iPhone Exclusivity: The Beginning of the End?
by John Paczkowski
Posted on September 29, 2009 at 5:45 AM PT
iPhone exclusivity is rapidly coming to an end. Less than 24 hours after Orange UK announced plans to offer Apple’s iconic handset to its customers “later this year,” Vodafone said that it plans to do so as well. Together, the two carriers will bring to an end a two-year exclusive contract held by rival O2, which overtook Vodafone as the largest mobile network in the U.K. largely on surging consumer interest in the iPhone.
“We estimate that the iPhone represents more than 100 percent of O2 UK’s growth, 6 percent of subscribers, 14 percent of service revenues and 13 percent of earnings before interest, tax, depreciation and amortization,” said Bernstein analyst Robin Bienenstock. “In the UK O2 has consistently taken contract share from competitors (in particular Vodafone) since its sole distribution of this iconic brand began.”
So what will happen now that three carriers will be peddling the device? A price war, most likely. “Research shows that in every country where there is more than one operator selling it, it is cheaper,” Steven Hartley, analyst at technology research house Ovum, told The Telegraph. “It could be very disruptive, but it depends how Orange play it. If they get really aggressive O2 will have to respond and a full-on price war could start.”
A more interesting question to ponder, though, is whether the end of iPhone exclusivity abroad means the end of exclusivity in the states as well. Apple’s (AAPL) contract with AT&T (T) is set to expire as early as next year, but that doesn’t necessarily mean it won’t be renewed–much as customers dissatisfied with the carrier’s network hope it does. By ending exclusivity with AT&T, Apple could offer the iPhone through Verizon (VZ) as well, potentially more than doubling U.S. iPhone sales in the near term. But to do that, the company might have to build another version of the device, which would remove the advantage of manufacturing and supporting a single model per year.
Comments
John please can we give the consumer a bit more credit. A price war is not the only likely result. Maybe (please) when the same handset if offered through multiple carriers we can finally get to consumers buying from carriers that offer better service…
I’m talking about more than coverage. How about reliable voice mail, clear/accurate billing, responsive support services, text messaging handling, alternate and competitive carrier integration, the list goes on.
Please – lets educate the consumer to drive the carriers back to what they should be doing Vs the front page.
Posted by Keith Turcot at September 29th, 2009 at 7:38 amI think what people dont understand is a carrier’s capacity in large urban areas, versus rural and suburban areas.
ive had friends complain about their phones calls dropping off, little or no signal or unbelievably long wait times (lag)making phone calls, txting or checking mail on 3G networks.
Its a network, just like at work, it has capacity and threshold limitations.
I think apple’s branching out to different carriers is a good indicator of a product value. if the Iphone ports to Verizon, or Tmobile and it’s just as popular on those carriers as it was on ATT, this should improve all carrier’s services, and ATT has much to fear.
just a suggestion.
Posted by mike Diaz at September 29th, 2009 at 1:22 pm