The iPhone and the Emperor's clothes

I'm reluctant to mention the word iPhone in this editorial given my somewhat disparaging remarks only a few weeks ago about the device being crippled by its lack of 3G.

However, since this upgrade is seemingly due sometime this year (see below), perhaps it's time for a little reflection. Certainly the lack of Apple's presence at the recent Mobile World Congress (MWC) was surprising given the praise heaped upon it--Arun Sarin included.

But not all have been seduced by the slick PR surrounding the iPhone. One notable commentator, John Strand of Strand Consult (a man never short of words), noted that Apple's direct exposure to the cellular industry at MWC would have many realising that the emperor was not wearing any clothes!

"The iPhone is not a success in Europe and the question is whether the product has in actual fact received more millimeters of newspaper coverage than the actual number of iPhones sold in Europe," said Strand (and here I am perhaps proving this point).

But, according to Matthew Key, the chairman and CEO of O2, the iPhone is having an overall impact on his European business. "It clearly drove more traffic into our stores. The iPhone was important to us, but we actually drove some significant sales towards our other products, so we're very pleased with the iPhone."

Scant product loyalty from a company that fought hard to get the iPhone distribution rights only a few months ago.

While O2 might be willing to play fast and loose, it needs to nurture the Apple relationship, if you believe what it has achieved for O2: an ARPU that is 30 per cent higher than an average postpay user, customer satisfaction levels that are claimed to be the highest of any device that O2 U.K. has sold and, critically, around 60 per cent of its iPhone subscribers have migrated from other networks.

This last statistic, even if it's only a half truth, must have other European, non-iPhone, operators beating their heads against a very solid wall.

Perhaps Apple doesn't need a lavish stand at MWC today--but the cellular industry is littered with the debris of shooting stars that came to market with a one-hit wonder. -Paul

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