"But in a year or two, when customers start looking to replace their handsets or switch networks Apple is going to need a product that will appeal to their new customer: the network operators, rather than the man on the street."
If the product does not appeal to the man (or woman) on the street, there will be little interest and the network operators won't be able to sell many. Consumers demand will drive sales - Need, Feature, Benefit.
Two things that will be interesting:
1) After a contract ends, don't consumers have the right to have the phone unlocked? A large 2nd hand unlocked iPhone market could appear?
2) How long will apple only supply to O2 - it's not sustainable in the long term
I'm a Vodafone customer, just out of contract. I won't lose out too much by getting an iPhone. Many others will be locked into 12 or 18 month contract, Apple can pick up new customers as contracts expire - perhaps this will help them deal with shortages when the phone appears (i.e. slow growth to match supply). In the short term, it might be a good strategy, I don't see it as sustainable however - 02 will not be able to cope if the product is really desirable (e.g. compare iPod sales to other MP3 players).
I don't own any Apple products (aside from Quicktime - which is free), I'm being tempted...