iPhone on Vodafone: Ray of hope for Airtel and others

Since the iPhone debuted in June, 2007, Apple has followed the same game plan for introducing its mobile device to a new market: Find a local service provider and ink a deal granting that company exclusive rights to providing cellular service for the iPhone.
Apple has exclusive deals in place with AT&T’s in the US market, O2 in UK and Ireland, T-Mobile in Germany and Austria, France Telecom’s Orange in France, and Rogers Communications in Canada when the phone arrives in that country later this Year.
Vodafone’s deal with Apple will let customers in India, Australia, the Czech Republic, Egypt, Greece, Portugal, New Zealand, South Africa and Turkey buy the iPhone for use on the company’s networks there later this year.
This means that only Vodafone customers in India, can get the iPhone luxury. Airtel and other network users will have to wait a little longer.
But thanks to the recent developments in Italy, there is a ray of hope for them. Exclusive deals was Apple’s M.O. until earlier this week, at any rate. On Tuesday, news broke that the iPhone would expand its reach into Italy later this year. But instead of being locked into one provider, Italian iPhone customers will have a choice—both Vodafone and Telecom Italia struck deals with Apple to offer service for the mobile device.
Having two partners in one market certainly signals a change from how Apple has grown its iPhone business in the past year. And it’s a pattern that could repeat itself as the company looks to expand into additional countries in 2008 and beyond.
But don’t expect Apple to entirely abandon its exclusive partner strategy, analysts say—which means iPhone owners in the US should expect AT&T to remain the exclusive service provider for the phone, at least for the foreseeable future.
Why did Apple shift its long-standing strategy for rolling out the iPhone to Italy? An analyst familiar with the European mobile market says Italy’s climate is much different from other countries in Western Europe.
Similar to India, most of the subscribers are on prepaid plans in Italy – 81 percent, compared with just 51 percent in the rest of the continent. “There are very few postpaid subscribers in Italy, making it harder for Apple to earn money from revenue-sharing. Hence, Italy could, for now, be the exception rather than the rule” said Neil Mawston, director of wireless device strategies for Strategy Analytics in the UK
However, that could change as the iPhone business expands. Mawston believes that Apple will continue to seek out multiple operators as it looks to launch the iPhone in new countries, allowing it to increase sales and market share.
“In the long-run, we expect Apple to adopt a multi-operator distribution strategy,” Mawston added. “Apple will never be a mass-market global player by just targeting one carrier per country. LG has tried making exclusive deals with 3G operators in Western Europe in the past, and that resulted in lackluster shipments and a loss of market share due its limited retail presence.”
But a shift to multiple carriers doesn’t figure to happen in markets where Apple already has a partner lined up—particularly in the US, where AT&T has been the iPhone’s exclusive service provider since day one. So long as AT&T has an agreement in place with Apple—and it’s widely believed the current pact runs for five years—customers looking to buy an iPhone will have to get their service through the telecom giant.
Further down the road, though, things could change in the US
“In the U.S., there is ample precedent for handsets coming to other carriers after a window of exclusivity,” said Ross Rubin, director of analysis at market-research firm NPD. “With T-Mobile now embracing 3G and Verizon looking to switch to LTE and more open handset choice in the future, chances are improving that the iPhone will eventually come to other carriers if AT&T no longer offers enough incentive to Apple to keep it exclusive.”
Strategy Analytics’ Mawston agrees: “AT&T is likely to be the sole supplier for the US in the near-term, unless the deal gets renegotiated.” he said.
India is the world's second largest mobile phone market with 261 million users, second only to China. Indian mobile firms added a record 10.2 million subscribers in March.
With the expansion of the market, the call tariffs have gone down as low as two cents a minute, according to the Telecom Regulatory Authority of India.