O2 Confirms iPhone 3G Exclusivity

Now that's gonna spoil quite a few people's cornflakes in the morning :(

I think iphone users eat granola ;-)

I live in a village (pop. 1500) and we don't have decent O2 reception. We only get T-Mobile and Orange. Looks like we remain an iPhone free zone.

So hot was the iPhone when Apple launched it last year that, in exchange for exclusive rights, network operators agreed not only to sell it at a high price, but to hand over a share of their user revenues as well. The normal tactic of mobile operators, however, is to subsidise the handset in order to attract high-spending customers. The iPhone may be flash, but it has struggled to compete with other handsets that are given away at no upfront cost.

That is a pity because mobile phone subsidies are inefficient. They prompt customers to change their handset every couple of years, when they come to the end of a contract, which has an economic cost. The constant churn in handsets also makes it harder to design new applications to run on them.

Perhaps Apple missed an opportunity: had it sold iPhones with no link to a network contract then the cycle of subsidy might have been broken. But that was always a long shot in a fiercely competitive market. The question now is which will bother the iPhone’s painfully cool users more: that they had to pay a fortune for the gadget, or that, with subsidies, the general public may start to buy them as well.

http://www.ft.com/cms/s/0/d4c78a3a-371a-11dd-bc1c-0000779fd2ac.html?nclick_check=1