The Verizon Wireless iPhone: It’s Real

Event Summary

January 11, 2011 -- Verizon Wireless officially announced that it will offer the Apple iPhone 4. The device will be CDMA-only and have features similar to the GSM iPhone 4 version. Verizon Wireless will pre-install a 3G mobile hotspot that will offer WiFi capability for up to five devices. Existing customers will be able to pre-order the iPhone starting February 3, 2011. It will then be available to the general public on February 10, 2011 for $199.99 for the 16GB version and $299.99 for the 32GB, with a two-year contract.

Quick Take

Analytical Summary

• Current Perspective: Very positive on the iPhone coming to Verizon Wireless, because despite much better devices from the competition, Apple still leads the industry in several respects: its user interface has the broadest appeal, its devices seamlessly integrate with the largest digital content store both in the cloud and on the PC, and it has the widest and deepest range of apps. An iPhone on Verizon Wireless will sell millions of units, and it changes the competitive marketplace in the U.S. However, while there will be some churn away from AT&T, most Verizon Wireless iPhone buyers will come from Verizon Wireless itself.

• Vendor Importance: High to Apple, which was doing fine without Verizon Wireless, but decided it needed a CDMA iPhone for reasons both strategic and practical. Without an iPhone, Verizon Wireless was forced to back other operating systems, and it proved to be a powerful backer. By giving the carrier an iPhone of its own, Apple will not only sell a lot of phones, it will also blunt the rise of Android and other competitive mobile platforms. Apple could not wait for LTE, because Verizon Wireless is only using LTE for data; building a CDMA/EV-DO iPhone today prepares the way for a CDMA/LTE iPhone in the future.

• Market Impact: Very high on the smartphone market in the U.S., because the leading smartphone platform will now be available at the largest carrier. The heaviest users and most disgruntled iPhone users at AT&T will switch, which may not be a bad thing for AT&T, but most AT&T iPhone users will stick with the carrier because they are on family or business plans. The biggest impact will be felt by Android licensees selling phones at Verizon Wireless over the coming year or so as feature phone subscribers choose iOS over Android and some current Android customers switch when their contracts expire.

CLIENTS ONLY

Competitive Strengths and Weaknesses

Response & Recommendations

Buyer Actions

Analytical Perspective

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