Apple keeps UK price promise on new iPhone 3G

 

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By Barry Collins

Posted on 10 Jun 2008 at 08:02

Britons will pay exactly the same for the new iPhone 3G as buyers in the US, according to prices announced by O2.

Read about O2's latest mishap on the PC Pro blog

Apple CEO Steve Jobs announced that the second-generation iPhone would start from "$199 worldwide" during his WWDC keynote last night. Click here for full details of the iPhone 3G launch.

But British buyers rarely see a straight dollar conversion of US prices, with Apple itself among the companies that routinely charge Brits more for its products than US buyers.

However, O2 has confirmed that the 8GB version of the iPhone 3G will cost £99 on a £30 or £35 monthly tariff, while those prepared to sign up for the £45 or £75 monthly tabs will get the hardware for free.

The 16GB version will cost £159 to those on the two cheapest tariffs, £59 to those who pay £45 per month and free on the £75 per month option.

O2 says it will also offer the new iPhones on a pay-as-you-go basis for the first time, but has yet to announce pricing for this model.

New pricing model

Apple has ripped up its business model for the launch of the iPhone 3G. The mobile networks will no longer pay Apple part of the subscription fees they get from iPhone users, but instead will subsidise the devices up front to make them cheaper.

"The vast majority of agreements we have reached do not have those follow-on payments, so you can conclude that the vast majority of carriers do provide subsidies for the phone," says Tim Cook, Apple's chief operating officer.

Analysts say the new pricing model won't hit Apple's profits. "It is still a very profitable business," says Shaw Wu, an analyst with American Technology Research. "Now the negative is it announced the elimination of some of the monthly fees, but I can't really imagine the economics really being too much different."

Jobs claims Apple has sold 6 million iPhones so far, and Cook says he is "still very comfortable" that the company will hit its goal of selling 10 million units by the end of 2008.