Colleagues at our sister paper Financial Times Deutschland have unearthed some tantalising details about Apple’s iPhone distribution deals in Europe. FTD reports that T-Mobile of Germany, Orange of France and O2 of the UK have agreed to hand over 10 per cent of their iPhone service revenues to Apple in exchange for the honour of being the first European mobile networks to partner with Apple on the new mobile handset. Most industry watchers are fairly certain that Apple had struck a similar revenue-sharing deal with AT&T in the US, but today’s story marks the first time that a concrete number has been established.

Assuming that Apple’s 10 per cent cut applies not only in Europe but to its US AT&T deal as well, and further assuming an average monthly iPhone bill of $79.99 (that’s not including overages or roaming charges - which have proved substantial in some cases), Apple could be making an additional $95.88 per handset per year on service revenues on the iPhone. If Apple hits its goal of selling 10m iPhones by the end of 2008, that would mean an extra $950m in service revenues by the end of next year. Not half bad.

Leaving the numbers aside, the fact that Apple has managed to hold out for such a high percentage of service charges in Europe - where the mobile market is much more advanced than in the US - is a sign that the iPhone and Apple really are changing the rules of the mobile game. While Research in Motion managed to get a revenue share on its Blackberry, no one until now has managed to do it with a consumer-oriented handset. The question now is whether the iPhone really is a unique case or whether Nokia, Sony Ericsson and other handset makers have the bargaining power to follow Apple’s lead.

August 22nd, 2007 in Consumer Electronics | Permalink