Why a Verizon Wireless iPhone Is a Game-Changer

By Don Reisinger  |  Posted 2009-08-10

Why a Verizon Wireless iPhone Is a Game-Changer

UBS analyst Maynard Um wrote recently that Apple might be announcing a partnership with Verizon Wireless in the coming weeks that could see a "data-centric" Apple product be made available to the carrier's subscribers. Um didn't say what that product would be.

He didn't say if the iPhone would be made available. He also didn't indicate if the product is Apple's rumored tablet device. Regardless, it's the iPhone, arguably the most important product in the mobile phone industry, that would make the greatest impact on the market if Apple brings it to Verizon Wireless.

Prior to the iPhone's release, most smartphones lacked the kind of appeal that excited end users. They didn't have a touch-screen with multitouch capabilities. They didn't offer an App Store. They didn't, in any way, deviate from the standard of the time. It was a period that was marked by derivative products from RIM and Windows Mobile vendors. It was boring. Smartphones weren't trusted companions that could provide entertainment and productivity. They were necessities that the boss made employees carry around.

But when the iPhone was released in 2007, all that changed. As Apple was revolutionizing the smartphone market, its competitors were trying desperately to stay relevant. Eventually, more companies joined the fray, unleashing several products that tried to match what the iPhone had achieved. So far, they haven't been successful in that endeavor.

But since 2007, the single obstacle Apple has faced is AT&T. Right now, several companies and consumers are opting for the BlackBerry over the iPhone because it's available on the carrier they have a contract with. It has kept the iPhone from realizing its real potential. Worst of all, it has forced Apple to leave money on the table as it continues to offer its iPhone exclusively to AT&T customers.

That's precisely why that "data-centric" Apple product Um referenced should be the iPhone. For too long, Apple has toiled away with one partner, trying to coax both consumers and businesses to switch carriers. By inking a deal with Verizon Wireless and ditching its exclusivity contract with AT&T, Apple could fully dominate the market.

Time to Worry?

By bringing the iPhone to Verizon Wireless customers, companies such as RIM, Google and Microsoft, three organizations that have phones available on multiple carriers, will need to worry. The iPhone has all the features, including a huge App Store, that users want. With Verizon Wireless availability, it would also have the ubiquity end users covet. Its competitors would need to ramp up innovation to match Apple.

Making the Switch from GSM

The Enterprise

One of the key factors keeping RIM in the lead in the business world is the BlackBerry's availability on multiple carriers. It makes it a convenient alternative to the iPhone for companies that can't get out of the long-term contracts they've signed with Sprint, T-Mobile or Verizon Wireless. If the iPhone is made available to Verizon Wireless customers, it now gives those companies an option. Do they stick with the BlackBerry or do they opt instead for the iPhone? It might be a difficult decision. But so far, it's a decision that they've been unable to make.

For Apple, it puts it into an even more enviable position in the market. Not only will it have the product so many people want, but it will have the product that so many people can have. Verizon Wireless and AT&T both have millions of customers. Right now, Apple's phone is only available to just a small portion of the U.S. market. By opening it up to Verizon Wireless customers, Apple can practically double its customer base, possibly allowing it to sell millions more iPhones. It could also translate to more sales in iTunes. It would almost guarantee more App Store downloads. It would be a financial boon for Apple.

The single issue facing Apple is that, right now, the iPhone is a GSM phone. It works with a SIM card. Since Verizon Wireless uses CDMA technology, the company would need to re-engineer the iPhone to work with Verizon's infrastructure. It's not such a big problem. If RIM can do it with its own products, why can't Apple?

And perhaps that's the biggest corporate game-changer of them all. RIM, a major player in the smartphone space and, arguably, Apple's biggest competitor, would no longer have a significant advantage over Apple. It still has its BlackBerry Enterprise Server, but for many of the customers looking to buy an iPhone, that's a small loss.


Current AT&T customers who are using the company's network solely for the purpose of having an iPhone would finally have the out they've wanted. Those customers can switch to Verizon Wireless and still use the phone they like. Customers who have wanted an iPhone but wouldn't consider switching to AT&T would win too. It gives the end user a choice they haven't had before. And it ensures that as long as they want an iPhone, they can find the carrier that provides the best experience.

So, as we anxiously await what Apple might announce with Verizon Wireless, it seems that the good move, for everyone, is that it brings the iPhone to the carrier's subscribers. It could radically change the dynamics of the mobile market. And that could be good for everyone.


Rocket Fuel