Ken's Tech Tips

November 25th, 2009

photo: William Hook

The big news today: Tesco Mobile is to offer the Apple iPhone 3G and iPhone 3G S on its network by Christmas. It will be available on both PAYG and Contract.

Why is this significant?

Certainly mobile industry analysts didn’t see this one coming. We knew that Vodafone were planning to offer the iPhone from early near year and that Three wanted to introduce it during 2010. What we never saw was a “small” virtual network operator such as Tesco being able to get the iPhone.

A Tesco Mobile spokeswoman told the Telegraph: “It is a bit of a coup to get it before some of the other major players. We know all of Tesco’s customers, well everyone, loves it and we are very glad to have it.”

A bit of a coup? Too right.

Will we have a price war?

photo: Manky Maxblack

Probably.

Part of the problem is that Apple still has a lot of control over the iPhone – how much it charges the operators for the phone and the cut of the contract that it demands. When Orange started selling the iPhone a few weeks ago, it did so with almost identical tariffs to O2 (see our price comparison guide). Many analysts suggested this was because Apple essentially dictated how much it should cost. However, I’d argue that we had the same price because we still have a lack of competition in the iPhone market with just two networks. Orange competed with O2 on it’s claim of quality of network.

The reason why I believe we could see price cuts with Tesco Mobile’s iPhone launch is because Tesco doesn’t have a huge base of existing subscribers or a way to differentiate itself on quality of network.Whereas Orange had lots of existing customers it could convert to the iPhone (and hence get them to spend more), Tesco don’t. Tesco want to take market share from the rival networks. Moreover, since Tesco Mobile shares its network with O2, if we see identical pricing there will be nothing to differentiate the two products in the market.

What should I do?

Wait and hold off your iPhone purchase. I would say it was likely that the iPhone will come down in price with Tesco Mobile’s launch and very likely that prices will come down next year when Vodafone, Three and perhaps other networks get the device.

Compare prices between different networks

We’re running an iPhone price comparison webpage. As soon as Tesco announce their iPhone tariffs, we’ll update the page so you can see all the tariffs side-by-side.

About the Author: Hi! I'm Ken. I've been using mobiles for over 10 years and technology for a lot longer! I'd love to hear from you.

• Apple , Mobile , Other Networks , Smartphones , iPhone
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