iPhone’s 10% revenue share in Europe August 22, 2007
Posted by wirelessinformatics in Handsets, Mobile Operator.trackback
The Financial Times is reporting that another three European operators have bowed to Apple’s demands for a
10% cut of all data and voice revenue made from iPhone customers. T-Mobile Germany, Orange and O2 have all reportedly signed-up (although I haven’t seen any official announcement yet). It’s a remarkable coup for Apple and proves that the power of a brand can sometimes outweigh everything else – even technical competency.
These are big, Tier One carriers and I would venture that such a deal would have been unthinkable in Europe just a couple of years ago. At that time, operators looked to be taking complete ownership of the user experience, even to the extent of mass-replacing OEM branding on handsets with their own. “If the big 5 OEM’s won’t bow to that mandate then there are plenty of white-label products in Asia” we were warned. That’s now reversing, with the operators thankfully seeing that OEM branding counts for a large proportion of consumer purchase decisions.
The FT claims that the chairman of Deutsche Telekom’s mobile business campaigned for personal talks with Steve Jobs, Apple’s chief executive, about the contract, while Peter Erskine, chief exeutive of O2, is said to have tried the same.
“These are not negotiations among equals. Apple clearly had the upper hand,” one industry expert told FT Deutschland.
Apple has also lured the mobile operators with the prospect of a financially risk-free business, as it will not allow the now common subsidies on the sale of handsets. Most mobile phones are sold by operators to subscribers at a highly subsidised rate.
If I were Nokia, a company that has a global market share of ~40% I’d be wondering how to exert more pressure on operator customers too.
I suspect that these Tier 1 carriers would have been less eager to give away the family jewels if other phone manufacturers were giving any hints that they have learned from the iPhone experience. All I’m seeing is announcements centering around ‘better, faster’ hardware with little thought given to Apple’s one big advantage – the amount of attention they’ve paid to the user interface and the ‘relationship’ between the phone and the user that the interface creates. I wonder how long it’ll be before they wise up to the fact that it really doesn’t matter how good the hardware specs are if people hate using the phone.