing,” Wu called Dell’s (DELL) explanation for these results, especially in comparison to competitors like Apple (AAPL) and Hewlett Packard (HPQ).

“DELL cited a tougher component pricing environment. We find this odd as AAPL and HPQ experienced the opposite and our own supply chain checks indicate otherwise. … It is interesting to note that DELL’s costs may actually now be higher than HPQ and AAPL, something that was unthinkable not that long ago.”

UPDATE: China Mobile is now said to have denied Southern Daily’s report that talks with Apple have stalled. See here.

Instant analysis from The Mac Observer’s Apple Finance Board:

Pretty much as expected, everyone is playing hardball, but China Mobile just blinked by having to issue a denial that it had terminated discussions, thereby looking like the weaker hand. They’ll be furious at having to disclose their interest in this manner - it undermines their bargaining position and strengthens Apple’s with the other carriers like Unicom. –Tommo_UK

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Less than three weeks after the first reports that Apple (AAPL) was in talks with China Mobile — the world’s largest cell phone operator with 350 million subscribers — to carry the iPhone in China, negotiations have broken down, according to a report today in China’s Southern Daily newspaper.

This follows earlier reports that talks with China Unicom, the country’s second-largest carrier, had also failed. The sticking point in both cases: the revenue-sharing model that Apple insisted on — and got — in the U.S. and European market.

It’s impossible to say from the brief report today whether this door is firmly closed or could be re-opened. Henry Blodget has argued persuasively in Silicon Alley Insider that a China iPhone deal is inevitable. The Chinese market is so big that even if Apple got only a 1% slice of the pie, no revenue sharing and fire sale prices, it could see revenues of $600 million a year. A 5% market share at today’s iPhone prices could bring in $6 billion a year, even without revenue sharing. (link)

That there is demand for the iPhone among Chinese mobile aficionados is clear. Wired early this month reported on the lively trade in black market iPhones, known in China as the “Ai Feng” (”Crazy Love”). The devices are carried back into the country where they were originally manufactured by mules from Hong Kong and sell for as little as $474.

But Apple may need China more than China Mobile needs it. Earlier this week, Chinese wire services reported that rather than relying on the big Chinese distributors to sell the iPhone, Apple plans to open its own stores in China in 2008.

Employees at Carphone Warehouse, the U.K.’s largest cellphone retailer and the main distributor of Apple’s (AAPL) iPhone in Britain, have been caught trying to mislead customers about what is and isn’t covered by the purchase agreement, according to the BBC.

Responding to viewer complaints, undercover researchers from BBC One’s Watchdog unit visited five Carphone Warehouse stores. In three out of the five, a salesperson told BBC staffers posing as customers that if they lost their iPhone, they would have to buy both a new phone and a new 18-month contract at a minimum cost of 630 pounds ($1,300 at today’s exchange rate).

That’s not true. Customers who lose an uninsured iPhone have to buy a replacement, but can still use their existing contract. Apparently the salespeople were trying to convince customers to buy coverage they did not need from the store’s own insurance policy.

In a fourth Carphone Warehouse store, BBC One was told that the iPhone insurance policy offered by O2, Apple’s other U.K. partner, provided less coverage than theirs. That was also untrue.

The story is reminiscent of some of the problems that surfaced when Apple partnered with AT&T (T) to sell the iPhone in the U.S. Shortly after the iPhone was introduced — and when the devices were still in stort supply — several AT&T stores reportedly wouldn’t let customers buy an iPhone unless they also bought a bundle of AT&T accessories. See Gizmodo’s report here.

A spokesperson for Carphone Warehouse acknowledged to the BBC that there could be “some element of confusion among an isolated number of sales consultants,” but added that the company did not believe the small number of complaints were a “fair reflection” of the experience of thousands of iPhone customers.

The BBC report points out that Carphone Warehouse was fined 245,000 pounds ($500,000) last year for breaking British rules about selling insurance.

“You’ll have it next year.”

That was AT&T (T) chairman Randall Stephenson’s answer to a question yesterday about when Apple (AAPL) will introduce an iPhone that runs on a faster, third generation wireless network rather than AT&T’s 2.5G EDGE network, according to an overnight report.

The remark was made at a meeting of the Churchill Club in Santa Clara, Calif., and seemed to offer slightly more hope of a speedy delivery than Steve Jobs’ latest public comment on the matter.

“Hopefully we’ll see that late next year,” was what Jobs said when asked last September why he hadn’t built a 3G iPhone.

A few weeks later, Broadcom began delivering samples of a low-power integrated device it calls “a 3G Phone on a Chip” that would seem to meet Apple’s requirements. It will be available next year in bulk for $23 apiece. (see here)

AT&T chairman couldn’t comment on how much an iPhone built around such a chip might cost. Steve Jobs “will dictate what the price of the phone is,” Stephenson said — a choice of verbs that reveals more about the relationship of the two CEOs than he probably intended.

Engadget speculates that such a phone might fit into the $599 price slot formerly occupied by the 8 gigabyte iPhone while carrying 16 gigabytes of flash memory like the iPod touch.

Rumors that a 3G iPhone might come as early as May 2008 were floating around last week. Will Stephenson’s remarks put a damper on Christmas iPhone sales? ParisLemon thinks so. Piper Jaffrey’s Gene Munster not so much.

Apple’s (AAPL) iPhone goes on sale in France late tonight at select Orange boutiques at prices that look very different from those charged in the U.S. ($399), the U.K. (289 pounds) or Germany (399 euros locked, 999 euros unlocked).

France Telecom, which owns Orange, knew even before it signed its exclusive deal with Apple that it was going to be required to offer customers the option of buying the iPhone with or without a contract. Agence France Press (link, in French) reports that Orange has structured its prices accordingly.

• 749 euros ($1,109) unlocked iPhone, no contract
• 649 euros ($956) locked iPhone, no contract
• 549 euros ($809) unlocked iPhone, with Orange contract
• 399 euros ($588) locked iPhone, with Orange contract
• 100 euros ($147) to unlock a locked iPhone

After six months, Orange will unlock an iPhone for free.
T-Mobile, which had already signed its exclusive deal with Apple when it learned that it would be required to offer German customers the contract-free option, is charging a 600 euro premium for unlocked iPhones. Yesterday a competitor, Debitel, offered a 600 euro rebate to people who bought unlocked iPhones from T-Mobile but agreed to sign a contract with Debitel instead (see The $890 iPhone Rebate).

Official sales of the iPhone in France begin tomorrow, Nov. 29.

Apple (AAPL) and T-Mobile may have thought they could choke off the sale of unlocked iPhones in Germany by pricing them high enough — and 999 euros ($1,485 at today’s exchange rate) is certainly pretty steep for a cell phone that ordinarily sells for 399 euros in Europe and $399 in the U.S.

But they probably didn’t figure on the competition using that 600 euro ($890) price differential as a crowbar to pry open the German iPhone market.

Debitel, a network operator that buys airtime from T-Mobile and other German carriers and resells it — announced today that it is offering a 600 euro rebate to any customer who buys an iPhone from T-Mobile and agrees to use it instead on Debitel’s cellular network.

T-Mobile had signed a deal with Apple to be the iPhone’s exclusive carrier in Germany, but was ordered by a Hamburg court last week to offer customers the option of buying unlocked iPhones without a T-Mobile contract (see here). Debitel has apparently calculated that it’s worth 600 euros each to lock customers into 2-year agreements.

France Telecom’s Orange division is also planning to charge a premium on unlocked iPhones when the devices go on sale in France later this week, but one that’s “substantially lower” than 600 euros. (See Paris: The city of unlocked iPhones.)

UPDATE: France Telecom today set its prices for iPhones locked and unlocked. See France’s $956 iPhone.

Apple’s (AAPL) iPhone goes on sale in France Wednesday night for 399 euros ($593) with a 2-year contract, and although we don’t know yet how much France Telecom plans to charge for an iPhone without a contract, we do know that it will be less than 999 euros ($1,485 at today’s exchange rates).

That’s how much T-Mobile is charging in Germany for unlocked iPhones, having been forced by court order to offer the devices both with and without a contract (see here).

France Telecom’s Orange division is also required to sell the iPhone in both configurations, but in an interview today with Europe 1 radio, Orange chief Didier Lombard said he planned to sell unlocked iPhones at a price “significantly lower” than 999 euros. Lombard also said he expected to sell “a little under 100,000 iPhones” before the end of the year.

Unlocked iPhones have been available on the gray market in Europe ever since September, when the first free unlock programs became available. You can pick them up in some French supermarkets for 999 euros. Look for those prices to come down, starting now.

Apple (AAPL) CEO Steve Jobs tops the “Power 25″ list in the current issue of Fortune, ahead of News Corp.’s (NWS) Rupert Murdoch, Goldman Sachs’ (GS) Lloyd Blankfein, and the Google (GOOG) guys.

My colleague Brent Schlender wrote the item, which says, in part:

Since returning to Apple in 1997, he has changed the dynamics of consumer electronics with the iPod, and persuaded the music industry, the television networks, and Hollywood to distribute their wares with the iTunes Music Store. With his hugely successful Apple Stores, he gave the big-box boys a lesson in high-margin, high-touch retailing. And this year, at the height of his creative and promotional powers, Jobs orchestrated Apple’s entry into the cellular telephone business with the iPhone.

That’s five industries that Jobs has upended — computers, Hollywood, music, retailing, and wireless phones. At this moment, no one has more influence over a broader swath of business than Jobs.

You can read the rest of his article here. A photo gallery of the full list is available here.

This promises to be a huge Christmas for Apple (AAPL) — what with new iPods, a new Mac OS, and the new iPhone — and the 200 or so Apple Stores will play a key part in moving the merchandise.

These retail outlets are cash machines. More than 100 million people moved through the stores in the fiscal year that ended in September, generating about $4.2 billion of the company’s $24 billion annual revenue.

The stores are also showcases, both for the company’s products — jewel-like devices that need to be seen and played with to be appreciated — and for its legendary commitment to service and support. The staff are unfailingly courteous and helpful, enthusiastic evangelists for the cause.

Sometimes, they’re a bit too enthusiastic. Witness the video below shot by a British user who braved freezing temperatures to attend the opening of the company’s new Exeter store last week. Matt Aiken, who has a blog called Lost in Tech, describes the scene:

about 15 minutes before the store opened the staff began to hype up the crowd running up and down like loonatics, shouting and whooping. All a bit to much for some of the more reserved people in the queue, the guy next to me threatened to pull a moonie if they didn’t shut up! The opening was done in a similar fashion - watch the youtube video I made below sorry it’s a bit jerky.

ADDENDUM: Piper Jaffray analyst Gene Munster and his staff spent six hours Thanksgiving weekend monitoring the traffic at “normal” sized American Apple Stores in the East and Midwest. Quantifying the “gravitational pull” the stores have on nearby customers, they report that “27% of people walking within 25ft of an Apple store entrance actually entered the store.” Muster concludes:

We note Apple stores are typically located in central, high traffic areas of a mall. Only a fraction of shoppers actually purchased anything from the Apple stores. The important point is this gravitational pull highlights that consumers’ future buying intentions could be shifting to Apple from PCs. If materialized, this shift should benefit Apple in 2008 and 2009.

For more detail from Piper Jaffray’s report, see AppleInsider here.

Is O2’s network to blame, or Apple’s (AAPL) iPhone?

That’s the question posed by more than a few British iPhone owners who purchased the device in the past two weeks and have been struggling ever since to get decent telephone reception on it.

The problem surfaced two days after the phone went on sale in the U.K. when “Matlock” in Derbyshire started a discussion thread on Apple’s support board entitled “UK 02 (poor signal strength/reception problems)”:

My iphone can barely pick up even the slightest signal, although on occasion can pick up 3 [b]ars, only for it to drop out again. I have two other 02 phones, a Sony Erricson and a Nokia n95 with no reception problems at all. Is anyone experiencing same problem with their iphone, I would like to hear from you. (link)

Two weeks later, Matlock’s query has received more than 100 replies (and 3,723 pageviews), most of them registering similar complaints. Some users found that reinstalling the software made a difference. When others returned their phones for new ones, the problem went away (although some reported that the new phones were no better).

Definitive U.K. sales figures are not available, but O2 reported that “tens of thousands” of iPhones were sold the first weekend it was available.

Several posters on the Apple discussion board volunteered that unlike the complainants, they were getting great reception on their iPhones. And many owners with signal problems expressed pleasure with how well the device performed its other functions.

But unlike American iPhone owners, who tend to blame any reception headaches on AT&T’s (T) cellular network, the assumption in the U.K. seems to be that the signal problem is Apple’s. That impression is reinforced by O2, which has been referring callers directly to the manufacturer.

One clue is that many British iPhone owners can, like Matlock, compare the signal strength on their iPhone with other cellphones using the same network (one user even posted photos showing the phones side by side). Another is that the indicator on the iPhone tends to jump to five bars as soon as it is placed in the charging dock, which suggests that the problem is battery related. As user Richard Catledge points out:

It says in the manual that phone signal is adjusted to the minimum power when not in use, just enough to detect the incoming pings, then it will power up to get the best quality call. It is digital, so as long as the signal power is strong enough to reconstruct at the other end, more power is pointless. I suspect this is what you are seeing, or a slightly flakey implementation.

Meanwhile, the consensus on the discussion board is that unhappy owners should let Apple know. Writes one user who posts as ::…SAM…::,

The only way to get anything done about it is if people that have poor signal problems is to take your phone back and get it replaced. The more phones they get back, the sooner they will do something to fix the problem. Emails and complaints are fine, they can be put in a folder, high handset return numbers cant be so easy to hide under the rug.

Thanks to InformationWeek’s Alexander Wolfe for the link. See his report here.