CTIA Wireless IT & Entertainment 2009

Verizon Wireless and Google Issue Joint Press Release

| Oct 7, 2009 | Mobile Devices | Show Update

| Analyst: Avi Greengart

Current Perspective: Positive
Vendor Importance: Very High
Market Impact: Very High

Event Summary

October 6, 2009 -- Verizon Wireless and Google announced a strategic partnership, wherein Verizon Wireless will offer devices based on the Android open platform. The companies did not announce any specific devices, pricing, or timing. However, the companies did say, “The agreement will come to fruition within the next few weeks as Verizon Wireless introduces Android-based handsets.”

Analytical Summary

• Current Perspective: Positive on Verizon Wireless announcing its intention to offer Google Android phones, because it should help the carrier fight the Apple iPhone over at AT&T while reducing Verizon Wireless’ over-reliance on RIM. Google’s Android has been badly constrained since launch with a limited range of handsets and carriers; with Sprint, and now Verizon Wireless, joining T-Mobile in the U.S., Google’s distribution will be quite good heading into the holidays. Verizon Wireless has promised to allow any Android app to run on its devices, and hinted that those devices may take forms beyond just cell phones. The announcement itself lacked substance; the companies did not disclose any devices, pricing, new software, or new functionality. However, two Android phones are expected to be launched in the coming weeks, with more in 2010.

• Vendor Importance: Very high to both Verizon Wireless, which badly needs better high-end consumer smartphones, and Google, which badly needs to build an installed base for Android. Contrary to popular belief, Verizon Wireless’ move towards openness is not new to this announcement or a response to the FCC’s net neutrality push last week, but fits with the carrier’s directional shift starting back at the end of 2007 around its business model for 4G and M2M. No carrier makes a long-term commitment to a mobile OS based on last week’s regulatory pressure.

• Market Impact: Very high on the smartphone market, because the U.S. cell phone market is still carrier-centric. Consumers overwhelmingly pick a carrier first, and a device second; even the majority of iPhone buyers are existing AT&T subscribers, not people leaving their carrier to get the device. However, consumer-oriented touchscreen smartphones are a fast-growing category and critical to carriers’ ability to retain existing subscribers. Android has not been a significant factor in the U.S. because, until recently, it had been constrained to just a single device at the smallest national carrier. That is about to change in a fairly significant way.

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Current Perspective

Competitive Positives and Concerns

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