iPhone makes eyes at T-Mobile and Orange
Darling, I think we should see other telcos
The days of O2's exclusive hold on the iPhone are probably numbered - T-Mobile has told us it's in talks with Apple about ranging the iPhone 3G in the next few months.
The deals being discussed only include the iPhone 3G, and O2's exclusive on the 3GS seems to be secure. But even this represents a major shift in how Apple markets the iPhone, which currently relies on network exclusives to get a decent subsidy; giving that up shows either greater confidence or reflected disappointment in how O2 has priced up the latest offering.
T-Mobile has been telling callers that the company is in talks with Apple about ranging the iPhone 3G, and Orange is also rumoured to have plans regarding Apple's last-version handset. That would leave O2 to explain to users why the 3GS is better; doing Apple's marketing for it.
O2's exclusive on the iPhone will have cost it dearly in terms of subsidy - manufacturers know what an exclusive is worth and use them to extract a big subsidy. Several years ago your correspondent wrote a piece claiming the iPhone would fail, largely because of Apple's reluctance to accept the operator shilling in the form of handset subsidy. Apple may have been naive about the mobile industry, but it learnt quickly (more quickly than your author expected) how important the subsidy was, and how the company paying that subsidy is the real customer - which is why we suddenly see MMS enabled, and tethering disabled.
The other way to increase subsidy is to link to lots of operator services - a menu item for "Get more games" is worth a few quid, while a pre-installed music application linked to the operator can make an expensive handset cheap. But those options aren't available to Apple, which wants all the services revenue for itself.
In the USA AT&T had hoped that its exclusive on the iPhone would make the company "cool", but in reality it's become the whipping boy for everything that goes wrong with the handset - blamed for poor reception, limiting tethering and failing to support MMS. Customer loyalty is to Apple, not AT&T, and much the same thing has happened in the UK, where iPhone users love Apple but have little time for O2.
So Apple have little to lose by allowing the iPhone 3G on to other carriers in the UK, even if the 3GS remains exclusive to O2 for the moment. Customers don't consider themselves to be using Orange, T-Mobile or O2 any more, they're Apple's customers regardless of who happens to be carrying the signal... which is just how Cupertino would like it. ®
COMMENTS
Here's hoping...
...that this means that you can finally purchase an iPhone on contract without O2's pitiful contract offerings. Anything that offers less than 500 free texts on the lowest plan is pretty ridiculous nowadays, when most other networks are happy to offer you unlimited free texting on similarly priced plans.
Yes, it's for the Jesus phone specifically, but whilst I would love to get an iPhone on contract, the price plans are the only thing that's putting me off converting back to O2 this September when my T-Mobile contract is up.
@Mac Phreak
You really shouldn't be describing other people as dull when your screen name is "Mac Phreak"
**** da operators
It doesn't seem so long when certain operators were going to abandon Nokia for daring to try and put it's own music service on it's phones. Well as Bill points out just look at what Apple have done in this area.
By chance? I don't think so...they'd already done it with iTunes and their iPod; now they just had to sucker the operators in to allowing them to operate the same model but just over the operators airwaves.
Those ofcom golfing partners are going to wake up and smell the coffee too late, just like the music industry. The operators have been well and truly shafted; reduced to their greatest fear, to no more than a carrier. lol@operators.
Cheers Bill great article.
I wonder if in the future carriers will still be able sell value add services such as music, email, apps under their own brands but just on lower end handsets? Or whether they will simply become BT but smaller. BT but smaller me thinks.
@Futumnsh
Palm as Apple's "biggest competitor"? Huh? What a load of total ar*se. You've got to be 'Merkin, right?
That'll be the same Palm whose handset sales fell 60% year on year and which lost $750m in the last year. Even if sales of the Pre are astoundingly huge (i.e. >1m this year), they'll be a rounding error vs. sales of the companies actually competing in this market.
Apple's biggest competitor? Jeez....
Chances are we'll see Palm starring on "www.F*ckedcompany.com"...again.
And no, I don't own or use a single piece of Apple kit...
@vamie 26
I guess you're not referring to 3G coverage?
Only last week was this (http://www.ofcom.org.uk/radiocomms/ifi/licensing/classes/broadband/cellular/3g/maps/3gmaps/coverage_maps.pdf) published with O2 and Voda being the bottom two providers of 3G in the UK. Crap + Crap still equals Crap
