Verizon iPhone impact on Android may be a wash

The bigger impact will come with the LTE iPhone, which some predict could arrive this year

Some analysts said Tuesday that the iPhone 4G on Verizon Wireless will cannibalize Google Android smartphone sales across various carriers, including AT&T, early on, but others disagreed.

Part of the reason some analysts see a relatively small impact is because the Verizon iPhone will run over existing CDMA/EV-DO networks, rather than the faster LTE service.

"There certainly appears to be a significant pent-up demand for the iPhone on Verizon, but AT&T's response to the news will be important," said Dan Hays, a consultant at PRTM. He said AT&T's network, which is based on GSM technology, will have some advantages over Verizon's CDMA/EV-DO service, including global roaming capability and simultaneous use of voice and data.

Hays was quoted in earlier reports saying that 2 million fewer Android phones would be sold per year once Verizon starts selling the iPhone, but Hays said in an interview with Computerworld that the impact "really will be more of a wash -- net neutral-- for Android" across all carriers. That's partly because the iPhone on Verizon will draw more customers into stores, and some of them will end up buying Android devices, including some smartphones with emerging dual-core processors and others that support LTE.

Ross Rubin, an analyst at NPD Group, said the Verizon iPhone will "steal some share from Android before LTE Android products hit the market," but he wouldn't estimate how much. About 70% of Verizon smartphones sold in the third quarter of 2010 were based on Android, which creates a "big target" for sales of the iPhone on Verizon, he noted.

Still, Rubin said AT&T and other carriers (even Verizon) will beef up Android sales in coming months, pushing faster devices running on either LTE or HSPA+.

Verizon will have an added advantage over the AT&T version of iPhone with the ability to support Wi-Fi devices, Rubin and Hays added, but they both noted that AT&T will retain the ability to support both voice and data uses simultaneously with GSM. "Wi-Fi [support] likely won't be a major factor" for the Verizon iPhone, he said.

The most serious damage to Android by a Verizon iPhone will come in the next three months, before the arrival of Android phones that run on LTE, several analysts said.

Tero Kuittinen, an analyst at MKM Partners, has predicted that Verizon's sales of Android devices in the first quarter may be cut in half as a result of a Verizon iPhone. But after the first quarter, the situation could change, because Verizon has recently announced 10 devices that will run over its emerging LTE network by midyear.

AT&T, meanwhile, will expand its Android lineup with devices such as the Motorola Atrix 4G with a dual-core processor, analysts noted.

LTE service will eventually be available on the iPhone, possibly by this summer. But Hays said he doesn't think an iPhone that supports LTE will available until 2012, because by then AT&T will have rolled out some LTE networks in the U.S., giving Apple the ability to sell an LTE version of the iPhone for both AT&T and Verizon, which are the nation's two largest carriers with 185 million subscribers combined.

Some analysts, such as Gene Munster at Piper Jaffray, said Apple's strategy to sell the iPhone with Verizon is not just about selling more iPhones but also about addressing the growing threat from Android.

But if the iPhone on CDMA/EV-DO from Verizon doesn't quell the momentum for Android, an LTE-capable iPhone will, some analysts said.

"I think iPhone will have some effect on Android sales on Verizon Wireless, but I don't think it will be substantial," said Jack Gold, an analyst at J.Gold Associates. "I think the effect would have been much greater had iPhone been released on Verizon a year ago. Android has a momentum now and should be OK even with iPhone on Verizon. Certainly there will be some effect, but I'd estimate it's probably no more than 10% or so in reduced sales, especially since the iPhone is only 3G, and there's no indication of when an LTE device is coming."

Ken Dulaney, an analyst at Gartner, agreed that an iPhone with LTE service will be the biggest differentiator, and he expects that such an offering will be announced for the iPhone 5 sometime in the spring.

"The big battle [over platform dominance] will come with the iPhone 5, which I would expect will have LTE support," Dulaney said.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen, or subscribe to Matt's RSS feed. His e-mail address is mhamblen@computerworld.com.

Copyright © 2011 IDG Communications, Inc.

  
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