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Friday, September 05, 2008

O2 offer of iPhone on prepay looks like a smart move

Regular readers will know that I'm a big fan of cellular business models in which upfront device purchase cost subsidises the service element.

I've also also talked about the challenges of getting prepaid subscribers to use data plans, something which has developed very quickly over the past 6 months.

And, lastly, I pondered about how the Apple's iPhone commission model would fit with prepay-centric markets.

Taking all this together, at first glance I'm pretty impressed with the way in which O2 UK is pitching its own new iPhone prepay offer. It's pricing 8/16GB variants at £350/400 inclusive of a year's data connectivity. (It's £10 a month)

It will be interesting to see how many people decide to use the prepay iPhone as a data-only mobile Internet tablet device & MP3 player, while keeping a separate phone for voice & SMS. If you treat the mobile data as being worth £10 a month, it's like paying £230/£280 for an iPod with full mobile web & email access. Compared with, say, a Nokia N810 or even some of the lower-end mini laptops (which probably would be used as a "second computer") that makes a lot of sense. 

In my view, it puts the iPhone centre stage in the new "MID" (Mobile Internet Device) category, albeit without some niceties like Flash support.  (Edit - Hmmm, I wonder if this is connected to the recent interesting in Flash Audio-based VoIP?)

(Yes, I know that many people will use it as a phone as well, but personally I like having a separate data device/contract that doesn't have an associated 'public' phone number I tell anyone, so I'm free to switch when something better comes along, with having to think about number porting)

The £10 a month for data in months 13 and onwards seems a bit pricy, compared to the £5 that 3 offers for a month's data on prepay SIMs in the UK (I have one), but I guess that predicted iPhone data usage is probably much 2x the average that 3 is expecting from its prepay data users. What's not unclear is whether the iPhone can be unlocked after Month 12, and a different operator's SIM installed.


Alex said...

Isn't there a legal requirement in UK to provide unlocking after 12 months?

Anonymous said...

Ofcom doesn't have any rules on simlocking at all.

BBusyB said...

While the £10 a month does look high at first, compare it to prepaid offerings from T-Mobile, Orange and Vodafone.

3 Has always been slightly ahead in terms of pricing, mainly because they lag behind the other players.

Among the others, T-Mobile charges you £15 for 30 days, but you have to buy 5 day access packs, when each expires. There is currently no way (that I'm aware of) to buy a months worth of usage in one go, or by stacking the add ons.

Orange and Vodafone are also not much better.

My only gripe is that O2 dosen't offer a Unlocking solution, but I'm hoping that as some carriers are already offering unlocked version, with it being available in Italy for Euros 499-599, that Apple, and in turn o@ will roll out an unlocking option.