“Verizon Wireless, which ended months of anticipation yesterday by announcing it would start carrying Apple’s iPhone next month, may have to eat as much as $5 billion in subsidies over the next 12 months to win over customers to the red-hot smartphone,” Garett Sloane reports for The New York Post.
“The $5 billion hit, the high end of Wall Street estimates, is the difference between the $199 price charged to customers and the estimated $620 price Apple charges Verizon times the estimated 15 million phones one analyst is predicting Verizon will sell in the first year,” Sloane reports. “‘Apple is good at pointing a gun at someone’s head and saying, ‘You want our stuff? Here are our terms,” said Jack Gold of Jack Gold Associates.”
MacDailyNews Take: That’s a cute quote from Jack Gold. Here’s another one:
Can [iPhone] succeed? Frankly, and contrary to the reactions of Apple fans and the stock market, I am pretty skeptical. I don’t think this device will meet the fantastic predictions I have been reading. – Jack Gold, January 2007
Sloane continues, “Of course, Verizon stands to gain new users with its Apple relationship.”
MacDailyNews Take: Of course. So, don’t cry for Verizon. They will benefit handsomely from the deal. Peddling fake iPhones can only take you so far.
Read more in the full article here.
Aha!
Thanks ATT for the chance to have you work out the details and problems for us. Thanks for taking a chance that we where not willing to take. Thanks again for finding out what usage levels it would require and the resolutions required. Most of all, thanks for taking the bad PR for us. We did not want that so we turned it down so others may venture out and provide the model so we may copy.
Love Verizon!
Verizon = Microsoft just a telco version.
Well, well, well!
It stool reams to be see if Verizon can match or beat ATT. I think ATT did a very good job of supporting the iPhone. I guess thatVerizon will probably have some of the hiccups that pleage ATT in the beginning.
The race is on!
I really think folks will be surprised at how crippled the iPhone will be on the Verizon network – at least until 4g/LTE is fully deployed (AT&T is also close with 4g). Imagine using your iPhone like you did in 2007… that is what Verizon is offering folks. AT&T has done a good job, despite all the criticism.
Don’t forget they’ll have to nickel & dime that $5 billion back from you, oh you happy faced Verizon iPhone customers.
Some people used to laugh at me when I said Verizon would eventually have to agree to everything Apple insisted upon. Even Verizon management used to scoff at the idea.
Ah yes, Jack Gold, the shill for hire a la Enderle. This loser never met a Blackberry he didn’t like. He’s just a RIM job operative and quote whore.
There’s nothing to see here, folks. Please move along.
Pay through the nose douchbags. And you dumbass Gold, go back to sucking Balmers ass
Verizon will have to get that money back from someplace, guess who’s going to pay that $5 billion?
I’ll continue with the Mytouch 4g that I can use to connect my ipad and MBP to the internet and put the savings into my pocket.
BTW, I’ve had the iphone on both AT&T and T-mobile. I love it but don’t miss it that much. When I do I just turn on hotspot and use my ipad.
As opposed to the $10 billion VRZ lost in the last couple of years NOT carrying the iPhone?
Bit of a stupid headline, it makes it sound like Apple are the only company who gets their phones subsidised. $5b is not much of a hit if your making many multitudes more from the sale of it as a whole.
The Apple/AT&T deal busted this oligopoly created by the phone and cable companies.
@NCG598 – I can’t believe you, as well as millions of others, still think $$soft is the superior operating system. What a farse !!! The ONLY reason why that OS is as big as it is is simple. They were the only one that was widely available when additional “software” was being designed to help whomever with their business, school, etc. With the exception of ONE, count it ONE, software I have no need for $$soft. Ans since I don’t know how to write software, I will deal with that for as long as I have to. However, I have too many friends that will give me the OS so that I can run my program on my Mac. Quite easily I might add, but then again Apple does make everything so much much much easier to operate & redesign for individual taste then the Gate who wants to control the world. It must be a very lonely existence having that much money and never being able to see the very person who needs a meal to survive or a roof over their head to call home.
@ B left nut – I have had the iPhone since day one. AND i have had VZW since they bought out Bell South. I have not had a single problem w/ either of them. They have been very good to me. I am not that critical of a company I do business w/ that they have to wine/dine me specifically when I see they have millions of other well satisfied customers. If you want a product to do what YOU want it to do, get off your high & mighty arse and design your own and put it to work for you.
But then again, that would be a wish for all of the complainers on here. They can’t be satisfied with what they have OR can afford. So they have to bash out & join in w/ everyone else cause they don’t have any legs of their own to stand on !!!
Why do I have 2 phones ? ATT does not offer Canadian service nor tethering w/o cost. So I have that w/ my VZW phone. AND still pay less then most folks. Not to mention, it always keeps me at the UNLIMITED date plan on BOTH !!! Thats what staying w/ these companies has gotten me and I will NEVER pay nor have to find an “excuse” to get around the ETF. Ooooops gee did I giveaway the fact that I THINK before opening my mouth w/ complaints of either of the biggest telco’s ?
Don’t cry for Verizon. They make back the iPhone subsidy the first year of the contract. The second year is all gravy.
Estimated $620 is for the cheapest model. Average retail price for the iPhone is actually quite higher (around $750, including global markets, where is is universally more expensive than in the US).
The point of this article is how much this subsidy differs compared to all those Droids. And the answer is, it does, but moderately. I don’t think the average subsidy difference is greater than $100. In other words, average iPhone subsidy is around $450 ($420 for the cheapest one, around $480 for the most expensive one). Cheap android devices start at about $350 (without subsidy). Verizon doesn’t sell those, but the cheapest ones they sell are at least $450 (offered for $100 with subsidy), and go up from there. The average subsidy for all those droids is likely not greater than $380 or so.
In other words, because the iPhone will be on the same kind of voice/data plan as Droid, it will take longer to recover the subsidy money. So why is Verizon so anxious to get the iPhone that it is willing to subsidise it so heavily? Because once that two-year contract expires (and the subsidy is paid off), that CDMA iPhone has nowhere to go but Verizon. A hand-me-down (or an e-Bay/CraigsList purchase) will continue to rake in that full voice/data monthly revenue, which continues to include subsidy, even though the subsidy has been long paid off.
Meanwhile, people have much less of a problem sticking an old droid into a drawer, or giving it to the kid to play with it on WiFi.
Won’t cost Verizon a penny. They’ll gouge that $5 billion out of their suckers, er, I mean “customers”.
Jack Gold changed his name from Jack Sh*t.
Greg M,
Life is too short to suffer crap products (like the mytouch) Someone I know is buying really horrid coffee at a gas on his way in station because it is 50¢ a cup (he often tells me how much money he saves a month doing it)
You use that phone everyday, $15/mo savings might buy you a couple meals at McDonalds (and that is -IF- you save that much) Don’t settle for crap when the best is within you grasp my friend, it will lead you don’t the wrong path.
oops… typo: station got juxtaposed, should read
Someone I know is buying really horrid coffee at a gas station on his way in because it is 50¢ a cup
I agree with Steve516
ATT customers switching to VZW will be sorely disappointed that this iPhone is crippled due to the limitations of simultaneous data/voice on CDMA. I imagine the return rate will be higher for VZW than was for ATT
It was CINGULAR that took the initial chance, not AT&T. Watch the original video.
LOL, MDN–nice take-out of Jack Gold!
Why all of this concern over subsidies? Verizon does not pay Apple, *we* do.
You, the consumer, pay the subsidy as part of your monthly cost (and/or your early termination penalty). You possibly pay a whole lot more if you maintain your contract past its expiration date without switching to a new phone. You will note that your monthly payment does not decrease. Those extra subsidy payments past the expiration date are all gravy for the carrier.
This is a lot of fuss about nothing. What are people attempting to make a positive development look bad?? Is this an attempt at stock manipulation? Or is it just plain idiocy?
Why does everyone on this site complain so much.Nickel and Diming you to death is exagerating the situation quite a bit and to restate many of my previous posts the Data and Call is the only advantage AT&T has over Verizon and it’s not that big of a problem.The actual network is also much better my iPhone 4 on AT&T with full bars was slower than my friends Droid X with 2 bars!There is also the amount of area in the US Verizon covers which is 5X AT&T’s.So yes I have looked before I lept and I’m falling into a pile of pillows ;D