Apple Inc will sell the iPhone in the UK with mobile-service provider O2 Plc, the first step by Apple chief executive officer Steve Jobs to capture a share of the mobile-phone market outside the US.
The 8-gigabyte handset will go on sale in the UK on Nov. 9 at a price of ?269 (US$536), Jobs said at an event in London yesterday. O2 is owned by Madrid-based Telefonica SA, Europe's second-largest telephone company.
Carphone Warehouse Plc, Europe's largest handset retailer, will sell the telephone in partnership with O2, the companies said.
The agreement gives Apple its first overseas partner for the iPhone, which went on sale in the US in June. Jobs has forecast sales of 10 million iPhones for next year, which would give Apple a 1 percent share of the global market. The UK is Europe's second largest mobile-phone market behind Germany.
"For the iPhone to be a success, it needs to be a hit in Europe," said Gene Munster, an analyst with Piper Jaffray & Co in Minneapolis. "The good news is Europeans are willing to spend money on phones." He estimates that half of iPhones will be sold outside the US in 2009.
Apple shares fell US$0.40 to US$138.41 yesterday in NASDAQ Stock market trading.
Jobs slashed the iPhone price by US$200 this month to spur sales during the holidays, a period that typically accounts for about a third of Apple's sales.
As of Sept. 10, Apple had sold more than 1 million iPhones. Customers must sign a two-year contract with AT&T, the largest mobile-phone provider in the US.
Mobile-phone sales are expected to reach 178 million units this year in the 16 countries of western Europe, about the same that will be sold in the US, said Carolina Milanesi, research director for mobile devices at Gartner Inc, a market researcher in Stamford, Connecticut.
Germany is the largest market, followed by the UK, Italy, France and Spain, she said. In Germany, T-Mobile is the biggest wireless operator, with 34.3 million users. O2 is the largest in the UK, with 17.8 million users and in France, Orange has the most, with 23.4 million.
Nokia Oyj, Motorola Inc and Samsung Electronics Co were the top three mobile-phone makers in the second quarter, accounting for about two-thirds of all handsets sold worldwide, Gartner said. Mobile phone sales in western Europe rose 11 percent to 45.4 million units in the period, compared with a 7 percent jump to 41.4 million phones in North America, Gartner said.
For O2, the deal with Apple will help it add and retain customers who may be willing to spend more money on data, music and other features.
The phone will be sold at 1,300 Carphone Warehouse and O2 stores in the UK, said Matthew Key, chief executive of O2 in the UK.
"The reason the carriers want the iPhone is because it is the most talked-about new phone," Milanesi said in an interview. "It's about getting new customers."
For Newbury, England-based Vodafone Group Plc, the world's largest wireless provider, the deals may hurt the company's ability to pick up some new customers but "Vodafone thought maybe at the end of the day, it's not really worth it," Milanesi said.
Vodafone chief executive officer Arun Sarin told reporters in July that the company was looking forward to a faster, 3G mobile phone from Apple.
Apple's success depends on convincing European customers, who are accustomed to flexible, short-term and pay-as-you-go pricing plans, that the iPhone is an attractive choice.
"In every country, there's going to be that group of people who will buy anything with an Apple on it," said Todd Dagres, a general partner at venture firm Spark Capital in Boston. "But their success will depend on pricing, how flexible the pricing is and the features."
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