Sharp End
The Panel
Dan Schama, fonehouse
Dan Schama, fonehouse.
Fasail Sheikh, head surgeon at fone doctors
Fasail Sheikh, head surgeon at
fone doctors.
Chris Caudle
Chris Caudle, MD of Opal Mobile
and chairman of the Independent Mobile Phone Dealers’ Association (IMPDA).

Obviously, the new iPhone (dubbed iPhone 2) is already set to be the most popular handset since mobile began, with orders expected to be in their millions. Due to the fact that the only official way to purchase an iPhone is through Carphone Warehouse or O2 direct (and Sim Free via Apple), do you feel that this leaves the independent dealer out in the cold and how do you get around this issue?

Caudle: It is one of the worst decisions that O2 ever made, to keep their own authorised dealers out of the market for selling the iPhone. When the iPhone originally came out and now with the iPhone 2 dealers were eager and excited to think they could sell what is probably the most revolutionary phone made, but the disappointment and anger at being excluded was obvious especially at Christmas time. Surely if you are making a product that will take the market by storm, then you need the widest availability possible outlets to sell as many as possible, so why restrict it to Carphone? O2 learnt the hard way on launch when they did not reach the numbers they thought they would. There were the scandals of supposed insurance demands that some shops made to provide the iPhone, and accusation of O2 staff making out they were queuing customers, yet O2 and Apple still insisted on restricted sales outlets.

Faisal Sheikh: For fone doctors, the iPhone has been a business changing event. We’ve unlocked over 3000 iPhones, and have sold several hundred, mainly to the trade. It has been our best selling phone on T-Mobile, by some distance. So I’ve not been too unhappy at the way Apple priced the original, and certainly pleased at the way it was sold, with the “go and connect it at home model”. Now the release of the new 3G iPhone presents its own challenges.

I was really worried last November when the first one came out, I expected to see a very quiet month but this didn’t happen. Although this handset is supposed to be better, we won’t know how well it works until it comes out.

Is there a way to get around it? It’s basically the biggest phone, has great tariffs on 18 month contracts, incredible demand but nothing for the independent. If someone gets one on contract, then it’s 18 months
on O2 only, unless you buy grey and unlock and jailbreak etc

Dan Schama: Many independents sold grey iPhones and made a lot of money unlocking and jailbreaking iPhones. I sold one or two and only when a very good customer insisted we source one for them. Personally, I won’t sell a product that I cannot offer a full warranty on, and with grey iPhones there is no warranty whatsoever. There is also the issue that the phones may re-lock if the software is updated when they are connected to iTunes.

Faisal Sheikh: It’ll make supply of grey stock a lot more limited, and of course the official contracts are now a lot more appealing, but the good news is that there’s a Pay as You Go version to come. So what you’ll find is that O2 & CPW stores will make it the best selling phone on O2, and then us indies will makes it the best selling phone on T-Mobile, Orange, Vodafone & 3. And then of course, there’s the export side of things, with huge demand from Dubai, West Africa and the Far East.

The big area for us though is going to be on iPhone software add-ons. Apple has made a big play about the App Store, but Jailbroken iPhone users have had something similar since last autumn. Indeed my current iPhone has a Piano, Guitar, DrumKit, MX Tube (so I can download YouTube videos), games galore, including Nintendo emulators, my Pocket Quran (for those spiritual moments), a Video Recorder and fully fledged File Explorer to name but a few. There’s also Book readers, Dictionaries, SIM contact apps, calling tools and so much more… And it’s all free and growing. You’ll find this stuff gets even bigger with the launch of version 2.0, and that’s why we’ll constantly have a huge demand for our jailbreaking and PWNing services.

Caudle: In reality until O2 let their dealers sell the Iphone, then unlocked or sim free phones are the only way dealers would be able to sell this fantastic unit allowing the customer a choice of their desired network. It does seem strange that other networks are going to be allowed to sell the iPhone but not in this country, and one wonders why don’t Apple let other networks in this country do the same. Perhaps one day the bosses at Apple and O2 will wake up to the fact that they have missed a valuable resource i.e. their own dealers, but by that time it will be too late, the damage in sales will have been done. They may have sold a lot, but they could have sold more.

How do you think this will affect dealers?

Faisal Sheikh: As independent dealers we can either get upset at not given a slice of the Apple iPhone Pie, or we can do what indies do best, and that is to be creative. So the first thing to say is long live the grey market! So July 11th? I. Can’t. Wait.

Schama: As an independent dealer I’m not that worried. The hype will be much

less and customers will not be as interested them second time round. Obviously the iphone2 looks very similar to the first one so most customers apart from early adopters or Apple buffs will not perceive a big difference. To be honest, there are plenty of great handsets around at the moment and due out this month, the blackberry bold will be massive so we will just push that instead of the iPhone.

Caudle: Certainly dealers are feeling like O2 is treating the independent channel with less commitment than they should. It has already been shown that of the numbers of handsets sold a great many never got connected to O2, they were unlocked or ‘jailbreaked’ by companies such as FoneDoctors, so that owners could use it on other networks. Why Apple decided only to go with O2 only Apple knows, but it was – and is – a bad business decision because the demand is there, and it appears that O2 really dropped the price to attract the numbers as people will just not pay the price they were offering at the time on such a poor tariff.

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