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Greenpeace knocks iPhone; unlocked iPhones in France, iTunes Plus gets cheaper

I didn't get the chance to write about several key developments in Apple's always busy world last week, so I'm catching up today:

Poisons in the iPhone: On Monday Greenpeace released a report criticizing Apple's iPhone for containing environmentally hazardous chemicals. "Steve Jobs has missed the call on making the iPhone his first step toward greening Apple's products. It seems Apple is far from leading the way for a green electronics industry as competitors like Nokia already sell phones free of PVC," said Zeina Alhajj, identified on Greenpeace's Web site as the organization's "toxics campaigner."

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To compound matters, the Greenpeace report inspired the Center for Environmental Health to initiate legal action against Apple under California's Proposition 65 law, which says products containing toxins must carry a warning label.

Apple issued a statement back on May 2 outlining its policy for phasing out various toxic chemicals from its products. On the PVC chemicals cited by Greenpeace, the policy states: "Apple plans to completely eliminate the use of PVC and BFRs [brominated flame retardants] in its products by the end of 2008. As I glance at the calendar, I see we're still in 2007. The iPhone that went on sale in June was actually completed before January, when Jobs revealed it to the public. You'd think Greenpeace would have given Apple until next year before excoriating the iPhone.

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And while today's iPhone does contain some traces of hazardous chemicals, even the Greenpeace report concedes that the product complies with the European Union's tough RoHS (Restriction of Hazardous Substances) Directive.

So why pick on Apple?

Reporting for the U.K.'s Register news site, Tony Smith submits: "We'd guess it's because Apple is an easy target, and Greenpeace knows iPhone related commentary gains press coverage." Dozens of comments posted on Web sites that reported the news agreed, overwhelmingly blasting Greenpeace. But if generating publicity by going after Apple was Greenpeace's primary aim, it succeeded. Unfortunately it gave Apple a black eye it didn't deserve.

iPhone in France: A month after the announcement of iPhone deals for the U.K. and Germany, Apple on Tuesday announced its delayed agreement with Orange of France. The iPhone will debut Nov. 29, just in time for the holiday shopping season, and will cost €399 ($560). This much was expected.

But the interesting bit, reported in the International Herald Tribune, is that an unlocked version of the iPhone will be available for a higher, though undisclosed price. Apple was hog-tied by a French law that prohibits "bundling the sale of a mobile phone and a mobile operator," according to the Tribune report.

The existence of legitimately unlocked iPhones in France raises the likelihood that entrepreneurs will buy them up there to export to customers in other countries who will pay a premium to have them. Apple already might have built in a way to prevent this, but any such mechanism couldn't be as hard to crack as the original iPhone lock. In any case, the existence of an unlocked version of the iPhone will give those incensed over this issue fresh ammunition.

DRM-free songs get cheaper: Apple said it's dropping the price of songs without copy protection from $1.29 to the same 99¢ as songs with DRM. All "iTunes Plus" tracks will still be available in the higher 256 kbps bitrate (double the 128 kbps of regular iTunes songs). Two million songs now are available in the DRM-free format, compared with more than six million copy-protected songs.

Apple appears to be responding to the challenge of the Amazon MP3 store. With Amazon selling DRM-free MP3s for 89¢, Apple's $1.29 per song looked awfully expensive. Though the iTunes Store still has several big advantages over its rivals – a huge catalog, a superior user experience and a better encoding format in AAC over MP3 –price is the one area competitors like Amazon and Wal-Mart can beat it on.

Apple's advantages will allow it to keep its prices a little higher than the others, but not 40 to 50 percent higher. Apple wisely made the price cut quickly rather than wait for large numbers of price-conscious customers to abandon iTunes. Such timely reaction to the changing market will continue to be crucial in light of Universal's aggressive strategy to partner with every possible iTunes alternative in its quest to weaken iTunes' dominant position.

One more thing: Prepare to be impressed when Apple reports earnings after the market close Monday.

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