With other networks – Orange and Vodafone also offering Apple’s i-phone 3G and 3G S deals, O2 faces a threat of losing users.
The trade analysts have claimed that O2 may face severe churn after Orange and Vodafone also acquired the Apple I phone 3G and 3G S deals. Analysts have also suggested that in order to prevent the repercussions of the new deals, O2 now should be extensively careful while setting its pricing strategy for the i-phone devices.
According to analysts, the non allowance of the existing i-phone users to upgrade to the i-phone 3G S version can also cause users to switch the operators and choose the one amongst the other two i-phone providers.
On the launch of Apple i-phone 2G version almost an year back, the users who signed a 24-month contract fort the service were given an option to upgrade to the 3G version at launch 12 months later, with a condition that they re-signed an 18-month contract. However, the service provider O2 did not offer the same deal to the subscribers when i-phone 3G S was launched.
“The timing of the announcements is bad news for O2,” said Ovum principal analyst for mobile strategy Stephen Hartley.
“The device will go on sale later this year, early next year – around the time O2 customers’ i Phone 3G contracts end.
“So, O2 will see a lot of churn. This is partially down to customers spiting O2 for not letting customers upgrade to a 3G S version when it was launched.”
The senior trade analyst of IDC, Jonathan Arber said that O2 may observe decline in I-phone sales in the coming months as the customers find other options to fall back on. If the other two networks offer better pricing deals to the users, there are all the chances of customers switching between the networks
Arber also added : “The decision by Apple to broaden its reach is positive in terms of sales. There will be a lull in sales for two months, while consumers wait to see what the tariffs will be. After that, there will be a sales boost in the UK.
“Pricing structure and tariffs are important factors determining which network will gain the most sales.
“Orange and Vodafone must decide how they will differentiate their offering. It could be on price or the quality of the network.”
Arber also claimed, that the networks – Orange and Vodafone can also derive benefits in terms of data revenue as i-Phone customers use four times more data than consumers of other smart phones.
Orange and Vodafone will also gain from the increased customer numbers who are willing to use i-phone. Hartley said: “Vodafone said they lost 150,000 customers to the iPhone in one quarter, so there’s a major churn affect.
“In America, AT&T said 30 per cent of i Phone customers were new to the network. The benefits are huge for the networks new to the i Phone.”
Hartley also said that Apple decided to distribute its landmark device i-phone through other networks with a view to to increase shipments during Christmas and the first quarter of next year.
He also added: “Apple is finally trying to open up its distribution. When the phone first launched, Apple wanted to sell exclusively through one network because it provided and aura of prestige for both the handset and network.
“The UK market is the first region where Apple has lapsed its exclusive deal with a network. In the USA, it has an exclusive deal with AT&T and in Germany with T-Mobile.
“In France, the competition regulator removed the exclusive deal, not Apple.
“Now, it’s about maximizing the audience.
“It’s not surprising if T-Mobile also gets it. It has the handset in Central Europe and Germany. “