Too hot to handle?

The long-awaited iPhone 3G has finally arrived in Thailand, with the third-ranked mobile operator True Move staging a gala launch that drew thousands of people.

True Corp CEO Supachai Chearavanont (right) celebrates with the first official purchaser of an iPhone 3G at a launch party that drew crowds to Siam Paragon up until midnight Friday.

The iconic handset revolutionised the user interface by replacing most keystrokes normally required with taps and drags on its touchscreen. As a result, users can quickly manage their e-mail or search content.

Finding and downloading a song on the iPhone are also a snap and at least three times faster than the same exercise through a network operator's portal, thanks to the much faster data speed of the third-generation (3G) standard.

But despite its high appeal, the iPhone 3G has raised some interesting questions, including how many Thai users can take full advantage of its rich features.

Or more to the point: Does Thailand have the 3G mobile broadband services available to accommodate the popular enriched data-enabled smartphone?

Besides, given its steep price tag, another question arises: Does the iPhone make sense for consumers and operators in Thailand, where voice calls dominate mobile use?

Top executives at rival companies are watching coolly as the third-ranked operator attempts to promote the iPhone.

They say the device was designed primarily to deliver rich content so its basic phone functions are relatively poor.

But in Thailand, data traffic is only 10% of mobile operators' revenue.

One executive said: "Imagine using the iPhone for data on WiFi or GPRS, and not on 3G. Why do people need to pay such high prices for a handset when they cannot take full advantage of the features it has to offer?"

The two largest operators, Advanced Info Service (AIS) and DTAC, decided last year to scale down their investment on 3G network upgrades in light of the flagging economy and shrinking consumer spending.

For an average consumer, it may not make much sense to pay more than 25,000 baht for an iPhone 3G when the most he can get from any operator in the foreseeable future is 2.5G speed.

The same could be said for the local operators. In exchange for the right to distribute the much sought-after handset, Apple asked True Move and DTAC to each commit to 300,000 units within three years and AIS 400,000 units.

The executive said the inventory costs would be massive. For example, True Move is required to set aside 7.5 billion baht for the quota it got.

Add that to the fact that the deal is not exclusive and up to one million iPhones could be pushed into the Thai market this year, and the prospect of a big profit could be elusive at best.

Since its US launch, fewer than 100,000 units of smuggled or grey-market iPhones have been sold each year in Thailand.

Another telecom source said AIS's decision to temporarily suspend its talks with Apple about marketing the phone in Thailand made economic sense.

He said that not only did AIS need to shoulder a huge inventory cost, it would face intense competition now that a large number of touch-screen handsets, both 2G and 3G capable, were on the market.

The competition could bring iPhone prices down significantly, especially now that the global leader Nokia has jumped onto the touch-screen bandwagon.

An industry source said True Move had received lukewarm response due to the iPhone's high price, with only 5,000 customers making advance reservations online. True Move did not provide sales figures but it extended its launch party at Siam Paragon to midnight on Friday to accommodate the big crowd.

True Move is offering a series of promotional tariff packages together with the subsidised handset, which can be paid in interest-free instalments. Starting from a monthly payment of 1,399 baht for 24 months (33,576 baht total), the package would include phone calls, SMS and data downloading over WiFi.

To push demand, True Move has brought down its iPhone prices by offering the 8GB model at 23,275 baht and the 16GB model at 27,075 baht.

With the promotion, postpaid customers - of True fixed-line phones, dial-up and high-speed broadband internet, mobile phone, PCT and TrueVisions pay TV - are required to sign up for the service for 12 months with a monthly payment of 599 baht for unlimited usage of WiFi, Edge and GPRS. The package also includes 300 minutes of phone calls plus 300 SMS messages.

Customers who purchase iPhone 3G handsets alone will have to pay 24,500 and 28,500 baht, respectively.

The source said the revised packages had attracted about 3,000 customers to buy the handsets without signing up for True services.