Sony Ericsson's Xperia X1 will go on sale in the U.S. the day after Thanksgiving, but at US$800 the touch-screen phone may be a tough sell, particularly because it will most likely be used on AT&T's network, the exclusive distributor of the popular and far less-expensive iPhone.

The Windows Mobile phone comes with the high price tag in part because it will be unlocked, which in theory gives buyers the freedom to use it on the carrier network of their choice and without signing a multiyear subscription.

However, in this case, buyers are unlikely to use the phone on any network but AT&T's. That's because the phone runs on GSM (Global System for Mobile Communications), making AT&T and T-Mobile the only options in the U.S. In addition, it does not include the capability to run on the wireless frequencies that T-Mobile's 3G network uses. The phone could run on T-Mobile's slower data network, but many of the data-centric features of the phone would be unusable or at least unsatisfying.

AT&T customers will likely compare the Xperia to Apple's iPhone, which is $600 less expensive: With a two-year contract, the iPhone 3G costs $199. Users ultimately pay for the subsidy through their two-year contracts, but most people are sensitive to the upfront price tag of phones.

In the U.S., phone makers seldom try to sell their phones without a partnership with an operator. Mobile operators subsidize phones, typically in exchange for a multiyear subscription, making the end price of the phone far less expensive. In addition, operators invest heavily in advertising the products. For example, Sprint recently spent $100 million advertising the Samsung Instinct, said Avi Greengart, an analyst with Current Analysis.

In addition, operators will sell the phones from their stores, and each of the national operators has thousands of retail outlets. "If you bypass [an operator agreement], you're not only giving up the subsidy but the ads and the retail distribution, so it becomes very difficult to compete," Greengart said.

There are some benefits for manufacturers to selling a phone without a carrier deal. "When going through third-party retail channels, there are no demands saying 'use my music service' or 'put this button here,'" Greengart noted. Operators often require handset makers to change their products in exchange for their marketing backing.

The IDG News Service is a Network World affiliate.