Tuesday, 10 June 2008

3G iPhone more affordable???

I'm blogging more out of a sense of duty rather than because I necessarily have anything to say about this. Apple announced the launch of the new whistles-and-bells HSDPA/A-GPS iPhone and announced that they would be cutting the price to £100 (from a current discounted £169 for a 2G version).

But it's not really a price cut is it? It's a guide price. What they're doing is allowing the operators to subsidise the phone, as MNOs do with all other phones. Very generous. It potentially means that users will face a much more expensive contract to pay for the device. Compared to a standard £35 tariff with an N95:
  • Assuming an unsubsidised price of £500 for an 8GB version there is something like an extra £100 cost to recoup, i.e. £6/month additional cost.
  • MNOs have to pay Apple a revenue share of the customers that take the phone. That may be as much as 30%, so £10-ish per month.
  • An unlimited data plan for £6-£8/month

So, that £35 contract pretty swiftly becomes a £60/month contract. That's a big ask.

It's difficult to discern whether this constitutes back-tracking, or whether it was always their plan. The fact that they've adopted the same process in US (where it's been something of a hit) and Europe (where it hasn't) indicates to me that they were planning to do this anyway.

Europeans just aren't such Apple-istas as our cousins on the other side of the pond. Here it's a phone, there's it's a must-have gadget. To sell as a phone in Europe it needs to be subsidised and it must be brought into the same sort of affordability range as the N95 8GB. It seems Apple has just about done that. I suspect that the strength of the range of high end phones available from the competition for free on a £25-£35 contract has forced Apple's hand.

There is an iPhone killer, it's the iPhone. It remains to be seen if the iPhone 3G is affordable enough to be the N95 killer.

Amendment: Looks like there'll be no up-front cost and a £45/month tariff (£59/month for the 16GB) and no more revenue share. Hmmm. Actually sounding much better.

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