Analysts split over benefits of iPhone deal

With continuing speculation around which UK operator will secure the iPhone, analysts are split over what the benefits of winning the deal are.

Orange, T-Mobile, Vodafone and, most recently, O2 have all been linked with the deal to bring the iPhone to Europe, keen to be associated with this year's must-have gadget.

Jonathan Arber, analyst at Ovum, said: "The key benefit is that you have the Apple name next to your brand. From that point of view, it's absolutely massive."

And Thomas Husson, mobile analyst at JupiterResearch said: "The iPhone has a huge consumer demand. Users are ready to pay a premium to get it. It's a way [for the operators] to differentiate — a way to say: 'Hey, we have the iPhone'," he said.

But other analysts are less convinced. Paul Skeldon, senior analyst at Juniper Research, said the winning operator wouldn't gain much other than the "the kudos of it", and added: "What they will gain is the halo effect of having the iPhone. I don't think it's something they're [operators] really battling and haggling to do. It's not going to be a mass market tool."

Skeldon said: "It'll be Apple calling the tune. Who ever does get the iPhone will have to accept their music service will be iTunes."

Some mobile network operators may have issues with running Apple content when they have spent considerable time developing their own, said Ovum's Arber, although he added operators with less home-grown content would have less of a problem taking on iTunes and other Apple content.

Arber said: "For them it's not quite as damaging — in fact it could be a positive thing because it allows them to focus on their core areas, while other players focus on content."

Arber cited O2 which used technology from an external partner - Japan's NTT DoCoMo - in its i-mode service. "There's a precedent there," Arber said.

"Even for those operators who are interested in building a brand, it may be that it's worth it just to have that Apple and iPhone brand associated with you. It might just be worth almost cannibalising your own content services because, in return, you can take a huge chunk of the market," he added.

Arber said that even though the iPhone may not offer 3G capability when it comes to Europe it would not represent a huge problem. "People don't necessarily care too much if it's 2G or 3G," he said.

Juniper's Skeldon doesn't feel an overarching European operator deal — which Vodafone would offer — is on the cards. He said Apple may prefer to go to individual operators in different countries on an ad hoc basis.

He also suggested big operators, such as Vodafone, would be less desirable from Apple's point of view as they could leverage greater commercial influence to get a deal more to their liking.

Jupiter's Husson added that, due to the European market being much more fragmented than the US, it would make sense for Apple to do deals with major operators in each country to maximise coverage.

Apple said it would not comment on rumours or speculation. An O2 spokeswoman said any stories linking the company to the iPhone are "entirely rumours".