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O2 Lands Palm Pre

Gordon Kelly


O2 Lands Palm Pre

Could one network really have a stranglehold on the two biggest phones of the year?

Following on from what we first heard in March, The Guardian is reporting an exclusive O2 Palm Pre deal has been struck. This move would mean the network has sole UK distribution rights for both the Pre and the impending third generation iPhone - expected to be unveiled at WWDC next month. Depending on how you interpret these things, O2 either made an admission of guilt or left ends open by refusing to comment on the news.

The Pre is expected to cost users a similar amount to the current iPhone 3G. The only official figures we have so far are from US network partner Sprint which will charge £129 for the device on a two year contract. That said, the comparably poor state of America's telecoms market means it doesn't give us much indication as to prices this side of the Atlantic.

Interestingly, similar speculation surrounding the original UK iPhone network proved largely wrong with every one of the major telcos touted at one point or another. Despite this talk seems far more polarised here so don't be surprised if O2 does indeed have the bragging rights to the only pair of multi-touch phones on the market...

For more about this exciting new handset read my extensive Palm Pre first impressions.


via The Guardian


May 26, 2009, 5:19 am

can a manufacturer actually make more money by limiting their network to one device? as well as the iphone's done surely if it was available on every network the sales would be even better.


May 26, 2009, 5:49 am

there's a few rumours going round that O2 are about to lose their iPhone exclusivity deal and that the 3rd Gen iPhone will be release on many competing networks over Europe (including the UK).

That could explain 02's eagerness to get this handset in the bag over Orange & Vodafone and why they're keeping quiet until the deal is signed in blood...the again, who knows? Do you guys? :)


May 26, 2009, 7:10 am

I don't think any network should be allowed to have the 'distribution rights' to a phone, it reduces competition and in this case like with the iPhone they will charge as much as they can possibly get away with. It's no better than Intel really..


May 26, 2009, 2:36 pm

Completely agree with xenos.


May 26, 2009, 2:49 pm


Yes they can. Not only do they get a lot of money from signing the deal, the netwroks also guarantee to sell a certain amount of units. But the most important thing (atleast in palms case) is the free advertising. The network will spend loads of money advertising its flagship phone if it has exclusivity as it's the best way for it to get people on to their network, however because of this I don't think it was in Palm's best interests to go over to O2 since they already have the iPhone as their flagship phone. Although I heard O2 payed a lot of money for the deal.


May 26, 2009, 3:40 pm

I'm pretty sure now this sort of thing is the biggest problem with the iphone so why would the competition want the same problem.


May 26, 2009, 5:31 pm

The exclusivity is not O2's doing, but rather their parent company TeleFonica...the original rumours Feb/Mar are that they've got Euro exclusivity for the Pre. Unlike the iPhone which has multiple euro carriers, but with just one per country.

Looking at O2's current tarrifs, they really need a better web deal, the Pre is even more heavily net connected than the iPhone.


May 26, 2009, 5:59 pm

Have to assume they've lost their iphone exclusivity and will be hoping to avoid customers churning to get their next iphone from another operator by offering pre's instead. Palm will be looking at O2's base as the market for Pre's as the market is likely to be the same and anyone who really wants a pre has probably switched over there in the last couple of years to get an iphone.

Can't understand why the likes of Voda and Orange didn't give their left arm to get the exclusivity though in order to win back all the customers they've lost over the last two years - and casualties have been heavy.


May 26, 2009, 6:45 pm

@bigman - I don't believe we can assume that at all. The O2 iPhone deal may however be running near to the end so it could be looking 12/24 months ahead.

Besides, who is to say Vodafone or Orange didn't give their left arm? O2 is now the biggest mobile telco in the UK so it has more financial muscle.


May 26, 2009, 10:45 pm

Have to say I'm a bit disappointed. One of my hopes for the Palm Pre was that in order to eat into the iPhone market they would be offered with very competitive tariff deals. Now that they are on O2 it looks like that might be less likely.

Unless of course they are in the process of losing the iPhone deal...


May 27, 2009, 1:15 am

Hmmmm, i don't quite know what to make of this one to be honest...

If o2 are about to lose the iPhone, then trying to replace it with the Pre is a step in a different direction to me. iPhone is generally a more 'youthful' brand than Palm is to my knowledge, and unless o2 are going to spend gadjungas of money assisting palm in rebranding their image, then replacing one with the other ain't gonna be THAT lucrative.

However, if thyey're seeing the potential to corner the business-user/uuber-geek market as more lucrative than the iphone market, then they may be onto something. They'd be the only uk telco with something that challenges iPhone on the flashy bits and also satisfies others with its techno gizmos and blackberry-challenging keyboard.

if they're not losing the iphone, they'd have cornered the market by getting arguably the two best touch-screen handsets on the market; one catering for the fashionable and hip, and the other catering for the more discerning/power user market.

On a slightly different tangent, telcos are now looking to rinse the handset price scenario dry since Europe and OfCom came hand in hand to take from their call charge pockets.

Bottom line is this: if you've got shareholders who demand more each year, and you can't make more on call charges, make more on handsets/handset deals. Nothing personal guys - it's just business...


May 27, 2009, 4:52 am


Perhaps there is a further scenario where, in order to keep the iPhone on their books, O2 will use their deal with the Pre to reassure Apple that the two products will be pushed at different markets a la your third example.

Thus staying with O2 becomes a more attractive option for Apple for keeping the iPhone market share intact.

Because, as you say, the Pre could challenge the iPhone on the flashy bits and, if it proves to be as good as early impressions, could generate a whole new legion of dedicated palm users as they did in the past and as Apple have more recently.


May 28, 2009, 5:12 am


I'd defo go with that, as long as Palm doesn't mind the Pre being marketed as an 'alternative lifestyle' product to iPhone.. Considering the state of their books at the moment i'd have thought they'd be gunning for the top wrung...?

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