Telstra Trying To Snare Exclusive iPhone Deal
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Telstra is trying to snare an exclusive deal with Apple to launch the new iPhone in Australia in mid 2008 according to sources inside Apple, however several other telecommunication Companies are in the queue including 3G operator Hutchinson Virgin and Optus.Apple is calling the distribution shots for its long-awaited iPhone and setting the price points, and the iPod maker developed every aspect of the user interface except for visual voicemail.
Dealing with Apple can be a bitter experience as Motorola found out when they launched the iTunes Rokr phone last year. Other issues for telecommunication carriers is the technology incorporated into the Apple iPhone.
In the US Cingular which is owned by AT&T snared an exclusive deal to roll out the iPhone in June 2007 and during a session at the recent CES show in Las Vegas Cingular National Distribution President Glen Lurie gave an insight to what is involved.
The phone is “locked and optimised to our network,” he said, but “distribution is owned by Apple.” When launched in June, the phone will be available only through Apple’s 150 company-owned stores, Apple’s web site, 2,100 Cingular-branded stores, Cingular’s web site, and the carrier’s direct-mail operation, Lurie said. After that, it will be up to Apple to expand distribution to major consumer electronics retailers, he continued.
In addition, he said, “it’s an iPod, so Apple sets the price,” and because it’s an iPod, only the Apple name will appear on the iPhone’s case. The Cingular, AT&T or joint Cingular/AT&T brand names, however, will appear on the device’s display when the phone is turned on and perhaps at all times when the phone’s radio is on, he added.
In return, Cingular will add a strong product to its selection of music phones, garner additional subscribers attracted to the iPod experience, and boost data-service revenues and average revenue per customer because the phone “makes SMS, e-mail and Web browsing easy,” he said. “We expect to grow our business.”

 

Lurie described the distribution deal as “unique” in the cellular industry and stressed that it is not an MVNO (mobile virtual network operator) arrangement in which Apple buys airtime wholesale and sells phones and service to end users, thus owning the customer. Cingular customer service reps will be cross-trained in answering Apple and Cingular questions, but when questions get “too detailed,” customers will be handed off to Apple customer service, “and vice versa,” he noted.
The distribution/product deal is a “multiyear exclusive” for any future iPhone models and for any U.S. carrier. Apple, however, is free to strike distribution deals with carriers outside the United States, he said.
The phone’s $499 price for a 4GB version and $599 for the 8GB version are with a two-year contract. Existing Cingular subscribers would have to extend their contract by two years to get the phone, Lurie said without revealing whether the prices are subsidised by the carrier. Some amount of subsidisation seems likely, however, given that Cingular’s highest priced phone with two-year contract is the recently unveiled Palm Treo 750 at $399.
Despite the high end-user prices, Lurie said he’s not concerned that the prices are too high. The iPhone will combine three devices that many people already carry: a cellular phone, an e-mail-oriented smartphone, and an MP3 player. At launch, the phone will be equipped with Wi-Fi and high-speed EDGE cellular data service, but the phone will not access the iTunes music store to download songs or video over the air. That capability, however, is technically feasible, Lurie noted.
In Australia EDGE technology is not available.