Comment

A joint venture between CPW and Apple might just work for the 3G iPhone

We should see proper iPhones this year, maybe even before summer - proper, meaning, WCDMA, or 3G capable iPhones. I'm expecting an official Apple announcement this month. But will they be an amazing, astonishing success?

The current model iPhone, as a 2.5G phone, is not a good phone, and wouldn't be one even if it sold for half the price that it fetches in Europe. So there are good excuses for any failures to flood the market

It may be a "shiny shiny" product, and it may attract fanatical enthusiasm from those who own one! - but for people who primarily want a good quality phone, it fails the acid test. So the launch of the 3G device is the game that matters - and Steve Jobs, Apple's charismatic founder, is probably going to make a statement about this in two weeks.

The original plan was to have the 3G phone out this month. That plan was supposed to be revealed to an excited world the week after the US launch, but contractual disputes arose, and it went onto the back burner - and just as well because, soon after that, it became apparent that Apple couldn't get the chips.

This fact wasn't apparent to the bulk of the market, because some companies have their own chipsets, and were happily making 3G phones in volume; others were doing relatively small numbers (HTC, for example) and were able to get adequate supplies for their purposes from minority suppliers (and from Qualcomm).

That was when Steve Jobs slammed the whole concept of 3G: "The 3G chipsets work well apart from power. They're real power hogs. Most phones now have battery lives of two to three hours," he added. "Our phone has eight hours of talktime life."

He can stop the negative publicity now.

The main supplier of WCDMA chip sets is Texas Instruments. A new fab is now coming online, say sources, and my guess is that as soon as they're available, Steve Jobs may well find the time ripe to revise his early public disapproval of 3G chipsets and their power consumption, and move into pre-launch hype mode.

I don't really doubt that he will claim that vast progress has been made in 3G design, and that the technology is now ready for showtime - but the truth is that there's no significant change in 3G power consumption, for the simple reason that it's not the chipset that "hogs" the power - it's the radio.

The radio on a WCDMA phone in Europe works on 2.1 GHz and that frequency is hopeless for indoor use; walls block it very effectively. To reach the mobile mast, the phone has to blast out a high power signal, and it's that which drains the battery.

From the user's point of view, however, this hardly matters. The data rate is far better on 3G, and an awful lot of Internet access is based on speed of response, and once you have your data, you can cut the power.

So what matters about the iPhone 3G is whether Apple has built smart software into the design, to manage power this way. It's not rocket science; 3G phones frequently have to switch from GSM to WCDMA and back, according to the strength of the signal. All they have to do, is ensure that if there's a demand for a lot of data, the phone tries to switch, temporarily, to WCDMA; and when the data is home, it tries to switch to GSM again.

This sort of trick is a proven winner in phone design.

It was exposed when Sony Ericsson found itself, unexpectedly, short of stock on a perfectly ordinary device two years ago. Customer research followed. It turned out that this phone's advantage over its competitors was that you could set the priority you associated with a 3G signal. You could set it to use 3G unless the signal was lost, and then use GSM. Or you could set it to use GSM unless it lost the 2G signal, and only then, if it was vital, to connect to a WCDMA mast.

This dramatically affected battery life, and users quickly shared the information, leading to a huge jump in sales.

So, if the technology is right, what really matters for the iPhone in Europe , is distribution. And there, Apple is in a hole - and so, coincidentally, is CPW.

Exactly what proportion of Euro iPhone sales go through eBay is a standing joke in stores; they aren't going through O2, for sure - and the figures for Orange sales of the device in France are only slightly more encouraging.

If the new phone turns out to be a winner, technically, then the limiting factor is how many stores stock it. Apple stores, Europe wide, number around 100 or less. CPW stores are around 1,500 or more. But the problem with CPW (not to beat about the bush) is that even the chavs have rumbled them. "You get ripped off" is what the bling-wearing classes say about Carphone Warehouse.

A franchise would be an excellent idea. Alternatively, a takeover could be considered. Whatever the mechanics, if 1,200 CPW premises were suddenly re-branded as "Apple" it would solve Dunstone's plummeting sales problem, and the CPW image problem, and Apple's need for widespread distribution.

I don't think the takeover is the likely option, because friends who know Charlie Dunstone well say he is determined to make CPW look successful - not just "more successful than phones4u" but a quality brand. Scepticism about his chances of success can be heard in many places. Nonetheless, Dunstone himself doesn't seem to share this, and I don't think he needs the money that a company sale would realise.

Some kind of joint venture, however, would make good sense. As to whether good sense is what is on the minds of CPW and Apple executives, I can't say...