Has Apple killed the grey iPhone market?

Adam Turner
Tuesday, 10 June 2008 05:18

IT Industry - Market

Whether or not the grey market in iPhones continues depends on the outright price local telcos charge for the iPhone 2.0.

Yes, I know Jobs talked about global pricing parity, but that's $US199 for an 8GB iPhone 2.0 on a two year contract with AT&T. It might translate to $AU220, but that's almost certainly dependent on you taking out a two year contract with your local telco. Optus and Vodafone recently announced they'd be selling the iPhone 2.0 in Australia, but we're still waiting on them to confirm the pricing.

There's no word yet as to how much a US iPhone 2.0 will cost if you want to own it outright rather pay it off on a plan. Jobs didn't say anything about pricing parity for buying an iPhone outright. We don't even know if you will be able to buy them outright in the US, or in Australia.

There are plenty of reasons why Australians would want to buy an iPhone outright rather than tie themselves down to a two year plan. The biggest reason would that so far Telstra has stuck to its knitting and refrained from announcing an Australian iPhone. So all those Next G customers out there who want to get a slice of iPhone goodness will be forced to break their Telstra contracts, pay out the contract to Telstra and then sign up for a new contract with Vodafone or Optus - neither of which can match Next G's coverage footprint.

If you've got 12 months to run on a Next G contract, breaking free will probably cost you at least $AU600. You'd be crazy to do this if you could buy an iPhone 2.0 outright for a good price and then start using it with your Next G SIM card. If buying an iPhone outright from the US is cheaper than buying one outright in Australia, Next G customers will ensure the grey market for iPhones continues. If Telstra doesn't add the iPhone 2.0 to its offerings soon, it might find its customers have already bought them outright elsewhere.

If it turns out you can't buy the second-gen iPhones outright, Next G customers would probably be better off grabbing themselves a cheap iPhone 1.0 and unlocking it to work on Next G. At least you'll get EDGE data speeds. This should tide you over until your Next G contract runs out. By this time Telstra might offer the iPhone 2.0 and hopefully market pressures will have forced the telco to offer a decent data bundle to go with it. If Telstra doesn't offer the iPhone 2.0 by the time your contract expires, you can consider changing providers without penalty. By then Apple might have started selling the iPhone 2.0 outright, or you might even be able to pick up a secondhand iPhone 2.0.

So if you're locked into a long phone contract and you recently spent $AU400+ importing an iPhone 1.0 from the US, you haven't made an expensive blunder. Sit back and enjoy your first-gen iPhone while the dust settles and then evaluate your options when your contract runs out.