Transition

iPhone: How to get from 2G to 3G without killing sales

December 16, 2007: 10:09 AM ET

picture-32.jpgFor Apple (AAPL), the transition from the 2G (or 2.5G) iPhone to the 3G iPhone is a tricky one.

We know the new model is coming sometime in 2008. Steve Jobs hinted as much in September, and AT&T's (T) Randall Stephenson confirmed it last month.

The problem for Apple is that it must get formal FCC approval before it releases any new radio-based device. Such applications are public documents, which makes it hard to keep a new cellphone secret for very long.

Jobs unveiled the original iPhone six months before it shipped. If he announces the 3G iPhone ahead of time, he risks choking off sales of the 2G model.

What to do?

The stock traders at The Mac Observer's Apple Finance Board have started speculating about how Apple might handle this delicate transition. One of the moderators, a Devon-based investor who calls himself sleepygeek (and uses those quaint British spelling conventions), offers a few ideas:

  1. innovative confidentiality agreements with approval agencies.
  2. No change in appearance - so that those encountering the device in advance don't realise it has new hardware.
  3. Covert hardware upgrades (like macbook 802.11n) so that iPhones sold in the weeks before announcement already have the important new hardware.
  4. Trade in programme - those on contract (and generating revenue share) can trade-in the old iPhone and start a new 2-year contract.
  5. price/model alternation (similar to macbook/macbook pro): new features are announced on a much more expensive model, which becomes the standard at the standard price at the next model change. (link)

How do you think Steve Jobs ought handle the 3G introduction?

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