The analysts at Ovum believe lack of EDGE network coverage and a high retail price will limit success of Apple's iPhone in the UK.
Apple yesterday confirmed plans to ship the iPhone in the UK starting 9 November. The device will be available exclusively through O2 and Carphone Warehouse. O2 will be the exclusive mobile network for the device, which will cost £269 plus a monthly charge of £35, £45 or £55.
The iPhone that ships in the UK will not support 3G. Instead it will offer both WiFi and EDGE network support. Unfortunately, just 30 per cent of O2's UK network will be turned on for EDGE when the product ships.
Ovum's director of wireless intelligence, Martin Garner, is highly critical: "We think that this is simply inadequate and will frustrate a lot of users who take their iPhone to their parents’ house in, for example Cornwall, at Christmas and say “look how great this is for web browsing," he warned.
Calling the iPhone tariffs sensible, the analyst noted that the deal with the Cloud under which iPhone owners will get free wireless access at a Cloud hotspot will serve urban users well, but be of less use to those in rural areas.
The Cloud also doesn't operate in Northern Ireland, leaving users there in the cold.
"Will the shortcomings of EDGE coverage be compensated for by WiFi?." Garner asks, observing: "O2 said that their research shows that up to two thirds of usage would be on WiFi, either at home or out and about."
The analyst also noted a flaw in Apple CEO Steve Jobs' claims that Apple moved to O2 because the two companies had "compatible cultures".
"Jobs said that the choice of O2 was cultural more than economic. Yet we understand that it is not using O2 in Germany, and is using a different carrier again in France. Something does not ring true here," said Garner.
The analyst also notes that other handset manufacturers are beginning to produce devices which compete with the iPhone.
"It looks as if a new device segment will emerge with the iPhone heading the charge. But how big is this segment and how competitive will the other vendors be?" the analyst asks.