With an Apple iPhone on Verizon coming "closer to reality," says a report, the deal may include preventing T-Mobile and Sprint from getting iPhones as well.
As a Verizon Wireless iPhone becomes "closer to reality," the
carrier may be negotiating to prevent competitors Sprint and T-Mobile from
getting iPhones of their own, according to a Dec. 6 research note from Kaufman
Bros. analyst Shaw Wu.
Following Apple's record shipments of 14.1 million iPhones in the September
quarter, Wu describes Apple as being "back in the driver's seat" and
Verizon more willing to accept Apple's terms, for three reasons: the popularity
of Apple's smartphone, Google's Android OS starting to "lose some of its
luster [at Verizon]" and the expectation that the newest Research In
Motion handsets won't be doing Verizon many favors.
"Our sources indicate that [Verizon] does not believe the pending
launch of BlackBerry 6 on its network is likely to have a material impact,"
states the report.
Wu added that Verizon may also be more willing to accept Apple's terms if
Apple agrees to sweeten the deal with some AT&T-style exclusivity. (Since
the 1997 launch of the iPhone, AT&T has been its exclusive U.S. provider.)
"We are hearing that [Verizon] does not want iPhone, the hottest
selling smartphone, available on T-Mobile USA and/or Sprint and may be willing
to pay for exclusivity to itself and AT&T," writes Wu. "For these
reasons, [Verizon] could be more willing to give in to Apple's terms and thus
its iPhone economics are likely to remain favorable with the pending launch of
[Verizon] in the [first half of 2011]."
Kaufman Bros. expects Apple to ship 62 million iPhones in 2011 and believes
Verizon could contribute 2 million to 3 million units per quarter, taking into
account that Verizon sales would "cannibalize" a bit of AT&T
market share.
Verizon
began rolling out its 4G LTE network Dec. 5 and is widely expected to steal
more than a few current AT&T subscribers when it does. AT&T has
notoriously struggled to support the data needs of its iPhone customers-particularly
in population-dense areas such as New York
and San Francisco.
To point, a recent Consumer Reports study found AT&T to be considered
the nation's worst wireless provider. In addition to scores provided by
readers, the publication rated carriers across several categories, including
value, voice, texting, data and phone. U.S.
Cellular, the nation's sixth-largest network, actually came out on top,
with a reader score of 82 out of 100. Verizon came in second, with 74 points,
followed closely by Sprint, with 73. T-Mobile was rated fourth, with a score of
69, and AT&T finished dead last, with a rating of 60 out of 100 points.
AT&T responded to the findings in a statement, saying, "We take
this seriously and we continually look for new ways to improve the customer
experience."
Additionally defending the carrier, the statement added that "hard data
from independent drive tests" have shown AT&T to have the nation's
fastest mobile broadband network, with competitors' speeds clocking 20 percent
slower on average.
The sentiments of AT&T customers, however, seemingly did little to prevent
the operator from signing up record
numbers of subscribers during its fiscal third quarter, which saw the
addition of 2.6 million wireless subscribers and $31.6 billion in revenues.
During the quarter-likely with the end of its iPhone exclusivity nigh-AT&T
widely diversified its mobile handset portfolio and added a number of other
exclusive offerings. AT&T president and CEO
Ralph de la Vega called the quarter "everything we could hope for and
more."
Kaufman Bros.' Wu stated that the expansion of the iPhone to another carrier
is important for Apple, as AT&T approaches a saturation point with the
iPhone. Adding Verizon to its carrier roster, said Wu, could arguable double
Apple's total available market. And notably, T-Mobile and Sprint combined-with
their 34 million and 49 million wireless subscribers, respectively-are nearly
equal to Verizon, at 93 million subscribers.
Also noteworthy is that Verizon, like AT&T, began selling Apple's iPad
in October. Wrote Wu, "We continue to believe that this marks a big
progressive step."
Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.
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