Apple’s (AAPL) iPhones (3G & 3GS) had a strong launch at Vodafone (VOD) UK as the carrier has reportedly sold a record 50,000 units to pre-registered customers on the first day, reflecting continued strong demand for the popular device among UK customers. The international telecom giant officially unveiled the iconic smartphone on January 14, 2010, thereby becoming the third carrier to sell the device in the UK.
Vodafone UK, along with its peer, France Telecom’s (FTE) Orange UK, sealed marketing rights to iPhones in September 2009, which effectively ended Telefonica (TEF) O2 UK’s two-year exclusivity on the device in the UK. O2, which will continue selling iPhone, has already sold more than a million units (including 8,000 units on the first day) since the device’s debut in 2007. However, the carrier’s network has been strained by surging data traffic due to the intense use of high-end smartphones, especially iPhones.
Orange UK launched iPhone on November 10, 2009, and has sold roughly 30,000 units on the first day, which is much lower vis-à-vis Vodafone UK. Supermarket and retail chain Tesco, which uses O2’s network, has also been selling iPhone in the UK from December 2009. Vodafone UK is selling iPhone on similar tariffs offered by O2 and Orange UK. The cheapest plan costs £35 a month with a two year contract and comes with 1GB data access.
Vodafone UK recently beat its UK peers to clinch the rights to market Google’s (GOOG) Nexus One, making it the first operator to offer the device in the UK. The carrier will officially unveil the device (dubbed as “Superphone”) at the Mobile World Congress in Barcelona in February 2010. Google has reportedly sold 20,000 units of Nexus One in the US during the first week.
The UK wireless market, Vodafone’s home turf, remains one of the toughest markets in Europe with five major operators battling for market share and customer retention. With a 25% market share, Vodafone UK currently ranks second behind O2 UK, followed by Orange UK.
However, the competitive scenario in the British mobile market is expected to change radically in the near future as Deutsche Telekom (DT) UK subsidiary, T-mobile UK (fourth-largest carrier) is set to merge with Orange UK. The merger will create a telecom powerhouse with roughly 37% share. As such, Vodafone faces challenges in retaining market share given the potential for more aggressive price competition.
iPhone has placed Vodafone UK on a level playing field with its two major rivals O2 UK and Orange UK. Vodafone UK is leveraging UK’s fastest 3G network (peak downlink speeds of 14.4 megabits per second) to roll out the device. The company’s network possesses the required capacity to handle the “explosive” demand for data services, enabled by iPhones.
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