Tesco Won’t Drive An iPhone 4 Price War

Tesco has joined the flock of operators offering the iPhone 4 in the UK, but if you think that means lower prices, think again.

The launch of the iPhone 4.0 has shown yet again Steve Jobs’ supernatural ability to make just the right changes to a product to keep it under tight control, and yet keep consumers happy to buy it. And above all to keep prices high.

Object of worship

The original shape and design of the iPhone seemed to inspire awe and worship, similar to the obelisk – or monolith – in 2001. Yet Apple has spotted exactly the right moment to change it.

Now, the new iPhone looks new and the old one looks old. No one will buy the old one and the new one keeps its cachet as a must-have gadget. Apple doesn’t have to cut prices. It is as simple as that.

Last year, when O2 lost its exclusive deal in the UK for the iPhone and others started selling it, (starting with Orange), there was talk of a price war – especially when the operators selling the iPhone 3GS expanded to include Tesco.

Analysts predicted that 2010 would see price cuts on the iPhone, partly driven by a “flood” of Android devices.

As it’s turned out, the Android devices like the Nexus One and the HTC Desire are impressive, but the flood is a problem for them – at least as far as handset makers’ revenues are concerned. There are so many different Android phones, that none can ever take the iconic position of the iPhone, and no single one can sell so fast.

Android’s App Store could theoretically take on the iPhone’s but will developers believe in a homogeneous market when there are different handsets?

Just enough

The new iPhone upgrades the hardware just enough. On a plain hardware level, it’s significantly less exciting than the competition, but has caught-up pretty well. With a slick hard-edged new look, the device looks fresh enough to make even a green geek like Andrew Donoghue drool and think of binning his iPhone 3GS.

And now, the phone is selling out, even after millions of Apple fans have shelled out for an iPad tablet they don’t need.

Anyone who thinks iPhones are headed for significant price reductions should think again. To do that, Apple would have to be thinking very “different”.