With rumours floating round the blogosphere that Apple may (finally) launch a 3G iPhone in the first half of next year, what happens if you’ve snapped up a first-generation model here in the UK on an 18-month contract? Under usual conditions, you wouldn’t be able to upgrade to another handset until at least 12 months in, which would be extremely frustrating if an all-new improved iPhone comes out in the meantime.
Mobile industry consultant Jon Mulholland reckons Apple and O2 have already got the problem licked, though, suggesting in an interview with SMS Text News that O2 will actually encourage customers to upgrade to the 3G iPhone as soon as it comes out:
“Usually networks prevent handset upgrades during contract term because the cost of the device is subsidised in line rental over the lifetime of that contract. This is not the case with the iPhone, as all of the handset cost has been paid upfront by the customer at point of sale. If a customer wants to upgrade from the current iPhone to a newer version less than 18 months later, where is the downside for O2? In fact, why not happily upgrade customers to a newer iPhone (taking another small percentage of the hardware sale in the process) and use that opportunity to reset and extend their existing 18 month contract?”
It sounds sensible enough, and would ensure that there’s not as big a rumpus in the UK when the 3G iPhone is released as there was in the US when Apple slashed the iPhone’s price just a couple of months after its launch. Alienating your early adopters, as the company has learned, is something to be avoided…
(via SMS Text News)
When they say “encourage” they better mean “discount”. I love my iPhone, but as a loyal apple customer I’ll be annoyed if I’m asked to pay full price for an upgrade so soon after shelling out for the phone.
I think that O2 should let iPhone Contract customers purchase the 2nd Generation iPhone (when or if it comes out) for it’s Apple RRP (lets say £299 this time) and then reset the customers contract from ‘date of purchase’ to another 18 month contract. In turn, O2 will be keeping their customer for a longer period. O2 will not be getting any percentage of the iPhone device profit, so the only thing O2 have to make profit on is getting people to sign up with them, and what better way to offer a new contract for iPhone 2nd Generation for 1st Generation iPhone O2 contract customers.
If O2 do not let existing customer change immediately to a 2nd Generation iPhone contract, they will loose customers coming back. Who’ll want to buy the 2nd generation iPhone 12 months after it has been launched by Apple (when your 18 month iPhone contract has just ended in May 2009!) on an even longer contract? By then we’ll have found away around getting an iPhone 2nd Generation on a contract and have no need to stay with O2. (just like the people who jailbreak their 1st generation iPhone already).
However, you have to remember that manufactures such as Nokia, Samsung, Motorola release new and updated mobile phones every month with no offer of a free or discounted upgrade to their newer model. If you already have their previous model, you have to remember you have entered into an 18-month airtime agreement with O2 so legally you are tied in, with no early upgrade until month 17.
I do think you have a valid point though, as all other mobile phone contracts with mobile operators do offset the price of the handset and include it as part of your mobile agreements meaning they have to actually buy the phone, but in this case with the Apple iphone you have already paid for the device in full. – I do strongly believe O2 been O2 will have some sort of offer for us pre-existing iphone users, but I also think it’s wise and healthy to put yourself in the mindset that you may have to buy the 3G iphone all over again.
On the flip side of this you also have to look at Apple, they do love to set fixed prices, and fixed terms and conditions a sort of ‘do as I say’ attitude especially with the iphone, in all honestly O2 better be prepared for its hands to be tied on who gets and upgrade and how much.
Is there a release date for these yet?
Upgrades? I think there’s some confusion here. The iPhone you effectively buy and then have a contract to use it. So the iphone is not like other phones in the UK in that there is no upgrade policy in place with the contract.
So when the 3G is available expect just to buy the phone, full price, and switch your service to that phone with no alteration to you new contract. When your contact runs out you renew it for another 18 months - the contract would just apply to what ever iPhone you where using it with. I would be very surprised to see any discount for existing iphone owners as that’s the equivalent of getting money off a new laptop or car just because you’ve owned the same brand before.
Stew Dean,
You have a good point, but considering the price of the iPhone in the uk, along with the over priced contract, apple an o2 are going to have many angry loyal customers if no subsidization is offered look what happened inthe u.s when the 4gb was dropped. I understand that apple prob won’t offer anything for us current iPhone users, but I feel that letting us upgrade before our initial 18months is up is the least they can do.
Here’s the answer. We’re getting a free upgrade (£45 tariff up)
http://www.o2.co.uk/iphone/existingiphonecustomers
What about those users who entered into a 18 month contract with some other handset like Blackberry RIM. Well, it would be punishing newer consumers like them …as one cant upgarde till the 17th month.. There is a clause in the contract mentioning if your monthly bill is more than 40 pounds over the tenure you have had the contract till date, then you are eligible for an early upgrade.. wonder what will happen for customers who have enetered a 75GBP 18month contract on Blackberry RIM. Will O2 keep punishing people who want to upgrade..to the new iphone for 17months??
i have been with O2 for over 10 years i am due to renew again in October after 18 month contract runs out,i have asked if i can renew a few months early they say i have to wait untill September i want to upgrade like now,but they still say have to wait,i don’t think i want an iphone as the tarrif i am on at the minute is only £40 a month i get about 800 minutes 1000 text and sat/sun/monday all calls are free,plus unused text/minutes roll over each month too.
yet the iphone will not work on this tarrif,so sod that £45 for a month and less minutes/text no free weekends no roll over.
o2 need some sort of loyality scheme i think 10 years plus is a long time with them.
I have been with O2 for 10 years and wanted to ugrade my Xda early (16 weeks away from contact end) to an iphone. I offered to buy out the contract to boot!
O2 advise that Apple have instructed them to NOT allow early upgrades to the iphone. However, they told me this AFTER I had gone through the upgrade process, been accepted, got an order code, delivery reference AND paid £59 for the iphone - as well as take a day off work for delivery of the iphone..!
I only found out the order had been ‘cancelled’ by O2 when, after six hours of waiting for delivery, no iphone had arrived and I called O2 for an explanation.
So now I have to wait until 4th March to qualify for a free upgrade. After 10 years with O2, Im voting with my feet and moving to a mobile company that treats customers like human beings - and keeps them fully informed without misleading them.
Oh, and I’ve sent O2 an invoice for my time and trouble.