The basic O2 iPhone contract is £269 plus 18 months at a minimum of £35 over 18 months (please note, even after the minimum term of the contract has expired you cannot get the iPhone unlocked from O2 even if you leave the network). So that's £899 or €1247.
So, an unlocked iPhone is cheaper. Errr, no. If you actually want to use the iPhone as a phone (and if you don't then why not just buy an iPod Touch?) you will need to have some sort of deal with a network, so an unlocked phone WILL cost more than just the €999.
If you only want to use the iPhone as a iPod and basic phone you could go with pre-pay or a cheap contract deal such as - ironically - O2's SIMplicity at £15 a month.
The average pre-pay customer spends about £10 a month which over the 18 months you would otherwise sign up for with O2 works out at £900 including the cost of the iPhone. As for SIMplicity over the same period it works out at €999 (£720) + £15x18= £990. Both options are more expensive than the basic O2 iPhone contract (OK - the pre-pay option only by £1).
Of course if you want to use the wi-fi/GPRS internet access services on the iPhone then you will need a data bundle on your phone service, whether that be pre-pay or some cheap contract option, or a contract with a hotspot operator like The Cloud or BT or T-Mobile, which will make it even more expensive to run an unlocked iPhone.
I am quite willing to be proved wrong but my view is if you're a few months into an 18 month or two year contract with some other operator and really (and I mean really) desperately want an iPhone and would otherwise be willing to pay a severance charge to jump ship to O2, then yes, it probably is worth your while to buy an unlocked phone and put your current SIM in it.
For everyone else, at the €999 price of an unlocked phone I just can't see the maths adding up. Which, I suspect, is the idea...
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