So O2, have decided not to launch the iPhone 3G on PAYG on the 11th July. It’s a terrible decision, which only goes to explain why the iPhone is performing so badly against Apple/O2’s expectations.

The facts seem self evident: more people want PAYG than pay monthly. More succinctly, they want the iPhone device, not the O2 monthly deals. This isn’t because O2 is offering bad deals – simply because people are locked to other networks, or have other factors that effect them from switching to O2 (free broadband with their existing provider for example).

The abundance of unlocked current generation iPhones only proves to illustrate this point. The answer, for O2, Apple and the UK at least is simple: make the iPhone available on PAYG. By holding the iPhone 3G back, it appears that O2 are simply praying on a select few’s desperation to get their hands on the device – even if it means signing up to another contract. The resultant scenario should be obvious…

To quote Abraham Lincoln: “You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.”

With O2 holding back the PAYG model the majority of people will do one of two things: simply wait, or lose interest in the iPhone 3G altogether…

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