UK Mobile Networks At The Mercy Of Apple In iPhone Talks?

Observers largely agree that Apple releasing the iPhone on several mobile phone networks will spark a massive price war across the nation early next year, something that we reckon might not be as easy as you'd think.

Although the iPhone is a huge crowd puller, it comes with a number of strings attached. Apple doesn't want it to be branded in anyway (notice the absence of O2 on all iPhones), it wants absolute control on the platform (note the absence of O2 applications loaded by default) and, shock horror, wants to get a cut of the monthly contract PLUS the revenues generated by the App store.

Take it or leave it. Vodafone left it first but then after losing 160,000 customers now has to wait till next year to be the third network to get the iPhone in the UK - talk about being humiliated!

The iPhone could be compared to a supermarket's loss leader products; networks might make money on it, but not as much as on other smartphones. Ironically, they could be using Apple's smartphone as a tool to negotiate better deals with the likes of HTC, Nokia or Samsung.

As for the rest of the competition, it depends on whether Apple deigns giving them the right to sell the iPhone or not. Virgin Mobile, with its 4 million or so customers, is rumoured to be interested and T-Mobile UK, which will soon be part of Orange, is likely to get the iPhone anyway.

The small mobile virtual network operators - the likes of Tesco Mobile, Asda, Ikea - won't be affected by the change of strategy from Apple. Their customers are very different from the ones targeted by O2, Orange and Vodafone, except if Apple decides soon to introduce cheaper models.

Our Comments

Obviously, a price war will benefit Apple rather than the other networks since the Californian based company will be getting a cut of profits plus any revenues from iTunes and its extremely lucrative App Store.

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