Apple

Orange will carry the iPhone in the U.K. in the fourth quarter of this year, the operator announced Monday.

The move marks the end of competitor O2's lucrative exclusivity on Apple's handset in this country, and comes days after O2 announced the release details for the rival Palm Pre smartphone, on which it has U.K. exclusivity.

Orange did not say exactly when it will begin to carry the iPhone. When O2 launched its iPhones in November 2007, it did not specify the duration of its exclusivity deal with Apple, other than to describe it as "multiyear." The most conservative understanding of "multiyear" as "two-year" indicates that the earliest Orange could start stocking the handset is November 9.

All currently available versions of the iPhone--the 8GB 3G, the 16GB 3GS, and the 32GB 3GS--will be offered by Orange, a spokesperson for the company said. The France Telecom-owned operator has not given details of pricing. Orange sells the iPhone in 28 countries and territories worldwide.

The end of O2's iPhone exclusivity in the U.K. confirms rumors that had been circulating in recent months, and "fits in with O2 getting the Palm Pre," Gartner analyst Carolina Milanesi said.

"It's something we expected, given how Apple moved away from exclusivity deals in all the other countries except the U.K., Germany, and U.S.," Milanesi said. "Apple will get a larger footprint in the U.K., which is their biggest market outside the U.S."

Milanesi predicted that Orange will offer similar iPhone tariff pricing to that available on O2 and will rely instead on "differentiated offerings on services" to set it apart from its rival. O2 has various tariffs for the iPhone--for example, a 44.05-pound-per-month ($70 per month) tariff on a 24-month contract gives the user the iPhone 3GS for free.

The Gartner analyst also said O2 would be likely to position the Pre as an alternative to the iPhone for "people who want a similar experience but with a QWERTY keyboard."

Orange and T-Mobile are currently in talks regarding a merger, which is scheduled for mid-2010. A spokesperson for T-Mobile said Monday that the two operators are remaining "standalone operations" for now, and that the Deutsche Telekom-owned carrier has no plans to stock the iPhone.

David Meyer of ZDNet UK reported from London.

Like it does in most countries, Apple has a preferred wireless carrier in the United Kingdom. In this case the carrier is O2, but that may not be the case for long, at least for the iPhone 3G.

(Credit: Apple)

According to a report on Mobile Today, Apple may open up iPhone 3G sales to other wireless carriers in the U.K., namely O2 competitors Orange and T-Mobile. O2's exclusive with Apple reportedly ends in September, giving Apple a couple of months to set up other deals.

T-Mobile is so sure that they will get the contract for the iPhone 3G that its call center employees have already begun telling customers that it may have the iPhone in the future, according to Mobile Today

If Apple were to open up the iPhone to other carriers it could increase sales of the older model phones, while continuing sales of the new iPhone 3GS with O2.

Many people in the U.S. are hoping Apple will do the same thing here. Rumors of talks between Apple and wireless carrier Verizon have been floating around for months, but so far nothing official has happened.

Verizon's work on its 4G network, which is based on the GSM standard, have kept the rumors alive. AT&T is said to be negotiating with Apple to keep its exclusivity deal.

Orange, Apple's wireless partner in France, on Friday said it had sold its first million iPhones in that country.

Apple and Orange began selling iPhones in France in late-November 2007. The 1 million iPhone milestone is an important goal for the carrier and Apple's international market, pointing to the success of the device in countries other than the U.S.

In its second fiscal quarter, Apple reported selling 3.79 million iPhones. The company doesn't break out sales by country, so there is no way to tell what percentage were sold in the U.S. or any other country. The quarter's iPhone sales represented a 123 percent unit growth over the same period last year.

To celebrate selling 1 million iPhones, Orange is offering its users unlimited viewing via the Roland-Garros iPhone application to all customers with an iPhone plan. Using the app, users get live coverage from the French Open tennis tournament.

While Orange was selected as Apple's exclusive carrier in France, the country's competition council ordered Apple to open the iPhone to other carriers in December 2008.

iPhone 3G owners in France should soon start to notice faster 3G download speeds.

(Credit: CNET)

French owners of the iPhone 3G are irate over Orange's practice of capping their 3G download speeds at a rate far slower than what their neighbors can access, but are in for a speed boost.

The carrier has apparently backed off its decision to cap iPhone 3G downloading speeds at 384Kbps, according to a report from France-Info. AppleInsider tracked the furor that arose after French iPhone 3G owners started comparing the speeds of their iPhones with their German neighbors, and discovered that iPhone 3G users on T-Mobile's German network were seeing speeds far greater, up to almost 2Mbps.

France-Info reported that Orange will raise the download speeds to 1Mbps by the middle of September as a result of the outcry, which spanned several French tech-related Web sites.

When, and how, will people get their hands on the iPhone 3G?

(Credit: Apple)

A few tidbits about the upcoming iPhone 3G launch have trickled out this week, though unfortunately, none of them are particularly illuminating, taken individually.

Perhaps the most interesting one--if only for its lack of details--is the memo distributed to Apple Retail employees this week in FAQ-style concerning the July 11 launch of the iPhone 3G.

Employees are being instructed to answer "I don't know" to any number of pertinent questions surrounding the launch, such as how the in-store activation process will work, any upgrade offers from the original iPhone, or any planned price cuts to the iPod Touch.

AppleInsider reported that Apple is planning meetings for July 6 with its retail staff, presumably to share these details, once the company has finalized its plans.

Last year, the actual time of the iPhone launch was subject to much speculation until Apple finally settled on its "Happy Hour with the iPhone" plan.

This year, it seems a late-afternoon or early-evening start would mean a long night for employees trying to process in-store activations, so a rumor that sales would begin at 8:00 a.m. circulated on the pages of The Boy Genius Report. That remains unconfirmed, but it makes some sense, if in-store activations take several minutes to process, as expected.

Another huge difference between last year's iPhone launch and this year's is the number of countries participating in the launch of the iPhone 3G. We got some sense of what the iPhone 3G is going to cost overseas, with Orange in France declaring Thursday that the iPhone 3G versions would respectively cost 149 euros and 199 euros, or $232 and $310.

The European carriers seem to be offering upgrade paths for original iPhone owners, something that AT&T has not mentioned in its prelaunch marketing.

One last tidbit comes out of Spain, where Telefonica has apparently received 300,000 preorders for the iPhone 3G.

Demand for the first-generation iPhone in Europe was sluggish, but the addition of the 3G networking chip might have changed the minds of cell phone buyers on the continent. If Spain's pent-up demand is any indication, Apple should do pretty well with iPhone 3G sales.

French iPhone carrier Orange might have an upgrade plan in the works when Apple ships the next generation of the iPhone.

French iPhone owners are reportedly being presented with an upgrade path to the expected 3G version of the iPhone.

(Credit: CNET Networks)

Anyone with a pulse and even a passing interest in consumer electronics knows that the 3G iPhone is perhaps weeks away from making its debut, probably at Apple's Worldwide Developers Conference on June 9. Those with longer memories will recall the outcry over Apple's decision to cut the price of the iPhone by $200 in September, forcing the company to issue $100 credits to iPhone early adopters to stem the criticism.

Perhaps this time around, Apple and its carrier partners are hoping to prevent similar bellyaching from current iPhone owners who might suddenly realize in late June that their iPhone isn't as cool as it used to be.

Ars Technica spotted a report from French Web site PC Inpact that Orange has been calling iPhone owners in France and offering them an upgrade path to the new model.

It would be somewhat surprising if Orange were choosing to publicly discuss a next-generation iPhone with its customers, but if true, it could shed light on how Apple plans to hit its iPhone targets for 2008. PC Inpact says Orange customers are being given two options: they can return their current iPhone and pay 50 euros for the new version, or they can keep their current version and buy a new one at a "heavily subsidized" price, presumably with a fresh contract attached.

If Apple and its partners can get even half of the estimated 5 million iPhone owners to upgrade to the new model, it will be much easier for the company to hit its 2008 goal of 10 million shipments. Sales are expected to increase based on the wider distribution of the iPhone in the coming weeks around the world, as well as those who were holding out for a faster model. Inducing as many current owners to upgrade as possible would provide a nice boost.

However, this offer might be an only-in-France type of deal, assuming that it's even true. European iPhone sales have not been as strong as U.S. sales, and Apple's partners might be trying additional demand-goosing methods that might not be available to stateside owners.

Editor's note: This story initially incorrectly reported the discount that a German iPhone customer could receive by crossing the border and purchasing a unit in France. It's 250 euros.

Apple's learning fairly quickly that Europe is a very different place, especially when it comes to mobile phones.

The iPhone went on sale Wednesday through wireless carrier Orange in France, marking the third European country to carry the phone within its borders. The launch also marked the debut of the third pricing strategy for the iPhone in the three countries: France, Germany, and the United Kingdom.

Apple CEO Steve Jobs introduces the iPhone to the U.K.

(Credit: Crave UK)

It appears that at least for a while, the iPhone is going to move more slowly for Apple in Europe. Orange said hopes to sell 100,000 iPhones by the end of 2007, and 400,000 to 500,000 in total by the end of next year, according to several reports Tuesday. Apple wants to sell 10 million iPhones next year in total, after expanding to Asia some time in 2008.

Was Apple blasé about the challenges it faces in Europe? The device's debut in one of the most hotly contested mobile phone markets in the world has been a little chaotic, with last-minute changes to pricing plans that don't appear to have been part of the plan.

Orange, the "exclusive" carrier of the iPhone in France, offers three payment plans. You can purchase an iPhone for 399 euros ($592.78) and sign up for one of the special "Orange for iPhone" plans, which range in price from 49 euros a month to 119 euros a month depending on usage. You can buy an iPhone for 549 euros if you want to use one of Orange's other rate plans. Or, you can buy an iPhone for 649 euros ($964.20) with no plan.

The only company that can sell you an iPhone in France is Orange (Apple doesn't have any stores in France) but it sure as heck isn't going to be the exclusive carrier. French law requires that carriers offer their customers the option of an unlocked phone. That will cost you 100 euros today, but if you're willing to wait six months, you can have it unlocked for free.

So French shoppers who want an unlocked iPhone today will pay the equivalent of $1,112,77, which is actually a significant bargain over what their German neighbors are being asked to pay for a key to other networks. After a legal challenge from rival Vodafone forced its hand, T-Mobile agreed to offer an unlocked iPhone in Germany for the equivalent of $1,478 (at last week's exchange rate).

At least in U.K., Apple's one-phone, one-carrier strategy is still in place. O2 and Apple have yet to release any sales figures, although O2 said it was its "fastest-selling" launch. No matter what, however, any expectations for lines and hoopla similar to what happened stateside on iPhone Day did not materialize in Blighty.

Simply put, Europe is different. Entering the European mobile phone market from the United States is like getting called up to the majors after just a few months in the minors.

One of the many things I've heard from U.S. iPhone owners is that many of them were relatively new to smartphones, especially the idea of getting e-mail and anything more than a real basic stripped-down Web page on their phones. They bought the iPhone because of its user interface, not because it was a data phone, although they quickly grasped what they had at their disposal.

And they didn't care that they'd be locked to AT&T for two years, because two-year wireless contracts are the norm in this country. Maybe that will change in upcoming years following Verizon's announcement earlier this week that it will open up its network, but it will take a long time before all of us are using our phones that way.

Unlocked iPhones are available through official sources in France and Germany, and there's nothing Apple can do about it.

(Credit: CNET Networks)

It seems Apple didn't anticipate the difficulties it would have selling the first generation iPhone to European customers and carriers under the same terms and conditions that AT&T and O2 were willing to accept. That situation could very well change next year, when Apple is expected to unveil a 3G phone that would be much more attractive for both consumers and carriers.

But how could Apple possibly have expected that it would be able to sell locked, exclusive iPhones in Europe going into the launch? A German judge quickly imposed an injunction after Vodafone aired its complaints (which were opportunistic, to be sure). But from that swift action it would appear the law regarding locked cell phones wasn't exactly murky, although the carrier said it would attempt to "clarify" the issues.

Likewise, from the pricing discrepancies, it's hard to imagine that the current situation was part of the original plan. A German citizen living on the French border could cross the old Maginot Line and pick up an unlocked iPhone at a 250 euro discount, and then use it with any German carrier, without having to pay any sort of additional import tax. Perhaps the T-Mobile and Orange "exclusive" deals don't transfer as much revenue to Apple as the company gets from AT&T, which is likely the reason behind the steep premium to be paid for an unlocked iPhone.

As always, we have to remind ourselves that this is very early days for Apple in this market. It has very little experience marketing mobile phones and even less experience negotiating tough deals with carriers, who still rule this industry.

Just look at Apple's early dance partners. AT&T's Stan Sigman told attendees at Macworld earlier this year that he signed an exclusive (and expensive revenue-sharing) deal with Apple to distribute and promote the iPhone without having even seen the device. O2 was so eager to be the exclusive iPhone carrier in the U.K. that it allowed Apple to throw in a free subscription to The Cloud--a U.K Wi-Fi hotspot aggregator that offers access to more than 7,000 hot spots--even though that almost guaranteed that iPhone users would do any heavy data action over Wi-Fi and deny O2 a cut of that revenue. Not exactly a bunch of Red Auerbachs, there; Apple must have gotten almost everything it wanted from those two carriers going into the negotiations.

Of course, Apple has one very powerful negotiating chip: a sweet product. I've been to several conferences and conventions this year about the smartphone industry, and Apple's user interface and design prowess has come up in every single one--the CTIA Wireless conference devoted an entire session to it.

The entire wireless industry is trying to figure out what to do about Apple's iPhone. But Apple has to do a better job figuring out how to navigate the complicated minefield that is the international wireless industry. A strategy that works in this country won't necessarily work in other places; just ask Dell, Disney, or the National Football League.

Apple will take its keynote show on the road to London next week, with speculation mostly centered on the carriers for a European iPhone.

The company sent out invitations to a Tuesday press conference, but didn't specify the topic. "Mum is no longer the word," was the tagline attached to this invitation, stirring up talk across the pond that Apple is ready to announce its plans for European iPhone sales. The company has previously said that it wants to start selling iPhones in Europe by the end of the year.

Apple could shed more light on its plans for iPhones in Europe next week.

(Credit: CNET Networks)

The Times Online reported that Peter Erskine, CEO of wireless carrier O2, didn't quite confirm that his company was about to start carrying the iPhone. However, he told reporters that Apple's insistence on receiving a share of the carrier revenue from calls made with the iPhone--as Apple does with AT&T--is actually a good thing for the wireless industry, apparently practicing for calls with his shareholders later this year.

Previous reports had indicated that O2 would be the U.K. carrier of the iPhone, but O2 representatives would not comment Thursday to The Times Online. The Financial Times had also reported that Apple had chosen T-Mobile's network in Germany and Orange's network in France, but it's not clear whether Tuesday's event will be just about the Brits.

Apple's forays into Europe will be very interesting, given the quality and quantity of mobile phones in that market. It's likely to produce the first 3G-based iPhone, and it's likely to be a much tougher go for Apple amid stronger competition and choosy shoppers. The company plans to enter the Asian market--also way ahead of the U.S. mobile phone industry--in 2008.

Apple has chosen T-Mobile, O2, and Orange as its European launch partners for the iPhone after wrangling a revenue-sharing agreement, according to the Financial Times.

The four companies are set to announce their partnership by the end of the month, the report said. The deals would require the carriers to share 10 percent of all revenue from voice and data services over the iPhone with Apple, according to the report. Apple has a revenue-sharing agreement in place with AT&T, the exclusive iPhone carrier in the U.S.

No new details surfaced in the report about the type of iPhone that would hit Europe, but most industry observers think Apple has a 3G model in mind for across the pond. T-Mobile provides mobile service to Germany, Orange operates in France, and O2 is based in the U.K.

Apple has said it wants to launch the iPhone in Europe by the end of this year. Tim Cook, the company's chief operating officer, mentioned that Apple wants to start in Europe with "a few major countries," and France, Germany, and the U.K. probably fall into that category.