Mobile network O2 wins the iPhone for the UK, but others say the deal means they'll barely make money from it.
O2 is about to roll out the long-awaited
iPhone in the UK, and no doubt sales will be high. But, according to rumors, it’s cost the company a lot to secure the exclusive franchise for Britain.
Under a non-disclosure agreement no one is allowed to reveal details, but a competitor that lost out described the deal as “madly money-losing.”
O2 will give Apple up to 40% of the revenues that come from its customers using the iPhone, and has agreed a margin on the retail price – although that price can be changed by Apple at any time. O2’s share will also pay a commission, and there will be another revenue share with
Carphone Warehouse, which will be the sole independent retailer of the iPhone on behalf of O2.
It’s understood that Apple wanted Carphone Warehouse in the deal because it worried that O2’s retail presence wasn’t large enough in the UK, even thought it has many stores of its own and just last year acquired independent retailer The Link.
Those wrapped in negotiations evidently hadn’t been given advance notice that Apple plans to release the iPod Touch, which is essentially an iPhone without the phone capability
Apple’s believed to have played the main European operators against each other in order to secure the best deal, and it’s apparently worked. Both
Orange and
T-Mobile were at one time believed to have signed contracts for the iPhone in the UK, but O2 carried the day by basically letting Apple it could have everything it desired, to the extent that competitors don’t see how O2 can make money on it.
It’s understood that T-Mobile will get the iPhone for Germany, and Orange for France, although those deals won’t be announced until later this week.
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