This week apple revealed their third generation iPhone and in appearance and design it is identical to the previous model, itself nearly identical to the first. Speculation and conjecture that Apple might, like every other cellphone manufacturer, produce a variety of different handset models to meet the needs of different demographics proved way off the mark. Rather than produce a budget pay-as-you-go trendy iPhone for Tweens or a stripped down model for business users, Apple has wisely adopted the philosophy that the Apps Store and its tens of thousands of add-on programs is the key to meeting the changing needs of different users and that the device itself is the constant, a foundation from which the adaptation grows.

 

The original iPhone 

This is the model used by video game consoles, which only change dramatically every four to six years. Everyone has the same box at home, but use it to play different games. Between cycles the game companies release “special edition” models of the same console, often with slightly different configurations or in special colours and as part of a bundle in order to stimulate new hardware sales. Apple seems to be using a variation of this, offering upgraded models in between major design changes.

How often does Apple expect iPhone owners to make the upgrade? Now that we have a full pattern to explore, it appears to be two years in practice. Last year’s iPhone 3G launched with just enough new features to make it attractive to new users, but not enough to warrant an upgrade to those who owned the original iPhone, especially as most the of the value of that second generation was in the iPhone OS 2.0 software update, given to original iPhone users for free.

The iPhone 3G 

This worked out well as that first wave of customers had signed a two-year contract with AT&T and, in principle anyway, weren’t ready for a new model.

This year Apple has performed the same trick, offering a third generation model that has just enough new features to make it attractive to new users, but not enough to warrant an upgrade for iPhone 3G owners. Again, most of the value of this generation’s model comes in the iPhone OS 3.0 software update, given to all iPhone users for free.

Between the first and third iPhone models there is a significant leap in new features and advantages that, yes, is certainly worth making the upgrade. Again, those first iPhone owners are just now ending their two-year contract, so perfect timing. And even if they choose to save money and keep using the original handset, the free software update takes care of them too.

It’s a system that delivers the sense that you can buy an iPhone for a few hundred dollars, knowing that you’ll get a free software upgrade each year and then when your contract is up, it’ll be just in time to get a new iPhone with significantly new features, again for just a few hundred dollars. It’s not a promise being made by the company, but it is the pattern the company has set, and it’s a good one.

The iPhone 3G S 

I can’t help but see this as having been the plan all along, and certainly the structure Apple saw when they first began negotiating with AT&T over how that partnership would continue and flourish. For carriers who sign exclusives with Apple, it’s a system that helps them keep their customers coming back again and again. Most of the carriers around the world have adopted this system and offer two-year contracts.

Of course, it’s a different situation here in Canada where Rogers has adopted a three-year contract cycle. Rather than skip one generation to make an upgrade to a new model, Canadians will have to skip two. Those who bought an iPhone 3G, the first model offered here in the country, are stuck not just having to pass on the current iPhone 3G S, but will also have to take a pass on whatever model Apple launches next year too. For them the next iPhone comes in 2011.

It’s a delay. Yes, we may finally have the same release dates as the rest of the world, but our longer contracts mean we’re still following a slower rhythm. In other countries the two-year cycle divides the market into two groups, with phones being sold to almost half of the market each year. Here in Canada, Rogers’ cycle drops that down to a third, meaning they will sell fewer iPhones and foster greater customer dissatisfaction as users are forced to watch as iPhone launches come and go without the ability to participate.

Is it merely an inconvenience? Or is it more? That depends on when Apple breaks the cycle of upgrades, when they offer a model that is dramatically different, something that is conceptually new. Around the world there will be a portion of the market with a year left on their contract before they can adopt the new concept, a manageable period to wait or negotiate out of. Here in Canada, for many it will be two years. It’s one thing to have to wait two or three years for a hot gadget to arrive in Canada, another when you have to wait and it’s already here. Apple clearly thinks far ahead with their plans. Does Rogers?