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Apple’s international iPhone 3G plans – How unlimited data will change the wireless landscape

June 27, 2008 by Will Park - 7 Comments

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Apple’s iPhone 3G has again frenzied the world in anticipation for a consumer electronics product launch second to none. With last year’s iPhone launch craze in the US (and, to a lesser extent, in Europe), Apple will be hard pressed to one-up itself with the next-generation iPhone 3G’s launch on July 11. But, it’s not just about showmanship and drama. No, Apple’s got bigger plans for the iPhone and how it will affect the global wireless industry.

In-store activations
Let’s take a look at Apple’s iPhone 3G purchase policies. By now it’s a given that Apple and AT&T will be forcing the AT&T iPhone plans upon anyone looking to walk out of an Apple or iPhone 3GAT&T retail store with iPhone 3G in hand. That means there are likely going to be significant lines as retail employees struggle to activate mobs of iPhone 3G handsets. But, why is Apple doing this?

As more information starts to trickle out from international iPhone 3G carriers, we’re starting to see that the iPhone 3G will be offered with price-tags similar to what we see in the US. The catch is that the US dollar is significantly weaker than the Euro. So, Europeans looking to grab their €149 iPhone 3G will actually be paying the equivalent of about $220 USD. Now, that makes for a seriously attractive US iPhone 3G market for anyone in Europe.

And, therein lies the reasoning behind Apple’s insistence that all iPhone 3G handsets be activated in-store. With the original iPhone, a significant percentage of the global iPhone stock was routed in to the grey market. The iPhones were purchased in the US and shipped overseas to be unlocked and used on international GSM networks. While Apple almost welcomed the international grey-market demand with the original iPhone, the next-generation iPhone 3G’s surprisingly low price-point in the US could be problematic for overseas carriers.

So, in an effort to completely kill-off any profit incentive for international importers to buy US iPhone 3G handsets and sell them in Europe, Apple has required that the handsets be activated and tied to 2-year contracts before they leave any store. It’s a hassle for Americans, but for Apple it’s all about the bottom-line.

Changing wireless landscape
Innovative pricing and POS (point-of-sale) strategies are one way that Apple is changing the wireless industry. But, it doesn’t end there.

Following the original iPhone’s launch, carriers around the world were lining up to get iPhone 3Gthe next-generation iPhone on its own network. And, that left Apple and Steve Jobs in a unique position to make certain demands from carriers. Perhaps at the cost of giving up their lucrative revenue-sharing model, Apple pushed for all iPhone 3G carriers to offer flat-rate data plans – a move that many carriers have resisted for as long as possible. According to Apple Insider‘s sources, Apple wanted to push the iPhone 3G as more of an internet browsing platform than just a run-of-the-mill smartphone. And so, rather than demand revenue kickbacks, Apple apparently demanded that carriers forgo their more profitable per-unit data plans with unlimited, all-you-can-eat data plans.

The data plans are still more expensive, on average, than their US counterparts, but unlimited data plans are a step in the right direction.

White Apple iPhone 3GMore than just a smartphone
Apple isn’t looking to just change the wireless industry views data revenue, but it is also looking to redefine what the iPhone is. By pushing data services like unlimited data plans and bundled WiFi HotSpot access, Apple wants its iPhone-carriers to present the iPhone 3G as a true mobile internet solution.

While many newer smartphones and third-party web browsers offer desktop-like browsing experiences, pricey data plans will keep their use to a minimum for some. By requiring that all iPhones will have access to unlimited data plans, Apple has essentially ensured that every single iPhone on-market will be used to its full potential

So, will the iPhone 3G prove to be the spectacular, industry-changing handset that many believe it will be? Or will Apple’s demands for higher-cost specialized services end up hurting sales? We’ll have to wait and see. Who’s ready to buy and iPhone 3G?

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