iPhone Goes Wide in UK

Ending months of speculation, yesterday France Telecom's Orange announced that the company would sell the iPhone later in the year. In addition Orange rival Vodafone, which already sells the iPhone around the globe (in almost a dozen countries), said that it would also sell the device in the UK and Ireland in "early 2010." O2 had been the exclusive vendor for the device until this point.

None of this was a surprise. But what will be interesting to watch is how the wide availability of the iPhone across the major carriers plays out in a very competitive market. There may be pricing competition as a way to differentiate. To that end Orange said in its release, "more information on pricing, tariffs and availability dates will be released in due course." 

In the absence of any significant differentiation among the operators, the iPhone should now have a non-impact on sales or churn. Thus the operators will probably keep their customers, who might have defected to get the device. However the iPhone itself will likely gain share in the UK relative to other handsets. Individual operators will likely gain data customers however and increase revenues accordingly.

In the US if the iPhone were more widely available, the same thing would likely happen -- more iPhone buyers, more data revenues but little impact to carrier subscriber numbers. This move is clearly a win for the iPhone but offers a more mixed picture for Vodafone and Orange, which must carry (and subsidize) the device to defend against O2. Previously O2 was the exclusive carrier of the device in the UK.

Orange and T-Mobile have agreed to combine their operations in the UK and are forming a joint venture to become the largest wireless operator in that market.

Here's a snapshot of the UK mobile phone market (source: Ofcom):

  • 77 million mobile subscriptions in the UK, more than one per person
  • Users on contract: 30 million in 2008: pay as you go fell to just under 47 million
  • More than 80 billion texts in 2008: 100 texts per person, per month
  • Consumers made 100+ billion minutes of calls in 2008, 123 minutes, per mobile, per month
  • Mobile-only households: 12% of UK HH; compare US: 17% (51 million people)

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Related: The Pre goes on sale in the UK on October 13 for free (from O2) with a 24 month contract.