The iPhone 3G S O2 upgrade backlash continues.
O2 iPhone 3G customers, my good friends included, are today experiencing a massive anti-climax. We all know business is business but O2 have dropped the ball this time and wiped out most of the goodwill they built up with iPhone fanatics in one evening. As soon as O2 loses exclusivity many of these customers will jump ship, costing O2 bucket loads of cash.
Yes, longer term contracts that tie you in to a specific phone are normal in the UK but the O2/iPhone situation is different for the following reasons:
- O2 has quietly changed it’s policy from the previous rules on iPhone upgrades causing customers to feel cheated. Whatever the economics behind the decision, O2 have managed customer perception poorly and this will cost them business in the longer term.
- Other highly sought after phones are announced months ahead of launch (e.g. Nokia N97) so potential buyers can plan their new phone purchase accordingly. Just last week O2′s own staff were advising customers that no new iPhone was coming this year and encouraging them to sign up to 18 month contracts. I was told this 13 days ago in an O2 store when my iPhone 2G died and I was faced with a £140 repair bill or, as encouraged by O2 staff, I could sign up for an iPhone 3G. Thankfully I declined otherwise I’d be spitting blood today. How many people bought an iPhone 3G in the last 3 months based on O2′s store staff advice that no iPhone is coming and will now effectively have to wait a year until they can afford to upgrade?
- O2 worked hard to secure iPhone exclusivity in the UK as it would drive thousands of new, high value, early adopters to switch to them from rival networks. It worked, but it’s these customers who are suffering the most from this poor upgrade policy shift. O2 should have realised that they are the people who would most expect to have the latest and greatest iPhone in their pocket at all times. Their O2 loyalty has now been wiped out.
- The iPhone 3G only cost $173 to build in June 2008 and that cost will have fallen over time as economies of scale increase. Are O2 over playing the subsidy argument? Surely they could facilitate a trade in scheme and sell refurbed iPhone 3G’s at a discount on PAYG and cheaper pay monthly deals to drive more customers onto their books?
- 12 months ago O2 would have been aware that a new iPhone was due in June 2009. Handset roadmaps plan at least 18 months into the future. They should have factored this in to their iPhone 3G tariffs to allow for the huge demand for iPhone customers to upgrade. O2 could also have structured the iPhone 3G S prices to cover their lost revenue in an easier to swallow, transparent way. They knew that the majority of iPhone users would want to upgrade and should have handled this properly. The implied £360+ cost for someone with 12 months left to run is similar to the cost of a PAYG iPhone despite the fact that this customer has already paid 6 to 12 months of line rental plus in many cases an upfront payment for the phone, and therefore covered a big chunk of the subsidy already .
Are you a recent iPhone 3G customer? What do you think about the upgrade policy? Please add a comment below.
Related posts:
Pingback: Carphone Warehouse To Offer Cashback For Old iPhones!
May not all be O2′s fault – Apple are pretty maverick in the way they deal with operators/suppliers etc. and they love to keep secrets then spring surprises. Anyone into Apple tech in general would have had a good idea that waiting would get them a new model, but sure, it’s not fair on the others. Rather like the mis-selling of the insurance.
The upgrade policy is such a shame. The 3GS is beautiful, I love it, and I feel for those who have to wait for the new bells and whistles.
I purchased an iPhone 3G one month exactly before the release of the iPhone 3G S, I was told by O2 staff that there would be no new iPhone coming out, just a software upgrade. I feel totally ripped off by O2, as soon as another network starts to sell the iPhone, I will be leaving O2.
I don’t blame you Jason. O2 has lost a lot of goodwill with iPhone customers over this. I was told the same by O2 store staff despite my protestations as a mobile phone blogger but they pushed really hard to get me onto a new phone and contract. Thankfully I resisted! There are strong rumours that the 3G iPhone will launch with Orange and Vodafone before Christmas. O2′s days are numbered.