Verizon and iPhone? Give ‘em a hand!
When it comes to smart phones in America, there are three things that should be accepted as fact:
- That they are expensive (there are people who have used payday loans and credit cards to buy them)
- The iPhone is the phone of choice for non-business users
- You have to be an AT&T subscriber if you want an iPhone (barring unlocking the phone and voiding the warranty)
But number three may not be true for much longer. Leslie Cauley reports for USA TODAY that Verizon and iPhone may be holding hands soon.
What a blow to AT&T!
Verizon and Apple are reported to be in discussion regarding the development of a separate iPhone for the Verizon network. If things go well, insiders predict it will introduced in 2010. This would be the first time Apple has produced an American iPhone that will work on a CDMA wireless network like the one Verizon uses. Vodafone, co-owner of Verizon Wireless, already sells the iPhone in Europe.
The AT&T-based iPhone 3G operates on a GSM network, which is the most popular type of wireless network worldwide.
AT&T’s exclusive deal ending soon
“High-level” talks apparently began between Verizon and Apple months ago, when Apple CEO Steve Jobs was still in charge of day-to-day operations. Even though Jobs is on medical leave until June, the conversations continue.
AT&T has exclusive U.S. distribution rights to the iPhone into 2010. That contract began in 2006, before the iPhone had even been released. However, if things progress with Verizon, it is clear they won’t be alone once that deal expires. Experts predict AT&T will do all it can to beg Apple to sign another exclusive deal for another year.
Consumers are the winners
“Breaking the (iPhone) exclusivity with AT&T is a huge thing,” said Roger Entner of Nielsen. “That would send shivers into AT&T’s stock and senior leadership.” But at the same time, consumers would have more choice, which helps to regulate prices through competition.
Currently, iPhone has helped AT&T to monster wireless sales numbers. According to reports, AT&T has taken on at least 1.6 million iPhone customers during this quarter alone. For these customers, 40 percent of them are new to the AT&T network. As a result of this shot in the arm from Apple, AT&T’s reported revenue from its wireless network was up nearly 40 percent.
What more does Apple need?
If Apple does indeed tap into the Verizon Wireless network of users, they would gain access to about 80 million customers, says Entner. Some customers may already have an iPhone (they may be a paying customer in both networks), but the vast majority do not. Thus, Verizon customers purchasing Verizon iPhones would be a great stimulus to Apple’s bottom line.
The tale of the tape for Verizon and AT&T would be like a tale of two cities. On the one hand, even though AT&T’s 3G network is generally considered faster, people on the fence could easily choose the competition. Verizon’s network is generally considered to be more reliable, although this varies by region. AT&T won’t be shout out of the iPhone party, but they’d have to share the wealth. And a little bit of competition is definitely a good thing for American consumers who are looking to save where they can during this recession.
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This is good news for those of us who aren’t enamored of AT&T, and want to get the iPhone, or Verizon fans in general wanting another smart phone option. It also means big bucks for Apple. I didn’t understand why they only shopped to AT&T exclusively (well…I do – they gave them a big fat cash advance) as they would have gotten even bigger money if they got it carried by all the big companies. Oh well, it’s still out of my price range.