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Palm Pre to be O2 UK exclusive?

'Deal is done' report suggests

In a retread of the situation prior to the Apple iPhone's UK launch, O2 is remaining tight-lipped over reports it has agreed a deal to be exclusive UK distributor of the Palm Pre smartphone.

O2 refused to comment on a report in today's Guardian that the deal is done. O2 is the UK's largest mobile phone operator with more than 20 million customers. Despite falling revenues on a per customer basis, O2 recently reported strong sales of the iPhone, for which it remains the exclusive contract vendor.

Indeed, as mobile phone sales in general have declined, sales of high-end mobile internet devices such as the iPhone and T-Mobile G1 have proved more robust. The Pre, Palm's response to Apple's must-have gadget, is expected to generate a similar buzz. It has an iPhone-style touchscreen, as well as a full qwerty keyboard.

The Pre should be available in the UK later this year, and will compete with the next-generation Apple iPhone, due to be launched by Apple in the next few months. Sources close to Apple suggest that it may decide to open up the UK market to other mobile phone operators as the iPhone range expands, so getting an exclusive on the Palm Pre could prove to be a coup.

Palm recently announced that the Pre will be available in the US exclusively from Sprint, and will cost $199.

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