Who's Sari now? - Vodafone and that iPhone O2 contract

by Guy J Kewney | posted on 05 July 2007

Imagine you're Vodafone, and imagine (just for fun!) that you're inches away from announcing an iPhone contract. Imagine that a well known journalist actually has an evaluation iPhone, complete with a Vodafone SIM card in it. And imagine that that journalist goes into print saying: "Telefonica will get the iPhone contract!" - and everybody else runs with the same story.

What are you going to do about it? Even having O2 deny it doesn't seem to help!

Well, you can probably legitimately call up the Telegraph, and complain bitterly about having CEO's name published as "Arun Sari" but what you want is an Authoritative Source to stand up and say "No..."

It was July 4th yesterday, so there wasn't much point in giving people phone numbers in New York. Even venture capitalists and private equity firms tend to take that particular holiday off.

Of course, you could get your investment and financial relations staff to ring the Editors of these papers up and say: "No, that's nonsense! - we've got the contract!" - at least, if you fancied ending up in the dock at the Old Bailey for insider dealing, you could.

So, where does this story about O2 getting the iPhone contract come from? Only the source knows for sure, but at Newbury, there's a suspicion building that it's rather simple: it's Carphone Warehouse.

Carphone Warehouse runs a virtual mobile network: the carrier that makes CPW an MVNO is Telefonica/O2. And in the normal course of things, if you buy a mobile from CPW, it will come with a SIM that works on the O2 network.

But the deal with Apple, as currently drawn up, splits the iPhone between Deutsche Telekom and Vodafone as carriers, and Carphone Warehouse as retail outlet. And there's no way Vodafone is going to deal with CPW! so logically, it MUST be an O2 SIM (the argument goes). So "Go with the O2 story!" says the Editor.

And will the iPhone in Europe be a GSM phone? or a 3G UMTS phone? Almost certainly, by the time there are stocks for Europe, the 3G phone will be available.

Will the European carriers be able to stock the 2G iPhone? Probably. But why would they? Neither one of them has spare GPRS capacity, and both have good 3G data capacity right now, plus good WiFi integration software (and hotspots, in the case of T-Mobile).

And there are no spare iPhones. Hyped it may have been, and problems there certainly were with registration, but only a few Apple stores have adequate stocks to meet US demand right now; and the factory (sources say) can't increase production rate.

Expect European stocks after the New Year, and expect them to be 3G. Don't expect Apple to make any announcement until it can say it's sold a million already.

Unless, of course, something changes in the meantime...!

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