Verizon & the iPhone: Is Apple Smart or Stupid?

Beyond the hubris and anal/controlling behavior in Cupertino the time has come to ask a basic question: Is Apple smart or stupid? That question will be answered in one way or another later this year (perhaps in a month) when we learn whether the iPhone will come to other US carriers -- especially Verizon.

iPhone growth in the US has stalled; all those who would switch to AT&T have already done so. Meanwhile Verizon's multi-million dollar campaign against the iPhone and on behalf of Motorola's Droid has succeeded in building Android awareness and adoption. Scores of Android phones are out in the market, including the most iPhone-like of all the HTC Incredible. 

People are buying these as substitutes for the iPhone because they want to remain with their own carriers. 

Many people believe that the forthcoming iPhone 4G/HD will be made available through Verizon in June when it goes on sale or at least is announced. If Apple fails to at least bring the device to Verizon we can call them "stupid." End of story.

There are many reasons to open the device to other carriers, but especially Verizon:

  • There's pent up demand for the iPhone but people unwilling to switch. My guess is that iPhone numbers would double in the US if more carriers had access
  • Apple needs to stop the Verizon anti-iPhone ads on behalf of Android; that would happen
  • Android, which has some features the iPhone does not, is still mostly a substitute for the iPhone where it's not available. I predict that Android sales would flatten or taper off if the iPhone were more widely available.

Some of this theorizing is confirmed by ChangeWave survey data:

The survey results show an unprecedented level of pent up demand for the iPhone among Verizon subscribers. If Verizon were ever to offer the iPhone, the evidence points to it having a profound and likely transformational impact on the industry. Picture 16 Picture 15

All of these non-AT&T customers are potential buyers of Android devices or RIM. So the opportunity for the iPhone with these customers is huge and so is the opportunity cost of staying exclusive to AT&T. 


Related: AT&T extends iPhone exclusive in quid pro quo, says analyst (if true, the answer is "stupid")