Nov 12, 2007

iPhone: fastest-selling product of all time

MOBILE phone giant O2 has declared Apple's iPhone its fastest-selling product of all time, less than a week after the handset went on sale in Europe.

The Daily Mail reported that O2 stores experienced a 300 per cent increase in customers since the iPhone was released last Friday, and the company was rumoured to have hired more than 1000 extra staff to cope with demand.

O2, which is owned by Spain's Telefonica, told the newspaper they had sold tens of thousands of units so far.

The company also predicted that "a couple of hundred thousand" more iPhones would leave its shelves over the Christmas period.

About 1300 stores around the UK were selling the iPhone on Friday morning. Several hundred customers lined up outside one Apple store in London waiting to get their hands on one, The Daily Mail reported.

O2 is the only company in the UK to legally use the handsets over its network.

A release date for the iPhone has not been set for Australia, but thousands of locals are thought to be using the handset already after importing it from overseas and using internet downloads to unlock the phone for use with domestic carriers.

More than 1 million iPhones have been sold in the US, where Apple recently announced plans to limit sales to two per customer and refuse cash payments to prevent people unlocking the phone and selling it overseas.

iPhone - where next?

The iPhone launch has sparked more debate in our office than any recent news from the tech sector. Advocates and detractors have been at loggerheads by the watercooler getting their point across....

What seems certain is that it will be the hottest christmas seller of '07 - the £269 price tag will deter few of the first wave of buyers. 200k unit sales in the first two months predicted by O2 CEO seems over-cautious, analysts have forecast closer to 400k units - closer to the 1m sold in the US during the first 74 days after launch. That stat made it the fastest selling phone in history - beating the RAZ-R by some margin.

However - phone sales are like games console sales- for a true reflection of demand we have to look beyond the initial PR-fuelled surge. Here is the nagging question...

- Will UK consumers be prepared to fork out £269 for a phone when they are familiar with paying zero for a subsidised handset? (even the Prada phone is available with a £35 tariff)

Anyone signing up today will be paying at least £880 for the phone and their contract - in return they get a measly 200 monthly free mins..

Wisely - Apple are creaming the premium from the market - but I predict that by March next year there will be a substantial price drop - maybe as far as £199. Why? it is widely known that O2 swallowed a 10-20% contract revenue share deal with Apple in order to guarantee an exclusive UK distribution deal. Given that they are making so little from the initial sale and contract - they must be looking for critical mass in terms of a user base, to achieve that, the entry price will have to reflect the 2nd wave demand before the competitors start to divert attention from the iPhone.

Rightly - O2 are in it for the long game, they recognise that iPhone buyers are not your regular phone users, they are the holy grail of HVC (High value customers) - the mobile users with higher average bills. As soon as Apple iron out the current teething problems (lack of flash player and 3G connectivity amongst others) usage levels should unlock excellent revenue potential for O2, from a user base that are very, very unlikely to switch network in current conditions.

So - don't be a surprised to see a price drop next year, but don't be surprised to see the iPhone dominate the 'must have' list for some time to come...

Apple patches security hole with iPhone update

Apple made the software available for download last Thursday, but on Monday it began pushing it out automatically to users via its iTunes updating mechanism.The iPhone uses iTunes to scan for security updates once per week, so users will gradually be offered this new firmware over the next seven days.

The update fixes a bug in the way that the iPhone renders TIFF (Tagged Image File Format) images.

The bug patch is a bit of a mixed blessing for iPhone enthusiasts. While it fixes a critical security vulnerability, that flaw had been used by iPhone developers in the unauthorized Jailbreak software that is used to run third-party applications. The update makes it difficult for users of brand-new iPhones to install Jailbreak.

Apple has been in a tug of war with some developers who have had to circumvent Apple's security measures in order to get their software to run on the iPhone. Apple initially wanted to prevent all third-party code from running directly on its mobile device, but in recent months the company has reversed course and promised to give developers a way to run their code on the iPhone. This software development kit (SDK) will become available in February 2008.

Apple's unauthorized developers have already found a way to stay ahead of Apple's latest software update.

Users with Jailbreak on their iPhone 1.1.1 systems are being advised to first install an application called OktoPrep, according to a post on the Unofficial Apple Weblog. This allows them to update to 1.1.2 without compromising their ability to run unauthorized software on the device.