Apple's iPhone 3G raises questions

Nathan Burley, analyst at Ovum, claimed one of the big stories was massive price drops for iPhone 3G. In Australia, speculation suggests that Vodafone will be offering the device for $0 upfront on contract or available outright for prepaid users. Telco rival Optus is already taking reservations for the iPhone and customers can place a $50 ‘refundable holding deposit’ that will guarantee ‘priority queuing’.

So how much demand will there be for the iPhone 3G? Will Three and Telstra suffer? Burley said that estimates vary on the number of iPhones already in Australia, with the most averred enthusiasts already possessing iPhones. Burley was unable to say whether this would slow the rush for the new iPhone.

Burley believes there is no doubt that the iPhone 3G will follow the success of its predecessor, especially since it is the first official iPhone to launch in Australia. “All the leading handset vendors know that the handset game is more than just selling pieces of hardware. Apple understands this perhaps even more due to its iPod success that was built around a mix of brand, fashion, DRM, iTunes and its music store,” he said.

He said building a strong ecosystem of its own and third party applications supported by an Apple store for iPhone 3G will be crucial. “Apple also announced new initiatives to support enterprise functionality after completing trials of new software with various companies. With a supremely effective and refined solution, Blackberry is the largest incumbent,” he said.

According to Burley, while specific users will want to use their iPhone for work activities, it unlikely that enterprises will have company-wide adoption of iPhones. Additionally, Apple, in a reversal of its previous position, is championing 3G over EDGE, which Burley doesn’t believe will help rivals such as RIM, with its Blackberry still EDGE-only.

While Australians lick their lips at the continued iPhone frenzy, Burley warned Australian rural users to be beware - although Vodafone and Optus are expanding their 3G networks in the 900MHz frequency band, the iPhone 3G will not support these networks.

“Coverage will be limited to existing 2100MHz 3G coverage and outside that area GPRS data performance will leave users unsatisfied. The device does support Telstra’s Next G network but as yet, Telstra has not announced it will be offering the device,” he said.

According to Burley, there is a long list of functionality still not supported by the iPhone 3G and it is still not a perfect device. “The form factor is actually slightly bigger than its predecessor. Never the less, the iPhone 3G is likely to be top of many consumers wish list.”

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