Morgan Stanley: iPhone market share would double without exclusivity

“Add Morgan Stanley’s Kathryn Huberty to the list of analysts calling for Apple to broaden the iPhone’s distribution by ending carrier exclusivity deals. In a research note issued this morning, Huberty — noting that the iPhone’s market share grew 136 percent in France when Apple switched to multicarrier agreements there — said iPhone sales could more than double if the company took a similar tack in other countries,” John Paczkowski reports for AllThingsD.

“Huberty claims as well that if Apple were to end its exclusivity deal with AT&T and add Verizon as a second carrier, its share of U.S. market would more than double, rising to 12.2 percent from 4.9 percent today,” Paczkowski reports.

Full article here.

MacDailyNews Take: Unfortunately, Huberty has proven to be a horrid Apple analyst, so whatever she spouts about AAPL, positive or negative, should be taken with a truckload of salt. And, oh, by the way, minor point: Apple’s iPhone doesn’t even work on Verizon’s network. Apple would first have to create another iPhone (CDMA) version specifically for Verizon in order for Huberty’s claims to even have a chance of coming true. We won’t even get into how much the iPhone would cost upfront with lower per unit AT&T subsidies that would surely come about without exclusivity.


  1. Apple’s strategy is clear and its smarty. The issue is price protection, and to demonstrate the desirability of the iPhone, desirability that will drive switchers.

    Apple wants more carriers, but not at the expense of the iPhone’s price. Until carriers see the damaging effect of not having the iPhone has on their subscriber numbers Apple isn’t going to expand carriers.

    Apple’s hand was forced in France by the French government. That will not be the case in other countries, especially the US.

  2. I don’t care what it takes for Apple to do it, but I want an iPhone on Verizon – and I want it NOW.

    Out here in the Heartland there are million of potential customers who have ZERO bars from AT&T;.

    Even if AT&T;can get me a microcell for my business (and right now, they can’t), I’d have to keep a Verizon cell phone if I needed to call AAA for a flat tire when I am more than 5 miles away from an Interstate.

    AT&T;is totally non-responsive to the needs of users outside a handful of big cities. Verizon is everywhere.

    Get rid of the exclusive AT&T;deal and my iPhone order will be in within 5 minutes!!!!!!

  3. Yeah, I like how these “analysts” leave out critical details like the amount of Apple’s subsidies (far higher than without exclusivity) and the increased costs Apple would have supporting multiple carriers and multiple handsets (in the case of Verizon).

    I’m sure Apple’s running the numbers constantly and right now the costs are in favor of exclusivity. When that changes, Apple will add more carriers, but right now it would hurt profits.

  4. The British Vodaphone will buy the German T-Mobile and create a powerful carrier in the US that will carry the iPhone and crush Verizon.

    Forget Apple creating a non-GSM phone. Steve is into less chips, not more – CDMA will kills Verizon and Sprint over time, they just don’t know it yet…

  5. “the iPhone would cost upfront with lower per unit AT&T;subsidies that would surely come about without exclusivity.”

    Is that what happened in countries that don’t have exclusivity?
    What would also happen without exclusivity is more competitive carrier rates.

    “iPhone market share would double without exclusivity”

    . . . and water is wet.

  6. And what about the issue of not being able to support simultaneous voice conversations and any application that sends/receives data on CDMA networks? Such as web browsing, email, MMS?

    As I understand it, this means that any iPhone that could work with Verizon’s current network would provide a noticeably inferior level of functionality to the AT&T;iPhones. Of course, for folks in Verizon territory where there is no AT&T;signal, this would be a better iPhone experience that none at all. But for those using their phones where both networks have coverage, Verizon would have to have some other major advantage (significantly lower price?) to overcome this problem.

    And I expect that if lots of iPhone users switched to Verizon, they’d have similar problems caused by floods of data as those users now experience on AT&T;.

    Finally, would Verizon really allow Apple control over apps via the app store? Everything I’ve seen indicates no. Hard to call this one.

    In summary, I don’t expect Apple to create a Verizon-compatible iPhone until enough of the Verizon network has converted to LTE. AT&T;will be moving to LTE eventually also. At some point Apple will produce LTE capable phones that can work on both networks. Then we might see exclusivity end – but remember, it takes two to tango. Verizon has to be willing to give up a lot of control to make a deal. Some time in the next couple of years I suspect that Verizon’s shareholders, if not their stubborn heads-stuck-in-the-sand managers, will see the financial damage caused by missing out on all the existing and potential new customers who end up with AT&T;. They might exert pressure to either get current management to change or replace them altogether.

    As to whether competing carriers would be willing to subsidize the iPhone as generously as AT&T;, I have no clue. In general, though, I would welcome iPhones working with multiple carriers. Good to have competition on price and quality of service.

  7. So her firm is sitting on a bunch of apple stock, bought recently, and wants an argument to unload it on her clients. Her firm will say ” huge upside if apple goes to more than one carrier”, then sell it to them. I believe long-term in apple, just not for that reAson. It’s the way it works. When analysing wall street just be as cynical as you can and your probably right.

  8. I can see that there may be political problems (getting Verizon to cede some control) and technical drawbacks (CDMA and simultaneous voice and data), but the issue of making a version of a GSM phone that works on a CDMA network seems like a solved problem. They can just buy the right chips or IC-macros for the design, and I would bet that some of the cell-phone software engineers they’ve hired have experience making phones work on both standards.

  9. @JROY

    I don’t see the damage to Verizon you are talking about. They are signing up new subscribers at a rate darn close to AT&T;and still enjoy fairly low churn rates. Now, I agree, the cream of the crop is going to AT&T;, but AT&T;hasn’t financially been rewarded yet because they have the heavy iPhone subsidy up front and heavy investment in their network. Where AT&T;gets juiced, is from subscribers like me, on the original iPhone on a new contract now. That’s why AT&T;is investing like crazy trying to hold on to as many original iPhones as possible. The 2G is still a heck of a phone/pocket computer.

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