Apple's pricing strategy is behind the 87 percent increase in the cost of a mid-range iPhone in the UK, according to O2.
On Wednesday, the operator, which is the exclusive carrier of the iPhone in the UK, said Apple is charging it the same price for this year's mid-range model as it did for last year's top-end handset.
O2's comments come after ZDNet UK pointed out that at launch, the cost of the new mid-range iPhone (which comes with 16GB of storage) was 87 percent more than the cost of last year's (which came with 8GB). Similarly, the new top-end iPhone (with 32GB) costs 72 percent more than last year's model (with 16GB).
However, O2 defended its price structure, saying it reflected the costs charged by Apple. "We have not raised the prices of the device," a spokesman for the mobile operator told ZDNet UK. "They are in line with last year's pricing, because the wholesale price we pay has not changed."
Apple's UK wholesale price for the midrange 16GB 3G S is the same as it charged last year for the top-end 16GB 3G, the O2 spokesman said.
While prices have increased for the mid-range and top-end iPhone in the UK, they have remained the same for customers of AT&T, the exclusive carrier of the handset in the US. There, the 32GB iPhone 3G S costs $299 (£180), the same price as its counterpart 16GB iPhone 3G from last year. The 16GB iPhone 3G S is $199, the same as last year's 8GB iPhone 3G.
O2 would not comment on the difference in Apple's wholesale prices between a 16GB and 32GB iPhone 3G S. In retail prices, on a SIM-free basis, the difference is just under £100.
Apple did not respond to requests for comment on its wholesale prices in the UK and the US by time of publication.
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O2 provides a cheaper deal on the iPhone than its US counterpart, according to the company's spokesman. He said a 16GB iPhone 3G S would cost $199, plus sales tax, for a customer on a 24-month, $70-per-month AT&T contract. The same handset would be free on a £45-per-month O2 contract of the same duration. At current exchange rates, £45 translates to around $74.
"AT&T may have reduced the price of the models, but we still offer a better value deal in the UK," O2's spokesman said.
The iPhone 3G S range will go on sale in the UK on 19 June. Aside from the storage upgrade, other enhancements include the addition of video capture and a built-in compass.
Talkback
Not at any price and certainly not what Apple wants to charge. I have had an IPhone since launch and upgraded to a 3G machine as soon as possible but I cannot upgrade with to a 3GS with O2 because my contract has not run put and the sim only price is just too much for poor quality video and a compass.
I suspect O2 and Apple will run into consumer resistance with their pricing but you never know
O2 should have trumped the competition with 'marketing'. A £15 tethering option could have been sold as 3GB Data usable across the EU. Most customers wouldn't have used/needed this except for Summer Holidays, but the perceived benefit could have been made up from the extra calls and the cost of EU-UK/UK-EU Received calls, by customer then willing to use their iphone abroad.
You would assume the cost of connecting your data to the Internet aboard is the same when roaming, as someone who subscribes to that local network, so why such a massive difference. The connection is terminated at the mast to an internet point of presence, and then sent acrosss europe as the usual internet traffic (not the radio mobile phone network). Therefore there should be little cost variance between any data across the EU.
Anyone who knows how this works in detail please comment.