Apple Changes iPhone Strategy with Moves in Europe

SAN FRANCISCO -(Dow Jones)- Apple is adopting a more open strategy for selling its iPhone as it dramatically expands the number of countries where the combination cellphone-media player is available.

The Cupertino, Calif., computer maker's been selling the iPhone since June through deals that call for just one operator per country to sell the phone. U.S. carrier AT&T is one such exclusive partner.

On Tuesday, Apple said its iPhone will be offered in Italy later this year by both Telecom Italia and Vodafone Group, the European cellphone giant. This will mark the first time two operators in the same country will be selling the iPhone simultaneously.

"This is different from how we are doing it in the U.S.," Apple spokeswoman Natalie Kerris said.

Vodafone intends to sell the iPhone in nine other countries as well.

Critics have been calling for Apple to both lose the exclusive deals, and to cut the iPhone's current price in half to around $200, in order to significantly grow sales of the device in 2009 and beyond.

In particular, the exclusive deals have given rise to a large number of iPhones being sold but then enabled by users to work on any cellphone network. These so-called unlocked phones deprive Apple of its share, estimated to be about $200 spent for every iPhone per year, of the fees paid iPhone owners pay to operators for Internet access and phone calls.

To be sure, Apple's exclusive iPhone arrangements have not stood in the way of selling around 6 million iPhones to date, and posing one of the first major challenges to the chokehold of Research In Motion Ltd. (RIMM) and No. 1 handset maker Nokia on the market for smarter, more advanced cell phones.

U.K. operator O2 recently offered $200 off the price of an iPhone for signing a two-year service contract. That marks the first time the iPhone's price has been lowered since Apple itself brought the price down to $400 from $600 just seven weeks after the iPhone's introduction.

Shares of Apple were recently up $2.21, or 1.2%, to $186.94 Tuesday. Vodafone was trading 27 cents lower or 0.8% to $31.81 and Telecom Italia was off 50 cents or 2.36% to $20.66.

-By Ben Charny; Dow Jones Newswires; 415-765-8230; ben.charny@dowjones.com

(END) Dow Jones Newswires

Posted to the site on 6th May 2008