Apple’s iPhone was undoubtedly a hot commodity from the first day of its
launch. The phone sold one million units in less than three months. While most
consumers had to get their hands on one, it didn’t stop them from grumbling
about the exclusive agreement (amongst other things). In the United States, the
response from Apple was largely, “Get over it,” but this attitude hasn’t flown
overseas in Germany and France where locking phones to a specific carrier is
against the law.
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After agreeing to comply with a preliminary injunction from competitor,
Vodafone, TMobile announced it will charge the equivalent of $1,478 for an
unlocked iPhone in Germany. (The company is, however, appealing the injunction
and will withdraw the unlocked version if successful.) In France, Orange is
letting unlocked versions of the handsets go for $965.32, a bargain over
Germany’s price tag. The cost of having a handset independently unlocked is only
about $150 and if you can wait six months, it should be free in Europe.
Hearing about Orange and TMobile’s exorbitant prices, I can picture Apple CEO
Steve Jobs’ smirk. The message behind the price tag seems to be “you can have
your precious unlocked iPhone, but it’ll cost you.” German and French law might
require TMobile and Orange to offer unlocked iPhones, but they never said how
much it had to sell for. Jobs’ “so there” move reconfirms Apple’s power and
shows that when you take away the carrier subsidies, the picture isn’t so rosy
One might argue that the announced unlocked prices goes to show that despite
Apple making it really hard to acquire the phone, customers still really want
the unlocked phone. My question is, are they really willing to pay Apple’s
inflated prices? Or, will this move have the side effect of encouraging the
already active hacking community to crack the phone on their own? I think the
answer will be both.
Customers who do shell out the cash for the unlocked phone run the risk of not
being able to use all of the phone’s features through another company’s SIM
card. According to TMobile, the coveted visual voicemail will be one such
missing feature. The company also noted that the their EDGE network is more
extensive than most of its rivals. Through TMobile, the locked phone ends up
costing consumers $2,330 after the twoyear contract expires – $590 for the
phone and $1,740 in monthly fees. While this is pricey, an unlocked iPhone would
still require some kind of contract through another carrier, so the price gap is
going to be even more significant.
TMobile competitor Debitel, for one, announced that it will give customers the
equivalent to an $800 rebate of sorts if they sign up their leased phone with
them instead. The bonus brings the phone down to around the same price that
TMobile is charging with a contract, however, that doesn’t factor in Debitel’s
own inevitable contract requirement. It’s a trade off, but one that is not
necessarily financially advisable.
I think it’s worth remembering that the European mobile handset market is very
different from the U.S. market. Customers are accustomed to paying a premium for
a multimedia phone in Europe and, to many, it may be more of a matter of
principal – it’s their phone and they reserve the right to choose a provider. In
the US, while complaints about AT&T’s EDGE network and requirement of a data
plan abounded, gripes about having a twoyear contract weren’t as prevalent.
Consumers are used to contract constraints in the U.S.
On a Webinar hosted yesterday by iSuppli vice president of multimedia content
and services David Carnevale, he noted that despite the recordbreaking level of
hype that the launch of the iPhone generated this year, its market share remains
almost insignificant. ISuppli estimated that the iPhone would ship 4.5 million
devices in 2007, just a drop in the bucket when you consider that overall
handset sales will surpass 1 billon. Carnevale’s point was that despite its
minuscule market share, the iPhone’s impact has and will be revolutionary for
the mobile and entertainment industry. Offering an unlocked iPhone seems to be a
step in the right direction, however, before I become a fullfledged believer,
something’s got to be done about the price tag…and that damn EDGE network, but
that’s another story.