'Complicated' Verizon iPhone deal said to be unlikely in 2010

Posted:
in iPhone edited January 2014
Though Apple striking a deal with the largest wireless carrier in the U.S., Verizon, would be ideal, competitors T-Mobile and Sprint are more likely to carry the iPhone in 2010, one analyst believes.



With 89 million total customers, Verizon is the top prize in terms of the four major U.S. carriers. Apple is currently in an exclusive deal with the No. 2 carrier, AT&T, which has 82 million customers. But that agreement is believed by many to expire in 2010.



In a new note to investors Wednesday morning, analyst Shaw Wu with Kaufman Bros. said although many believe the iPhone will come to Verizon in 2010, it's likely wishful thinking. The problem, he said, is both Verizon and Apple have found success by focusing on "customer control." Their similarities are what he believes will keep them apart.



"Apple runs its own App Store and VZ has aspirations to do so," Wu said. "Apple controls the media experience with iTunes and VZ with its V CAST service. Moreover, Apple gets very favorable economics with an overall iPhone (average selling price) of $611 and at AT&T, we estimate it is higher at roughly $700. RIM, who is by far VZ's largest smart phone supplier, only has an ASP of $340. Palm's ASP is $436 and we estimate Motorola's Droid ASP is roughly $450."



Because Apple and Verizon have conflicting interests, Wu said he believes that a deal between the two companies would take longer than many currently expect. That would make a potential 2010 deal unlikely.



Instead, Wu said that Apple could strike deals with both Sprint, which has 48 million wireless subscribers, and T-Mobile, which has 33 million customers. Both companies are more likely to be agreeable with Apple's practices in order to offer the iPhone.



"While we believe VZ is likely inevitable at some point when 4G technology rolls out in 2012 or so, we believe Sprint and/or T-Mobile are more willing partners for Apple in helping maintain margins and customer controls," he said. "From a technology perspective, we believe T-Mobile may have an advantage with a similar 3G UMTS/WCDMA network as AT&T."



It's the second time this week an analyst has predicted Apple will jump to T-Mobile in 2010. In terms of technology, T-Mobile would be the simplest choice: Though carrier's high-speed 3G connectivity operates on a unique 1700MHz spectrum that is incompatible with the current iPhone, the addition of that frequency to a future hardware model would be much simpler than adding compatibility with Verizon or Sprint's CDMA networks.



Recent rumors have suggested Apple is working on an agreement with chip maker Qualcomm to add CDMA connectivity to a new iPhone in 2010. But both Verizon and Sprint use a technology that, unlike the GSM network of AT&T and T-Mobile, is not widely used abroad.



Another possibility noted by Wu: Apple could extend its contract with AT&T through 2011. The analyst said he believes AT&T's agreement ends in the summer of 2010, but a last-minute extension remains a possibility. Earlier this year, there were reports that AT&T was working to extend the contract with Apple for one more year.



Kaufman Bros. has reiterated its recommendation to buy AAPL stock. It has also maintained its price target of $235.
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Comments

  • ivan.rnn01ivan.rnn01 Posts: 1,822member
    CDMA deal it's now or never. Yet, VZW as carrier has sure the huge appeal, way bigger, than T-Mo. It's not impossible that VZW gets iPhone, but hardly CDMA one.



    Analog TV spectrum, which is destined to become LTE one, is freed everywhere right now (I believe, it's already finished in States). This means deployment in 2010, not in 2012.
  • teckstudteckstud Posts: 6,476member
    Duh? Like who can't figure this one out?

    It's like the same story every other day, just re-worded differently.
  • ghostface147ghostface147 Posts: 1,629member
    Quote:
    Originally Posted by teckstud View Post


    Duh? Like who can't figure this one out?

    It's like the same story every other day, just re-worded differently.



    Exactly. Apple will have no choice but to make a CDMA compatible phone for Verizon since their LTE rollout isn't going to be 100% complete until 2013.
  • wigginwiggin Posts: 2,068member
    Quote:
    Originally Posted by ivan.rnn01 View Post


    CDMA deal it's now or never. Yet, VZW as carrier has sure the huge appeal, way bigger, than T-Mo. It's not impossible that VZW gets iPhone, but hardly CDMA one.



    Analog TV spectrum, which is destined to become LTE one, is freed everywhere right now (I believe, it's already finished in States). This means deployment in 2010, not in 2012.



    Deployment may START in 2010. But I think what he was referring to is the point where it's useful in that it has adequate coverage area. That is much more likely late 2011/2012.
  • mdriftmeyermdriftmeyer Posts: 6,874member
    Quote:
    Originally Posted by ghostface147 View Post


    Exactly. Apple will have no choice but to make a CDMA compatible phone for Verizon since their LTE rollout isn't going to be 100% complete until 2013.



    Apple isn't going to be on Verizon. Get used to it. They will more rapidly be on T-Mobile US than Verizon.



    As LTE rollout commences, AT&T will see it's growth continue while Verizon will continue to see a net loss in subscribers.



    There are no other Wireless providers to buy other than Cricket and other pay as you go rural players.
  • ivan.rnn01ivan.rnn01 Posts: 1,822member
    Quote:
    Originally Posted by Wiggin View Post


    Deployment may START in 2010. But I think what he was referring to is the point where it's useful in that it has adequate coverage area. That is much more likely late 2011/2012.



    Sure. I believe strongly VZW would have something potable already in 2010; sure, it will not be the 100% coverage.

    And we never saw before that handset features lagged behind the infrastructure...
  • alandailalandail Posts: 603member
    Verizon doesn't run the app store for Droid, why would this issue be a problem for carrying the iPhone.
  • richardk32richardk32 Posts: 29member
    Though Apple and Verizon may both focus on "customer control", their execution couldn't be further apart. Verizon's "control" ignores the customer for it's own gain, while Apple's makes the customer experience tantamount.

    Example - Verizon's version of the Motorola RAZR. Verizon insisted on shoehorning their interface into the phone, removing or crippling existing features because they might reduce demand for Verizon-controlled services that they could bill extra for. The result - a phone that is maddeningly slow in responding to even simple commands. When you can count past 3 before the phone responds to a first level menu request, there is something wrong. When the same function (erase, for example) appears on different keys depending on whether you are in voice mail, text messaging in, or text messaging out, your interface has failed. VCast fails in the most basic way - it provides what Verizon wants to provide, regardless of what the customer wants, rather than what the customer wants, with Verizon enhancements that make that service even more desirable.

    In short, Verizon is still the phone company, and their underlaying culture is still "we don't care, we don't have to." AT&T (aka Cingular) may have 3G and overall peak demand coverage problems, but they understood that the key to the iPhone was not the hardware, but the software and interface experience, and (VOIP not withstanding) kept their hands off.
  • solipsismsolipsism Posts: 25,726member
    Two stories in two days that are now saying what many of us on this forum have been saying for a couple years now.
  • zepzep Posts: 130member
    Quote:
    Originally Posted by richardk32 View Post


    In short, Verizon is still the phone company, and their underlaying culture is still "we don't care, we don't have to." AT&T (aka Cingular) may have 3G and overall peak demand coverage problems, but they understood that the key to the iPhone was not the hardware, but the software and interface experience, and (VOIP not withstanding) kept their hands off.



    i think its more like ATT probably sold their soul to Apple to get the Iphone
  • noexpectationsnoexpectations Posts: 481member
    ....if it is T-Mobile, what do they offer that AT&T does not?



    AT&T has roll over minutes and over 20,000 free wifi hotspots (really nice when you need it).



    Q for all the T-Mobile users....what can they offer us iPhone users that will make us switch?
  • roos24roos24 Posts: 170member
    I still find it hard to believe that Apple would go with Verizon with their current anti-global technology. I really would be surprised if they did, because it would mean that Apple has become a different company in my eyes.



    As I have said before, I don't think that Apple is out to be #1 in smart phone sales. They just want to make a cool product and have fun doing so. And in the process of course, make more money with it than all others combined.



    Here's an older article from Daniel Eran Dilger, that mentions a few more things about it:

    <http://www.roughlydrafted.com/2009/10/30/why-apples-iphone-is-still-not-coming-to-verizon/#more-3930>;
  • solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by Zep View Post


    i think its more like ATT probably sold their soul to Apple to get the Iphone



    It certainly doesn?t look to be the other way around. With the iPhone being as successful as it is (whereas AT&T reportedly didn?t even have a prototype to look at when making the deal) I?d think T-Mobile would sell their soul and give their first born to Apple to get the iPhone.



    This may be what T-Mo needs to finally push into 3rd place within 5 quarters. They are 15M subs away and would likely have done it anyway with Sprint?s slow collapse, but with AT&T and T-Mo as choices T-Mo will make big gains and Sprint users will have another reason not to stay with them.
  • solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by noexpectations View Post


    At least competition is coming to us consumers?.

    ....if it is T-Mobile, what do they offer that AT&T does not?



    AT&T has roll over minutes and over 20,000 free wifi hotspots (really nice when you need it).



    Q for all the T-Mobile users....what can they offer us iPhone users that will make us switch?



    Potentially cheaper plans. Of course, their current offerings may not apply to the iPhone with its huge subsidization, excessive data usage and popularity.
  • dluxdlux Posts: 666member
    From the article:
    Quote:

    Earlier this year, there were reports that AT&T was working to extend the contract with Apple for one more year.



    This is ambiguous; are they working to extend an exclusive contract, or simply a general non-exclusive contract to carry the iPhone?



    Also, which is it going to be, AT&T? Is the iPhone the best product for your bottom line, or the worst because of all the heavy data traffic? I've never seen a clear answer to that one.
  • ch2coch2co Posts: 41member
    Quote:
    Originally Posted by noexpectations View Post


    ....if it is T-Mobile, what do they offer that AT&T does not?



    AT&T has roll over minutes and over 20,000 free wifi hotspots (really nice when you need it).



    Q for all the T-Mobile users....what can they offer us iPhone users that will make us switch?





    For one thing, according to yesterdays Consumer Reports survey, T-Mobil has higher customer satisfaction than AT&T.

    I still would like to see the iPhone on Verizon.
  • noexpectationsnoexpectations Posts: 481member
    Quote:
    Originally Posted by ch2co View Post


    For one thing, according to yesterdays Consumer Reports survey, T-Mobil has higher customer satisfaction than AT&T.

    I still would like to see the iPhone on Verizon.



    Yes...but for any carrier that supports the iPhone, I would guess that customer satisfaction would go down. Too much data....too little bandwidth.
  • webpoet73webpoet73 Posts: 112member
    Quote:
    Originally Posted by solipsism View Post


    It certainly doesn?t look to be the other way around. With the iPhone being as successful as it is (whereas AT&T reportedly didn?t even have a prototype to look at when making the deal) I?d think T-Mobile would sell their soul and give their first born to Apple to get the iPhone.



    This may be what T-Mo needs to finally push into 3rd place within 5 quarters. They are 15M subs away and would likely have done it anyway with Sprint?s slow collapse, but with AT&T and T-Mo as choices T-Mo will make big gains and Sprint users will have another reason not to stay with them.



    Why would I leave Sprint? What's wrong with Sprint? NOTHING. That's what.
  • gwmacgwmac Posts: 1,795member
    As a Sprint customer I would be thrilled to get an iPhone on Sprint. The iPhone would be the only phone to get me to leave my $30 a month unlimited data/text 500 anytime minute SERO plan and upgrade to the nearly equivalent plan for $59 which allows you have any phone you want. I honestly have no idea why Sprint has been losing customers, although that seems to have finally slowed down considerably. Their customer service has been top notch for me so I think they are getting a bad rap for years past. I was with Cinguar 3 years ago and their customer service was far worse.



    In terms of coverage, that varies depending on where you live. I now get a much better signal with Sprint than I ever got with AT&T. The best part is that roaming is free so even when Sprint has no coverage I can use Verizon's towers.Though I rarely need to unless I am way out in the boonies where Verizon tends to have coverage. Sprint also has a much larger 3G coverage than AT&T or T-Mobile.



    If Apple really wanted to stick it to Verizon, which I think they do...They would bring the iPhone to T-Mo and Sprint but not Verizon. For $59 a month on Sprint the iPhone could have unlimited data, unlimited texting, voice GPS navigation, unlimited calling to any mobile phone on any network, and 500 anytime minutes for landlines or for roaming. To get close to that on Verizon you would need to pay about $130 a month.
  • burlesonaburlesona Posts: 5member
    Quote:
    Originally Posted by noexpectations View Post


    ....if it is T-Mobile, what do they offer that AT&T does not?



    AT&T has roll over minutes and over 20,000 free wifi hotspots (really nice when you need it).



    Q for all the T-Mobile users....what can they offer us iPhone users that will make us switch?





    I'm not sure that large percentages of AT&T customers would switch - since they've already got the iPhone - but for people who are on VZ or Sprint, T-Mobile might be a good alternative.



    There are three things T-Mobile has that I really value:



    1. Customer Service

    T-Mobile's customer service is phenomenal. I've been with them for 8 years, and I've had a few handset issues along the way (I had an old motorola that literally melted itself from some kind of malfunction!). Their service has been beyond helpful, both over the phone and in the store. When my phone broke they hurried like it was an emergency to get me in and out of the store with a replacement ASAP.



    In 8 years I've never had a billing issue, even when I've needed to make complicated changes to plans while still under contract, they've made things easy. They always seem like their job is to help you, and that they're not worried about whether it costs them a few bucks to help you out.



    With tech support they always put me through to an American who speaks English that I can understand, and they've been great at resolving issues quickly.



    Overall, top to bottom, I think T-Mobile has the best customer service in the industry.



    2. Price

    T-Mobile consistently delivers more minutes / text / data at lower prices than the other networks. You can get an unlimited talk / text / data plan with no contract right now for $80 / month WITH NO CONTRACT!



    AT&T costs $100 / month for unlimited talk with no text or data - $130 a month to get data and unlimited talk.



    The iPhone going to T-Mobile would certainly drive prices down - T-Mobile will charge a lot less and eventually AT&T will have to lower its prices somewhat to remain competitive.



    3. International service



    Because T-Mobile is a branch of Germany's Deutsche Telekom, T-Mobile exists all over Europe. I lived in Italy for a while several years ago, and this connection was very helpful for me. If you travel to Europe a lot it's nice to be able to find your cell phone provider overseas.



    In promoting iPhone as something for saavy execs I could see T-Mobile doing even more to unify their coverage so that there was no longer a distinction between calls on T-Mobiles various national networks. I don't know about technical limitations to this, but T-Mobile already carries the iPhone around Europe, so it can't be that big of an obstacle.







    So those are just personal reasons that I like T-Mobile, but I expect most other T-Mobile customers feel similarly (esp. about the first two). I know most of my extended family is on T-Mobile, and all of us have had the same experience - the customer service is fantastic and the best we've ever dealt with.



    I really hope T-Mobile USA gets the iPhone, that would be a dream come true for me.
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