Analysts divided over iPhone prospects

Some analysts have questioned the iPhone's pricing and internet connectivity

Industry analysts are broadly impressed with Apple's iPhone, but several have raised doubts about some aspects of the device.

Chief among these is price. The phone is expected to sell for £250 to £300 in the UK, typically on two-year contracts, double the usual licence period for most phones.

"$499 with a two-year contract is a high price in this highly competitive market where consumers are getting their phone for less than $100 or for free," said Niek van Veen, associate analyst for European telecoms at Forrester Research.

"Apple's sales target of 10 million iPhones in 2008 is ambitious. It depends on how much operators are willing to subsidise the phone, and whether the iPhone will be attractive to a wider audience."

The analyst explained that, while Apple looks likely to be a small player in the mobile phone sector, the market will still be larger than for MP3 players.

While Apple chief executive Steve Jobs said yesterday that nearly a billion phones were bought last year, the vast majority were ultra-low cost models for the developing market.

Doubts have also been raised about the iPhone's suitability for the European markets, where 3G is the de facto standard for data downloads.

"While the iPhone certainly looks the part, we have a few issues regarding its music, media and web browsing functionality," said Ovum analyst Jonathan Arber.

"Not least the fact that this first release will only support GSM and GPRS/Edge, with no 3G connectivity. This means that the "breakthrough internet communications" experience that Jobs touted will be severely restricted.

"2.5G browsing can be a painful experience, and the reality of using the phone as an internet device may be a far cry from what Apple is currently promising."

Ovum also questioned the pricing model for the European market, suggesting that most customers expect free phones.

Apple may also face a protracted battle over the name of its new device. Cisco has filed a lawsuit seeking to prevent Apple from calling its newly-announced mobile device the 'iPhone'.

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