So yesterday something very interesting happened, both for the end user, the mobile operator and mobile device manufactures. Today Apple announced that you can buy it’s new device, the iPhone 4, directly from it’s website; SIM free and unlocked. You may be asking why I find this so interesting, well this basically cuts the operator out of the equation. Put simply, I no longer have to be tied to an expensive monthly contract and miss out on new phone releases, I also don’t end up paying well over the odds for my handset over my 18/24 month contract at £45 a month (£810/£1,080)!! Although tbh £499/£599 for the device is not cheap 😉 but the benefits and savings far out weigh that initial upfront cost if you are buying it anyway.
I can now opt for a rolling contract on a month by month basis, no worries about adapting each months bills to suit my usage. I also don’t have to be tied to one operator and/or miss out on new phones, of which Apple will invariably release this time next year.
But what does this mean for the operator? I have to say that I have the utmost respect for O2 for stepping out first and ending the devil that has been unlimited data. Unlimited data has been a great driver for mobile data, however we can be greedy and when offered an unlimited platter and we occasionally overeat! This has caused huge issues for the operator and something needs to be done, data caps is one way of addressing this. Personally I think that a huge education issue exists for the end user and many are too scared to even use data, the ones clogging the network are high users … so you can’t taint everyone with the same paintbrush. I admit that I am a high user and I think that I should pay more then someone who uses less data then me. The answer is differing levels of pricing, I for one would pay more if that meant I had a better service.
So, O2 goes for the quick fix and caps data, offers us an early upgrade offer … then Apple undercuts them by offering the device SIM free and unlocked! That has got to hurt…will this mean that the operator is even closer to the dreaded bit pipe status? The mobile internet really has been the trogan horse for the operator … it lured them into a false sense of security with increased usage rates and took them by surprise with high bandwidth multimedia services, hugely popular websites, social networking and now device manufactures like Apple undercutting them…could we see similar offers from other device manufactures?
From an end user perspective this is of course great initially, however I do worry about data capacity issues and we have all experienced failed data services in someway. In an ideal world operators, internet companies and device manufacturers would come together and help build a stronger network … will this happen? Doubtful, but I do hope something is done soon as we have so many very cool data enabled devices to come to market and it would be a great shame to not be able to use them to their full capacity … and not forgetting there is money to be made from our data hungry appetites!!!
TechTelGirl 
It shouldn’t be long before Dell, Nokia and other device manufacturers follow this path.
Operators will become pipe providers as they should have been in the first place. WiFi, WiMax and LTE will have a major impact on data consumption.
As more devices come to market direct to users, prices will fall.
Vikram
Rolling contracts work for some people that are informed purchasers. However the network still plays a vital part in the value chain IMHO. Many people will baulk at the idea of paying £499 for a mobile phone, because they have been so used to the idea of a subsidised phone, when in fact the average smart phone costs around £300-400 SIM-free.
The iPhone 4 will be no different when it comes on contract and will be subidised accordingly to the tariff you sign up to. Networks also recognise and acknowledge customer loyalty, so while you may have to sign up to an 18 or 24 month contract or extend your existing contract, the reward is a vastly discounted device both now, and in the future. It’s cheaper to keep a customer than find a new one and networks realise that and will do what they can (within financial reason) to help you get that new phone of your dreams. On 30 day rolling contracts it is difficult to reward the customer as there is no sense of long-term commitment, even if they are a big spender.
As devices become richer in experience and more future proof (thanks to self-service upgrades) they become less disposable and more integral in our lives. While disintermediation maybe inevitable, the networks are doing their best to keep relevant with the end user. That may not necessarily be in the form of minutes, texts and MBs of data, but part of a greater ecosystem that has yet to be defined.
Totally agree Vikram … lets hope the prices fall!
Thank you for your comment Bob Le hat, very insightful and I completely agree that an operator is less likely to offer ‘incentives’ to consumers that are not locked to a contract. However, I do feel that although the mobile device is subsidised initially by the operator, the end user will still pay over £499 for the device, just spread over 18/24 months. Like paying interest on a loan … a clever operator will prevent becoming a bit pipe by offering its contracted users better offers as additional incentives to sign up to a long contract.
Just noticed that Dell Streak is £399 on Pay & Go at O2!
http://shop.o2.co.uk/tariffs/Pay_and_Go
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It’s a great initiatives of Apple, but we are in Indian subcontinent always feel lacking of Apple store.