[UK] Is a price drop inevitable?

[jonnyb]

So the Regent Street Apple store still has stock left from the launch and there's a survey showing that most people will not buy an iPhone because it's too expensive.

As much as I love my iPhone, as a Mac-devotee I'm hardly a typical UK mobile phone consumer. I have to admit that to your average punter used to free feature-loaded handsets and monthly deals including hundreds of minutes and thousands of texts, the iPhone isn't a good deal ( yes, I know it's an ipod, internet device etc etc...)

Apple are marketing the iPhone in the UK along US-centric models with a complete disregard for the very well established conventions of the UK mobile phone market. The UK market won't go for it in big numbers until it's a lot cheaper.

I think a price cut is inevitable. The question is - when? (and will us early adopters get some vouchers if we whine hard enough ;) )

[CD3660]

The answer to your question will be determined by how the sales figures over a reasonably significant period of time match up to expectations (Apple and O2's, not ours).

The survey you referred to suggested that 72% of people thought it was too expensive. In my view those figures are favourable to Apple. It means that almost a third of people don't think it's too expensive, and I don't believe Apple expect to sell to anywhere near that percentage of the population.

[Luke Redpath]

I'm still struggling to understand why people think the iPhone is "too expensive" unless you are taking the contract fees into consideration too.

You don't hear people complaining about paying up to £200 for an iPod or competitor's mp3 player so for an extra £70-100 you also get a mobile phone and wifi enabled internet device with the best UI in the world.

The O2 contract rates aren't brilliant but they aren't terrible either. At the end of the day, the sort of person who spends £40 on a cheap and nasty phone and pays a tenner a month on PAYG because "that will do" isn't really the sort of person the iPhone is aimed at.

[CD3660]

I'm still struggling to understand why people think the iPhone is "too expensive"
I completely agree. The hardware at £269 is perfectly reasonable. It must be the fact that people are conditioned to get their mobile phones free in the U.K. and that the tariffs are not, at first sight, as good value as they are with other phones.

I'm happy though!

[theGAPkid]

I'm still struggling to understand why people think the iPhone is "too expensive" unless you are taking the contract fees into consideration too.

You don't hear people complaining about paying up to £200 for an iPod or competitor's mp3 player so for an extra £70-100 you also get a mobile phone and wifi enabled internet device with the best UI in the world.

The O2 contract rates aren't brilliant but they aren't terrible either. At the end of the day, the sort of person who spends £40 on a cheap and nasty phone and pays a tenner a month on PAYG because "that will do" isn't really the sort of person the iPhone is aimed at.

I wouldnt mind paying the £269 IF the contract offers were cheaper / better value. 200 texts? I pay £15 for 340 texts AND a free phone. And I know you can say you get the free wireless etc, but the original £269 AND a minimum of £35p/m plus any extra costs is too much for quite a lot of people. (for me anyway :p)

I think a price drop will come. Not sure when, but I sure am waiting!

[CD3660]

I think a price drop will come. Not sure when, but I sure am waiting!
Don't start holding your breath just yet! :D

[Luke Redpath]

200 texts? I pay £15 for 340 texts

Fine, but do you also get unlimited data and wifi hotspot access?

If you send loads of texts then the iPhone plans probably aren't for you. I don't send more than 200 texts a month so it suits me just fine. Who over the age of 21 needs to send that many texts a month anyway? Somebody I know sends thousands of text each month; it's crazy.

[j26]

... the sort of person who spends £40 on a cheap and nasty phone and pays a tenner a month on PAYG because "that will do" isn't really the sort of person the iPhone is aimed at.

Yes, but there is the sort of person who doesn't use the phone that much, is happy on PAYG spending a tenner a month or less, and would like the iPod/phone combo, who would buy the iPhone but for the contract (and a few missing features that should appear in the next version)


Like me. I'm sure I'm not alone, and people like me would be the ones to drive sales figures in markets where the majority of punters are on PAYG (like Ireland where there's 1.1 phones per person in the country and about 2/3 are on PAYG)

[Luke Redpath]

Yes, but there is the sort of person who doesn't use the phone that much, is happy on PAYG spending a tenner a month or less

If you use your mobile phone so little, why do you even care about the iPhone? Just buy an iPod Touch.

Yes, loads of people love the iPhone but don't want a contract. That's life. I just wish people would stop bloody whinging like Apple have committed some kind of great sin. They can sell their products to whoever they want and if they want to rule out a certain portion of the market that's their lookout. Me...well I've got an iPhone and I love it so I really couldn't give a toss.

[CD3660]

Yes, but there is the sort of person who doesn't use the phone that much, is happy on PAYG spending a tenner a month or less, and would like the iPod/phone combo, who would buy the iPhone but for the contract (and a few missing features that should appear in the next version)


Like me. I'm sure I'm not alone, and people like me would be the ones to drive sales figures in markets where the majority of punters are on PAYG (like Ireland where there's 1.1 phones per person in the country and about 2/3 are on PAYG)
You have to remember that Apple are not only interested in the profit that they make on the hardware. They are also taking a tidy share of the 'tariff cake'. This is why the tariffs are more expensive than normal tariffs.

[Eraserhead]

that the tariffs are not, at first sight, as good value as they are with other phones.

Remember the iPhone contacts are 18 months, vs the norm of 12 months, and you don't get £100 cashback like you would with other phones. (The phone is free as well).

Fine, but do you also get unlimited data and wifi hotspot access?

Is it really worth £20/month more?

[j26]

If you use your mobile phone so little, why do you even care about the iPhone? Just buy an iPod Touch.

I travel 1,100 miles a week. I'd like one device to cover most of my needs, rather than having all the separate devices in my pockets and bags. I'd like not to need to carry all these cables to connect to my Macbook. I'd like seamless integration with my computer.

Edit: You added to your post, so I'll reply here. If loads of people would like an iPhone but don't want the contract, then it seems to me that the marketing of the phone is a bit wrong and they will lose a lot of customers. Many people would spend more than the contract price to have the iPhone sim free, or even locked to a network, but not a contract (me included).

I'm not whinging, merely observing that the iPhone, which I was championing on this site well before it was even announced, is not a product that suits me. If you want to call that whinging, that's fine. Its just that I have money that Apple won't be getting, which ultimately is Apples loss. I can live with my workarounds until the right product come up for me.

[CD3660]

Remember the iPhone contacts are 18 months, vs the norm of 12 months, and you don't get £100 cashback like you would with other phones. (The phone is free as well).
A lot of contracts are for 18 months nowadays, and even more of those 'cashback' deals are a complete con. I got stung by one of those once!

[CD3660]

I travel 1,100 miles a week. I'd like one device to cover most of my needs, rather than having all the separate devices in my pockets and bags. I'd like not to need to carry all these cables to connect to my Macbook. I'd like seamless integration with my computer.
Sounds like the iPhone is perfect for you. You'd better just cough up! :D

[j26]

Sounds like the iPhone is perfect for you. You'd better just cough up! :D

I'd love to, but there are cheaper, and in some respects better options out there.
I have better uses for my money than an iPhone at the moment.

[CD3660]

I'd love to, but there are cheaper, and in some respects better options out there.
I have better uses for my money than an iPhone at the moment.
That's entirely your choice. One of the advantages of living in a free country.

[stekerrod]

If you use your mobile phone so little, why do you even care about the iPhone? Just buy an iPod Touch.

Yes, loads of people love the iPhone but don't want a contract. That's life. I just wish people would stop bloody whinging like Apple have committed some kind of great sin. They can sell their products to whoever they want and if they want to rule out a certain portion of the market that's their lookout. Me...well I've got an iPhone and I love it so I really couldn't give a toss.

I agree to an extent, no matter how apple sold the iPhone at what price with what features not everyone wouldn't be satisfied! If you're not prepared to pay the money for an iPhone don't! I think its awesome and worth the money so I was okay with the amount it costs, people deal with it and move on people!

Rant over I can breathe again.....

[OllyW]

Fine, but do you also get unlimited data and wifi hotspot access?


Is it really worth £20/month more?

O2 data package £7.50
Cloud Wi-Fi (iPod touch) £3.99

Not really ;)

[j26]

That's entirely your choice. One of the advantages of living in a free country.

True, but I can still rue the fact that Apple decided to create something that doesn't suit my needs. I can also hazard a guess that my views represent the views of a significant number of people, and that Apple will find Europe a much harder nut to crack than the US unless they change their model.

I wouldn't like to see Apple squander the opportunity they now have.

[CD3660]

I wouldn't like to see Apple squander the opportunity they now have.
Judging by Apple's phenominal success so far, I think that they have the matter well in hand. :)

[Luke Redpath]

Is it really worth £20/month more?

It is to me, but it's also down to how much you value the iPhone. I value it enough to pay a small premium on my monthly contract (even though it's only a fiver more each month than the contract I was on previously anyway).

[j26]

Judging by Apple's phenominal success so far, I think that they have the matter well in hand. :)

In the US maybe, but I can see with doing so much travelling, that in Ireland at least, the iPod is losing ground to music playing phones, particularly Sony Ericsson. People want a convergent device, but are not willing to pay ridiculous cash for it.

The Irish phone and music player market is not too unlike the rest of Europe, so I think it's fair to say that Apple will start to lose mindshare, and consequently marketshare and sales overall in Europe unless they do this right.

[CD3660]

The Irish phone and music player market is not too unlike the rest of Europe, so I think it's fair to say that Apple will start to lose mindshare, and consequently marketshare and sales overall in Europe unless they do this right.
I really don't believe that Apple will be loosing sleep over this.

[sjo]

I really don't believe that Apple will be loosing sleep over this.

they should.

[Stella]

I'm still struggling to understand why people think the iPhone is "too expensive" unless you are taking the contract fees into consideration too.


It doesn't matter if the iPhone is the "best" in the world - it doesn't change the fact that if the UK public think the contract rates and the upfront cost are too expensive, then it won't be purchased.

A lot of people in the UK ( and anywhere else ) have priorities that exceed that of the iPhone, such as paying mortgage / rent, food, council tax, utility bills etc etc.

If they need a cell phone they'll opt for a cheaper phone with cheaper rates that is affordable.

[Eraserhead]

I got stung by one of those once!

How?

I suppose when I had a cashback deal, it didn't come straight away, but I went back to the Orange Shop and they gave it to me on the next bill.

[seedster2]

Judging from the luke warm response in the UK and Germany, I think iPhone buzz and sales will continue to decline if Apple continues with this business model. It seems that everytime a new carrier is announced the plans get increasingly expensive. This is likely the carriers attempt to recoup the money from profit sharing and investment in EDGE(:confused:)

The market will eventually force either a price cut or tariff adjustment to maintain sales. Consider the premium and continuing demand for unlocked 1.1.1 phones and it is evident that at some point they will have to release a new model or abandon this present approach. Considering China's telco's responses so far I don't know if this is a scaleable repeatable model. Apple needs China more than they need Apple.

Apple's initial foray into this arena was a success domestically. But there are numerous other "smartphones" that sold really well in the same time period as well. With all of the buzz and satisfied customers, the phone should be flying off the shelves across the water as well. But Apple is against superior handsets (feature wise), competitive carriers and superior technology overseas. Despite their revolutionary UI, they will have to improve the specs and pricepoints quicker than they are accustomed. This may eventually become a hinderance.

[CD3660]

How?

They refused to pay claiming that they hadn't received my paperwork. Pure lies.

There was a feature on Watchdog a few weeks ago about several such cowboy companies.

[Eraserhead]

They refused to pay claiming that they hadn't received my paperwork. Pure lies.

I think we are on about different deals, this is a cashback deal with an external company that you have to send off for the money, and they are only available from non network stores like Carphone Warehouse or Phones4U. This deal is a cashback deal with the network. Like this one (http://shop.orange.co.uk/shop/show/offer/free_credit_2007).

[samab]

Judging from the luke warm response in the UK and Germany, I think iPhone buzz and sales will continue to decline if Apple continues with this business model. It seems that everytime a new carrier is announced the plans get increasingly expensive. This is likely the carriers attempt to recoup the money from profit sharing and investment in EDGE(:confused:)

The market will eventually force either a price cut or tariff adjustment to maintain sales. Consider the premium and continuing demand for unlocked 1.1.1 phones and it is evident that at some point they will have to release a new model or abandon this present approach. Considering China's telco's responses so far I don't know if this is a scaleable repeatable model. Apple needs China more than they need Apple.

Apple's initial foray into this arena was a success domestically. But there are numerous other "smartphones" that sold really well in the same time period as well. With all of the buzz and satisfied customers, the phone should be flying off the shelves across the water as well. But Apple is against superior handsets (feature wise), competitive carriers and superior technology overseas. Despite their revolutionary UI, they will have to improve the specs and pricepoints quicker than they are accustomed. This may eventually become a hinderance.

Imagine Nokia copying Apple --- non-subsidized full-priced locked phones with revenue sharing from the carriers with a long contract.

Now, imagine Nokia updating it with a brand new generation of simlocking technology (i.e. a BB6) which no one will be able to unlock them for 2 years.

[CD3660]

I think we are on about different deals, this is a cashback deal with an external company that you have to send off for the money, and they are only available from non network stores like Carphone Warehouse or Phones4U. This deal is a cashback deal with the network. Like this one (http://shop.orange.co.uk/shop/show/offer/free_credit_2007).
Same thing in essence. Mine was with a very established company but it made no difference. They bend over backwards to avoid paying.

[CD3660]

Judging from the luke warm response in the UK and Germany....
Any evidence of this or is it supposition based on the negative minority who are very vocal on this forum?

[samab]

Any evidence of this or is it supposition based on the negative minority who are very vocal on this forum?

The absence of any official numbers is a very strong indication that the numbers were all that great.

[Eraserhead]

Same thing in essence. Mine was with a very established company but it made no difference. They bend over backwards to avoid paying.

The network will be much less likely to screw you over.

If I get a free phone from Orange and they refused to pay the cashback the contract would null and void (as they have broken it), so they would get no line rental to repay the subsidy on the phone.

Its like if Apple have a mail in printer rebate and they don't pay its a third party at fault, but if Apple give you money off you will get it.

[CD3660]

The absence of any official numbers is a very strong indication that the numbers were all that great.Pure conjecture then. Let's see after Christmas. You may be right.

[Stella]

The absence of any official numbers is a very strong indication that the numbers were all that great.

Or very bad because Apple wouldn't want to admit poor sales.

[CD3660]

Or very bad because Apple wouldn't want to admit poor sales.
That's what he meant.

[CD3660]

The network will be much less likely to screw you over.
I agree with that but there are several seemingly reputable companies out there who are nothing of the sort.

[redgaz26]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU like Mac OS X; en) AppleWebKit/420.1 (KHTML, like Gecko) Version/3.0 Mobile/3B48a Safari/419.3)

no one needs an iPhone. But I like many others here had been waiting on this since January. This was something I've looked forward to for months and I don't regret the price I paid for it or the monthly plan. Its pretty simple-if your not prepared to pay put the money don't buy it. If you are then buy it and welcome to the club!
I really don't think of it as a phone and its name I think under mines what this device is capable of.
I can't wait till febuary to see what goodies will be on offer!!!!!

[j26]

Pure conjecture then. Let's see after Christmas. You may be right.

Link (http://blog.wired.com/gadgets/2007/11/iphone-sales-al.html)
It doesn't bode too well. Only 26,500 activations, or 1/8 of the US adoption rate at this stage. However I await real figures, and freely admit that more information is needed.

[seedster2]

Any evidence of this or is it supposition based on the negative minority who are very vocal on this forum?

This is macrumors - practically everything posted is supposition. But as people stated above:

lack of official numbers from apple
low reported activations
no stock shortages (not even store claiming to have sold out on iday or within the week)

There is even less evidence indicating it has sold well.

[Stella]

That's what he meant.

Oops, sorry, misread.

[CD3660]

There is even less evidence indicating it has sold well.
I never suggested that it has sold well. I merely asked whether there was evidence to support the opposite proposition.

[Brianstorm91]

We never get pricedrops, maybe they're living off our currency because of the weakness of the US Dollar!

[helo]

Is it really worth £20/month more?

unlimited data is worth a lot more than that, especially if you were once an Orange customer...

[DogcowUK]

A price drop in the UK of say £50 on the handset itself will do nothing for sales, the lack of flexible contract options is what's killing sales in the UK.

Approaching my first full month of usage I've used less than 5Mb of EDGE data yet I am frighteningly close to hitting my 200 SMS / 200 Minute allowance. Of all the possible UK iPhone customers I would guess upwards of 80% will be likely to want to use the iPhone as a phone (SMS and Voice minutes) rather than a mobile internet device (EDGE data). I would also guess that for the vast majority of these possible customers the maximum they're willing to stretch to is a £35 a month contract. The balance of SMS/Voice minutes/EDGE data is all wrong with the £35 a month contract.

If I was Job's I'd have three types of £35 contract:

£35 SMS Bundle - 200 minutes Voice / 500 SMS / 20Mb EDGE
£35 Voice Bundle - 400 minutes Voice / 300 SMS / 20Mb EDGE
£35 Data Bundle - 200 minutes Voice / 200 SMS / Unlimited EDGE

I'd also improve the £45 and £55 contracts too:

£45 - 600 minutes Voice / 1000 SMS / Unlimited EDGE
£55 - 900 minutes Voice / 2000 SMS / Unlimited EDGE

In fact if I were Job's I'd go even further... allow totally custom contract allowances. During sign-up you'd move sliders to adjust the usage you require for each feature, increasing your allowance for one feature would limit how far the other sliders could move etc

I'd also slap a large Liverpool FC logo on the side of my Jet and invest in a new wardrobe... :rolleyes:

One thing is certain... they have to change something with the pricing in the UK.

[Brianstorm91]

"Unlimited data is worth a lot more than that"

It's worth a lot, but look at it this way, for a lot of people they would rather pay for what they use because it won't be all that much.
I think O2/Apple also overlooked the difference in phone habits beetween the US and Europe, we send a lot more texts than those across the pond.
I personally, don't own and won't do for the considerable future, because of a multitude of reasons.

Can't buy one under the age of 18
Price of the basic contract is far too much for me
Not enough bundled for the basic contract
18 months! 12 would be a lot more tempting.
The ringtone fiasco
Flat-rate £900 over 18 months, at £35/month + £269


Some may say it's worth it, but, to me? I'd be using the internet for fun, wasting time etc., and I just can't afford it.

[Nicolasdec]

I think there will be a change, but not a price drop. I think o2 is going to to change there tariffs..

[CD3660]

... allow totally custom contract allowances. During sign-up you'd move sliders to adjust the usage you require for each feature, increasing your allowance for one feature would limit how far the other sliders could move etc

Excellent idea if it could be implemented. I would swap a lot of my texts for talk time and retain unlimited data.

[lordgaino]

not another long discussion about the price of the iphone. how tedious.
there is nothing more boring than people moaning about the cost of this and that.

everyone wants something for nothing, the iphone is a market leading premium product at a premium price, apple knows it, o2 knows it. if you want a cheap phone, then get a payg plastic nokia and buy the vouchers!

i dont moan about how bmw 3 series cars are so much more expensive than a ford focus', because they are different products for different levels of the market.

why does a phone have to target everyone

[MikeDTyke]

This has happened before and will happen again.

Apple releases iPod, world + dog condemns it as an overly expensive toy.
Apple releases iPod Mini, world condemns it as a pretty expensive toy.
Apple releases iPod Nano, world condemns it as a cool expensive toy.
Apple releases iPod Nano 2, world condemns it as the best iPod ever, buys it in the 10's of millions.
Apple releases iPod Nano 3(phatty), world has pretty much shut up, except for the dozen Zune fanatics out there, none of which in squirting distance of each other.

Apple releases iPhone, world + dog condemns it as an overly expensive toy.
You know what's coming next...

Apple starts at the highest price it thinks it can get away with in the market, targeting power users, early adopters in the first iteration, with each following iteration, capacity goes up, price comes down, people buy an exponentially larger number.

If it's too expensive for you, stop whinging, Apple's never going to see your comment, nor take any hindrance. They're working to the schedule above, come back when they hit your sweet spot.

M. :)

[synth3tik]

If anything there will be a price increase in the US because of the weak dolla dolla bill.

[Stella]

If anything there will be a price increase in the US because of the weak dolla dolla bill.

A guaranteed way to dampen iPhone sales in Europe.

[DogcowUK]

Having a "premium product" which gets labelled as "an expensive toy" is besides the point, who cares, not me... as long as it sells! The point is the iPhone is not selling well in the UK :rolleyes:

[lordgaino]

With regards to the sales figures, dont forget that there is a no-mans-land period of 3-6 months where people are waiting for their existing contracts to expire before buying that shiny new iphone.

[MikeDTyke]

With regards to the sales figures, dont forget that there is a no-mans-land period of 3-6 months where people are waiting for their existing contracts to expire before buying that shiny new iphone.

I'd second that, in the UK it's very common to renew a contract as soon as it's up to get a shiney new phone, so i'd say there's a large percentage of monthly contract people, still in contract. Whereas in the US and i admit my dataset could be skewed, only have a few friends over there. They say they don't update their contract as soon as its out of the minimum period. They're not so much about the new shiny phone as long as the exisiting one is working fine and they're not feeling ripped off by their monthly bill.

So i'd surmise there's a higher percentage of americans outside of their contract at any particular time and so more readily interested when the game changer comes along.

M.

[Project]

I think people are being VERY presumptuous.

1 - we have no idea what Apples/O2s targets are
2 - we have no idea whether sales are meeting these targets

No official figures published? None were in the US until the earnings call a couple months after the launch.

[samab]

I think people are being VERY presumptuous.

1 - we have no idea what Apples/O2s targets are
2 - we have no idea whether sales are meeting these targets

No official figures published? None were in the US until the earnings call a couple months after the launch.

Which is precisely why we can't trust any of the "official targets" after the fact.

The best example is --- "after the fact" --- O2 said activations surpassed their internal targets of 3000 activations on the first day. That's total bogus numbers because Carphone was also predicting that they would sell 10000 iphones on first day. So --- was O2 essentially expecting 7000 unlockers? Or O2 expecting massive computer crashes on the activation server --- thus only 30% of the buyers would activate on the first day?

Both Apple and AT&T had posted "official" numbers on the first weekend --- via their own press releases --- that makes them official. Those first weekend numbers were also given 3 weeks after launch when Q2 results were released in July.