Mobile Working Experiences
The realities of remote working
Thursday 5 July 2007, 5:35 PM
iPhone - did Vodafone make the right call?
Instinct and share price reaction suggests that O2 has landed a great coup in sealing the exclusive iPhone UK deal.
On further reading and reflection I am not so sure....
It is clear that O2 will have paid a significant premium to secure these rights, at a level where VF clearly felt it did not make sound business sense to follow.
Analyst comment from Cazenove highlighted the TCO issue that seems to have been missed in the press. It appears that Apple AND the operators have expressed a desire to make money upfront from the sale of iPhones. However UK consumers are unusual in the EU in that they are used to receiving heavily subsidised top of the range handsets that they pay a nominal fee for. Will a premium price that reflects more of the handset's actual value deter them?
Traditionally consumers have ignored price and value and bought Apple on the basis of brand alone - will this stretch to the phone market? I have been amazed in the past at how Apple has apparently shrugged off product problems to outsell its rivals in other markets.
Other vendors are already talking about 'iPhone killers' coming to market. Again history suggests that competitors will struggle to take a significant share of consumer purchasing outside the real experts who heavily research what they are buying (examples being portable music players..). But arguably the competitors in the phone market are a lot tougher and consumers are unlikely to be buying their first phone, so they will be better informed.
I can understand O2's unique desire to dominate the music space and hence why the tie-up with Apple makes so much sense, but overall, I do feel that Vodafone made the right call in deciding to withdraw from the race for the exclusive license.
Any agree? disagree?
PreviousComments on this post
The iPhone may provide a major breakthrough in the adoption of cell phone – internet connectivity, but based on initial market results I can’t say that I entirely disagree with Vodafone. There has been a lot of hype around the iPhone, but many reports indicated that first day sales in the U.S. were lower than expected. Many journalists uncovered the plans of many first day buyers planning on obtaining the handset just to mark it up for resale in the aftermarket rather than buying for personal use. Ebay clearly has an abundance of iPhones available and the prices have been dropping since their debut. Perhaps Vodafone was looking past the hype… then again, who thought Google shares would soar so high? I hate to default to elementary economics, but perhaps time will be the best indicator of this debate. Cheers!
