Verizon iPhone Desire Is Already Hurting ATandT

Rumors of an Apple iPhone on Verizon Wireless are affecting the purchases of all consumers, states a new report. Among AT&T iPhone owners, 34 percent are waiting to upgrade to the iPhone 4 on Verizon.

Verizon Wireless customers do indeed want an Apple iPhone, but they're not the only ones, market research firm Morpace reported in a new study out this month. According to the firm, 34 percent of current AT&T iPhone owners say they haven't yet upgraded to the iPhone 4 because they're waiting for the device to debut on a competing network.

While consumers are keen on the iPhone 4-as evidenced by the 1.7 million units Apple sold within three days of the smartphone's launch-consumer frustrations, as well as word of dropped calls and poor service on the network, have persuaded consumers on all networks to hold out on committing to a new contract with AT&T.

"It is clear that if the iPhone does become available on the Verizon network, it will impact the phone and carrier intentions of many consumers," stated the Morpace report. "The study found that nearly a third of consumers are very likely or somewhat likely to purchase an iPhone if it is made available to Verizon."

Among the 1,000 consumers surveyed, 51 percent of current Verizon customers said they were "Somewhat/Very Likely" to purchase an iPhone with Verizon. Stating the same were 22 percent of current Sprint customers, 20 percent of T-Mobile customers and 23 percent of current AT&T customers.

Neither Apple nor Verizon has confirmed that an iPhone is coming to the nation's largest network, but analysts have predicted as much for months.

In June, Gleacher & Co. analyst Brian Marshall and Auriga Securities analyst Chandan Sarkar appeared on the Bloomberg Television program "Taking Stock" to discuss not the likelihood of Verizon getting an iPhone but what the effects will be when it does. The show's host, Pimm Fox, prefaced the program by plainly announcing that Verizon Wireless will begin selling an Apple iPhone in January 2011-a date widely agreed upon by analysts.

Marshall and Sarkar generally agreed that a Verizon iPhone, likely used to spearhead Verizon's planned 4G network, will present a challenge to AT&T-as well as to Verizon. Marshall described AT&T as having been "brought to its knees" by the demand of iPhone users and added, "I worry about the same thing for Verizon."

The criticisms of AT&T's network have followed years of efforts on the carrier's part, as well as investments of billions of dollars, specific efforts to address very heavily populated areas and even the launch of an app to alert the carrier to specifically when and where an iPhone call was dropped. In April, AT&T announced plans to invest still another billion dollars in expanding and boosting its network.

The Morpace report echoes the sentiments of Marshall and Sarkar in stating that "there may be concerns over how the Verizon network will handle the bandwidth demands of the iPhone users."

Additionally, the report cautioned that a Verizon iPhone could impact sales of other Verizon smartphones that as yet haven't faced the iPhone head on. Promoting devices running Google's Android OS has been a major way that carriers have worked to compete against AT&T and its iPhone. Should Verizon's Android lineup-which currently includes the Motorola Droid 2, the HTC Droid Incredible and the Motorola Droid X-be put in direct competition with the iPhone 4, results would be telling for the future of this industry.

"The impact of Android phones, a current favorite among Verizon customers, has yet to be determined," states the Morpace report, "and could be the key to understanding future market share if Verizon and Apple develop an agreement."