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iPhone: Apple's and Orange's deal leaves O2 in sticky situation

29 September 2009 / by Rachael Stiles

The Apple iPhone will no longer be available exclusively on the O2 network, as rival mobile phone provider Orange looks set to harvest the handset's popularity by Christmas.

Since its launch two years ago, the Apple iPhone has been held tightly in the clutches of O2 after it beat Orange to an exclusivity deal with Apple, but this has now come to an end and it will have to share the iPhone's popularity, which could significantly dent its profits. 

Despite asking customers to sign up for a minimum 18 months contract and charging £44 a month, around 1.7 million Apple iPhones have been sold on the O2 network, and Orange, which already offers the iPhone in 28 countries and territories around the world, hopes to repeat this success.

A pre-registration system has been set up on the Orange website, where a reported 65,000 customers had already expressed their interest within hours of the news breaking.

Orange has yet to reveal its pricing structure for the iPhone 3G and 3GS in the UK, but it is expected to undercut the current price, The Guardian reports. it will sell iPhones in Orange shops, via the Orange website, and Orange telesales channels, in addition to some high street retailers.

However, O2 will have known that it was going to lose its exclusive distribution of the iPhone, and is expected to retaliate with other new mobile phone handsets – it has an exclusive deal for the new Palm Pre handset – and it will still be able to sell the iPhone under a renegotiated deal with Apple.

it is also thought that the iPhone will become available through at least one other major network, most likely to be Vodafone, but it is not known whether this will happen in time for the Christmas rush and a price war with Orange.

Tom Alexander, who became chief executive of Orange UK just after it lost the deal with Apple in 2007, told The Guardian that securing a deal for the iPhone was "right at the top of my list when I joined."

© Fair Investment Company Ltd

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