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Steve Jobs was characteristically bullish as he launched the new iPhone tonight, but by Apple standards the company’s venture into mobile handsets has been a funny kind of success story.
Admired for its technical prowess and coveted for its slick design and tactile interface, the iPhone nonetheless failed to sell as well as Apple hoped. Now, a faster version of the sleek device will be available at a much lower price, eliminating the main technical and economic barriers to purchase.
That is probably enough to perk up sales, especially in Europe, where people have been waiting for a 3G iPhone since before the last model arrived on the shelves. What consumers have to pay in monthly fees remains to be seen, but cutting the up-front cost to the £100 mark makes signing the contract less painful.
This marks a substantial departure from Apple’s policy of keeping prices high and stoking demand with new features. This time around, we will be paying less – much less – and getting more.
Apple has, in effect, been forced to behave more like a traditional mobile phone company, allowing its device to be sold cheaply for the benefit of the network operators. Reports suggest that Apple may also get less of a cut from iPhone users’ monthly bills.
The balance of power has certainly shifted since the launch of the first iPhone, when mobile networks feared a mass stampede to whichever carrier got hold of the handset and willingly agreed to hand over their cash to Apple. With other manufacturers queuing up to offer iPhone rivals which offer similar features, albeit without all the glitz, Apple is no longer in a position to dictate terms. Its second-generation iPhone is a stronger product, but a weaker bargaining chip.
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Apple certainly doesn't have a policy of keeping prices high. This is a very common misconception..
The iPod is the prime example. I bought a iPod in 2003 40Gb for £400. Last year I replaced it with a 80GB version for .....£159.
Also, their computers are constantly being reduced in price.
Kingkerouac, London,
iPhone is almost perfect, but I won't never buy one if it keeps being locked to only one expensive operator.
Alex, London,
in light of the competition, iPhone should have at least the ability act as a 'modem' for your laptop over bluetooth, as well as stream audio over bluetooth. Amost all other mobile phones can do this, and its only a matter of including the bluetooth stacks (software). Also the 2MP cam is inferior.
Mikkel Breum, Berlin,
The biggest problem with the iPhone remains being locked to O2. Apple should really offer sim-free (unlocked) iPhones for sale in the UK even if at a premium. Then those of us who have no wish to use O2 for network coverage reasons, or because of previously bad service, will have somewhere to go.
Simon, Woking, UK
The 'Pay-as-you-go' option, plus the GPS means that Apple and o2 will have a new customer here when it's released in July!
Andy, Wales, United Kingdon
As a user that declined the original iPhone on the assunption that a 3G model would quickly supercede it this looks spot on. Let's hope O2 offer a decent package here in the UK.
Personally, I'd prefer Apple to sell the hanset and let us chose the airtime provider - that would be REAL competion
G Saul, Sheffield,
The iPhone has been a phenomenal success in the United States and a sensation elsewhere, though sales numbers in Europe failed to live up to the hype. The insane, widespread adoption of the unlocked / "jailbroken" iPhone around the world proved demand to be insane. Apple listened to their customers!
John, London,
As long as O2 don't mess up the package, I think there will be a lot of people thinking get that PAC code sorted and roll on 11th July.
Bruce R, Plymouth, UK