O2 To Offer A 40 Percent Revenue Share For IPhone?
By Ingrid Lunden - Mon 17 Sep 2007 06:21 AM PST
For those of you who thought a ten percent revenue share on services sounded like a steep and unprecedented deal for operators to cut to Apple in exchange for the privilege of selling the iPhone, get ready for more craziness: today the rumor is that Telefonica’s O2 is actually going to give Apple a FORTY percent of all revenues made off the iPhone. This will be on top of any margin O2 has agreed with Apple on the retail price of the device, which will reportedly also need to be shared with Carphone Warehouse—these details will presumably be made more clear at Apple’s press conference in London tomorrow, which everyone expects to be related to the iPhone.
According to a story in the Guardian, Apple has played all mobile operators off each other and has specifically sought national deals as a way of increasing its bargaining position [no mention of the FT Deutschland rumors that T-Mobile might actually be offering it in more than one country]: “Orange and T-Mobile are understood to have signed contracts [in France and Germany respectively] and at least one had Apple employees helping to implement the device on their networks. But at the 11th hour O2 snatched the UK deal with an offer that gave such a high proportion of revenues to Apple that none of its competitors could see any way of making any return on the phone, even over three years.”
Technically it is still unknown whether it is O2 that has clinched the iPhone deal in the UK, but the Guardian story leads with this fact as a done deal. O2 CEO Peter Erskine last week said that even with revenue sharing in place, an iPhone deal would be to any operator’s advantage. But also remember that while O2 has made some very successful plays in the mobile data space—O2 Active is one of the top mobile data portals in terms of usage in the UK—it has also been host to some costly failures, such as trying to launch i-mode. It’s unclear how this launch will tally with O2’s other custom-designed music phone called the Cocoon, which they expected to launch around now. Still, even if Apple has tried to “divide and conquer,” linking up with a Telefonica-owned company could have other advantages for Apple when it takes its product into Spain and significantly Latin America, where Telefonica is an active wireless player. Meanwhile, TechCrunch is reporting that the iPhone in France will be selling at a 300-euro price point, with no unlimited data plan, and no 3G access. The French iPhone product is due to launch at the end of November and will be announced later this week at the Apple Expo in Paris.
The Independent has a piece about the incipient European launch of the iPhone, arguing that the carriers are less than pleased that the iPod Touch will be available before Xmas. “Ben Wood, a research director with CSS Insight, said: “I think the product will have come as a shock to the network operators that have secured exclusive rights to sell the iPhone in Europe. The iPod touch risks dampening demand for the iPhone. Users will quickly realise they can purchase the iPod touch and get all the benefits of the iPhone – plus an additional 8 gigabits of storage – at the same price, without having to commit to a lengthy contract term.” I’ve got to take issue with that—buyers of the iTouch do not get all the benefits of the iPhone because it lacks mobile connectivity and is therefore a completely different device...people can’t use it to “converge” their music players and mobile phones for one. However, it does illustrate that the iPhone is considered a video iPod with mobile capabilities, rather than a phone with iPod capabilities. There was a lot of discussion about this a while ago, but it died away when the iPhone was launched. Perhaps it’s significant that the carrier quoted in the story, O2, doesn’t believe the iPod touch will damage demand for the iPhone.
Posted in: Companies, Apple, Operators, O2, Countries, Europe, UK, Gadgets
