iPhone in the UK: Apple, O2 take on iPhone questions

Editor’s Note: The following article is adapted from reports at Macworld UK.

With Apple announcing both a launch date and a mobile partner for the U.K. launch of its iPhone, the focus on Tuesday turned to other iPhone matters during Steve Jobs’ press conference in London. Joined by Matthew Key, CEO of iPhone service provider O2, Jobs fielded questions on everything from the phone’s £269 price tag to its features and capabilities.

The iPhone will begin shipping in the U.K. on November 9 through Apple retail stores, O2, and Carphone Warehouse, putting the device into reach of 90 percent of the U.K. population, Apple and O2 claimed. The companies believe most of the U.K. will be within 20 minutes drive of an iPhone outlet.

“We’re thrilled to be partnering with O2 to offer our revolutionary iPhone to U.K. customers,” Jobs said. “U.S. iPhone customer satisfaction is off the charts, and we can’t wait to let U.K. customers get their hands on it and learn what they think of it.”

“Our strategy at O2 is to bring our customers the best products and experiences,” O2’s Key said. “The iPhone is a breakthrough that is changing the way people use their mobiles forever, and we’re thrilled to have it exclusively for O2 customers in the U.K.”

Price

Steve Jobs outlines the plan for the iPhone in the UK.

In a similar offering to that made in the U.S., the device won’t be available under any subsidy and it will cost consumers £269 for the handset under an 18-month contract with O2.

The £269 price point is higher than the price in the U.S. Jobs defended the situation saying: “The majority of the extra cost is VAT. In the U.S. sales tax is not included in the price. It is also more expensive to do business in the U.K. But we have tried to be as aggressive as we can.”

Asked whether customers used to getting a free phone with their contract would be prepared to pay such a high price for the iPhone, Key said: “This is a great mobile but it’s not just a mobile phone. Yes the phone costs £269 but it’s more value as an overall package—clearly we think it is a compelling package.”

Key added that his company’s research shows: “80 per cent of our high value customers want the iPhone.”

Tariffs

The iPhone will be available under three tariffs with prices set at £35, £45 and £55 per month. All three plans offer free unlimited data traffic—users pay for the device, their calls and messages. “There is no need to worry how much you are using the internet,” explained Key. The unlimited fair usage extends to no more than 1,400 internet pages a day, he added.

A U.K. network of 7,500 Wi-Fi HotSpots (via the long-established network, The Cloud) will also be available for free to users signed up to one of the three tariffs. O2’s Key explained that O2 would be extending the Wi-Fi access with The Cloud to all its customers from 1 October.

EDGE verses 3G

The phone will work on EDGE networks and will support Wi-Fi. Jobs discussed 3G and said he believes Apple has a superior solution. Jobs stated that battery life is a problem with 3G. While he admitted that EDGE is slower than 3G for Web browsing, he claimed that Apple’s solution to the problem: adding Wi-Fi capabilities to the phone is the best solution.

Steve Jobs talks about the EDGE's advantage over 3G.

“Wi-Fi offers better connectivity,” said Jobs, adding: “What we did, rather than risk running battery life down, is add Wi-Fi. We’re sandwiched between 3G with more energy efficiency and a faster Wi-Fi network.”

However, O2 CEO Key revealed that when the device launches in the U.K. on Nov. 9 just 30 per cent of the U.K. will be enabled for EDGE on the O2 network.

Pixels

Jobs was also called to defend the 2-megapixel camera in the iPhone. Many phones on the market have 3-megapixel or higher cameras. Jobs explained: “It’s not more megapixels that make a better picture. The main problem is the sensors in camera phones are too small and don’t let in enough light. Turns out that with enough light our camera takes great pictures.”

With regard to whether Apple would open up the iPhone to the development of third-party applications, Jobs said: “This has already started to happen. It is possible to design applications for the iPhone using Web 2.0 standards.”

The Apple CEO conceded, however, that “some want us to open up the iPhone so that you don’t require an Internet connection to run applications,” but defended the current situation.

“If you use a PC, you’ll know that viruses, and conflicts with other programs, cause problems,” Jobs added. “You might be happy to trade off reliability on a PC but you wouldn’t want to do that with a phone. If your phone isn’t working, you’d be pissed. And you should be. People have a higher standard for their phones than their PCs. We want to do the right thing by our customers.”

Hacks

Another issue raised in questions was that various hacks have emerged that have made it possible to use the iPhone without being on the approved network. When asked what his company was doing to stop this situation, Jobs responded: “It’s a cat and mouse game. We play it on iPods with DRM. We try to stay ahead. I’m not sure if we are the cat or the mouse. People will try to break in, and it’s our job to stop them breaking in.”

iPod touch

O2’s Key was questioned on whether he was aware of the iPod touch when he signed the contract with Apple. While he didn’t elaborate on the situation, Key did confirm: “We are working with Apple because we know they never stand still.”

“The touch and iPhone are different segments of the market place,” he said.

Jobs added: “One’s a phone and one’s not a phone. They are pretty different products. The iPod touch teaches the experience. iPod touch users will realize ‘I could have it all and combine my phone with this iPod.’ The iPod touch is training wheels for the iPhone.”

Price drop

Apple’s recent decision to cut $200 off the price of the device in the U.S. also came up in questions. Asked if a U.K. iPhone purchaser could expect a similar rebate to that offered Apple’s U.S. customers when that discount emerged, Jobs stressed the fast-moving nature of the technology market and warned of no guarantees.

The company remains focused on the iPhone. “We’re already working on the next iPhone, and the one after that,” Jobs said, adding, “And we’re already thinking about the one after that.”

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