3/11/2009 12:40:00 PM
New iPhone could be bad news for O2
We are, I believe, just three or four months away from the next Apple landmark. Will the next iPhone be a top-end replacement; another £500 all singing, all dancing piece of Apple statement making, or a pared-down, circa £250 mass-market ‘Nano’ phone?
A top-end device would repeat Apple’s model in iPods and MacBooks of succession products. It follows a rationale that there is a large but limited number of high-spending, gadget-hungry Apple followers, who can be trusted to regularly open their wallets on updates to their existing iPod or laptop. But this creates a problem for O2. The operator has had a two-year window to gobble up all of the potential iPhone customers, and it has done that successfully (see O2’s financial results over the last two years). A new Apple smartphone is unlikely to bring in vast numbers of new customers who have been undecided on taking an iPhone over the last two years.
It will mean O2 will either be coughing up buckets of new subsidy to keep its existing base of iPhone customers, or risk being portrayed as tight-fisted if it doesn’t allow recent iPhone customers to break their existing contracts to upgrade to the new model.
The other possibility is a cheaper iPhone for younger customers. This would favour O2, shifting the millions of rolling monthly Sim-only customers on to a cheap but attractive Apple phone. The problem with this theory is that O2 wouldn’t be clearing its stocks of the current iPhone if it were not set to be replaced with another top-end device.
Maybe Apple will surprise all of us and unveil both, and a mobile broadband powered netbook. Whatever happens, you can bet it will have a major bearing on the industry in the coming year.