Apple strikes first non-exclusive iPhone deals

The first time that the American company has made a non-exclusive arrangement in a market for its smart phone.

Two mobile service providers, UK-based Vodafone and Telecom Italia, announced Tuesday that they had struck separate deals with Apple to sell the iPhone in Italy, the first time that the American company has made a non-exclusive arrangement in a market for its smart phone.

"Apple's either turned a corner that they've had to turn, or that they've chosen to," said Ezra Gottheil, an analyst with Technology Business Research, referring to the apparent non-exclusivity of the Vodafone and Telecom Italia deals. "I don't know if they prefer the exclusivity, and the revenue sharing that goes along with it, or just prefer to sell iPhones and grow their share of the [handset] market."

Until Tuesday, Apple signed exclusive agreements with a single mobile service provider in each market it entered. In the US, for example, the only authorized network is AT&T, while in the U.K. and Germany it's O2 and T-Mobile, respectively. Orange, on the other hand, holds the exclusive rights to sell the iPhone in France.

As part of those deals, Apple receives a portion of the subscriber fees paid by iPhone owners.

It's not known whether Vodafone or Telecom Italia will share customer revenues with Apple. The two companies were unavailable for comment.

While having two iPhone sellers in Italy marks a change in Apple's iPhone business model, Gottheil remains convinced the Cupertino, Calif. company is on track strategically. "Absolutely," he said, noting that he has long expected Apple to modify its practices to make its sales goal of 10 million iPhones this year. Last month, in fact, Gottheil said Apple's attitude about "unlocked" devices — iPhones that had been hacked to work with any mobile carrier — hinted that the company has come to terms with the practice and would at least tacitly allow it in order to reach the 10-million mark.

"Apple sold 3.4 million or so iPhones in the first six months, which is drastically more than the number of iPods sold in its first six months," Gottheil said, noting the fast pace. "Apple's moving up in handset sales, certainly among advanced phones."

Vodafone, which lost out last year to O2 as Apple's exclusive network partner in the U.K. and T-Mobile in the bidding for Germany, also said it would sell the iPhone in nine other nations, including India, the world's second-most-populous country. With an estimated 1.15 billion people, second only to China's 1.33 billion, India is a huge market.

"India certainly adds a significant potential market for the iPhone," said Gottheil, adding that even in countries like India, where average incomes are far below those in the U.S. and Western Europe, the pricy iPhone has a place. "The iPhone has all the computing power and browsing ability that many people need, and for the people in India or China that can afford anything, they'll need something to give them Internet access and something to make calls.

"It's not clear that it isn't the same device," Gottheil said.

In a brief statement, Vodafone said it would sell iPhones in Italy and India, as well as in Czech Republic, Egypt, Greece, Portugal, New Zealand, South Africa and Turkey. The company did not say whether its agreement with Apple was exclusive in any of the countries.

Telecom Italia, Italy's largest telecommunication company, issued an even shorter statement. A translation of the 17-word announcement noted that Telecom Italia would start selling the iPhone in Italy "within the year."

Telecom Italia Mobile, the company's mobile brand, has an estimated 35 million subscribers. Vodafone, meanwhile, counts an estimated 252 million customers on its rolls.

Apple did not issue a press release touting the new deals with Vodafone and Telecom Italia, and was not immediately available for comment.

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Gregg Keizer

Computerworld

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