Apple's iPhone Moves Abroad

With more iPhone partnerships now in the works, it looks like there won't be a European Grinch to steal Apple's (AAPL Quote) Christmas.

Apple shares jumped 3% Thursday on reports that Telefonica's (TEF Quote) U.K. unit O2 was close to signing an exclusive deal to sell iPhones abroad. The Financial Times, citing people familiar with the situation, reported that O2 would be the first European telco to offer the heavily hyped phone.

Investors had been jazzed about the success of iPhone sales in the U.S. since the device's launch Friday. The exact size of that success, though, is still being determined. Hopes of an immediate sellout of 1 million units were dashed, but the milestone appears to be looming this week.

In order for the iPhone juggernaut to keep rolling through the upcoming holiday buying season, however, analysts and investors say other markets have to be conquered.

"Europe is the key to Apple hitting its official 10 million target," says one industry observer who has been closely watching the overseas effort. Apple has said it expects to sell 10 million iPhones by the end of 2008.

Analysts say Apple would likely demand the same terms from an overseas carrier that it got from AT&T (T Quote) in the U.S. -- and that could be a problem for some European carriers.