Analyst slams UK iPhone strategy

Edge and Wi-Fi may not be enough for UK market, says Ovum

Analysts have described Apple's iPhone strategy in the UK with carrier O2 as "inadequate " and likely to "frustrate a lot of users".

Martin Garner, director of wireless intelligence at Ovum, criticised Apple for not making alterations to the device in light of feedback received since its launch in the US, most notably the non-removable battery and lack of 3G.

Apple chief executive Steve Jobs claimed at the UK announcement yesterday that the lack of 3G was down to the heavy power draw of the chipsets, which would dramatically reduce the battery life of the phone.

However, Garner maintained that European users are accustomed to very good coverage and will require excellent Edge and Wi-Fi coverage if this is not to be a problem.

O2 has promised just 30 per cent Edge coverage across the UK at the iPhone's launch on 9 November.

"AT&T was heavily lambasted as the weak link in the chain when the iPhone started shipping in the US earlier this year. O2 looks to be heading for the same fate here," said Garner.

"O2 said that its research shows that up to two thirds of iPhone usage would be on Wi-Fi either at home or out and about.

"Certainly the [hotspot] deal with The Cloud is good for users and will help in urban areas and in people's houses, but it will not mean much in rural areas."

Garner's predictions were not all doom and gloom, however. "The tariffs look sensible. It is good to see O2 using unlimited data plans, and it promised that unlimited data would be made available on its other contract plans shortly," he said.

"One small niggle is that many users will have to accept fewer voice minutes than their existing £35 plan, or buy a more expensive plan, if they want to use an iPhone."

Garner listed the important factors that need to be considered when it comes to the deal between O2 and Apple:

• How much is this all costing O2 and how long will it take to break even? This will be of great interest to the City ahead of wider European launches due from Q1 2008
• Steve Jobs said that the choice of O2 was cultural more than economic. Yet we understand that it is not using O2 in Germany, and is using a different carrier again in France. Something does not ring true here
• Various handset vendors have started producing user interfaces that head in the direction of the iPhone, and it looks as if a new device segment will emerge with the iPhone heading the charge. But how big is this segment and how competitive will the other vendors be?