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Vodafone favourite to win Apple iPhone European rights

LONDON - Vodafone has been tipped to win the exclusive European rights to distribute Apple's iPhone, which goes on sale in the the US today.

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The £88bn mobile phone company faces strong competition from rivals such as Orange and T-Mobile, but Arun Sarin, its chief executive, is known to have a good relationship with Steve Jobs, the Apple chief executive and the pair have held private talks about a deal.

The iPhone, which does not go on sale in Europe until the end of 2007, includes a touch screen and Bluetooth and could prove to be a vital tool in helping Vodafone attract and retain high-spending customers.

The phone is expected to encourage thousands of mobile customers to switch from their existing contracts to the Apple provider.

Queues of fans have been forming outside New York's Apple Store since 5am on Monday, even though the £250 to £300 iPhone is not on sale until this evening.

The delay in the iPhone reaching the UK is expected to fuel desire in British gadget-lovers. Shares in Apple have gained more than 30% since the iPhone was revealed in January.

In the US, Apple signed an exclusive deal with US telecoms giant AT&T and it is retailing for either $499 or $599. On buying a phone US consumers are committed to a two-year contract with AT&T, which will cost them a minimum of $59.99 a month.

The phone has come under fire because it is not on a 3G network and does not support instant messaging.

According to Steven Hartley, a senior analyst at Ovum, the high price of the iPhone will prevent it from becoming a mass market device -- initially at least.

"For the consumer, the iPhone is expensive and technically not unique. It is a simple proposition of integrating iTunes and iPod functionality into a wider communications -enabled device.

"However, it is being sold as iconic rather than simply functional, so the high price will have little impact in the short term.

"The device is selling at a high price point and will not be a mass market device. Furthermore, if it signs further exclusive two-year deals with limited distribution in Europe and Asia it will be able to target only a relatively small numbers of users." 

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