Apple's iPhone can only help rivals in Europe

By Tarmo Virki

HELSINKI (Reuters) - Major handset vendors have much more to gain than to lose from the buzz Apple Inc's coveted iPhone will create when it arrives in European stores for the key shopping season ahead of Christmas.

As Britain, Germany and France await news this week on which telecom operators will be awarded contracts to sell the iPhone in Europe's major markets, Apple's rivals reckon they will profit either way.

For one thing the iPhone will have a tough time justifying its price tag in Europe, expected to be around 399 euros ($553), in a market where almost all but the most basic pay-as-you-go phones are given away for free with operator contracts.

Sales of the iPhone, which has been available in the United States since the end of June, do not approach those of its competitors there -- Apple has sold a million iPhones so far, about the amount Nokia sells every day.

At the same time the iPhone marketing campaign has raised awareness about extra features in phones -- which can only benefit the likes of Nokia, Sony Ericsson and Samsung Electronics, who have strong portfolios of music focused phones.

"The iPhone is hugely positive for the handset market," said CCS analyst Ben Wood, adding that those operators who do not get an iPhone contract would look for alternative products to keep their clients.

"Who's got the problem? Operators. Who gains? handset makers. For every one operator that gets iPhone -- there are three to four who don't," he added.

In Britain, Vodafone has already unveiled a range of new handsets and services for the Christmas period including an exclusive music service offering unlimited tracks in preparation for the iPhone's arrival.