Apple Watches Bloomberg

The U.S. Escaped Apple Watch's European Carrier Restrictions

(Bloomberg) -- Germany’s Deutsche Telekom AG, BT Group Plc’s EE in the U.K. and France’s  Orange SA are the only carriers in their countries to offer Apple Inc.’s new smartwatch, giving them an edge over their competitors.

It’s the opposite experience customers in the U.S. will face, as all four major American carriers will offer the LTE-enabled Apple Watch Series 3. 

The device, which has an embedded cellular radio that lets users talk, text and stream music without a phone nearby, is an innovation fantasized about since Dick Tracy’s famous wrist radio hit TV screens. The limited network support could create headaches for some Apple aficionados, threatening customer departures from carriers that don’t accommodate the new technology.

It’s too early to say how EE’s agreement with Apple in the U.K. will resonate with customers, Vodafone U.K. Chief Executive Officer Nick Jeffery said in an interview. Vodafone always looks to make a compelling offer to consumers, he said. "We’ll have to see how that plays out in the market.”

Not Exclusive

The situation is reminiscent of the original iPhone, which in 2007 was available only with  Telefonica SA’s O2 in the U.K. for two years. 

However, Apple has not signed exclusive deals with European networks this time. Instead, the carriers offering the new watch are those that agreed to upgrade their networks to support the technology first. Other operators are not contractually blocked from adding the new device to their systems.

Owners won’t be able to put their existing SIM card into the watch. It has its chip soldered to the inside of the device. Apple has been using its own SIM components for a number of years, such as inside 4G iPad models that allow owners to dynamically sign up to and change cellular data plans. But this is new territory for the company that lets it hold an even tighter control over which networks the watch will work with.

New Product

Apple CEO Tim Cook introduced the Apple Watch in September 2014, banking on the product being the company’s next big category. So far, the Watch has mostly been an accessory to the iPhone. The cellular feature has the potential to be a "game changer," according to Kepler Cheuvreux analyst John Cox. Cook said recently that the Watch was the best-selling smartwatch "by a very wide margin," while noting sales of the device grew more than 50 percent in the third quarter.

The watch is one of the earliest of its kind to have 4G connectivity, but it’s not the first -- Samsung Electronics Co.’s Gear S3 incorporated cellular connectivity when it launched in August last year. Apple also sells the Apple Watch Series 3 without the cellular feature, which would work with iPhones on all carriers, but as with previous models would require the phone to be nearby to make calls.

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