Apple's iPhone Coming to the U.K. (UPDATE)

UPDATE: Britain's Carphone Warehouse, which had just won the coveted right to sell the iPhone in the U.K., is up sharply in midday trading on news that U.S. electronics retailing giant Best Buy (BBY) has purchased a 3% stake in the company. See here.

Meanwhile, Piper Jaffray analyst Gene Munster estimates that U.K. sales of iPhones will add 78,750 units to his previous projection of 2 million iPhone sold worldwide in the upcoming Christmas quarter. See iPhone in Britain: 3 weeks early, 34% more expensive.

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With about 100 journalists assembled at Apple's (AAPL) big Regent Street store in London -- and after tea and cakes had been served -- Steve Jobs  announced the terms under which the iPhone will be sold in the U.K., the first country outside the U.S. to get the device.

The 8 GB model running on the EDGE network (not 3G) goes on sale Nov. 9 for £269 ($537), including VAT, and will be carried by O2. "We picked the best one, the most popular carrier," Jobs said, according to Thomas Ricker, who covered the event live for Engadget.

"I've seen hundreds of devices every year, and within a few minutes of playing with the iPhone I knew it as a breakthrough product," said O2 UK CEO Matthew Key. According to a report in The Guardian yesterday, O2 may be paying Apple a kickback of as much as 40% of its iPhone revenue for the privilege of carrying the phone. Jobs declined to discuss the terms of its revenue-sharing plan.

O2, which will be partnering with Carphone Warehouse to sell the iPhone, is offering three 18-month plans -- £35 ($70), £45 ($90) and £55 ($110) a month -- each with nearly unlimited data (although there is a limit of 1,400 Internet pages per day).

In the Q&A, Jobs defended the decision to use the slower EDGE network and Wi-Fi Internet access where available rather than the 3G networks that are widely deployed in the U.K. and Europe. "The 3G chipsets are real power hogs" that cut into battery life, he said, repeating the rational he used in the U.S. But he held out the hope that 3G iPhones could arrive in 2008. "3G needs to get back up to 5+ hours, something we think well see later next year," he said.

Key said O2 has been building out its EDGE network and now covers 30% of the U.K. He added that Wi-Fi access for the iPhone will be provided at some 7,500 hotspots by The Cloud, which bills itself as Europe's leading wireless broadband network.

Based on earlier reports, it is expected that Orange will be providing iPhone service in France and T-Mobile in Germany, Austria, the Netherlands, Hungary and Croatia. (See Apple's iPhone Heads for Europe and European iPhone Update.)

[Thanks to Engadget's Thomas Ricker for the on-scene reporting.]

[Photo courtesy of netdog via MacRumors]