Verizon holds almost 10 percent of U.S. iPhone market

Mar 16, 2011

AT&T (T) talked tough, but if the formerly exclusive iPhone carrier isn’t scared of what Verizon (VZ) might be doing to its share of the market for Apple’s (AAPL) iOS devices, it probably should be.

Only about a month and a week after the iPhone’s release on the new network, PC World is reporting that Verizon has captured 9.4 percent of the domestic iPhone market from AT&T. That’s following what Verizon reported were record-breaking sales for the phone when it was first released, which could have gotten as high as around 900,000 or a million units.

But the information isn’t precise. It comes from Chitka Insights, an analysis firm based on an advertising network called Chitka. Insights tracks how Chitka ads show up on various iPhones, figures out which carrier they’re using, and extrapolates that to the larger iPhone market. It’s not a terrible way to measure things, but the accuracy is in question — PC World points out that while it is seeing 9.4, Boy Genius Report previously had Verizon up to 12 percent of the market, then adjusted and brought it back to 9.4.

Still, it’s an indicator that’s useful. Consider that at the Verizon iPhone’s release, after its initial sales, Chitka Insights’ tracker put the Verizon market share at 3 percent. A month later, it has tripled.

It’s worth noting that Verizon doesn’t even have a new iPhone to push. Its version of the iPhone 4, which has a CDMA chip in order to make it work on Verizon’s network, is actually a fairly dated entry considering Apple’s yearly hardware upgrades. In addition, Verizon entered the game near the end of the yearly Apple cycle — dropping its phone in February, with the iPhone 5 expected in June.

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There are a great many reasons for customers not to switch from AT&T to Verizon, and the looming iPhone 5 is certainly the biggest, since Verizon customers will probably pay a premium to get the new phone, rather than having it subsidized by the carrier after two years. That’s how most people upgrade their phones — by letting Verizon pay for it.

The same goes for joining up with Verizon with the iPhone 4 as a newbie. AT&T runs a faster data network, Verizon shares the same dropped-call and antenna issues, and the CDMA chip limits users’ ability to access the phone’s data capabilities at the same time they’re on calls. All of these things work against the Verizon iPhone as it stands today, and yet the new entry, in just a month, claims one in every 10 iPhones in the U.S. If you’re not impressed, you should be.

What does the future hold for AT&T?

As should AT&T. Some major events are on the horizon that could decimate AT&T’s death grip over the iPhone, a scenario that isn’t just likely at this point, but inevitable if AT&T doesn’t find a way to give customers a better experience than they can get with Verizon.

First off, when the iPhone 5 hits: it’ll be the start of a brand-new cycle; it’ll likely draw lots of new iPhone owners; and it will be a perfect moment for AT&T customers to jump ship and start up with Verizon and a new phone. It’s very probable that lots of iPhone owners who hate AT&T and the company’s track record for not really caring about its beholden iPhone customers are just waiting for a convenient opportunity to defect. That opportunity comes in June, and I wouldn’t be surprised if the Chitka Insights tracker’s needle suddenly swings far into red Verizon territory.

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If that wasn’t enough, Verizon is hard at work touting its 4G LTE network as it continues to spread it to about 176 markets this year. AT&T’s 4G capabilities, on the other hand, are sorely lacking. The iPhone 5 might not be the phone that Apple takes into new network territory, but certainly by the iPhone 6, now less than two years away, iPhone users will have 4G access. When that happens, if things keep going the way they are, Verizon will be in place to dominate the conversation.

AT&T right now is probably a little worried. That might have something to do with the 1,000 free rollover minute offer it has been quietly offering, which is available to customers who text “YES” to the number 11113020 before March 31. But that’s not nearly enough if AT&T wants to hold onto the iPhone customers it has been taking for granted — it needs to find a way to make sticking with AT&T worthwhile, and it needs to do so very, very soon.

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Phil Hornshaw

Phil Hornshaw is a freelance writer, editor and author living in Los Angeles, dividing his time between playing video games, playing video games on his cell phone, and writing about playing video games. He’s also the co-author of So You Created a Wormhole: The Time Traveler’s Guide to Time Travel, which attempts to mix time travel pop culture with some semblance of science, as well as tips on the appropriate means of riding dinosaurs. Check out his profile.

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