AsiaOne : Want an iPhone? Don't expect it to come cheap

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http://www.asiaone.com/Digital/News/Story/A1Story20080616-71087.html

Want an iPhone? Don't expect it to come cheap

By Tham Yuen-C

The bad news first: When Apple's "souped up" iPhone model hits Singapore later this year, first-off-the-block seller SingTel is unlikely to throw in a hefty subsidy.

But the good news is that once the other major telcos - StarHub and M1 - get their hands on the coveted 3G touchscreen cellphone, prices are likely to fall.

Analysts here gave this crystal-ball prediction.

In the United States, the 8GB model is priced at US$199 (S$274), while the 16GB model goes for US$299.

In Britain, the iPhone 3G is even being given free to mobile subscribers who sign two-year contracts.

SingTel, which will be the first here to sell the phone, is keeping mum on its pricing.

But telco analysts and market watchers believe the phone will not be cheap initially. They predict the price will be between $500 and $1,000 for just the 8GB model.

In the US, the low pricing is possible because of heavy subsidies by AT&T, which analysts have pegged at about US$250 per phone.

Subsidies are a lure to allow phones to be cheaper for consumers willing to sign term contracts.

Here, telco subsidies typically range from $100 to $500. But the more popular a model, the less subsidy is needed. Since the iPhone "sells itself", it is not likely to be heavily subsidised.

Already, Vodafone in Italy has taken that stance. It will sell the phone for 499 euros for the 8GB version and 569 euros for the 16GB one, approximately $1,058 and $1,206 respectively.

SingTel's pricing will probably be similar, according to a report from research house Casenove.

"It will likely be offered with as little subsidy as possible initially, since there will be users out there who just must have the iPhone," said its analyst Lai Voon San.

In Britain, O2 will give away the 8GB iPhone free to customers who sign up for its high-end phone plan that will cost at least £45 (S$120) a month.

But in Singapore, SingTel and the other telcos will likely take a different tack.

Analyst Melissa Chau from research firm IDC said the phone will probably be priced to be competitive with other models in the same high-end category.

For example, the Samsung Omnia with 16GB of memory, seen as a direct rival to the iPhone, will sell for $1,098 here later this month.

In Britain and Australia, expensive devices are heavily subsidised to entice subscribers to long-term contracts, said Mr Nathan Burley, an analyst from British-based research firm Ovum.

But in Singapore, customers are usually willing to sign long-term contracts with phone providers anyway.

Mr Burley's prediction is that the iPhone will go on sale here for at least $500.

Both StarHub and M1 have indicated that talks are under way for the telcos to bring in the iPhone 3G too.

Prices will then likely be more competitive.

"When the other operators come on board, they will be later in the game, and will probably offer higher handset subsidies," said Mr Lai.

"And SingTel has shown that it can react very quickly to competition, so it could cut prices too," he added.

BATTLE OF THE TOUCH-SCREENS

Call them clones or killers. The slew of touch-screen phones that have already arrived or are set to hit the shelves here in the months ahead are all iPhone 3G rivals.

They all have large touch-screens and are packed with features such as a camera and video and music players. Here are a few of the hottest competitors.

Unveiled a day before Apple chief executive Steve Jobs showed off the iPhone 3G at an Apple developer's conference, the Samsung Omnia bears the closest resemblance to the iPhone. But it comes with a 5-megapixel camera that trumps the iPhone's 2-megapixel one and runs on Windows Mobile.

The iPhone was the first device to have a user interface that many analysts credited with waking smartphone makers up to the importance of simplicity and ease of use. Now, Taiwan-based HTC has come up with its own interface, called TouchFLO 3D, that can be seen on the HTC Touch Diamond, which is due here later this year.

The Sony Ericsson Xperia combines a touch-screen with a qwerty keyboard that slides out, so those who prefer to type on an actual keyboard instead of a virtual one can have a choice.

The LG KF700 is a touch-screen phone, but also comes with an alpha-numeric keypad. This device is expected to be the cheapest on the market, at $698.

This article was first published in The Sunday Times on 15 June 2008.