O2’s iPhone conundrum

While we won’t know for certain until Steve Jobs takes the stage in San Francisco next Monday (at 6pm Irish time), it is all but certain that the centre-piece of his keynote to the WWDC will be the 3G iPhone.

Precise specifications and details are sketchy but various reports suggest the new model will feature GPS, a front-facing camera for conference calls, more storage capacity and most critically a 3G chip as opposed to the EDGE/2.5G chip that’s in the existing model.

To be blunt, the new iPhone is rumoured to carry everything the original iPhone really should have had in the first place.

So now O2 Ireland are faced with a serious problem.

While the iPhone first went on sale in the US in late June 2007, giving early adopters about a year of job before their investment was obsolete, the Irish consumer has only been able to get their hands on the iPhone for the past two and a half months.

In fairness to O2 Ireland they probably didn’t realise the 3G iPhone was going to come on stream so soon after the launch but there’s no doubt that they knew it was going to come at some point – almost certainly during this calender year.

But even if they are victims of Apple’s legendary secrecy, pleading ignorance will do little to help them now. What O2 Ireland face is a swathe of customers who spent anything between €400 and €500, not including the money they’ve committed towards expensive and sub-par contracts, on a device that is about to become obsolete less than three months after it became available to them. Even fashion designers give their ranges more of a lifespan than that.

O2′s conundrum is in what they must now do to minimise the damage and turn things around to their benefit.

One thing they may take comfort in is the fact that the 3G iPhone may not hit Irish shores immediately, which will make the gap between the two launches that little bit more tolerable. This article suggests it may be Christmas before O2 UK gets the iPhone and it’s unlikely that O2 Ireland will get it before its British counterpart – but then again this article suggests that O2 (in both countries) will get the new iPhone very shortly after the US launch.

Whenever the device hits our shores is irrelevant, though. Even if they can’t buy it yet, Irish customers will still be angry to find that their brand new (and expensive) phone is obsolete – a delayed Irish launch just means that O2 will be left selling a 2.5G phone that no-one wants to buy anymore.

Once the 3G iPhone does become available, O2 have to decide how to deal with existing customers’ anger. They could hope to ride out the controversy and brush off the controversy without compensation but this would surely be a major PR disaster that they’d have to eventually do a U-turn on anyway. Either that or lose a serious amount of goodwill and clientèle too.

The most likely solution is for O2 to provide existing iPhone users with some kind of upgrade service – it’s only really a question of what shape this will take and how generous they will be about it.

Pat Phelan has his own thoughts on what they (and their international counterparts) could do – basically his idea is that they offer coupons which allow iPhone users to upgrade to the 3G model at a low price, then refurbish the traded in 2.5G models and give them free to new customers who want an iPhone but don’t care about 3G.

This article suggests O2 UK may offer an entirely free upgrade to existing iPhone customers – the catch being that they must re-boot their 18-month contracts to avail of the offer. There’s no mention of what might happen to the traded in iPhones from this deal but their the tantalising suggestion of a reasonably-priced Pay As You Go model.

It’s hard to say what path O2 will take to quell consumer discontent but we may get a better idea in the next week or so. What is clear is that they’re going to have to have a plan to ensure that things don’t get ugly fast come Monday evening.

If you want to see exactly what Steve Jobs has up his sleeve (or more likely in his pocket) then you should check out Mac Rumours Live around the 6pm-mark on Monday evening. You may even find out what his plans for the Irish 3G launch are, but if not you’re sure to know for certain shortly afterwards.

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