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Aug 16
2010

Verizon iPhone Would Shake Market

Posted by meggebrecht in VerizonMotorolaiPhoneHTCGoogleAT&TAppleAndroid

meggebrecht

Rumors that Apple is ready to end its exclusive contract with AT&T by bringing the iPhone to a rival carrier are nearly as old as the smartphone itself. As AT&T customers have grown more and more annoyed with the dubious performance of the carrier's network, the rumors have gotten louder. When a move finally becomes more than rumor, the fallout will be huge, says a new survey.

At the end of June, Bloomberg reported that Verizon Wireless will begin offering the iPhone in January. The article was -- reasonably enough -- viewed with suspicion because: a) we've heard this story more than once; b) the sources were the super-vague "two people familiar with" Apple's plans; and c) to run on the Verizon network, Apple would need to develop a CDMA iPhone, which is a touch more work than simply offering the same GSM model  through T-Mobile -- which has also been repeatedly rumored.

But last week, TechCrunch reported that Apple has ordered millions of CDMA chips from Qualcomm. The chips are due to be delivered in December, which points to a January launch of the Verizon iPhone, according to the tech blog. The sources, of course, were people with "knowledge of this entire situation." That's quite a bit of knowledge.

Until we see an actual announcement, I'm not holding my breath. But if the iPhone does show up on Verizon in January, the shakeup in the smartphone market will be tremendous, according to a study released today by market research firm Morpace.

In surveying 1,000 consumers from July 15 to July 20, Morpace found that 51 percent of current Verizon customers are somewhat or very likely to buy an iPhone if and when the carrier offers it. That's a lot of users who would otherwise be opting for an Android-based phone, like the Droid 2 or Droid X from Motorola, or the Droid Incredible from HTC.

Those numbers can't be encouraging for the Android camp. We haven't seen a proper head-to-head competition between the iPhone and Android yet, given that the Androids offered by AT&T -- the Motorola Backflip and HTC Aria -- understandably haven't gotten much of a marketing push

What would happen to Verizon's Androids if Apple climbed aboard? A July report from ChangeWave gives a hint. In surveying more than 4,000 consumers, ChangeWave found that more than 600 were planning to buy a smartphone in the next 90 days. Of those, 52 percent said they planned to buy an iPhone, versus 19 percent who cited an HTC phone and 9 percent who said Motorola. Now add the iPhone to a wireless carrier that has a better reputation than AT&T, and what do you think happens?

In that same ChangeWave survey, 73 percent of iPhone customers said they were very satisfied with their phone. HTC? 39 percent. Motorola? 34 percent.

In fact, it really does look like AT&T is the only thing holding Apple back. According to Gartner, Android has overtaken the iPhone as the third most popular mobile OS in the world (17.2 percent of the smartphone market, compared to 14.2 percent), but it's used by only one phone, while Android is used by dozens. Give the iPhone another, more reputable carrier and the competition could get more interesting.

For AT&T, the move to Verizon is potentially devastating, according to Morpace. Forty-seven percent of iPhone users would consider switching from AT&T to Verizon, and 34 percent are waiting to upgrade their iPhone until it's offered by another carrier.

Of course, Verizon's reputation may eventually look a lot like AT&T's, if a flood of iPhone users begin to tax its network.

Apple's move to Verizon would mean that AT&T, which is bound to adjust its data plan pricing if an exodus occurs, will have to get serious about Android (though the carrier does have an exclusive with RIM for the BlackBerry Torch, for what that's worth). And we'll also see flashier new Androids from the increasingly popular HTC and others.

In other words, a Verizon iPhone hardly guarantees Apple will beat out Google and that AT&T is doomed. But it certainly wouldn't make either of the companies happy.
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