The Crumbling of iPhone Exclusivity

Amid ongoing industry discussions about the wisdom of exclusive handset deals, Apple Inc. is opening up carrier distribution for the iPhone around the world. And many wonder, could the United States be next?

This week it was announced that both Orange and Vodafone UK would be able to sell the iPhone in the United Kingdom (and the latter in Ireland), effectively ending the exclusivity that O2 had in those markets. There’s no work yet on pricing, but British and Irish consumers should have carrier choice for the iconic device beginning in early 2010.

That leaves Germany and Spain as the last two big Western European markets where the iPhone has exclusive carrier deals, with T-Mobile AG and Telefonica, respectively. In France and Italy, the iPhone has distribution with all major carriers.

“The shift in Apple’s strategy highlighted by the announcement means that other markets are likely to follow suit,” said Steven Hartley, senior analyst at Ovum Ltd.. “Apple needs as many distributors as possible to generate maximum sales. We questioned Apple’s ability to hit its sales projections when the first 2G iPhone launched in 2007 with such a limited, painstakingly negotiated deployment. However, Apple has become increasingly open in its distribution strategy and the result is availability today in 85 markets around the world.”

As Ovum notes in its iPhone tariff strategies report, most iPhone markets are now multi-operator environments. “This must surely be a signal for the other ‘old’ iPhone monopolies (signed for the 2G iPhone) still in existence in major markets,” said Hartley.

That may be, but will Apple end AT&T Inc.’s exclusivity in the United States? It’s a particularly piquant question as AT&T struggles with network congestion issues and unhappy customers, some of which might be happy to port their device to a new carrier.

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