O2 said to have Pre exclusive, reducing iPhone dependence

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O2 said to have Pre exclusive, reducing iPhone dependence

By CAROLINE GABRIEL

Published: 27 May, 2009

READ MORE: O2 | iPhone

UK reports indicate that the bidding war for the Palm Pre launch exclusive may be over in Europe, with Telefonica O2 the winner. The Spanish multinational was the original frontrunner to have a six-month headstart in selling the Pre, but was then apparently challenged by its fellow European majors, Vodafone, Orange and T-Mobile. Now, according to the UK's Guardian newspaper, O2 is to launch the Pre in the UK and Ireland. The deal is also likely, sources say, to include Telefonica's other European territories and possibly its Latin American operations.

Such a deal would bring O2 a much-needed second string to its iPhone bow. The UK's leading cellco has flourished on the back of the iPhone exclusive, but with this in danger of ending next year, and with a wave of new smartphones stealing some of Apple's thunder, it has been accused of neglecting the section of its user base that want more high end handset choices.

The Guardian reports: "O2 has seen off fierce competition for the new handset from Vodafone and Orange" and won an exclusive.

The Spanish firm may have won out because it has not traditionally demanded as much input into its top end phones as Vodafone does (as with the RIM Storm and HTC Magic, which it helped to design). And as well as bringing strong territories in Spain, the UK and central Europe, Telefonica could potentially use its massive holdings in Latin America, and its new handset partnership with Japan's NTT DoCoMo, to ease Palm's path into new global markets. Broad global reach without Vodafone's stringent demands - a good combination for Palm, and one that may also have put Orange out of the running.

The Pre reaches US consumers next week, but is reported to suffering components shortages, so the European launch may not come until late this year. When it does, O2 is likely to have a six-month exclusive, as Sprint does in the US and Bell in Canada, and pricing should be similar to the iPhone's.

Expect to see the other UK cellcos battling for attention grabbing handsets for the autumn - O2 will get the rumored 'iPhone 3' of course, while Vodafone has sewn up HTC Magic and RIM Storm, but there are still big hitters to come from Sony Ericsson, Nokia and Samsung, not to mention HTC's well regarded Touch Pro 2. Only 3 remains largely aloof from the superphone war, concentrating on mobile broadband, affordable web-optimized phones and strong pricing.

A year from now, and there may not be quite so many choices in the UK. Vodafone's CEO Vittorio Colao said in a recent interview that the market is too crowded and he would expect to see consolidation. The most likely move is thought to be a merger between the smallest players, 3 UK and T-Mobile UK.