TECH: Why iPhone under-performs in the UK: still no PAYG...

So O2, have decided not to launch the iPhone 3G on PAYG on the 11th July. It's a terrible decision, which only goes to explain why the iPhone is performing so badly against Apple/O2's expectations.

The facts seem self evident: more people want PAYG than pay monthly. More succinctly, they want the iPhone device, not the O2 monthly deals. This isn't because O2 is offering bad deals - simply because people are locked to other networks, or have other factors that effect them from switching to O2 (free broadband with their existing provider for example).

The abundance of unlocked current generation iPhones only proves to illustrate this point. The answer, for O2, Apple and the UK at least is simple: make the iPhone available on PAYG. By holding the iPhone 3G back, it appears that O2 are simply praying on a select few's desperation to get their hands on the device - even if it means signing up to another contract. The resultant scenario should be obvious...

To quote Abraham Lincoln: "You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time."

With O2 holding back the PAYG model the majority of people will do one of two things: simply wait, or lose interest in the iPhone 3G altogether...

TECH: O2 iPhone 3G PAYG price accidentally revealed?

Following on from the last post it would seem that O2 briefly posted pricing for the iPhone 3G PAYG on their site this evening. Only to have it taken down moments later. Did O2 jump the gun? Was the pricing incorrect? Hopefully not as at £299 the iPhone 3G seems like a fair enough deal on PAYG. Click the image for a full size screengrab...

TECH: iPhone 3G - PAYG, how much?

Perhaps the most interesting development for the new iPhone 3G is the ability to purchase it on a Pay As You Go contract from O2 (UK only).
However, how much does O2 intend to charge for the device? Given the original iPhone started out at £269 with a hefty 18 month contract and ultimately failed to produce the desired sales, one has to wonder whether Apple/O2 have actually learnt from their previous pricing mistakes.
My take: with the new £99 price for the iPhone 3G handset on the cheapest O2 contract (a far more sensible proposition) I imagine a PAYG price of anything beyond £300 will turn out to be a serious mistake, especially given that the 8GB iPod touch, (basically an iPhone without the 'phone') currently costs £199.
I think they will pitch in at £269-£299...

TECH: UK iPhone: Something's got to give.

Almost a year ago to the day, Apple head-honcho, Steve Jobs revealed the iPhone publicly for the first time. The Macworld crowd was largely astounded seeing the iPhone in action for the first time. However, a year on, as impressive as the iPhone was and is, something perhaps still needs to change to see it widely adopted in the UK.

I don't believe the technical shortcomings of the iPhone are a problem. It's never possible to make a device that is all things to all people. The iPhone 'niggle list' is well documented and usually includes these minor grumbles: poor camera specification (2 mega-pixel), no MMS messaging, lack of voice recording, no 3G support and no GPS. Whilst some of these problems are set in stone (camera quality for example), others are easily addressed in a future software update; don't be surprised if tomorrow's Macworld keynote address by Mr Jobs doesn't cater for some of these issues.

Nor is the iPhone's UK problem one of desire. The device itself is revolutionary. Virtually anyone can pick up an iPhone and browse through the features in genuine wonderment. It's usable; the interface, for a mobile phone, is light years beyond the clunking, ugly and intuitively convoluted experience of Symbian (and the like) phones. The feature set and its execution, even without the promised 3rd party application support, is also hugely impressive. It would take an extremely cynical person indeed to spend a few hours playing with an iPhone without being in the least bit impressed. And that is without mentioning the slender chassis of the iPhone and its genuinely usable touchscreen technology.
Nor is the UK iPhone problem one of availability or marketing. Apple has done a great job of getting the iPhone 'out there' and into public consciousness. You can also play freely with one in any Carphone Warehouse or O2 store throughout the UK. I would venture anyone with a passing interest in the device has managed to get their hands on one.

The problem is more fundamental. It is price. UK customers simply won't put their hand in their pocket and shell out £269 for a phone with a £35 per month, 18 month-long contract. Speak to any O2 or Carphone warehouse representative and they'll tell you the same thing. People want the device, they just won't pay for it. I spoke to Carphone Warehouse staff at the weekend and the message was clear "Most people have already got iPods so people would rather get a free phone". And whilst competitive devices like the Nokia N82, N95 8GB etc fail in the slick execution stakes, they more than make up for it in feature set. Such devices boast 5 mega-pixel cameras, GPS built in and 3rd party applications and unlock potential without the threat of 'bricking'. What's more, these other devices, on like-for-like tariffs are free. Is Apple arrogantly ignoring the most essential feature for the UK market - value?

Regardless of personal opinion, the next few months will be telling. Will Apple/O2 concede on iPhone/tariff price in the UK to gain some market share and installed user base? Or steadfastly refuse on principle? It certainly presents an interesting conundrum. Especially as Apple stands to make as much back, revenue wise, in related sales (music and film downloads from iTunes for example) as from the margin of the device itself.