Price cut needed to maintain sales?
Apple's iPhone has struggled to take the UK by storm, and it comes as no surprise. Matthew Key, chief executive of O2 Europe, had stated last year that O2 expected 200,000 iPhones to be sold in the UK in its first two months of sale.
The quoted figure was seen as highly conservative, as research firm Gartner had estimated that between 350,000 and 400,000 iPhones could have been sold during the same period.
Today, the Financial Times claims that people familiar with the situation have revealed that O2 sold approximately 190,000 iPhones in the two months since launch. Some 10,000 less than an already low estimate.
It isn't difficult to see why Apple has faced problems in the UK market however, three barriers are clear for all to see:
- The iPhone is currently available exclusively to O2. Being restricted to one mobile operator, many users simply can't get the device.
- High handset cost. Most UK users are accustomed to receiving a mobile phone free of charge when signing up to a long term contract. Unfortunately, despite the associated contract, the iPhone carries a handset cost of £269.
- Expensive contract. The minimum contract available for the iPhone is an 18 month contract charged at £35 per month.
Taking the charges into account, the iPhone is available in its cheapest form at a cost of £899 over 18 months, nearly £50 per month.
O2 insists it is "delighted with the response to the iPhone, which has seen unprecedented levels of customer satisfaction". If Apple plan to dominate the UK market however, price cuts in 2008 are a must.
