Will Orange spark an iPhone price war?
Orange's move into the iPhone market - possibly to be joined by Vodafone - is good news for UK consumers.
A Christmas price battle between Orange and O2 could cut the cost of the iPhone.
Orange's success in breaking into O2's exclusive deal to stock the iPhone is expected to lead to a Christmas price war with the cost of the Apple handset coming down for UK consumers.
It is also likely to be available from at least one more mobile phone operator, with Vodafone also understood to be close to signing a deal with Apple, though it may not have the device in time for Christmas. Executives at Vodafone, which stocks the iPhone in just under a dozen countries, have long maintained that they would like to get their hands on it in the UK.
T-Mobile, which had been holding on-off talks with Apple for some months, is understood to have dropped out of the race.
Orange earlier announced that it will stock the latest version of the iPhone – the 3GS – in time for Christmas. It has refused to give any detail on pricing, but the Orange deal is understood to be less complicated than the one O2 signed in the summer of 2007 to gain its status as exclusive UK partner, and it is expected to undercut the current hefty price of the phone.
Under O2's deal the network had to share some of the revenues it made from customers using the iPhone, with Apple. The Orange deal, in contrast, does not have any revenue-sharing component and as a result the company, owned by France Telecom, is expected to offer the iPhone at a cheaper price than O2.
The basic 8GB version of the handset currently costs £96.89 for a customer willing to pay £29.38 a month under an 18-month contract, but is free for anyone willing to spend £44.05 a month for the same period. The largest 32GB device is £274.23 at £29.38 a month over 18 months and free only for someone willing to pay £73.41 a month over two years. This makes the total cost of the phones between £625.73 and £792.90 for the basic phone over 18 months, and between £803.07 and £1,761.84 for the 32GB phone over 18 months.
Losing its exclusive grip on the iPhone is a blow to O2, which has used the phone to cement its position as the market leader in the UK over the past two years with its rivals consistently blaming the "iPhone effect" for the brand's success. O2 has 20.7 million UK customers and has sold an estimated 1.7 million iPhones in the UK.
It has also provided a boost to Carphone Warehouse, which has been O2's exclusive independent retail partner. The company, Europe's largest independent mobile phone retailer, will also stock the iPhone for Orange. But in a note to staff this morning, Orange UK chief executive Tom Alexander suggested that more independent retailers may also get the phone.
"It'll be available in all of our Orange shops, online, and will also be available through some of our specially selected partner stores," he said.
It remains unlcear, however, whether Orange's use of a two-year break clause in O2's five-year deal with Apple, originally revealed by the Guardian more than a year ago, has allowed the company to renegotiate its own terms and therefore retaliate in a Christmas price war.
In other countries where Apple has released the iPhone to more than one network, its partners have not had to sign away some of the ongoing revenues they make from customers so it is unlikely that O2 is being kept to its original terms. Part of the reason for the change in tack at the Californian company is that the Apple iTunes store has been so successful in selling applications to iPhone users that these revenues are starting to replace revenues from the mobile networks.
Certainly O2 insiders maintain that the company has been preparing for an end to its exclusive hold for some time. It has already grabbed another hotly anticipated handset under an exclusive deal for the Christmas market, but the hefty price tag it has placed on that device – the Palm Pre – may put off many users.
The breaking of O2's exclusive deal in the UK leaves the US as the only one of the original four markets in which Apple launched with just one operator after legal issues led to the German and French markets having to be opened up.
source
A Christmas price battle between Orange and O2 could cut the cost of the iPhone.
Orange's success in breaking into O2's exclusive deal to stock the iPhone is expected to lead to a Christmas price war with the cost of the Apple handset coming down for UK consumers.
It is also likely to be available from at least one more mobile phone operator, with Vodafone also understood to be close to signing a deal with Apple, though it may not have the device in time for Christmas. Executives at Vodafone, which stocks the iPhone in just under a dozen countries, have long maintained that they would like to get their hands on it in the UK.
T-Mobile, which had been holding on-off talks with Apple for some months, is understood to have dropped out of the race.
Orange earlier announced that it will stock the latest version of the iPhone – the 3GS – in time for Christmas. It has refused to give any detail on pricing, but the Orange deal is understood to be less complicated than the one O2 signed in the summer of 2007 to gain its status as exclusive UK partner, and it is expected to undercut the current hefty price of the phone.
Under O2's deal the network had to share some of the revenues it made from customers using the iPhone, with Apple. The Orange deal, in contrast, does not have any revenue-sharing component and as a result the company, owned by France Telecom, is expected to offer the iPhone at a cheaper price than O2.
The basic 8GB version of the handset currently costs £96.89 for a customer willing to pay £29.38 a month under an 18-month contract, but is free for anyone willing to spend £44.05 a month for the same period. The largest 32GB device is £274.23 at £29.38 a month over 18 months and free only for someone willing to pay £73.41 a month over two years. This makes the total cost of the phones between £625.73 and £792.90 for the basic phone over 18 months, and between £803.07 and £1,761.84 for the 32GB phone over 18 months.
Losing its exclusive grip on the iPhone is a blow to O2, which has used the phone to cement its position as the market leader in the UK over the past two years with its rivals consistently blaming the "iPhone effect" for the brand's success. O2 has 20.7 million UK customers and has sold an estimated 1.7 million iPhones in the UK.
It has also provided a boost to Carphone Warehouse, which has been O2's exclusive independent retail partner. The company, Europe's largest independent mobile phone retailer, will also stock the iPhone for Orange. But in a note to staff this morning, Orange UK chief executive Tom Alexander suggested that more independent retailers may also get the phone.
"It'll be available in all of our Orange shops, online, and will also be available through some of our specially selected partner stores," he said.
It remains unlcear, however, whether Orange's use of a two-year break clause in O2's five-year deal with Apple, originally revealed by the Guardian more than a year ago, has allowed the company to renegotiate its own terms and therefore retaliate in a Christmas price war.
In other countries where Apple has released the iPhone to more than one network, its partners have not had to sign away some of the ongoing revenues they make from customers so it is unlikely that O2 is being kept to its original terms. Part of the reason for the change in tack at the Californian company is that the Apple iTunes store has been so successful in selling applications to iPhone users that these revenues are starting to replace revenues from the mobile networks.
Certainly O2 insiders maintain that the company has been preparing for an end to its exclusive hold for some time. It has already grabbed another hotly anticipated handset under an exclusive deal for the Christmas market, but the hefty price tag it has placed on that device – the Palm Pre – may put off many users.
The breaking of O2's exclusive deal in the UK leaves the US as the only one of the original four markets in which Apple launched with just one operator after legal issues led to the German and French markets having to be opened up.
source
Posts
No comments: