iPhone: Poor O2 or Poor Punter?

Another blog from me (Richard), but this time it’s different. This is the first in my line of technology blogs. I’ve been meaning to write technology blogs for some time, but never really got round to it. I figured the phenomenon known as the iPhone would make a good place to start, and I figured […]

Another blog from me (Richard), but this time it’s different. This is the first in my line of technology blogs. I’ve been meaning to write technology blogs for some time, but never really got round to it. I figured the phenomenon known as the iPhone would make a good place to start, and I figured writing technology blogs would be cool for me to write being that I’m a technology geeky person.

So there it is – The much hyped iPhone. I don’t have one, and I personally don’t want to have one, so this blog is based on what I’ve read and seen and not personal experience, and I’ll try to be unbiased.

This article is inspired by an article I read today at El Reg (The Register). The link the to the article is http://www.theregister.co.uk/2007/09/19/uk_iphone_at_last/. So with the world seeming to be at Apple’s beck and call these days, you can’t walk down the street without seeing at least one or two people with an iPod of some flavour or not know anyone that uses iTunes, so why shouldn’t they bridge into the mobile market, but are they making too much of it all?

Apple have been very sneaky with their marketing strategy with the iPhone meaning that there is only one vendor per nation to keep it exclusive. AT&T for the USA, O2 for the UK and T-Mobile for Germany. As of yet, nothing official has been announced for France, although many expect it to be Orange.

O2 has released the phone on iPhone exclusive tariffs coming in three breeds: O2 iPhone 25, O2 iPhone 35 and O2 iPhone 45, each priced at £25, £35 and £45 per month respectively. Looking at the packages themselves, the 25 isn’t very impressive at all for anyone that actually wants to make calls or texts etc, giving only 200 of each. The 35 is better and the 45 as you would probably expect for that price, however they both boast an unlimited data tariff for the price. Myself included, this is very irritating to other O2 data users, as at present O2 are charging £5 for 4MB of data by the means of a bolt-on. Compare this with T-Mobiles Web’n’Walk tariffs and you can get yourself unlimited data usage for about £8 a month, which is cracking – There is a drawback, but I’ll talk about that later in this post.

So with the unlimited data tariff, you may wonder what the iPhone can inspire you to you all that bandwidth for? Well not a lot really. As with the majority of mobile devices these days such as the Windows Mobile powered phones, or the Symbian powered Nokia’s you get a web browser and a mail client for doing your normal stuff. This is one of the iPhone’s major downfalls. Where a lot of phones are now supporting 3G data speeds and using EDGE or GPRS as a backup service if the 3G network has no coverage, the iPhone does not support 3G, and relies solely on EDGE and GPRS. O2 is heavily involed in the deployment of a 3G network infrastructure to allow users to use these faster download speeds, however they have now started rolling out an EDGE network infrastructure purely for the iPhone public…according to some sources, this is much to the disgust of O2’s technical developers who spent an aweful lot of time, money and effort calculating the 3G deployment. Steve Jobbs, owner of Apple said in a statement that the reason for the iPhone not including the 3G technology was because it had serious battery life implications and it wanted to enchance the battery life of the device: In that case, why did they choose to include a WiFi wireless network adapter in the device? WiFi – Known to be the one of the biggest performance drains on a mobile device will obviously please a lot of people allowing them to surf at home using there home networks and The Cloud, a WiFi network hotpost service provider, which you will find all over the place including McDonalds for your un-posh side.

On top of the lack of 3G, the iPhone also lacks the ability to send or recieve MMS messages: Not that important in the grand scheme of things as with many users now using data tariffs to send and recieve email, the MMS services are less used today, however it would have still been nice to see the feature there.

So I mentioned earlier the tariffs which to most will seem a little pricey for the amount of minutes and messages? Well there is reason it now seems. According to the linked Register article at the top of this post, it mentions the O2 agreement in relation to the AT&T deal with Apple.

AT&T pays $3 a month when one of its customers takes up an iPhone, but $11 a month when someone switches, so a similar arrangement would be unsurprising for O2.

O2’s ARPU (Average Revenue Per User) is around £23, so 10 per cent of that would be £2.30 while 40 per cent comes to £9.20 – not incomparable with what AT&T is paying, if a little higher. Still, that would be in keeping with the “high cost of doing business here”, as Mr. Jobs put it when justifying the price of the handset.

It also matches nicely the additional cost of the £35 a month iPhone tariff, as reader Dan put it:

But 200 minutes and 200 texts usually cost £25 a month on O2…Seems like the end user is paying the 40 per cent revenue that goes to Apple.

Further to this, O2 will also be paying a nationwide service fee to The Cloud for thier ability to offer O2 iPhone customers free access to their WiFi hotposts, although nobody is currently sure of the amount O2 will be paying for this.

To boil the costings down to a point where is makes sense to you and me, read the below quote which I’ve taken from the article at El Reg left as a comment by a reader there:

So that’s 279, then [£]35*18 [months], for a total of over 900 quid. For that you could get yourself a Nokia N95 on a 12 month Flext35 contract, with double the included minutes, and unlimited 1.4mbit 3.5G. What’s more, you’d still have enough left to buy an 8GB iPod Nano. And an entire PC.


The iPhone is a visually appealing handset which in my view the core appeal can be split into two groups

  1. The Microsoft hating, everything Apple and Mac loving people.
  2. People who care more about style than function.

In my eyes, the way Apple is going with it’s marketing and strategies they are turning out to be worse than Microsoft. The people who care more about style than function are the people who won;t actually use half of the half set of functions that the iPhone actually has, so they may as well still be using a Nokia 3210 or something of the like.HTC Kaiser

Whilst the lack of MMS won’t bother most, the lack of 3G wil annoy some people looking to get the most from the unlimited data tariffs, and the lack of GPS now featuring on the Nokia N95 and several of the new HTC handsets is also disappointing. The pricing leaves a little to be desired due to the fact that O2 are paying so much for these, the costs are passed on to the customers with high tariffs for not much collateral as a result, and the fact that the handset price does not drop as you increase the tariff will also displease many, further coupled with recent news that people attempting to unlock iPhones and use them on Apple’s non-designated networks will render the phone un-usable, although Apple claim this is not by design – I beg to disagree however.

I am personally a lover of the HTC device family, and as a current O2 customer, I was very disappointed that it seems O2 chose to add this brick to their portfolio over a device like the HTC Kaiser which for anyone that knows of the Kaiser will realise dominates the iPhone in every respect. If I plan to stay with O2, I will be adopting the O2 XDA Orbit (HTC Artemis), however I have my eye strongly T-Mobile as they have the Kaiser for release at the end of September. With my contract at O2 up for renewal, it’s watch this space for me.

I hope you’ve all enjoyed reading my first of technology blogs, and there will be more of them to come covering a variety of topics, not just phones.