Hefty UK premium could tarnish glitzy iPhone launch

Tech News

By Stevie Smith Nov 8, 2007, 13:50 GMT

After a long wait, California-based Apple Inc. will roll out its iconic iPhone smartphone handset in the United Kingdom this coming Friday. However, it remains to be seen whether gathered consumer expectancy will win the battle against a significant £80 GBP premium that the phone will carry in comparison to its U.S.-based counterpart. Could a significant GBP premium and a slow-moving EDGE network seriously affect the adoption and sales performance of Apple's iPhone in the UK? EPA/Peer Grimm

Could a significant GBP premium and a slow-moving EDGE network seriously affect the adoption and sales performance of Apple's iPhone in the UK? EPA/Peer GrimmMore pointedly, while tech buyers across the pond can presently secure the 8GB model of the iPhone for $399 USD (£190 GBP), eager consumers looking to pick up a unit of the diminutive device in the UK will need to find £269 (or the equivalent of $565 USD) before additional usage charges related to exclusive carrier O2’s 18-month contract.Regarding the significant price hike, Apple CEO Steve Jobs has offered that: "The majority of the extra cost is VAT. In the US sales tax is not included in the price. It is also more expensive to do business in the UK. But we have tried to be as aggressive as we can." From O2’s perspective regarding the iPhone’s market potential in the face of an already sizeable unit price and an £80 GBP regional premium, O2 (UK) CEO Matthew Key insists that UK consumers accustomed to receiving a free phone alongside a carrier contract will be willing to invest in Apple’s latest ‘must have’ device. "This is a great mobile but it’s not just a mobile phone," said Key during O2’s recent unveiling of the iPhone. "Yes the phone costs £269 but it’s more value as an overall package – clearly we think it is a compelling package."Other contributing factors that could play against the UK launch of the iPhone include the recent introduction of the iPod Touch, which is a cheaper version of the iPhone (8GB for £199 GBP) that offers the same array of functionalities but without telephonic capabilities. Also, the iPhone will run on the EDGE network, a markedly slower option than existing 3G networks, which compromises some of the phone’s feature performance.Furthermore, according to a Times Online article, O2 is banking on iPhone users relying on Wi-Fi connectivity to access the Net, especially as EDGE coverage currently only extends to 30 percent of the UK, which will leave those located outside of major cities (where coverage is generally strongest) facing even slower speeds.The iPhone will hit more than 1,300 retail outlets come Friday evening, which will include Carphone Warehouse and official Apple and O2 stores. Outlets are expected to close at 2pm on Friday in order to place their stock, before then opening again at 6pm to being sales. O2, which expects to sell "hundreds of thousands" of iPhones in the first 8-10 weeks of retail, has hired around 1,400 members of staff to cover the high-profile event, and has even dispatched an iPhone "specialist" to each of its 450 nationwide stores. The iPhone sold in excess of a million units in the U.S. during its first two months of retail availability.

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