Still wait-and-see for Apple’s iPhone 3G
By Lawrence Casiraya
INQUIRER.net
First Posted 17:31:00 06/10/2008
Filed Under: Technology (general), mobile phones, Telecommunications Services
MANILA, Philippines -- Will the iPhone finally give third-generation or 3G mobile services in the country a much-needed boost?
Apple's newest iPhone will now support 3G (also HSDPA or 3.5G), answering widespread clamor for faster network support. But more significantly for local users, the iPhone will be officially carried by Globe Telecom.
It could make up for the wait-and-see situation on whether the iPhone can reap immediate benefits for Globe. Although already in place more than two years, operators -- including rival Smart Communications -- have yet to demonstrate widespread adoption of 3G.
Both operators have not been divulging official numbers of their respective 3G subscribers.
"Overall, 3G applications haven't fully matured in the Philippines and consumers are still waiting for an enhanced 3G service application and more importantly, a significant price reduction before switching from voice to 3G," said Benedict Ferrer, senior analyst for XMG Asia Pacific, which monitors the local telecom industry.
Telecom companies, Ferrer said, are now faced with the tough reality of shaping consumer behavior by transforming a predominantly "text and voice" market to adopt 3G.
"Globe's aggressive product and service bundling of the iPhone will not have a significant impact in their overall profitability due to the size of its target market," Ferrer said, answering questions from INQUIRER.net via email.
Another significant factor is Aple’s decision to lower the price of the iPhone -- $199 for the 8-Gb model and $299 for the 16-Gb model.
Globe, however, is not yet saying what pricing model it would adopt or whether it will subsidize the phones via subscription plans. In today's announcement, Globe said it would make the iPhone available for both prepaid and postpaid users.
But eventually, Ferrer believes it all boils down to how Globe will price its 3G services -- including Internet surfing or push email -- bundled with the iPhone.
Based on XMG's first-quarter study of spending habits of Philippine consumers, prices of telecommunication services constitute one of the biggest hurdles in availing value-added services such as mobile TV and 3G.
"Because of this, the uptake of such services will be hampered indefinitely until such time telecommunication companies drive prices down to levels that are acceptable to consumers," Ferrer said.
Before Globe's announcement, the first version of the iPhone has been sold unofficially by local retailers through the gray market. Apple said it would sell the new iPhone in 70 countries -- a significant development, according to Steven Hartley, senior analyst for London-based Ovum.
"From a corporate perspective, the drop in price and dramatic expansion of the (legal) geographic availability of the device will provide a major, greater boost to volumes," Hartley said in comments sent via email to INQUIRER.net.
"The geographic expansion is also the only way to ease the revenue leakage caused by the gray market that sprung up around the first iPhone," he added.
The new iPhone's improved features also make it a closer competitor to handsets like the Blackberry and Nokia's high-end smartphones.
"Admittedly, Apple is not targeting the entire device market, so their share of the high segment will be more," Hartley noted, "But it is important to put Apple's marketing presence in context with its size relative to Nokia and the others."
Furthermore, he said a "halo effect" surrounding the first device helped vendors to seize customers looking for iPhone-like capabilities, but on a different network or for a smaller budget.
"There is likely to be a somewhat similar effect this time around," he said. "However, this time Apple is competing in more markets at lower price points (again subject to price plans). Therefore, we feel that this time the potential for disruption is greater than before."
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