O2 Set To Lose iPhone Exclusivity Following Pre Capture

Telefonica-owned O2 seems now resolute over the loss of its exclusivity agreement with Apple regarding the distribution of the iconic iPhone smartphone.

This would explain why the mobile phone operator has been interested in signing Palm's Pre smartphone despite the fact that the iPhone is by far the best selling model of the new generation of smartphones currently on the market.

O2 currently has an exclusive agreement with Apple that is supposed to last until 2011 but rival networks are likely to push for Apple to rethink its strategy and make the iPhone platform agnostic; and there is no reason why Apple wouldn't do that.

The iPhone has already been well received amongst consumers and after two years has managed to dig itself a rather envious spot in the high end market; furthermore, the iPhone's audience is remarkably faithful and almost certainly has one of the lowest churn rates on the market.

The main reason why Apple would like to break the bond between itself and O2 would be to get more people to buy the iPhone and thereby get a bigger, steady stream of revenues through the revenue sharing scheme the company has imposed on all other networks.

This brings us back to O2. All other major networks in the UK, excluding 3, have some sort of "exclusive" handsets. Vodafone has the Blackberry Storm and HTC Magic (they're lucky!), T-Mobile has the G1, Orange has none and now O2 has the Palm Pre.

It would have been a shame if Britain's biggest network hadn't manage to secure what many consider as the finest of the iPhone rivals on the market and don't consider it to be a coincidence given the fact that the iPhone 2009 is set to be launch during the first week of June.

A number of other soon to be released mobile phones including the Sony Ericsson Idou, the Nokia N97 and the LG GD900 Crystal are up for grab as far as exclusivity deals are concerned.

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Our Comments

The loss of the iPhone is something O2 must have considered as part of its worst case scenario. The contingency plan in this case would have been to get the best substitute on the market. This doesn't mean though that O2 will not sell the iPhone anymore in the future, it just means that it will not be the only one on the market to do so.

Related Links

Pre on O2 in UK?

http://mypre.com/pre-on-o2-in-uk-2009241623

O2 follows iPhone success with deal for next must-have gadget

http://www.guardian.co.uk/business/2009/may/24/02-iphone-palm-pre

O2 "wins battle for Palm Pre"

http://www.pcpro.co.uk/news/253409/o2-wins-battle-for-palm-pre.html

O2: New Palm Pre and Apple iPhone in 2009

http://www.product-reviews.net/2009/05/25/o2-new-palm-pre-and-apple-iphone-in-2009/

Palm Pre out on O2 by Christmas

http://www.electricpig.co.uk/2009/05/25/palm-pre-out-on-o2-by-christmas/