Vodafone joins the iPhone throng

Cupertino gets another dumb pipe laid to its door


Vodafone has confirmed it will be selling Apple’s iPhone in the UK and Ireland from early next year, joining Orange as notches on Jobs’s bedstead.

Vodafone will be selling the iPhone from "early 2010", and while we don't have details of tariffs and contracts, consumer groups are already falling over themselves to herald a new era of customer choice and competition-driven reductions in price. Unfortunately, Vodafone's enthusiasm to sell the iPhone has almost certainly locked the operator into a deal that puts Cupertino firmly in control.

Apple has been hawking the iPhone around operators for the last year or so, though rumours indicated that the 3GS was to be excluded from any deal. T-Mobile has been selling iPhones to its best UK customers for the last few months, and unlocked iPhones have been legitimately available for ages. However, subsidised handsets with network support have been restricted to O2, despite strong demand for the handset elsewhere.

But Apple's demands for a share of user revenue, as well as control over the pricing and marketing of their baby, put some operators off signing a deal with Cupertino. This will likely result in near-identical offerings, differing only in the colours of the attached logos.

Our understanding is that Apple not only reserves the right to get involved in pricing of handsets, but also expects "partner" operators to contribute generously to Apple-controlled advertising. This is on top of the ongoing revenue share to which operators around the world have signed up. Operators used to demand exclusivity before agreeing to such things, but such is the lure of the iPhone, that Apple can call the tune without having to offer the additional inducement of an exclusive deal.

Apple already offers the iPhone through multiple carriers in many countries, but the company is very careful to maintain control of the platform, regardless of the network from which their customers get their iPhones. Apple considers iPhone users to be Apple customers - network operators are just dumb pipes to Cupertino.

Not only dumb pipes, but dumb pipes that will pay for the privilege of bringing customers to the iTunes door: doubly surprising given Vodafone's announcement of Vodafone 360. This is supposed to engender customer loyalty - or at least reliance - neither of which applies to iPhone-touting Apple fans.

This deal will prevent a few customers from leaving Vodafone, and perhaps bring in a few more, but those customers will be loyal to Apple, not Vodafone or Orange. It may not be worth the investment that the operators have agreed to make, promoting what is rapidly becoming a competing service: not a smart thing to do if you don't want to become a dumb pipe. ®

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