What we think we know about the Verizon iPhone

After a CES no-show, Verizon is teasing us with an iPhone-generated Tweet today on the eve of its press event where it is expected the carrier will at last introduce the iPhone, meaning US customers shall enjoy more choice as to which network carries their Apple smartphone. The move should also boost Apple in its battle with Android. So, what do we know?

UPDATE: Since this report was first written, the Verizon iPhone has been introduced. Learn more about it in this report, here.

Pressure to bring the iconic Apple device to Verizon has been immense since the iPhone was first introduced. However, it should be noted that the exclusive deal with AT&T was a powerful tool, enabling Apple to launch its transformative product without being limited by carrier control.

iPhone history

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To characterize iPhone's place in history, it is worth noting that when it was introduced carriers were in the habit of controlling what features and capabilities were included within handsets. By reaching a deal with AT&T, Apple was able to open the industry up by bringing to market a device which was not defined by the carrier, but by the technology.

Verizon was offered the chance to offer the iPhone but it declined the chance, apparently because Apple's financial terms were too steep, Verizon confirmed in 2007. Apple also wanted to control distribution and to take a slice of service revenues, reports at that time claimed.

(Some may also see it as interesting to note that Android, despite its claims to be open, somewhat ironically serves to give carriers back control over what features a handset might have.)

The Apple/AT&T relationship hasn't been easy. Steve Jobs, according to Wired magazine, talked about dropping AT&T at least six times. In a famous story, Jobs allegedly once told an AT&T staffer who suggested he wear suits to meetings at the carrier, "We’re Apple. We don’t wear suits. We don’t even own suits."

Data, data, data

iPhone users enjoy using of the device, driving greed for data traffic. iOS Apps also like to quietly interrogate their network for software updates, messages and so on, which also boosts data demand. (Incidentally, travelers should always remember to switch Data Roaming off on their iPhone when going abroad).

The demand for data is a hallmark for the future of the mobile industry. Data traffic is eclipsing voice traffic and this trend is expected to continue. In preparation, Verizon has been improving its network.

The Wall Street Journal claims Verizon will offer unlimited data-use plans when the iPhone goes on sale. AT&T has faced complaints about its patchy network coverage since the launch of the iPhone, leading the carrier to impose data usage caps since last year. A recent Consumer Reports survey put AT&T's network quality in last place. Verizon was ranked at number one.

Verizon has a reputation for network quality. If Verizon's network proves itself capable of handling iPhone data traffic, then AT&T will face serious competition. If the iPhone factor rocks Verizon's network, then the carrier's reputation will suffer. With no iPhone to offer, Sprint and T-Mobile in the US must now be discussing consolidation.

Don't expect Verizon's unlimited data iPhone offer to last forever. Carriers worldwide are realizing the difficulty in serving data-hungry smartphone users. In the UK, 3, O2 and Vodafone have already abandoned unlimited deals, as AT&T did last year. This suggests Verizon's unlimited tariff constitutes a marketing tool designed to tempt existing iPhone users to jump ship from AT&T.

War is on. AT&T PR boss Larry Solomon told Business Insider that AT&T's GSM technology is faster than Verizon's CDMA technology: "The iPhone is built for speed, but that's not what you get with a CDMA phone. I'm not sure iPhone users are ready for life in the slow lane."

Checking the 'iNumbers'

Stifel Nicolaus thinks five to six million AT&T subscribers may switch to Verizon, despite two-year contracts and Family Plans from AT&T, reports CNBC.

iPhone users on Verizon will likely be unable to surf and browse the Web while talking on the iPhone, though there have been reports claiming Verizon intends removing this limitation.

Verizon will sell a lot of iPhones:

  • Mutterings from Wall Street analysts predict sales of between nine million and 12 million Verizon iPhones this year.
  • Piper Jaffray analyst Gene Munster expects the move will boost Apple's iPhone sales by 5 percent or more, adding $5.9 billion to AAPL's earnings this year.
  • In a note to investors on Monday, RBC Capital Markets Managing Director Mike Abramsky stated that Verizon Wireless may sell 9-10 million iPhones in 2011.
  • Cross Research thinks the device could reach around 12 per cent of Verizon's wireless subscribers.

JP Morgan this morning warns the Verizon iPhone may be more expensive than the AT&T model. Analyst Mark Moskowitz warns it may cost up to $30 more than the equivalent AT&T iPhone. This is because of pricier components, principally a CDMA radio.

"While the acquisition price of the iPhone could be slightly more expensive for subscribers on Verizon, we think that there will be offsets, specifically network performance," he wrote.


It seems unlikely the device will only function on CDMA networks -- if it is CDMA-only then iPhone users won't be able to use the device abroad. Don't expect an LTE iPhone. This isn't going to happen -- yet. What we'll see is a combined CDMA/GSM model. Apple will wait until more international carriers support LTE.

Apple CEO Steve Jobs may appear at tomorrow morning's Verizon press conference, set to take place at 11am at the Lincoln Center. In case you missed this, that is 11am on the 1/11/11. (What could this mean numerologically?)

Apple staff in retailers across the US have been told not to take vacations from later this month and all across February. This suggests the Verizon iPhone will go on sale at the end of the month, a notion confirmed by the Wall Street Journal. (It is also highly probable we'll see some form of iPad announcement in this period).

You should be able to pick the Verizon iPhone up from February 3, two days after Apple is expected to reveal the iPad 2.0. Meanwhile take a look at these images to see that the Verizon iPhone has a slightly different antenna design.

Are you an iPhone user on AT&T who might switch to Verizon once the device is offered there? Or are you a customer on Verizon who intends taking an iPhone next time you upgrade? Or are you quite happy with another device? Please let me know in comments below, I'd also be very pleased if you chose to follow me on Twitter so I can let you know when new posts appear here first on Computerworld.

Copyright © 2011 IDG Communications, Inc.

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