Assessing the Impact of a Verizon iPhone

Verizon is really, finally getting an iPhone of its own -- about a year too late perhaps. On Tuesday Verizon is holding a press event in NYC that will announce the device according to the Wall Street Journal. And some believe that Apple's Steve Jobs will be on hand.

There are a few questions that arise in my mind about all this:

  1. Is it simply an announcement of the iPhone 4, CDMA edition, or is there more to it?
  2. How will it impact Android sales at Verizon?
  3. Will it draw AT&T iPhone users to Verizon for a perceived superior network?
  4. What impact will the announcement have on Sprint and T-Mobile?

Some people have speculated that the mythical white iPhone would be announced on Tuesday. I can't imagine that the announcement will simply be: now we have the iPhone. Might it be an LTE-capable iPhone? We'll see.

My view has always been that Android sales (at least at the high end of handsets) would be negatively impacted by the presence of a VZW iPhone. Despite surging Android sales there is some evidence that were the iPhone more broadly available, beyond AT&T, some number of people would be buying that instead. I rounded up some of this data, from mid-2010, in an earlier post


 Picture 15

There's also evidence from some of this survey data that a percentage of AT&T customers would migrate to Verizon. 


However, many of these people many not entirely understand that they'd have to buy a new iPhone because their devices aren't compatible with VZW's CDMA network. Contract-breaking penalties will also keep many would-be switchers at home. 

In terms of the potential impact on Sprint and T-Mobile: I do think there will be one. Sprint and T-Mobile will see little or no subscriber growth unless they continue with aggressive pricing. That will be the only way to retain and potentially grow subscribers. 

A CDMA iPhone would mean it could potentially come to Sprint but Verizon may now get some period of quasi-exclusivity. So I would guess it will be at least a year (if then) that the "tier-two" carriers will get access to the iPhone. 

Because VZW will now be seen as the carrier offering the most options on the "best network," Sprint and T-Mobile will suffer. Simply saying "we've got all these Android phones" will not be enough. They'll have to more aggressively discount their data plans, as VZW and AT&T seek to migrate customers to usage-based pricing. 

Pre-paid carriers with heavily discounted pricing (including Sprint's Boost, VirginMobileUSA) will continue to thrive because there are lots of people still who don't want to get into contracts, are looking for the best deal and don't need a high-end smartphone. 

Those are the predictions, let's see what happens.

As a final note, there were rumors in December of a late February Apple event. It's not clear if the VZW announcement on Tuesday is that event or whether there will be a separate event to launch the widely anticipated iPad2.