Across the pond: iPhone in the UK

By

cult_logo_featured_image_missing_default1920x1080

Following up on the posts by Leander and Leigh about the various iPhone rumors floating around, I thought I’d add a little perspective from the other side of the pond.

The subsidization rumor isn’t one I’m entirely convinced by (given Apple’s track record), but it is something Brits in general expect when it comes to new phone hardware, which might explain Apple having a change of heart.

When the iPhone finally arrived in the UK, somewhat late, Apple got the market wrong, inflicting an American model on the Brits. In this wee island, we’re not used to paying for hardware when on a monthly contract. Typically, if you’re paying £35 per month, you get a decent phone for free (or very little) and a decent number of minutes and texts; alternatively, you grab a pay-as-you-go card and pay full-whack for your phone.

Apple’s cunning plan was to go for all of the expensive options—a relatively high monthly charge and full-price hardware, along with a frankly insulting number of texts and minutes when compared to other local plans of the same cost. This pretty much explains why the iPhone borderline bombed initially in the UK.

The dreadful sales picked up some when the number of texts and minutes increased, but until Brits see iPhones on sale for £150 or less, they’re not going to go for it in any number, especially if there’s a (minimum) £35 per month contract attached. And the same goes for a lot of other European countries.

It wouldn’t entirely surprise me to see a subsidized iPhone in Europe, but the older system remain in place in the US. Frankly, it’d be about time we got something out of Apple after its many years of having fun with exchange rates and charging way over the odds for its goods in Europe.

Newsletters

Daily round-ups or a weekly refresher, straight from Cult of Mac to your inbox.

  • The Weekender

    The week's best Apple news, reviews and how-tos from Cult of Mac, every Saturday morning. Our readers say: "Thank you guys for always posting cool stuff" -- Vaughn Nevins. "Very informative" -- Kenly Xavier.

24 responses to “Across the pond: iPhone in the UK”

  1. Michael says:

    Does this wanker realize that Americans are also used to subsidized phones when on a contract? We all know that the iPhone is the exception.

    Maybe next time he decides to write an article he should do a little research before he creates a flawed hypothesis.

  2. Thom says:

    You’re exactly right – I notice that I can get a Nokia N95, on O2 with similar text, minutes and rental for free.

    There are many advantages to the iPhone, but how many people feel that it is worth around £270 extra.

  3. Pmoes says:

    Do you Wanker, er, sorry, Michael, realise that the rest of the world had to wait for the iPhone because we all use 3G and have done for a long time. But we had to wait because of outdated infrastructure in the US.
    Keep your personality out of it thanks.

  4. Diarmaid says:

    In Ireland (as in the UK) we have suffered from the longer delays for release of the iPhone. While we are an island with a potential customer base of about 2 million, we are none the less the highest consumers of mobile telephony in the EU with higher Average Revenue Per User (ARPU) of any other EU country.

    The problem with European adoption of the iPhone is not that it’s overtly expensive (which is a major factor) but rather the fact that Europeans are so far ahead in the adoption of 3G technologies and BlackBerry up-take that the iPhone brought nothing new to the market.

    For my part, Apple must come in next week with a 3G iPhone with the 2.0 software coupled with ActiveSync Exchange on board and be willing to put it on the shelves in USA and Europe at the same time. The infrastructure is ready, but if Apple delays release of the iPhone 2.0 to Europe as it did with 1.0, Europeans will not adopt.

    Timing is everything, and Apple has now a chance to tap into a larger market than the USA in Europe and they need to address it ASAP.

    But more than anything, and above all else, Apple need to cease their contracts with the network operators. Europeans, like Americans, enjoy the freedom of movement between networks. Locking users into one contract with one provider will be the deathknell (part deux).

    Therefore, to be successful, iPhone 2.0 needs to be cheap, available on any network and ordered directly from Apple.com. As a support to this theory, I’m deeply involved in IT service provision, and anyone I’ve seen to date who have an iPhone, use it on another network and prefer to suffer without the features. Do it right – the money and the market is there. I’m dying to ditch my BlackBerry. Just give me and Europe the reason.

    diarmy

  5. Jamie says:

    The price structures of the IPhone put it beyond the reach of the people who make or break a product…..teenagers.

    It will only be really cool if teenagers say it is. It then works its way up the chain to adults and evil corporates.

    I can’t think of an example where evil corporates and adults have started a trend downwards towards teenagers…..

    Can you?

  6. M says:

    @Jamie

    “I can’t think of an example where evil corporates and adults have started a trend downwards towards teenagers…..

    Can you?”

    Umm, have you heard of the BlackBerry? The cheap(er) ones are now popular text-crazy kids, but corporate and professional users were addicted to BlackBerries years before the low-end Pearl made them affordable for all.

  7. David_Lazarus says:

    In the UK I think that the problem is the contract. the minimum of £35 a month is crazy. The initial combination of minutes and texts only appeals to a few and was over priced. When they tripled the calls it became a better deal. I am a low user and would happily pay £270 for the iPhone, but want a cheaper contract. The iPhone needs to be open to any network as long as it supports visual voice mail and an unlimited data package then it will be the networks who gain. Until then I will wait till they come out with a deal that suits me. I have waited a year so far so another year or two will be fine.

  8. Jamie says:

    @M

    Where do you live? I haven’t seen this example in any part of UK. I’m not saying your wrong, just that I haven’t seen it

  9. mkjones says:

    Apple need to listen if they want to succeed in the UK with the iPhone.

    A friend of mine was desperate to get one as soon as they came out. So, like most, he wandered into O2 and offered to sign up for the £35 deal.

    Thing is, he had no idea they were charging him for the handset. At that price, he, like any UK mobile user, expected it for free.

    The in-store salesman explained that the iPhone was like buying an iPod AND a phone so he should expect to pay a little more.

    But the majority of new phones have the same kind of music player options and guess what, he already had an iPod.

    So he declined. Sucked up his pride and now has an N95 (terrible phone if you ask me).

    Its a shame O2 don’t want to subsidise the iPhone. £35 a month is a LOT for a standard contract. They could quite easily give away the iPhone for £30 and suck up the hardware cost from the extra contract payments.

    It would not only help Apple sell more iPhones over here but it would also help grow the O2 brand and spread word of mouth to on-the-fence phone users not willing to upgrade.

    I for one hope the 3G iPhone will be more affordable in the UK when it eventually is released. The mobile phone market needs the device to do well in order to drive out the stagnated handsets we have been given over the past 5 years.

  10. clicknathan says:

    Wow, the “wanker” statements are a bit harsh, eh?

    Anyway, while it’s true that the US has also grown accustomed to getting phones for cheap or free with service contracts, this has often been cited as the reason why we have garbage phones. When I lived in the UK, the really good phones (of the time) were still much more expensive than your average phone that came free with service. This is the reason, I believe, that Apple wasn’t all that interested in subsidizing the phone – if you want to show somebody that a device has value, don’t give it away for free.

    Something that is free equates cheap, because well, it is cheap. If you want a free phone then you’ll get buttons to dial numbers and a screen to see your moms’ name when she calls, but if you want sleek style, touch-screens, and the internet you’ll need to pay for those.

  11. owen-b says:

    For such a specialist Mac site, there are an awful lot of people posting comments who don’t really understand how the iPhone deals in the UK have been struck.

    For one thing, I don’t for one second believe that O2 “don’t want to subsidise the iPhone”. Apple have got O2 over a barrel – it’s Mr Jobs that’s told O2 they won’t be offering a subsidised handset. After all, the phone is available in Apple Stores as well as O2 stores. It’s Apple’s baby – they’ve dictated the price, they’ve dictated the rates/tariffs, and they’ve dictated how much of a cut they get from those tariffs.

    It may very well be that in the US there are subsidised handsets on offer but anecdotal evidence from other forums and some Americans I know (I’m British) says that those tend to be very low end handsets. In the UK, since, well, practically forever, we’ve been able to claim free high-end handsets (that sell for the same as an iPhone, if not much more, if you chose to buy them outright without a contract) with tariffs as low as £35 or £40 a month. I got a free Blackberry Pearl with a £30 a month contract with O2, and that tariff got me almost double the minutes and texts the £35 iPhone tariff initially offered.

    Personally, it would be nice if Apple allowed O2 to adjust the tariffs to allow some subsidy if you take a more expensive option, but I doubt it’ll ever be ‘free’ except for extremely expensive tariffs, and I can understand why that is – premium product, Apple simplicity of interface, etc. However, I’m also very keen to see them offer it at full price without tying you into a contract when you hand over your cash (that is, the way they do it at the moment) because I want to unlock it onto my current O2 tariff and ditch the Blackberry Pearl…

    ;)

  12. Jamie says:

    There is so much negative vibe at the moment over here with the expensive iPhone and expensive movies. I would love to know how Apple are thinking this is going to work out in the long run.