Analysts: Apple-Verizon pact could double iPhone sales

“Apple has a big decision to make: whether or not to extend its exclusive relationship with AT&T for U.S. distribution of the iPhone. (The current deal reportedly expires sometime in 2010.) Verizon would certainly like to get its hand on the iPhone (and so would Sprint and T-Mobile, for that matter),” Eric Savitz blogs for Barron’s. “The question: is Apple willing to take a hit on margins to dramatically increase unit sales?”

MacDailyNews Take: Under Steve Jobs, Apple has been loathe to taking a hit on margins to increase units sales; at least for the Mac. iPod is a different story, since, at least during some periods, Apple has seemed to sacrificed some margins in order to boost unit sales.

Savitz continues, “Bernstein Research analysts Craig Moffett and Toni Sacconaghi jointly took a look at the issue in a research note this morning. They contend that adding Verizon could allow Apple to boost sales by at least 100% in units, but that it would likely result in a cut in revenue per phone of $100 to $200.”

“The analysts note that for AT&T, the iPhone provides both a customer acquisition tool and a customer retention tool. A non-exclusive deal, they say, would reduce the value of the phone to AT&T and likely result in a reduction in the subsidy per phone from an estimated $450 to around $250-$350,” Savitz reports. “They add that the fact that Verizon operates on the CDMA standard is not a major technical barrier, and that the issue will become less relevant in the years ago at VZ migrates to LTE.”

Full article here.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.