IPhone's UK sales disappoint
O2 fails to hit its own target — IN A couple of leaks to the FT, O2 and independent reseller - the Carphone Warehouse - have conceded that iPhone sales have disappointed. — The paper says that between Apple, O2 and the Warehouse, only about 190,000 handsets …
Context & Ripple Effects
The arc here runs from triumph to retreat in six months. In July 2007 O2 beat rivals for the exclusive UK iPhone contract, and by September the Times reported it was happy to pay Apple's unusual revenue-share terms because it expected volume. Instead the November launch night drew thin crowds, early buyers hit serious reception problems, and now O2 and Carphone Warehouse have both conceded through FT leaks that sales missed their own internal targets.
First-order effects
- O2 has paid Apple a share of monthly service revenue on the assumption of scale it did not get — roughly 190,000 handsets sold across Apple, O2 and Carphone Warehouse means the subsidy math behind its exclusive deal is under water.
- Carphone Warehouse, which bet shelf space and marketing on the device as a premium anchor product, is left carrying stock against demand its own executives now publicly call disappointing.
Second-order effects
- Apple faces carrier-side pressure across Europe: if the UK's sole licensed partner cannot move units at these terms, other European operators negotiating exclusives will push back on the revenue-split model or demand price cuts.
- Rival handsets and networks gain an opening — Vodafone, Orange and T-Mobile can pitch business customers on devices without O2's documented coverage complaints, and grey-market unlocked iPhones undercut the official channel's pricing.
Third-order effects
- If exclusivity-plus-revenue-share keeps underperforming in mature markets, the operator-subsidised handset deal itself gets repriced — carriers will want volume guarantees or flat fees before ceding brand control to a single device maker.
- A pattern where flagship hardware disappoints outside the US would force Apple toward broader distribution and multi-carrier deals, eroding the very scarcity that made the launch exclusive valuable.
The trend: Carrier-exclusive smartphone launches are colliding with European market reality, testing whether operators will keep paying Apple's premium partnership terms for unproven demand.