“If Apple ends its exclusive carrier agreement with AT&T next year, it will likely mark the end of its estimated $450 carrier subsidy for the iPhone, a new analysis has forecast,” Sam Oliver reports for AppleInsider.
“In a new note to investors, analyst Brian Marshall with Broadpoint.AmTech said that the ‘sweetheart’ carrier subsidy provided by AT&T for the iPhone would not be attainable with Verizon. He believes that the iPhone will be added to the Verizon network in the second half of 2010, but not without consequences,” Oliver reports.
“A non-exclusive iPhone, Marshall forecast, would command roughly a $300 carrier subsidy,” Oliver reports. “But he believes that any losses would be made up in volume, as Verizon is predicted to sell roughly 14 million iPhones in the 2011 calendar year. With an average selling price of around $500, that would be another $7 billion in revenue for Apple.”
More in the full article here.
There were no price cuts in any other country where the carrier lost exclusivity.
WTF does this guy think? Does he think that economic principles do not apply to America?
Just because the major banks in the USA think that way, does not make it so.
Brian Marshall with Broadpoint.AmTech…
Ah, yes. He has a B.A. in Japanese. He thinks Verizon’s going to carry the iPhone. Who gives a shit?
Reading “analysts” might as well be reading tea leaves… ‘cept maybe the tea tastes better.
I’m willing bet this is NOT happening.
Explain to me how T-Mobile OR Verizon is going to be able to provide the seamless experience of PUSH technology and LOCATION aware apps on networks that don’t support simultaneous Voice and Data? So as long as I never make a cellular call it will work like the AT&T;version? Yeah, right…
Analysts, shut up. Just shut up. Please — shut the f*** up.
I am so goddamn sick of all this “iPhone going to Verizon” bullsh*t. Yesiree Bob, here it comes, anytime now, this time we mean it.
I’ll believe it when I see it. Until then, it’s wishful thinking.
——RM
Only a guess, but they (verizon) said they are going to roll in the new svdo spec to the existing network while doing the lte on the new. Svdo allows simultaneous voice and data. Even without hope for the iphone, I think verizon will do this for the BB people.
Verizon has been a mess since it was formed. Most pro-Versizon posters are either paid by them, or spoiled like no generation ever has been, or both.
verizon has better coverage in my area. I’m not paid by verizon or spoiled. When at&t;improves coverage in my area, I’ll consider switching. Not all areas are the same. You get what works for you.
@predrag:
Normally I agree with EVERYTHING you write- I find your comments some of the most insightful and intelligent on this site.
However, consider this: Apple would make a special version of the iPhone JUST for Verizon- it’s ONLY CDMA- so a Verizon customer can’t just cut and run to AT&T;. Furthermore, one would still sign up for a 2 year plan into which the user is basically locked. So I don’t see any reason why AT&T;AND Verizon can’t subsidize the iPhone on their networks at the current rates. They’re still locking in high paying customers who use lots of data and pay lots more per month than other phone users (I was just making a supposition- I can’t imagine Apple making a phone with only CDMA because it would be useless for anyone traveling abroad- but you never know…).
What becomes more difficult for them (and better for us) is that there will be real competition- so they will have to possibly lower their rates somewhat- but it’s still probably worth it to them because in the end most people don’t bounce back and forth continuously between carriers.
As for Apple not being able to meet the demand, that could easily change after the holiday season. I could well imagine demand falling off and having a second carrier (with all those on Verizon starving for an iPhone but can’t get one because they can’t or won’t leave Verizon) as a nice source of demand to take up the slack. Just an idea…
There hasn’t even been any kind of a Verizon iPhone announcement yet, and already, their sales figures are under scrutiny! LOL
@ MacMan – Do you realize the amount of R&D and testing that would be required for a special CDMA-only verison of the iPhone? It’s not as simple as switching between AM and FM on your radio dial – these are two radically different kinds of wireless technology.
Speculation like this reminds me of all the people repeating the “Red Box” myth, opining that Apple could “easily” add native Windows exe support to OS X – proving that they had no idea whatsoever of the steep technical challenges involved.
You will notice that, in the article cited by MDN, Brian Marshall does not even mention CDMA or GSM technologies – making his “analysis” completely and utterly worthless. It’s like speculating how many copies of iLife Apple could sell if they made a Windows version… while completely ignoring the time and effort required to make a Windows version in the first place.
I hope T-Mobile gets the phone. You cannot makeup lost revenue through volume: just ask Mike Dell!
My prediction is a lite version CDMA iPhone for Verizon. Maybe give credence to the rumors of a mini iPhone… Even IF Verizon upgrades their network to support simultaneous voice and data, that’s not going to happen overnight. It would take a substantial amount of time to upgrade all their towers. If this was going to happen we would have heard chatter about Verizon upgrading those towers a long time ago. However, since this article is suggesting that it will happen in the middle to late half of 2010 it COULD happen, but I still think it’s BS…
the tech difference and cost to support.
the flip off in those Droid ads (you don’t let a partner insult a potential partner while negotiations are still going on).
verizon’s control issues.
verizons’s habit of ‘matching’ prices with rebates rather than just charging said price.
and so on .
the first in particular is a huge step. without addressing how it would be solved I can’t see this as anything more than wishful thinking
I did see they did 2 cities with lte about a month or so ago. No handsets other than ones they made themselves. It’s a start I guess.
http://wirelessfederation.com/news/17723-verizon-wreless-completes-lte-rollout-in-boston-seattle-usa/
http://www.betanews.com/article/Verizon-completes-4G-LTE-trials-in-Boston-Seattle/1250278855
MacMan
…”Apple would make a special version of the iPhone JUST for Verizon- it’s ONLY CDMA- so a Verizon customer can’t just cut and run to AT&T;”…
First, thank you; same here to you. As for your thoughts, while I also agree with you most of the time, cutting and running is what most people generally do these days when switching carriers. They abandon their old phones and get new ones from their new carrier. Very small number of people have heard of unlocking and brought along their T-Mobile phones to the new AT&T plan (or vice-versa). Vast majority switch and get a new phone. It is difficult to argue it would be any different with the iPhone. If a person had an AT&T iPhone and was jumping to Verizon, the old iPhone would end up on eBay, or even worse, just plain abandoned (or working as an iPod).
The massive existing subsidy for the iPhone cannot be recovered during the initial 2-year contract. This is OK for AT&T, though, since even the oldest 1st gen iPhones (EDGE) are still all on AT&T, recovering that subsidy and making profits. AT&T took a calculated risk and allowed original owners to upgrade to 3G and 3GS at fully subsidised prices, expecting that the majority of those original owners will just hand down the old handsets to family members, keeping them on the family plan. More than likely, most of the iPhones that were upgraded to newer models remained in the family.
If another carrier showed up selling iPhone, this may no longer be the case. If you have an AT&T device and you switch to Verizon, you can’t give the old AT&T device to your spouse or child; they are all on your Verizon family plan. When many iPhones end up on eBay, good percentage will end up unlocked, exported or by some other means taken off of the AT&T network and monthly plan. The subsidy revenue will then stop before it had a chance to fully recover the initial subsidy.
This is why it will be difficult for either carrier to subsidise the iPhone by anything significantly more than $200-250.
So this is fact,no it is not yet it is written as such .even with sales figures. Who controls what these folks write.or can they just make stuff up
@Rike
I’m with you. I’m a pretty happy t-mobile customer. I travel mostly the west coast San Diego- Vancouver but am on the east coast on business a few times a year, and I’ve been pretty happy with T-mobile overall. A few one bar calls here and there, but no problem in New York – DC corridor.
As T-mobile already carries the Iphone in Germany I can’t imagine why they wouldn’t kill to have the Iphone as well. They are now moving ahead with aggressive 3G rollout, and they are the only other GSM network in the US. Canada is totally GSM, that’s why they now have multiple IPhone vendors. I hope T-mobile gets the Iphone next year when my two year contract is up. Maybe the AT&T;Apple contract doesn’t extent to the IPHONE II or tablet. That would be sad.
.
Apple wants to sell one phone they can sell the current one all over the globe with out inventory/repair logistics – Can you imagine the apple store with 2 different phones times the 3 versions? – Six different phones just because Verizon wants in –
These are all rumors to keep Verizon from losing it’s customers as they are leaving in droves. I guarantee the people working in the Verizon stores are trained to say they are getting the phone in 3-4 months as people can hold out that long but the truth is that it won’t happen.
@Gabriel
Yes, developing a CDMA iPhone would be some work- but seriously- it’s no where nearly beyond what Apple can do. After all, this would not be the first company to make both a CDMA and a GSM phone (not even the first to make a dual CDMA/GSM phone). So I’m betting that the resources necessary to put CDMA into an iPhone are well within Apple’s capability and probably worth the investment to be able to sell to all those Verizon customers.
Are they going to do it? I have absolutely no clue. Can they? I have no doubt they could. Would it be cost effective? I don’t know. Don’t forget that a CDMA phone could also be sold in Canada and Japan. So that sweetens the pot a little…
Actually, according to this site:
http://www.cdg.org/worldwide/index.asp
there are half a billion CDMA subscribers around the world. It doesn’t seem unreasonable to me to tap into that base, even if CDMA is on its way out…
@predrag
You make a good point, but I take issue with:
cutting and running is what most people generally do these days when switching carriers
Well, I think we have to examine why people switch carriers. A lot of people left Verizon/Sprint/T-mobile for the iPhone- if it were available on Verizon, more would stay. Perhaps some would move back from AT&T;. But the real question is: how many do this? Of AT&T;’s 83 million subscribers, 1.2 million were new. It’s a nice number, but it adds up to, what?, 5% over a year? I suppose the big question for them is: how many iPhone users would jump ship to Verizon if Verizon offered the iPhone AND they knew they had to buy a new iPhone (that is, they couldn’t take theirs with them)? I don’t really have a good answer to that, but it has to be the key to everyone’s interest (Apple’s, Verizon’s and AT&T;’s) as to whether or not any of this makes sense economically…
And, on another point:
They abandon their old phones and get new ones from their new carrier… It is difficult to argue it would be any different with the iPhone. If a person had an AT&T;iPhone and was jumping to Verizon, the old iPhone would end up on eBay…
Indeed, but I believe that neither you nor I have hard data as to what would happen to those phones (or the 2Gs and 3Gs which end up there now- maybe a large number of people are buying used iPhones at a discount because they can’t afford the $200 entry price? Or they want to use them on a cheaper contract with AT&T;? There could be lots of reasons the phones actually stay on AT&T;, which would continue to reimburse AT&T;for the initial subsidy.
But I wanted to address another statement of yours which I would never claim is wrong, I just don’t understand how you know:
The massive existing subsidy for the iPhone cannot be recovered during the initial 2-year contract.
At $70-100/month over 2 years, that’s a lot of money. Are you positive they don’t make back the $450 initial subsidy? Put another way: yes, the subsidy is probably higher for the iPhone than what carriers are paying for the Pre and Droid or non-smart phones, but what AT&T;charges per month on each iPhone is higher than all the non-smart phones they sell. So maybe they do make it back in 2 years? I was just curious if you have any hard data that they’re taking a loss?
Hello everyone,
First off, I don’t think anything of Apple making a CDMA iPhone whether it’s for a one year or two year contract with Verizon. In fact, I bet that the first iPhones created were CDMA iPhones and Steve Jobs walked into Verizon with a couple of them when he first approached Verizon about being the carrier. So, no big deal there.
Second. Apple comes out with a different iPhone almost every year, forcing people to upgrade or wait patiently for their two year contract to expire. I don’t see Apple doing anything all that different with Verizon’s present network, and I don’t see them waiting for the G4 network to become more popular. If they release it, they’ll release it. That’s all.
Now, whether they will actually do it or not is another thing. There are so many different iPhone want-a-be type clones out there, that I’m not sure it’s worth all of this speculation. Still, I would love to see the iPhone available to any carrier who wants to carry it and give it the full iPhone experience. Whether Verizon can measure up to Apple’s high expectations is another matter.
Verizon wont need the iPhone now that they have the Droid.
Wait until the Droid phones with Google navigation hit Verizon’s network and you can’t download maps on the fly pecause you are out of range or you are on their non EVDO 3G which is slow as molasses.. Then we will see who’s network is better..
This analyst is spewing bunk. Verizon has made no commitment tht they would be willing to curb their nickel and dime ways of fleecing customers. Apple would not commit to a series of IPhones having a different user experience on one carrier versus all others world wide. A dual radio CDMA/GSM phone would be an inefficient use of R&D;dollars. Especially given the landscape above, if your potential partner is not going to buy into your concept of a carefully crafted user experience, then that extra $7 billion that would have been in your coffers quickly gets eaten up in bad will, extra cost for customer support and reduced customer satisfaction. Why would they spend money researching a concept that would destroy brand equity and tarnish your image? Apple has already learned from that mistake. Let’s not forget that current Verizon implementation of 3G does not allow multitasking. Say goodbye to being able to type out notes while on a phone call or looking up directions while doing same. Just my 2 cents.