The iPhone comes to Tesco — will a price war follow?

[UK] Is an iPhone price war about to break out? After Vodafone and Orange bagged the iPhone – after O2’s two year monopoly expired in September – we learn today that Tesco, the UK supermarket leviathan, is to sell the iPhone on Tesco Mobile, its MVNO joint venture partnership with O2.

Both iPhone 3G and iPhone 3GS handsets will be sold in Tesco Phone Shops and online through Tesco Direct in the UK, possibly before Christmas. There’s even a pre-regsitration website – but it’s showing a 500 Internal server error. [Update: You can now get to pre-registration here].

Tesco Mobile focuses on the low end of the market with voice and text, and we’re told the prices will be “competitive”. But there is no word yet on data packages, which is something of a necessity where the iPhone is concerned. As an MVNO, Tesco has a fairly free hand regarding the the markets it goes after – and this is usually a market O2 itself is less interested in targeting as it tends to concentrate on higher value customers. O2 says it has sold over one million iPhones since September 2007.

Could it be possible that Tesco might offer a deal which forces the larger players to discount? Now that would be interesting.

Furthermore this move fires yet another starting gun on the iPhone app race. As if it was hard enough to find an iPhone app developer in the UK prior to this, with the mainstream approval of the Tesco iPhone, it certainly will be now.