Tuesday, July 15, 2008

iPhone 3G Goes On Sale

On Friday July 11 the iPhone 3G went on sale at 8:00am local time in the United States and in 20 other countries around the world. There were some problems for some users activating their phones which took place in-store as opposed to at home as with the first generation iPhone. This new activation process is in response to the huge number of first generation iPhones that were unlocked. Apple has taken a different approach to this release, offering the iPhone with many different carriers in many different countries. The iPhone 3G is now subsidized by the carriers which has allowed for some very substantial price reductions in the price of the device itself, at $199 for 8GB and $299 for 16GB, with the option for a black or white plastic backing. Apple does not receive revenue from the carriers from the monthly fees that the carriers charge the user as Apple had received before. This is more in keeping with the traditional model that has been used in the cell phone market, however it is thought that Apple receives the same amount of revenue from each iPhone sold, which is very likely given management's ability to negotiate and the power Apple holds in negotiations. Apple will be able to sell many more devices this way but won't receive revenue from the revenue-sharing deals that were in place before. MobileMe is now live after a few issues getting it up and the AppStore is also now operational. Apple announced on Monday that in the first weekend they had sold one million iPhones and over ten million apps had been downloaded from the AppStore. The AppStore will be huge and there will be more in my next posts about the AppStore, the carrier strategy, this release and the iPhone going forward.

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