Network exclusives: Pushing out third party providers?

Posted: 30 July 2009

Competition in the smartphone market has now driven many mobile operators to offer network-exclusive handsets to try and tempt new customers away from their rivals. However, as these devices are increasingly becoming some of the most sought-after models on the market, does this mean that third-party suppliers are in danger of being pushed out?

One of the most recent examples of a highly anticipated handset being made available only to one carrier in the UK came earlier this month, when O2 announced it would add the Palm Pre to its line of products. Customers across Britain will see the device hit the company's high street and online stores later this month and the deal to become the sole provider of the gadget will also be rolled out across Ireland, Spain and Germany.

At this point, O2 has only confirmed that the Palm Pre will be available to its subscribers "in time for the winter holidays" and no pricing has been announced. But the fact the firm has got the exclusive rights to a phone that has been receiving some great reviews in the US - where it is already available on the Sprint network - is arguably something of a coup which may only fire up its rivals the next time a high profile model is scheduled for a release.

Commenting on the launch, chairman and chief executive officer of Telefonica Europe - O2's parent company - Matthew Key said the move helped establish the carrier as "the home of the smartphone" and boasted the acquisition would be a big deal to its UK user base. "Our customers will be the first outside of North America to experience one of the most successful mobile devices of the year," he added.

Jon Rubinstein, chairman and chief executive officer of Palm, added the announcement of availability of the Pre in Europe was something a lot of people were waiting to hear about - making the unveiling of the device as a network exclusive important.

"Europe continues to be an important region for Palm and we're proud to work with O2 … to spread the excitement Palm Pre has already ignited in North America," he stated.

Of course, this is not the first time the carrier has been able to secure the UK rights to one of the most anxiously awaited touchscreen smartphones to hit the market. Following the deal with Apple to make it the only operator in Britain to supply the original iPhone, the firm announced last month it had extended its partnership with the electronics manufacturer in time for the release of its upgrade - the Apple iPhone 3G S.

The device went on general sale at 08.02 BST on Friday June 19th in O2, Apple and Carphone Warehouse stores, but was strictly limited to the one network provider on 18 and 24-month Pay Monthly tariffs, as well as its Pay & Go option. O2 even sweetened the deal with unlimited web browsing and Wi-Fi offers for an initial 12-month period, although it could be argued that, regardless of this, the iPhone fanbase would ensure the gadget would still sell very well indeed.

"The iPhone continues to be a phenomenal device with over a million O2 customers owning one. The combination of the new software update available to all and the new range of iPhone 3G S devices allows us to continue to differentiate O2 in the marketplace." said Ronan Dunne, chief executive officer of O2 in the UK.

It was confirmed the very next day that this confidence was well placed, as the 3G S version of the handset went on to outsells its predecessor on its launch, with the firm predicting sales would be around double what they had seen on the previous occasion. Footfall to O2 retail outlets was reportedly ten times that of any other day and it was noted the carrier's web page had seen a traffic increase of around 150 per cent.

However, the network is not the only one to have secured the rights to one of the most sought after mobile phones on the market. Following T Mobile's launch of the Google Android-powered G1, Vodafone announced it had entered a partnership with the makers of the HTC Magic - the second device to come to Britain that uses the new operating system - to offer the handset exclusively.

Once again, Spain and Germany would be involved in the deal, as well as France. It was announced a non-exclusive partnership had been struck for the Italian market and the carrier invited interested parties to sign up for information on availability, pricing and pre-ordering by entering their details online.

Patrick Chomet, global director of terminals at the firm, said: "Following our joining of the Open Handset Alliance, we have worked very closely with HTC to bring this cool new phone to the market. Our customers want to access a wide range of the most attractive mobile devices to help them make the most of their time - the HTC Magic helps meet that need."

Earlier this month, Orange grabbed a couple of its own devices it claimed would be available nowhere else including the Toshiba TG01 and the limited edition LG Touchscreen watch Phone - noting these would be the first of many new and innovative additions to its line of telecommunications solutions.

One of the key selling points of the former was reported to be its high-definition display that was designed with movie fans in mind - and the exclusives kept on coming from the network with the revelation that the device would also come pre-loaded with a special trailer for the upcoming blockbuster movie GI Joe. This was something the carrier claimed would offer buyers the chance to test out the model's 4.1-inch WVGA front panel, which is "the perfect size for watching TV, videos and looking at pictures".

Francois Mathieu, director of devices at Orange UK, said: "We're really pleased to have teamed up with Toshiba to bring the TG01 exclusively to the UK. We believe the TG01 is a prime example of manufacturer innovation and is a device that is at the very top of its game which will allow users to make the most from their mobile experience."

One thing that is clear is the new focus on single network devices could prove to be a big battlefield when it comes to the latest smartphone technology. Now it is up to the consumer as to whether they opt for the models in question, or go to third party providers to seek out a more affordable solution that is tailored to their individual needs.

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