SAN JOSE, Calif. — Consumers who want to buy an iPhone but don’t want to be tied to AT&T’s network will soon have another option.
Verizon Wireless announced Tuesday that, at long last, it will sell Apple’s signature smart phone. The move would mark the first time since the iPhone debuted in 2007 that it would be available on a U.S. carrier other than AT&T, and would have far-ranging implications for the companies involved, for the industry and for consumers.
Verizon’s embrace of the iPhone is a boon to both the carrier and Apple. Whereas AT&T was recently rated the worst major carrier in the United States by Consumer Reports, Verizon is widely regarded as the best. Verizon also is the largest wireless company in the United States, with about 93 million subscribers. That represents a huge new potential market for the iPhone, one that Apple has never been able to sell to before.
Meanwhile, the iPhone is the best-selling smart phone by far, despite being restricted to just one carrier. Having the device on its network is sure to allow Verizon to retain customers it might have lost to AT&T and to lure customers not only from AT&T but also from Sprint, T-Mobile and the other carriers that still won’t have the iPhone.
Gene Munster, a financial analyst who covers Apple for Piper Jaffray, estimated that by expanding to Verizon, Apple is likely to sell 20 million iPhones in the United States this year, including 9 million through Verizon. Had Apple stuck with just AT&T, it would sell only 17.5 million this year, Munster forecast. Of course, those projections could fall short if iPhone users, with their heavy data consumption, overwhelm Verizon’s network as they did AT&T’s.
But if Verizon and Apple are the winners in such a deal, other companies are certain to be losers, most notably AT&T.
New iPhone sales for AT&T are likely to plummet if consumers are given a choice of carriers. Munster forecasts that AT&T will sell only 11 million iPhones this year if it has to compete with Verizon, compared with an estimated 15 million last year.
AT&T’s not the only potential loser. Before Verizon started selling Android phones in late 2009, its smart-phone sales were largely composed of Research In Motion’s BlackBerry phones and devices running Microsoft’s Windows Mobile.
The two-year contracts on many of those devices are going to expire soon, and many users will be looking to upgrade from those dated operating systems. Apple’s bound to benefit as users of those devices on Verizon trade them in for newer smart phones.
The Verizon iPhone is also likely to impact Android and companies making Verizon’s Droid phones, including Motorola and HTC. Sales of Droids have helped boost Android’s sales overall, giving it now the largest market share among smart-phone operating systems in the United States.
The popularity of the Droids is partly due to the lack of operating system choice on Verizon. If you wanted a smart phone with a contemporary operating systems and a thriving application marketplace, your only choice was one running Android because Verizon didn’t offer the iPhone.
Apple may not be able to lure many of those current Verizon Android customers to the iPhone. But it still could slow Android’s growth. That’s because much growth in smart-phone sales in recent years has come from sales to customers who previously didn’t own smart phones.
Having the iPhone on more than one carrier is likely to have other effects.
It could force AT&T to finally fix long-festering network problems. It could also prompt both AT&T and Verizon to offer better deals on data access or the phones themselves.
That would be a good start to what looks like a big win for consumers.
Verizon iPhone
Sales: Goes on sale Feb. 10. Verizon customers can pre-order starting Feb. 3.
Differences: Works on Verizon’s network, considered more reliable. It will also allow customers to use the device as a Wi-Fi hot spot to connect up to five other gadgets to the Internet. Unlike the AT&T version, Verizon users won’t be able to talk on the phone and surf the Web at the same time.
Cost: $200 for the 16-gigabyte version and $300 for the 32-gigabyte model with a two-year contract, the same as AT&T. Verizon data plan not yet available. Hot spot feature will cost $20 monthly.
Network: Will connect with Verizon’s 3G network, not the faster 4G.
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