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Leader: Will the iPhone shake-up the mobile world?

Just how much is Apple worth?

Tags: iphone, apple, verizon wireless, cingular

By silicon.com

Published: 29 January 2007 16:45 GMT

When Apple launched the iPhone in the US it didn't share the love - it signed an exclusive deal with Cingular, one of the biggest operators in the US.

According to reports, Verizon Wireless - the number two player stateside - was originally offered the chance to sign up for the Apple deal but refused, saying it couldn't find a deal that suited both parties. One Verizon exec told USA Today Apple wanted a slice of profits from each subscriber using the device, control over where and how the device would be sold as well as over the repair process.

The Verizon exec also said Apple's distribution plans could have put its partners - retail giants such as Wal-Mart - at a disadvantage.

The big boys have become fiercely attached to getting their branding stamped on the handsets, something Jobs is unlikely to welcome.

While no details have come to light of what operators will receive for signing up with Apple, rumour has it the Mac maker and Cingular have agreed a five-year exclusive deal. Now, according to the UK papers, all the mobile operators over here bar 3 are scrapping for the rights to offer the device when it launches in the last quarter of this year.

The draw of the iPhone is indisputable and doubtless there will be some vicious bargaining between the four operators to secure that elusive deal and the PR coup that goes with it. But how far will the lucky winner be prepared to go in order to seal the deal?

Apple is aggressively protective of its brand and all the minutiae that entails. UK operators are beginning to go the same way. Of late, the big boys have become fiercely attached to getting their branding stamped on the handsets, something Jobs is unlikely to welcome.

The question of which retailer gets the iPhone will also be a toughie for the UK market. Carphone Warehouse is thought to be after an exclusive deal. Should such a deal be struck, it could prove problematic for Orange and Vodafone, whose relationships with the phone flogging chain are somewhat fractious.

Negotiating too will need to be done over contract length. To get a Cingular iPhone, customers will have to sign up to a two-year contract - at present most UK users are on 12 or 18 month deals. Blighty's mobile owners are also not used to paying for their devices - US iPhone buyers will need to spend around $499 on top of their contract for the privilege.

Will the iPhone remake the UK market? It's possible if the operators want it to - both Apple and the networks have something to gain if consumers are forced to sign up for longer contracts. However, there's likely to be not inconsiderable resistance to handset makers asking for a bigger cut - and Apple is after all, a very small fish in a very big pond.

It's indisputable that the iPhone will come to Blighty, via an exclusive deal that comes with its own operator-disgruntling concessions. Whether those concessions will be on the level of those wrung from the US networks remains to be seen.

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