O2 running low on iPhone 3GS model, subscribers may abandon ship

"We continue to see extremely high levels of demand for the iPhone which means it comes in and out of stock very quickly and will be why the website hasn't had any," the salesperson said, adding that though it is not possible to buy a black or white 16GB 3GS iPhone over the internet, yet "one can check out whether any O2 store is stocking one and then he/she can pick one up in a store."

However, Mark Mulligan, vice president and research director of Forrester Research, feels Apple will not commit the blunder of making its latest version of iPhone available on multiple networks in the UK if it knows it cannot "meet consumer demand."

“There is no doubt that Apple is still adjusting to being a player in the mobile phone market. It’s a different game than what it’s used to… However I expect it will be building up its supply chain in advance," Mulligan said.

"Apple is usually good at avoiding disappointing consumers compared to its peers," he added.

When contacted, a staff supervisor at a London O2 store told International Business Times that shops were expecting the next batch of iPhone 3GS models to be delivered by the end of this week or the beginning of next.

But, besides running low on stock, O2 also faces the threat of thousands of its subscribers returning their iPhones and terminating their contracts so that they can pursue better and more attractive ones offered by Orange or Vodafone.

Some O2 customers are also reportedly unhappy that the operator will not allow them to upgrade their older 3G iPhones to the new 3GS model unless they pay-out the remainder of the contract term.

However, O2 said it is not planning to offer its subscribers a better deal in order to convince them not to cancel their iPhone contracts. "We always knew that iPhone exclusivity was for a limited period of time, but our relationship with Apple continues and will be an ongoing success," the company said in a statement. A company official said they are confident that their customers will not abandon ship as most contracts run till 2010 or even 2011 with a pre-termination penalty clause.

O2 began selling the iPhone in November 2007, and the exclusive contract enabled the operator to poach customers off rivals such as Orange and Vodafone and consolidate its position as the largest network in terms of subscriber base. The group has sold more than 1.5 million iPhones till date and has over 20.7 million subscribers.

Meanwhile, adding salt to the wounds, Orange also said on Thursday that its network coverage was better than its rivals and it offered better tariff plans.