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iPhones everywhere... UK's soon-to-be market leader wins the deal

Orange UK gets to sell the iPhone. Vodafone ever so slightly miffed

Posted By Martyn Warwick , 28 September 2009 | 1 Comments | (2)
Tags: Industry Devices Mergars & Acquisitions mobile mobile data

Put out more flags. The iPhone is, officially, the coolest thing in Britain. Except, of course, for those handsets that overheat. Good news for Orange and a poke in the eye for Vodafone. Orange has just announced that it will start selling the device "later this year" when O2's exclusive distribution deal expires, as Martyn Warwick reports.

The globally famous car-maker Aston Martin has been knocked-off off the top of the list of the UK's "coolest" brands by Apple's iPhone. The announcement comes at a fortuitous time for France Telecom's Orange. The company has this morning confirmed widespread and persistent rumours that it will begin to sell the greatest mobile device in the history of the known universe "later this year".

Telefonica's O2 has been Britain's sole distributor of the iPhone since striking what has turned out to be a very lucrative exclusive deal with Apple back in 2007. However, that period of exclusivity expires shortly and then the iPhone will be available from another source.

However, there is no indication as to whether Orange's arrival on the scene will lead to any meaningful price competition that would be to the benefit of the consumer. Orange will not be drawn on its pricing plans or the length of time punters will have to sign-up to to get an iPhone contract. Ominous.

It has been rumoured for months that Apple was leaning towards awarding Orange a deal to distribute the iPhone in the face of intense competition from other mobile a service providers but the agreement was cemented only after the proposed merger of T-Mobile's UK arm with Orange was mooted. Apple believes the expected takeover, that would create the biggest mobile network in the UK, will turn Orange, into a fearsome market-leading competitor.

If/when T-Mobile disappears the British scene, the country will be left with four big mobile players with Orange being the dominating presence with a 37 per cent market share.

Speaking last week, France Telecom's director of finance, Gervais Pellisier, noted that FT and T-Mobile are already “good partners” to Apple in their home markets, where they already sell the iPhone. He added “We have a very good chance to be a strong partner in the UK as well.”

O2 is well aware that its uninterrupted period of making hay while the sun shines is coming to an end and that it will soon have rivals. Back in February O2 confirmed that it had sold over a million iPhones in the UK. That was seven months ago, and despite the ongoing economic downturn, the carrier has continued to sell the device by the cartload, helped particularly by the June launch of the "new and improved" iPhone 3GS.

The runaway success ot the iPhone has meant that the UK's big mobile operators have been vying viciously with one another to seal a deal with Apple (with Vodafone seeming to have been particularly desperate to get into bed with that nice Mr.

Jobs) once the O2 contract expires - not only because the iPhone is such a popular and iconic device that millions of subscribers around the world have churned away from their established networks and queued-up to get their hands on one of them, but also because the handset has massively boosted the mobile data revenues of those operators that do sell the device. Subscribers routinely use the iPhone to browse the mobile Web and download a myriad of applications, something the distributors of rival smartphones can only dream about.

In a newly published release Orange says, "Orange, which has the largest 3G network covering more people in the UK than any other operator, will sell iPhone in all Orange direct channels including Orange shops, the Orange webshop and Orange telesales channels, as well as selected high street partners."

To take a little gilt off the gingerbread, there is some speculation that the Orange agreement will, in the early days at least, refer only to first generation iPhones as Apple seeks to rid itself of old models during the upcoming Christmas present buying season. Orange so far has neither confirmed nor denied this. Meanwhile O2, will continue to sell the phone in the UK but, for it, the best of the good times are almost certainly over.

No reaction of comment so far from Vodafone, probably because many executives there are too busy biting their office carpets.

But, for Orange this morning all publixcity is good publicity and the company is basking luxurously in the reflected glow of the new report from CoolBrands showing that the Aston Martin, the favoured mode of transport of 007 and, hitherto, the most coveted car in the UK, has been relegated to second place behind the iPhone.

However, the device may not hold the Number One position for long - as Stephen Cheliotis, the chairman of the CoolBrands Council and CEO of the Centre for Brand Analysis notes, “Aston Martin has finally lost its top spot in the rankings but only just... cool can be very fluid and changeable... it would be easy for the brand leaders to take their eye off the ball, become complacent and let others steal their thunder..."

That said, Apple has three places in the CoolBrands 2009/2010 Top Twenty. The IPhone is at Number One, the Apple computer family is at Number Three and the iPod at Number Four.

Blackberry is there too - at Number Seven, Dom Perignon champage hangs in there at Number Thirteen, and the BBC iPlayer (a diruptive technology and service if ever there was one) is at Number Twenty.

Interestingly, Facebook, a site and service whose time seems to have come... and gone, fell out of the "Cool" Top Twenty altogether and is unlikely to make a reappearance.

Sic transit gloria mundi, friends.


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(1) 28 September 2009 18:20:43 by Ewan MacLeod

I enjoyed your perspective Martyn! I particularly liked the 'executives there are too busy biting their office carpets' quote!