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Vodafone eyes Palm Pre exclusive to battle O2's iPhone
Published: 2 March, 2009
Tags >> Telefonica O2 | Palm | Vodafone | iPhone
The relatively strong results of major European cellcos in the difficult fourth quarter of 2008 highlighted, once again, the power of the smartphone exclusive. Along with mobile broadband and SIM-only deals, these exclusives were the key growth drivers for O2 (iPhone), T-Mobile (G1 and the German iPhone) and others. In response, Vodafone is looking to add to its arsenal of exclusives too, having launched the codeveloped RIM BlackBerry Storm late last year; added the Android-based HTC Magic (also jointly designed) at Mobile World Congress; and now reported to be negotiating for the Palm Pre.
Vodafone famously passed up on the original iPhone deal, unwilling to accept Apple's onerous terms, although it has introduced the 3G version in some territories on a non-exclusive basis. But it is hoping to release smartphones that will give it clear differentiation from the iPhone carriers, particularly the most successful in Europe, O2 UK and T-Mobile Germany (Orange France has lost its exclusive).
The Palm Pre, which is expected to ship in the US around midyear as a Sprint Nextel exclusive, has had a successful launch and is seen as a viable competitor to the iPhone, despite the lesser impact of its brand compared to Apple's. However, Palm is relatively weak outside its US homeland and will require the channels and marketing muscle of major carrier partners to push the Pre on an international basis.
According to industry sources, Vodafone is in the front line for a three-month exclusive for its European markets, though it is being challenged by a rival bid from T-Mobile for the UK, Germany and Czech Republic. Vodafone would only officially say that it was "interested" in such a deal.
The world's largest cellco by revenues will have a close eye on O2, whose UK arm said its crunch defying 10.4% rise in fourth quarter revenue owed much to increased activity around the iPhone at the end of the year, in the run-up to Christmas. Where O2 does not carry the iPhone, as in Germany, revenues were flat.
The cellco has now sold over one million iPhones in the UK even though customers need to spend at least £44 ($62.50) a month for at least 18 months to get one for free. A spokesperson said: "iPhone sales are continuing to accelerate, and we have been pretty stunned at the results of our prepaid offer, which is £342.33 ($486) for a year's data usage included." O2 UK signed up 390,000 new subscribers in the fourth quarter, reaching 19.5m, ahead of second placed Vodafone UK on 19.1m. The Simplicity SIM-only tariff and BlackBerry models were also significant to O2. Telefonica Europe's total customer base rose by 9% to 46m, with mobile accounting for 41.2m.
