O2 wins Apple iPhone deal - at a hefty price

Mobile operator O2 is preparing to unveil Apple's much anticipated iPhone in the UK tomorrow. But serious questions are being raised in the City about how much ground it has had to give away to Apple in order to clinch the deal.

The UK's largest mobile operator came from behind at the last minute to seal an agreement with Steve Jobs, Apple's chief executive, to market the iPhone in the UK, but one other operator described the deal as "madly money-losing".

O2 is understood to have agreed a margin on the retail price - to be confirmed tomorrow - but will return to Apple as much as 40% of any revenues it makes from customers' use of the device.

The price of the combined phone and iPod can be changed by Apple at any time, as happened recently in the US. Out of O2's share also comes a commission and further revenue share with Carphone Warehouse, which is understood to have secured the right to be the sole independent retailer of the device on behalf of O2.

View: Guardian

Report a problem with article
Previous Story

Leaked Media Defender e-mails reveal secrets

Next Story

China Web User Dies After Three Day Online Binge

38 Comments

Commenting is disabled on this article.

Just hope they have an unlimited data plan at a reasonable tariff. I'm with O2 and due an upgrade but if the contract and data tariffs are expensive, I ain't getting one. :confused:

I'm in the same boat as you and pretty much have the same mindset. I can see it being too exspensive for me at the moment to be honest

kraized said,
Just hope they have an unlimited data plan at a reasonable tariff. I'm with O2 and due an upgrade but if the contract and data tariffs are expensive, I ain't getting one. :confused:

If you're thinking of buying an iPhone, how can you bloody well complain about the price of ANYTHING? =P

On a serious note, don't be surprised if O2 has the same logic...

I hope they're not going to put up the tarriffs on their other products to make up for the fact that they're giving Apple so much money. Stupid idea, based on old tech. It'll be out of date in no time and they'll not have much to show for it apart from spending lots of money on outdated technology 'upgrade' to their network.

eAi said,
Not really, most people aren't as geeky as you and will just buy a phone to use as a phone.

may be not but there are phone unlocking stores who are pretty geeky at every corner of UK streets

i think i will stick with my vario II for now, as i get web included in my tariff. from using 02 in the past there data rates are two expensive

my 2p worth is since o2 taking a hit on the cost of bringing this phone the customers is going to feel the most with hiked up call/data charges/tarrifs i can see many ppl leaving if this happens i know i will leave and go straight to virgin mobile as i find thats the 2nd cheapest/value for money network

Its not in a tear down of the iPhone they compared the chips for both 3G and 2.5G and the chip for 3G was far larger than the 2.5G. Its not on the board, sorry bud.

Xero said,
Its not in a tear down of the iPhone they compared the chips for both 3G and 2.5G and the chip for 3G was far larger than the 2.5G. Its not on the board, sorry bud.

This is Apple however. Maybe they managed to source smaller 3G chips and incorporate them into the iPhone, hence the tear down doesn't show normal 3G chips that we know of. They probably even got the manufacturer to label them as 2.5G just in case anyone decided to take some apart. You never know. :suspicious: Wishful thinking maybe. LOL.

GPS requires an antenna - they tend to be pretty obvious, so that isn't going to be included in this chip. Even if it is, it'll never be enabled.

It's an internal antenna, my MDA Vario II(hermes) is the same but GPS doesn't work despite having the chip because it has no antenna.

Nice, I'm on 02 and all my family is so if they cut the price of the Iphone in like half a year to a year time then ill get one.

Quoted from Guardian article

O2 will also have to spend a considerable amount of money installing the Edge technology which the iPhone needs to operate on its network, in the run-up to the device's launch this year.

It appears that the iPhone won't use GPRS, but rather the same Edge technology used in the US? Wouldn't it be easier / cheaper to change the hardware to a GPRS receiver (or whatever it is) instead?

t i stone said,
Quoted from Guardian article


It appears that the iPhone won't use GPRS, but rather the same Edge technology used in the US? Wouldn't it be easier / cheaper to change the hardware to a GPRS receiver (or whatever it is) instead?

Better yet, wouldn't it just make more sense to upgrade the phone to 3G standards?
I mean if you're going to charge that much for the damn thing, you can surely afford it.

Kushan said,

Better yet, wouldn't it just make more sense to upgrade the phone to 3G standards?
I mean if you're going to charge that much for the damn thing, you can surely afford it.

There's no way in hell their shareholders would allow them to spend millions installing an already obsolete 2.5G/EDGE communications infrastructure, when they've already invested millions in 3G. I just won't make ANY kind of economic sense just for one phone; especially one that it appears they're going to be making little to no profit with.

FloatingFatMan said,

There's no way in hell their shareholders would allow them to spend millions installing an already obsolete 2.5G/EDGE communications infrastructure, when they've already invested millions in 3G. I just won't make ANY kind of economic sense just for one phone; especially one that it appears they're going to be making little to no profit with.


Acording to http://www.theregister.co.uk/2007/09/14/o2_edge/

"EDGE connections are popping up on O2's network as the company prepares to deploy the 2.5G technology.

The sudden outbreak of edginess comes despite the firm paying over £4bn for a 3G license and dismissing EDGE as a redundant technology, and can only be related to the imminent launch of Apple's iPhone."

eAi said,
Acording to http://www.theregister.co.uk/2007/09/14/o2_edge/

"EDGE connections are popping up on O2's network as the company prepares to deploy the 2.5G technology.

The sudden outbreak of edginess comes despite the firm paying over £4bn for a 3G license and dismissing EDGE as a redundant technology, and can only be related to the imminent launch of Apple's iPhone."

Hmm.. do I believe and article on The Register... Or O2's own website, which has bugger all on it about EDGE?

I think perhaps I'll wait until there's an official announcement; but even if that article is true, they'd be limiting it to London...

first of all, iPhone wont be of the same value as it is in US market.
secondly, the GPRS rates on O2 are very hefty for Youtube to work.

if you are planning to use this with the WiFi hotspots, there are not many in UK!

thirdly, 40% is too much profit to share!! Apple is anyway getting the phone cost price why should they get profit share?

Fourth.., the best phone on O2 till date is orbit (cost wise, i think) which is free with a minimum of pound 40 plan for 18 months and you don't see people using many of the high end phones for one main reason, initial cost! . If they are introducing this one in the market, the initial pay would be atleast 200 pounds even on the 40 plan.

O2 does not Lock mobile phones so, AT&T will have BIG trouble with the stolen and imported iPhones into US!

There aren't as many hotspots in the UK compared to the US with regards to the sheer number, but per person there are more than twice as many.

I'm pretty sure O2 does lock phones, or at least used to.

Phones you get from carphone warehouse, however, are usually unlocked so they can sell them on any network, although if the phones are provided just for O2 they probably will be.

BBinder said,
my O2 phone is locked to O2 only

what phone are you using? when did u buy?

as far as i know.., no O2 phone i have seen till date is locked.

I've had a Samsung E700 (3 years ago) and a Samsung E720 (2 years ago) bought from the O2 shop which were locked to O2.

I currently have a Sony Ericsson W580i from carphone warehouse which is unlocked since they sell it on all networks.

Both the samsungs had O2 branded firmware which is maybe why they were locked?

Meikle said,
I've had a Samsung E700 (3 years ago) and a Samsung E720 (2 years ago) bought from the O2 shop which were locked to O2.

I currently have a Sony Ericsson W580i from carphone warehouse which is unlocked since they sell it on all networks.

Both the samsungs had O2 branded firmware which is maybe why they were locked?


interesting.., I had a Sony Ericsson, motorola razr, now Orbit all are unlocked. also, the p1i which my friend has is not locked. may be it has stopped locking phones recently.

also, O2 has mobiles which other networks also are offering. so may be thats the reason.