Apple Adds Vodafone as Third UK iPhone Dealer

And then there were three: Vodafone and Apple confirmed Sept. 29 that they have reached agreement to bring iPhone 3G and iPhone 3GS to the UK and Ireland in early 2010. The announcement came just one day after France Telecom's Orange said it will begin selling the Apple iPhone in the UK later this year when Telefonica's O2 exclusive deal with Apple expires.

O2 will continue to selling the iPhone, leaving T-Mobile Germany as the last exclusive European distributor of the iPhone.

Neither Apple nor Vodafone announced pricing, tariffs and availability information but interested consumers can register at Vodafone's site.

"Orange and Vodafone will also undoubtedly benefit from the hype generated by all things iPhone. However, the degree to which they benefit depends on the tariff plans associated with the device," Steven Hartley, a senior analyst at Ovum, wrote in a Sept. 29 note. "We do not believe that they will be able to differ dramatically from O2 on the device costs (Apple’s sales terms will dictate that). However, they could exploit differences in their tariff plans."

Hartley predicted Vodafone and Orange will aggressively target O2’s iPhone customers since O2 customers who signed up for the 3G iPhone at launch will be coming to the end of their 18-month tariff in January 2010, including those customers that upgraded from the 2G version.

While Hartley said the deals with Orange and Vodafone marked the "end of the party" for O2, he added that O2 still holds significant advantages.

"It has 100 per cent  UK iPhone market share. Anyone desperate to get the iPhone will already have one and be locked into a contract," Hartley wrote. "High subscriber acquisition costs are therefore less relevant than generally lower retention costs. Secondly, this was always inevitable so O2 has had time to plan a response. The first example of this is its exclusive deal for the Palm Pre, which will be used to attract those seeking an alternative to the iPhone."

In the United States, where AT&T is exclusive distributor of iPhones, AT&T CEO Randall Stephenson admitted July 23 the company's partnership with Apple as the exclusive provider of the iPhone will inevitably end and network quality will ultimately be the differentiator between carriers' offering the wildly popular iPhone. AT&T's deal with Apple -- originally signed in 2007 -- is rumored to end next year.

AT&T added nearly 7 million subscribers in 2008, many of them seeking the sleek, touchscreen iPhone and poached from rival carriers Verizon, Sprint and T-Mobile. For the second quarter alone, AT&T added 1.2 million new subscribers. Approximately 1.2 million of the new users signed up for a subsidized iPhone and a two-year contract.