Phone model updates

It is one of the most traded phones on our exchange: the original iPhone. And now the much awaited 3G iPhone has just been announced last night by Steve Jobs at the WWDC in San Francisco. It is half the price at US$ 199.- with 3 G capability, and a GPS chip. It is black, but you can avail of a white option if you were to opt for the more expensive (US$ 299) 16 GB. The sound quality is vastly improved too.

Apple has plans for shipping 10 Million iphones by the end of the year. Figures so far show that they have shipped 1.7 Million 1st Q of the year and probably an equal amount for the 2nd Quarter. So, they need to improve for the remainder of the year if they are to achieve their objective. And it seems that they are very serious about it: we have heard rumors that Foxconn (the Chinese contract manufacturer who is making the iphones) is ramping up to deliver 3 Million iPhones for the month of June.

And to move these volumes, Apple has finally accepted the industry wide practice of handset subsidy: how else are they able to deliver on an end user price of US$ 199? No panic for Apple, since the subsidy will be at the cost of the operators who are selling the device. However, we have heard that they are abandoning the unique revenue share deals that they had with the network operators such as AT&T, and O2.

What does all this mean? Well, for starters, Nokia - which has sold a few million N95's in the UK alone, stands to lose some market share in the high end segment. This is no small matter, since this is where they derive much of their profit. As we write this blog Nokia stock is trading at its 52 week low.

Secondly, it will be interesting to see just how many of the iPhones will be unlocked and sold on the grey market; our guess is that the estimate of 1 in 4 for the first generation will be beaten with the 3G iPhone. Unless, and it is not clear yet how they will do it, Apple and the networks selling the iPhones deploy some heavy handed tactics to ensure that this does not happen. One thing for sure, if there was a lot of demand for the 1st generation iphone on the parallel market at US$ 399, there will be a riot for the 3G at US$ 199. Let us hear your thoughts and experiences out in the marketplace.

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