Free iPhone

In a shocking announcement, Tesco Mobile has said it will be offering the iPhone in its stores and via Tesco Direct ’shortly’.

This surprise move, from the fastest growing UK mobile operator, will see it selling the iPhone 3G and iPhone 3GS in time for christmas 2009.

The superstore-come-phone provider is renowned in the UK for offering great deals that are very hard to beat and this announcement is likely to spark the iPhone price war consumers have been waiting for, and which didn’t come when Orange began offering the iPhone earlier this month with almost an exact pricing structure as O2.

Tesco will offer both contract and pay-as-you-go iPhones, although it is still in discussions with Apple over pricing.

The move comes as a big blow to Vodafone, who won’t get in on the action until early 2010, and Orange, who hoped to take up to 50% of the iPhone market away from O2; as consumers now will probably delay their iPhone purchase until next month to see what kind of deals can be had from Tesco Mobile.

O2 are the silent winners in all this, with a 50% stake in Tesco Mobile, they will retain their position has top earners from the iPhone in the UK, and are able to focus more of their efforts on marketing the Palm Pre – which it still has exclusivity on.

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