News Analysis: An analyst claims that Verizon might pay Apple to not bring its iPhone to T-Mobile's or Sprint's networks. That sounds like a wise idea for Apple.
Since
its release in 2007, Apple's iPhone has been available exclusively to AT&T
customers in the United States.
Since that launch, rumors have been swirling that Apple would be bringing its
smartphone to Verizon's network sooner rather than later. But more than three
years since that launch, the company hasn't done it. Some industry watchers are
wondering when its exclusivity deal with AT&T will finally end.
But
at least one analyst, Shaw Wu from Kaufman Bros., believes that exclusivity
deal will come to a close. When it does, Apple's iPhone will soon be on Verizon
store shelves and its mobile network. There have been many reports that this
will finally happen in early 2011, but there has been no confirmation from
Apple.
But
perhaps most importantly, Wu believes that Verizon could even pay Apple for the
right to limit the iPhone's availability to AT&T and Verizon to keep it out
of the hands of T-Mobile and Sprint.
Although
Apple hasn't confirmed that report, it certainly
sounds
like a good idea for the hardware company. Yes, it might be nice to bring
the iPhone to as many customers as possible, but in this case, it's best if
Apple sticks with AT&T and Verizon.
Here's
why:
1.
Verizon and AT&T are enough
First
and foremost,
Apple
needs to realize that Verizon and AT&T are enough. Sprint and T-Mobile
aren't the leaders in the U.S.
mobile market; Verizon and AT&T are. As a company that does its best to
align with the top companies in any market, it would only make sense for Apple
to limit the availability of its smartphone to the top carriers, rather than
allow it to be offered on most of the major U.S.
wireless networks. AT&T isn't enough for either consumers or Apple. But if
Verizon is included, the vast majority of the market will be satisfied.
2.
Supply concerns
If
Apple finally announces iPhone availability on Verizon's network, the company
will be facing huge demand for the device. As a result Apple might have trouble
filling the demand from both Verizon and AT&T customers. If Apple were to
offer the iPhone on T-Mobile and Sprint networks as well, the supply chain
would be even more strained, which could potentially discourage more customers.
3.
Size must play a role
As
of the end of the third quarter, T-Mobile had approximately 33 million
customers, according to its quarterly filing. Sprint has around 33 million
postpaid subscribers, according to its own third-quarter filing. Verizon, on
the other hand, had about 93 million subscribers at the end of the third
quarter. Based on those figures, and considering there is a finite supply of
iPhones available to consumers, why would Apple want to even worry about
bringing its iPhone to T-Mobile and Sprint? The big winner is Verizon.
4.
All the bases are covered without them
AT&T's
network uses GSM technology, while Verizon's uses CDMA technology. If Apple
decides to bring its smartphone to Verizon's network ahead of Sprint or T-Mobile,
the company will have the two main wireless technologies covered with its
iPhone. Granted, Sprint and T-Mobile customers would be forced to switch
providers, but as AT&T has shown, consumers are ready and willing to do
just that.
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