Rumour mill: O2 to lose iPhone exclusivity, but win Palm Pre deal

Despite dismissing the idea it had secured the exclusive distribution rights to the forthcoming Palm Pre handset, the cellular industry is alive with gossip that O2 Telefonica has concluded the deal having seen off fierce competition from Vodafone and Orange.

However, O2's keenness to secure the potentially valuable rights to the Palm Pre could have been driven by the ongoing speculation that the operator is destined to lose its UK exclusivity to Apple's iPhone next year. Reports also suggest that O2 won the deal because it has not traditionally demanded as much input into its top-end phones as seen with Vodafone (the design of the RIM Storm and HTC Magic were heavily influenced by Vodafone).

This softer approach, together with its strong presence in Europe and Latin America, and its new handset partnership with NTT DoCoMo, could have persuaded Palm that working with O2 Telefonica would make for a more profitable venture than with France Telecom Orange.

But O2 could well have to wait until the end of 2009 before it can launch the Palm Pre given that the device is due for launch next week in the US and is already encountering component shortages.

The likelihood of Apple wanting other distribution outlets for its iPhone--other than via exclusive operator deals--could be triggered by the company's fall in profits in key areas of its business. The idea of recruiting other mobile service providers to sell future versions of the iPhone could provide a welcome return to Apple's profit line.

For more on this story:
Guardian and Rethink Wireless

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