Prepare For The iPhone Price War

Apple iPhoneThe cost of smartphones on a contract in the UK could actually go up if networks start an iPhone price war.

Analysts have warned that carriers will need to raise subsidies on the Apple iPhone as they fight it out to gain customers with lower prices; at the same time, the price of other mobile phone handsets will be forced to increase as a result.

As you all likely know by now, on Monday, September 28th, Orange announced that it now has the right to begin distributing the iPhone before Christmas, followed by Vodafone who announced the next day that it too had secured a similar arrangement to start selling the handset in early 2010 – there are now expectations that both T Mobile and 3 may soon announce similar deals with Apple; which would make five major carriers compete for iPhone customers against one another.

Neil Mawson, Strategy Analytics director of wireless practice, said; “All the operators will have to do something. The UK is the most important smartphone market in Europe,” adding, “The biggest issue will be that subsidy budgets will be ramped up. You could see subsidies moved from other vendors, such as RIM, HTC and Samsung, which will increase the price of their handsets.”

It is rumoured that O2 will be looking at alternative mobile phones to help fix their revenue come the fall out, including the Palm Pre.

Orange has not yet released tariff details on the iPhone made only a brief comment, stating; “It is business as usual on all of our devices.”

Vodafone, the most recent network to announce it will be selling the iPhone, declined to make any comment whatsoever.

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