Thursday, 10 December 2009

Tesco sparks iPhone price war with £20 a month contract

An iPhone price war has been triggered with news Tesco is to sell the iconic device on a £20 a month contract. The entry of Tesco into the iPhone market means that the cheapest way of buying and running one amounts to £462 with a one year contract. This is made up of £222 for one of the original 3G models with an 8GB memory and 12 monthly payments of £20.

Over 18 months, the figure would be  £582, which is some £43 cheaper than the equivalent deals from current iPhone providers. The supermarket is taking on established mobile phone networks, Orange and O2, in the battle for sales in the crucial Christmas trading period. The pressure to cut prices will be turned up in the new year when Vodafone will also start offering the iPhone. Currently, both Orange and O2 insist on customers signing up for a minimum 18 months for those who buy the iPhone on a contract basis.

This means the cheapest way of buying and running an iPhone 3G works out at £624.98 with Orange. That is a handset price of £96.50 and a monthly charge of £29.36. The price with O2, which originally had exclusive rights to sell the iPhone when it was first launched in November 2007, works out at  £625.73 for a similar deal.

Mobile phone handset prices and tariffs are notoriously complex, which means making a like for like comparison is virtually impossible for consumers.

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