An end to iPhone exclusivity

The most interesting thing about Vodafone’s announcement this week that it has struck a deal to sell the Apple iPhone, is that it signifies an end to the exclusivity deals Apple has been so fond of.

Vodafone will be able to sell the device in ten countries: Australia, the Czech Republic, Egypt, Greece, Italy, India, Portugal, New Zealand, South Africa and Turkey.

But Telecom Italia Mobile (TIM) said on the same day that it too “has signed a deal with Apple to bring the iPhone to Italy later this year”. We can probably assume that the Vodafone deal didn’t extend to the UK and Germany because of the existing exclusivity agreements with operators (Telefonica O2 and T-Mobile) in those markets. And as Ovum analyst Steven Hartley points out, Italy is a bit of a special case.

“Italy has the second highest proportion of prepaid in Western Europe (87% in March 2008), far higher than any of the five major Western European markets. Given that the iPhone is likely to be available only to contract customers, the Italian market simply requires a different approach to attract sufficient customers,” Hartley says.

If this is the thinking, and it seems likely, then we can probably expect further markets where Apple needs to work with multiple operators to make the offering viable. After all, it’s long been rumoured that Apple gets something between a 20 per cent and 40 per cent revenue kickback from iPhone users in exclusive markets, but in a country dominated by less effluent prepay subscribers, how do you sell a gadget costing hundreds of Euros if its tied to one provider? It would be interesting to see if Apple has changed its revenue model as well, particularly given the slowing rate of adoption of the iPhone in Europe.

As for the introduction of a 3G device? Well that is a question still left to the imagination, with neither Voda nor TIM making any kind of comment. On the one hand, the fact that these operators are launching the device ‘later this year’ suggests that it will be a new model, but as Ovum’s Hartley also points out, the inclusion of India and Turkey in the list, neither of which yet have 3G, may raise some questions. However, both these countries do have EDGE networks, meaning that a 3G iPhone would be backwards compatible.