Verizon iPhone would cause ripple of winners, losers in smartphone universe

Jan 11, 2011
Finance

Verizon (VZ) Wireless hasn’t made it official yet that it will finally get the iPhone from Apple (AAPL), busting the four-year AT&T (T) lock on the app-happy devices. Verizon won’t make anything official until a press event at 11 a.m. today in New York. Meanwhile, the rumor hype mill has been on overdrive, driving up […]

Verizon (VZ) Wireless hasn’t made it official yet that it will finally get the iPhone from Apple (AAPL), busting the four-year AT&T (T) lock on the app-happy devices. Verizon won’t make anything official until a press event at 11 a.m. today in New York.

Meanwhile, the rumor hype mill has been on overdrive, driving up Apple’s valuation along with consumer expectations.

Here are some tidbits on a mixed bag of ripples created by Verizon scoring the iPhone:

—John Paczkowski in Digital Daily blog in All Things Digital cites two analysts who predict that the Verizon network will experience some growing pains with the addition of the iPhone, though not as bad as those suffered by AT&T. He notes that many AT&T iPhone users will remain with AT&T rather than break their contracts. So AT&T defectors to Verizon may be smaller than some expect.

—Adam Satariano and Peter Burrows report in Bloomberg that Google’s (GOOG) Android will be hit hard by the iPhone at Verizon. About 2 million Android phone shipments a year could be cannibalized, according to Dan Hays. “A lot of people who bought Android phones were buying it in lieu of an iPhone because they couldn’t get one on the Verizon network,” said Charlie Wolf, a Needham & Co. analyst in New York.

—Amy Thomson reports in Bloomberg that Verizon may spend $3 billion to $5 billion to subsidize consumer purchases of its own iPhone. Analysts predict this will cut into Verizon’s profits.

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—Just the other day, a ZDNet blogger expressed his skepticism that Verizon finally will be getting the iPhone. But the latest word from Larry Dignan at ZDNet’s Between The Lines Blog is that the iPhone is on its way to Verizon. He discusses the impact of this move on all the parties with a dog in the fight.

He notes that Verizon could be a big winner. But if the Verizon network stammers with the addition of the iPhone, it could be a boost to Ma Bell’s rep. Meanwhile, the deal could affect Motorola Mobility (MMI): “No company has been more tethered to the success of Verizon’s Droid franchise in the last year. Motorola’s wireless division would be on the scrap heap if it weren’t for Android and Verizon Wireless.” If the Verizon iPhone isn’t available for LTE, Moto could be fine, Dignan said.

He said T-Mobile and Sprint (S) could be hurt big time if they are locked out of the iPhone. He predicts they may ponder a merger.

—Neil Hughes in AppleInsider said the arrival of the iPhone on Verizon is expected to increase overall U.S. iPhone sales for Apple, while hurting AT&T. He quotes analyst Gene Munster from Piper Jaffray predicting AT&T will sell 11 million iPhones in 2011 compared with 9 million by Verizon.

But that will shortchange AT&T. Hughes quotes Munster as saying if iPhone weren’t launched in 2011, AT&T alone would sell 17.5 million iPhones in 2011.

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