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O2 to hand over up to 40% of iPhone service revenues to Apple

DailyTech reported in early July that Spanish-owned O2 won exclusive rights to the Apple iPhone in the United Kingdom. There were vague details of revenue sharing bantered about among analysts at the time, but today the concrete details have come to light.

According to The Guardian, Apple will rake in as much as 40 percent of the revenues generated by O2 customers using the iPhone. This is in addition to the commission and revenue sharing imposed by O2's relationship with Carphone Warehouse. Carphone Warehouse will be the sole retailer for O2-based iPhones in the UK.

"I can't imagine any of the operators agreeing to terms like that," said one UK telecom official. "It is an extraordinary number."

It is believed that Apple receives $3 to $11 per month from AT&T for each iPhone customer in the United States.

While O2 may have the sold it soul to Steve Jobs to gain exclusivity in the UK, it is reported that T-Mobile and Orange will have iPhone-exclusive partnerships in Germany and France respectively. The T-Mobile announcement will be made on Wednesday, while the Orange announcement will be made on Thursday according to The Guardian.

One thing that is uncertain for either market is pricing for the iPhone itself. Apple made rather large waves in the North American marketplace when it priced the 8GB iPhone at $599 -- it still wasn't enough to dissuade the iPhone faithful from lining up for hours to get their hands on the device.

Apple garnered even more attention when it decided to drop the price by $200 to $399. That move sparked a revolt from early iPhone customers and eventually led to a surprisingly apologetic Steve Jobs with $100 of store credit in hand.

Updated 9.19.07: 
As expected, Germany today officially chose Deutsche Telekom to be the official German host of the iPhone, which will go on sale on November 9.  The 8GB version of the iPhone will cost German consumers $557.



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What is O2 thinking?
By mcnabney on 9/18/2007 12:48:50 AM , Rating: 5
I didn't know Europeans were dumb enough to buy this crap.




RE: What is O2 thinking?
By Gul Westfale on 9/18/2007 1:00:26 AM , Rating: 2
one of my friends here in montreal wanted to get one when it comes out, but then he read this and bought a sony ericsson instead:

http://www.thebestpageintheuniverse.net/c.cgi?u=ip...

i'm sticking with my nokia. no way in hell i'm gonna pay that kinda money to call somebody on he phone.


RE: What is O2 thinking?
By Ralph The Magician on 9/18/2007 1:29:26 AM , Rating: 3
Sounds like your friend is a complete tool if he genuinely wanted something, and then changed his mind and bought something else because of a piece of internet satire.


RE: What is O2 thinking?
By Maskarat on 9/18/2007 2:14:45 AM , Rating: 5
And what is a member of the Church of Jobs called then?


RE: What is O2 thinking?
By AlphaVirus on 9/18/2007 10:20:44 AM , Rating: 2
I LOL so hard when I read that.
People honestly follow apple's cult and dont think anything is wrong because their products "look cool".I am glad I have a mind of my own and have not gotten sucked into this bregade of evil fellowship of mindless drones.


RE: What is O2 thinking?
By rsmech on 9/18/2007 2:29:13 AM , Rating: 2
Wrong, to be a complete tool he would have bought it because he read the New York Times satire of the phone. Was he wrong in the comparisons?


RE: What is O2 thinking?
By zerocool84 on 9/18/2007 3:16:29 AM , Rating: 2
That site made my LOL


RE: What is O2 thinking?
By Polynikes on 9/18/2007 11:37:41 AM , Rating: 2
Hehe, good link.


RE: What is O2 thinking?
By Locutus465 on 9/19/2007 11:41:52 AM , Rating: 2
Your friend is a moron if he made a purchasing desision based on that...


RE: What is O2 thinking?
By kelmon on 9/18/2007 3:57:03 AM , Rating: 2
I'm just gutted that the iPhone almost certainly won't be released in Belgium. Many European countries sell the phones discounted with a subscription from a provider but that's illegal in Belgium so Apple aren't able to enter into an exclusivity contract with a provider here. I'll have to see if I can pick up one from the UK and get it unlocked but I'm honestly worried about the unlock being disabled via a firmware update later.

Personally, I'm in need of a new phone since the current one is about 6-years old and the iPhone would be a perfect fit. Not entirely sure why you're calling it crap since most people who bought one seem to be very happy with it.


RE: What is O2 thinking?
By seamonkey79 on 9/18/2007 9:17:01 AM , Rating: 2
There's this thing about people who spend too much money on something because they can... they're almost always happy with it. Why? Because being unhappy with it would imply that they were a wee bit silly in their purchase. Either that, or their expectations are so low that they can't help but be happy with it.

But, when you get right down to it, they're not happy either. The other day I saw an iPhone user trying to do something, I didn't pay much attention to it, then suddenly he blew up, started swearing, and threw his phone on the ground and jumped on it and kicked it and just smashed the heck out of it. This was at a store with people in it, we all just stared at him, then this dude started clapping. It was funny, the guy was just standing there fuming, then he blushed and left the store.


RE: What is O2 thinking?
By Murst on 9/18/2007 9:34:00 AM , Rating: 2
Without knowing much else, I'd guess that he was unhappy with something other than his cell phone.


RE: What is O2 thinking?
By kelmon on 9/18/2007 10:38:58 AM , Rating: 2
Pictures or it never happened.

I'm sorry but I'm definitely calling this made up. No one is going to smash an iPhone when they can just sell it and at least recoup some of the money. Either that or they're just plain nuts and therefore doesn't matter either. Honestly, I could believe that someone wasn't happy and returned it but suggesting that they smashed their own phone is just unbelievable.


RE: What is O2 thinking?
By tjr508 on 9/18/2007 11:57:51 AM , Rating: 2
RE: What is O2 thinking?
By seamonkey79 on 9/19/2007 12:08:06 PM , Rating: 2
quote:
Pictures or it never happened.


You obviously don't know humans. When a person gets mad, particularly at an inanimate object, they are definitely capable of breaking it. I'm sorry you think I'm making things up, but that's your right as a human :-)

I respect people's privacy, and as such, while my phone does in fact have a camera on it, and is capable of taking videos, I don't do such, because it irritates the heck out of me that people are likely doing such to me, and I hate it, so I don't do it to them, because they might hate it. Who knows, this guy could be husband to someone who's reading this, and they might have gone out and bought another iPhone, so then their spouse would know that not only did they spend (probably) $600 on the phone in the first place, but then broke it in a fit of anger, and then another $400 to replace it. So no, no pictures.


RE: What is O2 thinking?
By Pjotr on 9/18/2007 12:19:13 PM , Rating: 2
We're not, you'll see. European phone sales, in Sweden at least, are now over 50 % 3G phones, not having 3G will hurt badly. Secondly, music purchases and watching TV is already in full swing among the trendy today in Europe, so iPhone doesn't add much new at all.


RE: What is O2 thinking?
By Locutus465 on 9/19/2007 11:44:25 AM , Rating: 2
You would think that after all the efforts Apple had to make here to get real iPhone sales going (i.e. beyond launch day madness) O2 would have been smart enough to realize that the iPhone isn't worth it at all! There are a whole bunch of acceptable (and depending on your POV better) alternatives out there, for way cheaper. I'm loving my i730 which lets me use any Mp3 as a ringtone with out having to double purchase it for instance...


RE: What is O2 thinking?
By msheredy on 9/19/2007 12:07:46 PM , Rating: 2
I actually look forward to days when good news for Apple is annonced on this site. Every Apple hater climbs out from their dull boring lives to rant. To say that the iPhone is an overpriced phone and that there are cheaper more feature filled options out there goes without saying. I see it every day in the automotive industry too. Why buy a Mercedes when you can get a Nissan with more standard options for less??? Because of the experience, that's why. Don't try to figure it out... It's just human nature. Now go have fun trying to figure out your "Smart phone" while I have fun using my iPhone.


RE: What is O2 thinking?
By cochy on 9/19/2007 12:55:57 PM , Rating: 2
Is the iPhone not considered a "Smart Phone"?

Which Smart Phone do you find excessively difficult to use?


RE: What is O2 thinking?
By Locutus465 on 9/19/2007 3:14:03 PM , Rating: 2
I had no problem figuring out how to set an Mp3 as my ringtone on my i730 *FOR FREE* , ammmmazing, no hack required! I also had no problem figuring out how to get on my verizon 3G internet network with the i730, how to set up email, how to set up wireless sync, how to download and install a 3rd party chat client that integrates AIM, Yahoo, MSN and ICQ... Didn't have any problems with typing on my slide out keyboard either interstingly enough... Many of these things you'll never figure out how to do with an iPhone because, well... You simply can't do it with an iPhone.

I'm not an Apple hater, but I do think they charge quite the premium for their products, a bit too much for some to swollow (my self included). The iPhone does reportedly have the best LCD on the market which should be nice, and apparently for the most part it's very responsive which is nice too. But the fact that apple had to knock $200 off the price so soon after launch speaks volumns about how the market at large views the iPhone, an expensive gadget that they don't need *THAT* much. Not when verizon is selling i730's for $100 (yes, that's $100 total) which runs Windows Mobile 5, which means you get access to a huge library of 3rd party softare, good exchange integration etc.


RE: What is O2 thinking?
By Locutus465 on 9/19/2007 4:20:22 PM , Rating: 2
Ah yes, and because my iPhone has an off button I also won't have any trouble figuring out how to avoid a $4,800 phone bill while on vacation...

http://hardware.slashdot.org/article.pl?sid=07/09/...


RE: What is O2 thinking?
By Locutus465 on 9/19/2007 4:20:59 PM , Rating: 2
Ah, crud.... I meant to say my i730... lol, too many phones that start with 'i'


Pricing has been announced
By Lonyo on 9/18/2007 8:01:43 AM , Rating: 3
http://news.bbc.co.uk/1/hi/business/7000370.stm

Handset: £269 ($536)
Customers have to sign up for an 18-month contract on a tariff of £35 ($70), £45($90) or £55($110) a month, all of which will include unlimited mobile data usage.

For comparison, the Nokia N95 is £90 with a contract.




RE: Pricing has been announced
By dav115 on 9/19/2007 4:03:43 PM , Rating: 2
Actually you can now get the N95 for free if you sign a £30 per month 18 month contract with 02. http://shop.o2.co.uk/phone/Nokia/N95


RE: Pricing has been announced
By ghost101 on 9/20/2007 6:10:00 AM , Rating: 2
I got the Nokia N95 free on a 12 month £35 contract with £155 cashback over the year.


RE: Pricing has been announced
By ghost101 on 9/20/2007 6:17:06 AM , Rating: 2
The cashback is additional. Basically a rebate should you wish to take it. So the phone + contract costs you anywhere between £265 and £420. For me since i have the time to fill out the casback forms, it should be £265.

Bargain compared to the iphone and similar 12 month offers crop up all the time.

The Samsung G600 can also be had for free on competitive contracts.


Exclusive?
By tjr508 on 9/18/2007 11:53:04 AM , Rating: 2
When I lived in the UK, there was a shop right in the mall (Livingston) dedicated to phone unlocking. The sign didn't give it away but the large fella standing in front with a shirt that read "PHONE UNLOCKER" in giant letters did. Hell, I was even sent there by an 02 sales rep because I wanted their sim card and already had a quad band gsm phone. I can see Vodaphone people and the likes just sending people right down the hall to get iPhones on their networks.




RE: Exclusive?
By darkblueslider on 9/18/2007 5:22:20 PM , Rating: 2
In the UK, operators are obliged to provide an unlock code for a price (capped at £20, i believe).
Whilst Useful, its a little pointless in this case, considering you can't get the phone until you've signed up for (at least) a 18month £35 Contract.


RE: Exclusive?
By Johnmcl7 on 9/18/2007 7:41:19 PM , Rating: 2
It's not capped, I can't remember the exact terms but the networks are allowed to charge an 'admin fee' - I think it's just Orange that charge the 20 quid, others charge 35 quid.

Also getting the unlock code isn't that simple, with most companies you will need to have been with the network a certain time which is usually the minimum length of the contract. I believe Orange will unlock it for you earlier but only if you pay all your line rental upfront.

John


RE: Exclusive?
By darkblueslider on 9/18/2007 5:22:33 PM , Rating: 2
In the UK, operators are obliged to provide an unlock code for a price (capped at £20, i believe).
Whilst Useful, its a little pointless in this case, considering you can't get the phone until you've signed up for (at least) a 18month £35 Contract.


This shows what the UK mobile market is like.
By George Powell on 9/18/2007 5:22:14 AM , Rating: 2
The mobile market in the UK is pretty incredible. Without too much looking around it is possible to get contracts that will cost you nothing at all. The various providers are all doing everything they can to differentiate themselves from each other. While 40% of revenue is a lot the iPhone will always be a niche product, unless Apple stop charging for it, so is unlikely to hurt O2s bottom line too much. Most phones are available for free with a new contract in the UK at the moment and this extends to some of the 'PDA' style phones as well.




By xsilver on 9/18/2007 7:27:04 AM , Rating: 2
I think one of the reasons why O2 may be willing to take this is because the reasoning that if you're fashion conscious enough to get the iphone, you're probablly going to be spending mucho $$$ per month. Bottom line for O2 is still good.

Either that you're one of those people who just have a phone for looks and don't actually call anybody so 40% of $0 is still 0. lol.


40% isn't bad
By Dactyl on 9/18/2007 11:48:13 AM , Rating: 3
Who knows what AT&T paid?

And then the iPhone was unlocked.

Paying a straight percentage means that O2 doesn't lose any money on unlocked phones. At worst, they simply don't get money. O2 is being careful and that is smart.

I think most people will stick with the default carrier, especially if O2 doesn't try to gouge people like AT&T did. Unlocking is a bit of a hassle* and its pointless if O2 gives good service.

* I am guessing that the iPhone was updated to prevent it from being unlocked in the same manner as in America, but that's just a guess. And if there is no hack from day zero of the Euro release of iPhone, there will be a hack soon enough.




By darkblueslider on 9/19/2007 6:25:50 AM , Rating: 2
http://technology.timesonline.co.uk/tol/news/tech_...

"O2 is thought to have agreed to hand back about 10 per cent of subscriber revenues each month to Apple".

I'm curious then - where does Dailytech's 40% figure come from?




By kamel5547 on 9/19/2007 1:08:02 PM , Rating: 2
10% similar to ATT.




4 Words
By AlphaVirus on 9/19/2007 3:56:45 PM , Rating: 2
I'm tired of Apple.




Gah....
By daftrok on 9/18/2007 2:25:11 AM , Rating: 1
If Apple isn't going to put up with NBC for $4.99 episodes than O2 shouldn't put up with Apple for 40% revenue.




"This week I got an iPhone. This weekend I got four chargers so I can keep it charged everywhere I go and a land line so I can actually make phone calls." -- Facebook CEO Mark Zuckerberg














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