vzwiphone

This has been an on-going rumor ever since AT&T first launched the iPhone under exclusive rights back in 2007. Even today there was an analyst that said there is 70% chance Verizon will get an iPhone next year when the carrier exclusivity expires in April.

Let’s see if it makes sense from different points of view.

AT&T: AT&T took the gamble early on and paid through their noses to be the first and exclusive carrier for the untested iPhone in 2007. Not only did they have to pay a lot (initially $600) for the phone and later through subsidy, but they also had to give away part of the money they collect from the mandatory data plan that each iPhone users had to sign for 2 years. The results? AT&T “stole” a lot of subscribers from other carriers who had to have the iPhone. And they increased their revenue significantly, but at the expense of profit. What would happen if the exclusivity runs out and people can get their iPhone from other carriers? AT&T will definitely lose some of the subscribers and that’s why AT&T is trying so hard to continue the exclusivity with Apple.

Apple: Apple has been a big winner. During the last 2 years, their stock almost doubled hitting over $200 recently. Out of nowhere, Apple is now one of the major cell phone player dominated by others who’s been around for more than a decade. They got to sell their phone at extremely high profit margin, but also collected pure profit from data fee generated by their users. So, why change anything? Well, 2 reasons. One, of all the praises that Apple has been getting with their innovative gadget, one complaint they always get is the AT&T network on how the 3G coverage is spotty and voice qualify is not good. (See recent Consumer Reports review on iPhone and AT&T)  2nd major reason. Apple would gain access to close to 90M subscribers that Verizon has if the iPhone was available on Verizon, who has the highest customer satisfaction and have better 3G coverage (5x according to recent TV ads). If customer had choice of picking iPhone AND their carrier, it’s a win win for Apple and the consumers but lose for AT&T.

Verizon: So, what’s in it for Verizon? They had the chance early on when Apple was shopping around for exclusive carrier but Verizon wasn’t willing to pay the kind of money that Apple was asking. And why change now? While AT&T had their iPhone, Verizon has rolled out model after model of iPhone Killers, some not so good and some with even more features than iPhone, but none had the kind of success that iPhone had. People who wanted to stick with Verizon stayed with Verizon and chose one of the available iPhone Killers. It’s not like people gave up their current carriers to get one of the Verizon exclusive phones, not like how many iPhone lovers gave up their current carrier to switch to AT&T. Verizon added respective new subscribers each quarter but recently it was at slower rate than AT&T was able add. The second hurdle is the technology. AT&T uses GSM/EDGE/WCDMA/HSDPA that are more compatible with rest of the world whereas Verizon uses CDMA/EV-DO that are only popular in US, Japan, Korea, and few other smaller markets. Many business users require phones that they can use when they travel internationally and 3G iPhone can address that whereas the choices are limited with Verizon phones. Verizon does have some phones they consider world phones that does operate on CDMA/EV-DO network in US but has the built-in SIM card to operate under GSM network outside of US. And Qualcomm, who makes 99.99% of all the CDMA chipsets, have recently announced a industry’s first dual-carrier HSPA+ and multi-mode 3G/LTE chipset.  If an iPhone is made with this chipset, it would work on both Verizon network and rest of the world. Even the CEO of Verizon has publicly said that iPhone on Verizon would make more sense when LTE is available. Verizon is planning to roll out LTE in 25 markets by 2010, and full roll out by 2013.

So, given all those reasons do you think Verizon will have an iPhone on their network by 2010? Maybe, but this blog is betting not in 2010 but possibly later.

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