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With Apple’s iPhone set to make its debut on the Verizon network in a matter of days, speculation is already percolating on what impact this will have on Android handset makers.
The end of the exclusivity deal that Apple had in place with AT&T made other carriers, especially Verizon, fertile ground for the rapid sales growth of Android smartphones as well as other mobile phone platforms. But now Verizon’s more than 94 million customers will have a chance to switch to the iPhone, something many of them have probably wished they could do for a long time.
Based on how things have gone over the past month with Verizon unveiling the iPhone and information related to pricing starting to be made available, it’s quite possible that the top Android handset makers on Verizon, including Motorola, Samsung and HTC, might get annoyed by their treatment under this new market regime. They have been so used to being the top companies on the network that taking a backseat to the iPhone-as they certainly have on the AT&T system-could be enough to hurt the relationships between those companies and Verizon.
At this point, it’s important to keep a close eye on Verizon’s relationship with Android vendors. Already the carrier has done things that probably didn’t make other smartphone makers happy, and the relationships could deteriorate even more as sales of Verizon iPhones inevitably grow.
Read on to find out whyVerizon’s Apple concerns could annoy Android smartphone makers.
1. The iPhone’s unlimited data plan
Verizon is expected to offer unlimited data plans to iPhone customers when the smartphone finally launches on its service on Feb. 10. However, Verizon said that the unlimited offer will only be available for a set amount of time and then the company will move to a tiered-pricing strategy. The company said that its decision to offer unlimited data at launch is designed to coax more customers to its iPhone option. The only problem is Android handset makers have no leverage in that scenario. Their phones will have unlimited data offered until Verizon is satisfied with the number of iPhone customers it has. When that happens, all devices will be subject to tiered pricing. It’s an Apple-centric move on Verizon’s part that won’t make its Android partners happy.
2. The attention is on Apple.
TheiPhone stole the show on Verizon’s most recent earnings call with investors and analysts. During the company’s discussion on financial performance and its question-and-answer session, the device came up dozens of times. Android, on the other hand, was mentioned very little throughout the entire presentation. Moreover, Verizon has been speaking publicly about the iPhone far more than it has been talking up Android. Perhaps it’s just because the iPhone is coming to Verizon’s store shelves starting Feb. 10. This focus on Apple’s platform should worry Android handset makers.
3. Verizon knows the stakes.
If nothing else, Verizon realizes that it needs the iPhone more than any other device to jump-start its business. It should be noted that Verizon is still generating billions of dollars in revenue every quarter and its subscriber base is growing, but AT&T is on its heels. And the carrier’s profits pale in comparison to AT&T’s, a company that isn’t invested so heavily in Android. Given that, it would only make sense for Verizon to double down on its support for the iPhone and push Android to the back burner.
4. The events surrounding CES didn’t help.
At the Consumer Electronics Show, Verizon spent much of the time during its keynote discussing its 4G network and some Android-based devices. It also unveiled a number of Android smartphones at the show. But by announcing the iPhone the next week at a separate event with the world’s media focusing only on that, some can’t help but wonder how Motorola, HTC and others felt. Sure, they got their day in the spotlight, but they got it during the world’s biggest consumer electronics show. Apple enjoyed its day in the spotlight at its own event.
5. Marketing hype
Verizon’s marketing effort is slowly but surely starting to kick up. The company recently launched the first iPhone spot, thanking its customers for hanging with Verizon through the many years it didn’t offer Apple’s iPhone. Previously,Verizon’s marketing efforts focused mainly on Android devices. Now, the iPhone is starting to take over, and it’s being flanked by the company’s 4G network. Is Android in danger of becoming the forgotten platform in Verizon’s ads?
6. How will Verizon’s sales people respond?
It should be interesting to see how Verizon’s salespeople handle customers when the iPhone finally launches. As the retail experience at AT&T stores has shown over the past few years, the company was quite concerned with getting customers to the iPhone and making that experience as appealing as possible. In other areas, its retail experience is lacking. The question now is whether Verizon’s salespeople will provide the same attention, quality of sales pitches and customer service for Android devices as it has in the past. After all, Android smartphones were once Verizon’s most important products. By Feb. 10, that importance will be diminished, to say the least.
7. The iPad doesn’t help matters.
Customers that shop at Verizon stores right now will find some iPads on display. Customers can try out the device, see how it interacts with the company’s MiFi 2200 Hotspot and much more. Along the way, they’re potentially showing those who have never used an iPhone why iOS might be right for them. The iPad might not be an iPhone, but it’s undoubtedly helping to sell Verizon customers on Apple’s smartphone. That won’t help Android sales either.
8. Verizon might follow the AT&T model.
It should be interesting to see how Verizon responds to having the iPhone available to customers after all the hype has died down and its business is back to normal. If sales skyrocket, as most expect them to,it’s possible that Verizon will follow the AT&T model and promote the iPhone more than any other device over the long term. If it does that, Android handset makers won’t be happy. Companies like Motorola and HTC will be left to wonder why they maintained such strong relations with Verizon for so long.
9. Customer perception considerations
If nothing else, the Verizon iPhone could prove to be a thorn in the sides of Android handset makers because of consumer perception. When customers walk into a Verizon store starting on Feb. 10, they will be able to compare the functionality of the iPhone to a device like the Motorola Droid X. Motorola will have to work even harder than ever to coax customers to choose Android over iOS. The reason is simple: Apple’s iPhone is perceived by customers to be a better device than any Android handset. Its sales prove that quite well. The onus is on Android handsets to overcome expectations and show more value than the iPhone. Meanwhile, all Apple has to do is put its iPhone on store shelves and the device sells itself. It’s a phenomenon that Android handset makers didn’t have to deal with in Verizon stores before. But they are forced to deal with it now.
10. It’s what investors care about.
When it’s all said and done, Verizon’s first responsibility is to its investors. As a public corporation, Verizon must maximize shareholder value. In order to do that, it has to bet big on the devices and platforms that have the highest likelihood of doing that. At least for now, that’s the iPhone.Whether Android handset makers like it or not, both Verizon and its investors think Apple’s smartphone is integral to the future success of the corporation. All other devices must take a backseat.