iPhone shakes mobile market

Anthony Caruana
15 July, 2008
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The iPhone 3G has arrived. There have been midnight store openings, millions of words written and plenty of water cooler discussions. So, has the world changed in some way? Or, at least, the technoverse in which many of us live and work?

Apple has announced that over one million iPhones were sold over the opening weekend. When the first iPhone was released it took several weeks to reach that milestone but given that iPhone 1.0 was a US-only event it’s hardly surprising that record was beaten this time around. More interesting, in our view, is the number of downloads from the App Store — ten million on the opening weekend. Now that’s a market change worth looking at. All of a sudden, a new software distributor hits the market and ten million units have shipped. Sure, some of those will be freebies like the excellent iTunes Remote — but we have to admit to spending some hard-earned on Texas Hold ‘Em and Monkey Ball. We’re sure that we weren’t alone on that score.

Life for resellers is a little different. We did some reconnaissance over the last couple of days through the various Telstra, Vodafone, Optus and Apple dealers and discovered a few things. Stock allocations were quite thin. Of the million units sold globally, we doubt that more than a few thousand were made available in Australia. One Optus Premium dealer we spoke to was allocated just six units. A large Apple Premium Reseller had about 50 and they were only available to business customers (those with an ABN) with a limited range of buying options (no pre-paid). The Optus stores we visited seldom had more than 100 units allocated and all were sold on the first morning.

When the next shipment hits our shores, we expect those that were disappointed this time round will make their purchases with the benefit of some more time to really digest the plans on offer.

Just to get some sort of idea of what impact the stock shortage of iPhones brings, a quick scan of eBay reveals that 8GB unlocked iPhones are selling for over $900 and unlocked 16GB units are topping $1300. To put that in context, Optus is the only local telco selling iPhones on pre-pais with an unlock option that adds $80 to the cost. The eBay prices, with plenty of bid traffic, are adding a 20 percent-plus premium to those prices.

Another piece of the iPhone puzzle is what this is doing for sales of other handsets. In response to the iPhone and in an attempt to hang on to existing customers, Three has increased the value of many of its capped packages and increased data allowances for some of its wireless broadband products. One consumer we spoke to even managed to get an Internet Key at no charge to their existing mobile broadband package without any extra financial commitment. If Three manages to join the iPhone gravy train in a few weeks time, as widely tipped, then we’re hoping existing customers will be able to add the handsets to Three’s current, excellent-value deals.

With the first round of iPhones largely sold out it was interesting to see which mobile phone stores were still busy. Telstra’s new flagship T-Life store in the heart of Melbourne was filled with people and the iPhone demo unit was popular. Three’s store on Elizabeth street was chock-a-block while the Vodafone store two doors down the street was almost deserted. Most of the Optus stores we checked out had a steady stream of customers.

Optus seems to be the only reseller that planned for the sell out with nice signage in place indicating that there were no iPhones available.

When will the next lot of iPhones be available? One Apple reseller hoped that it would be about three weeks. At least that’s what Apple was telling them. A customer service rep at Optus suggested four to six weeks. Either way, that potentially leaves enough time for Three potentially negotiate a deal with Apple and to undercut the plans offered by Telstra, Vodafone and Optus. We’re hoping that Three realise that the iPhone isn’t just another mobile phone. It’s an internet communications device that delivers the most benefit with a constant connection.

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