So the iPhone has been announced in the UK. This is the first beachhead in the planned global campaign of total mobile domination from Apple. The question is, is the iPhone positioned correctly in the UK market?
I’m indebted to Tarek Esber for his excellent analysis on the relative pricing between the US and the UK. Tarek works with this stuff, I’m just an observer.
As I see it, Apple has two paths to choose to market the iPhone. They can compete on price and features, or they can compete on exclusivity and features.
Features: the iPhone is a great multimedia phone, but in the UK, you can get the Nokia N95 free with the same contract as O2 has announced for the iPhone. Comparing the two phones is a bit like comparing apples to oranges (although Steve Litchfield does a good job doing just that), but feature-wise the N95 wins. The iPhone wins on combined packaging, and looks.
Now, I know even less about the US mobile market than the UK one, but I have the feeling that the iPhone was perceived as being head and shoulders over every other phone on the market. In the UK, you can actually buy Nokia N-series and Sony Ericsson Walkman phones. The emphasis is on small stylish phones, not necessarily with QWERTY keypads.
In Europe, ubiquitous WLAN has arrived, in the form of mobile networks. You can get online from anywhere with a network signal (for a price). The WiFi hotspot market is much less evolved in urban areas than in Northern California. So the inclusion of WiFi in the iPhone is just another feature, not a selling point per se.
The camera is not really competitive, let’s leave it at that.
The multimedia features are IMHO more compelling in Europe, where more people commute by public transport. On the other hand, this also means that disposable income is generally less. It’s a pity that the WiFi features can’t be used for syncing with iTunes.
I believe that the iPhone is a compelling device. The drawbacks (2.5G network, closed platform, anaemic feature set) are balanced by the positive things: innovative user interface, visual voicemail, multimedia features. But pricing it more than direct competitors from Nokia, Sony Ericsson and other manufacturers is a mistake. Apple should have been more aggressive on pricing, and not gouged O2 for such a large share of revenue.
Then there’s the question of timing. The iPhone had an unprecedented launch, the hype level was astounding. Since then, potential buyers in Europe have been bombarded with reviews, but few have actually used the device. Competitors have had time to marshal marketing against it, getting people to commit to a new phone before the iPhone is launched and curtailing the market a bit. Negative views on the iPhone have been spread (Carlo has a good list here). The price has already dropped, and the iPod Touch has been launched.
I predict that the UK iPhone launch will be much more muted than in the US, and that savvy consumers should hold out for a month for a price drop from O2. You read it here first…