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Android's weak sales drive Verizon toward Apple's iPhone

post #1 of 109
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An analysis of Verizon Wireless smartphone sales over the past year indicates why the carrier is suddenly demonstrating interest in Apple's iPad and iPhone: Android isn't working out as well as once hoped, with AT&T now selling 2.5 times as many iPhones as Verizon is Android models.

According to new analysis by Asymco, data published earlier by ITG Investment Research analyst Matthew Goodman shows just how much the iPhone has done to blunt Verizon's growth, and how little Android has done to help Verizon.

Previously, AppleInsider reported how the same data indicated that Verizon's relationship with RIM's BlackBerry was being strained by Android.

BlackBerry made up over 90 percent of the carrier's smartphone mix as recently as October 2009, but was rapidly displaced by Android-based phones starting that same month with the arrival of Motorola's Droid, which was accompanied by a media blitz paid for by Verizon.

Verizon shifted its marketing efforts from BlackBerry to focus on Android because RIM was unable to deliver a phone that could compete against the iPhone. The 2008 holiday season's BlackBerry Storm was a particularly bad launch for the carrier.

A year later, Verizon's smartphone selection is now split by RIM and each of the carrier's Android licensees: Motorola, HTC, LG and Samsung. However, there's valid data for explaining why Verizon is seeking to make another platform jump, this time from Android to Apple' iOS. The carrier has already started selling the iPad, and is now rumored to be launching Apple's iPhone early next year.



Enter the iPhone

Asymco points out, graphically, that Verizon's smartphone performance with BlackBerry, Android, and Palm's webOS simply pales in comparison to AT&T's performance with Apple's iPhone.

"Verizons volumes grew from 2.7 million in Q1 to 3.3 million in Q3," the site reports. "Not a bad story in itself. However, the iPhone at AT&T went from 2.7 million to 5.7 million in the same time frame. Relative to just the iPhone, Verizon has been underperforming over the last quarter."

Unlike popular comparisons of global device activation numbers, mobile web "market share" and mobile advertising analytics, all of which can gerrymander markets that either include or exclude iPods and iPads and other devices, or group third world cheap devices into the same pool as high end smartphones, the report's comparison of AT&T and Verizon is one of the clearest looks yet at how iPhone sales compare to Android-based smartphones in similar circumstances.

Both carriers cover the same population and are similarly sized, with Verizon hosting 92.1 million subscribers and AT&T serving 90.1 million. Together, "AT&T and Verizon Wireless raked in 75% of all mobile data revenue in Q2 of 2010 and account for 62% of the U.S. wireless customer base," the report notes.

When looking at data by month, rather than quarterly figures, Asymco points out that Verizon's unit sales growth "hit a wall in August. Following widespread iPhone 4 availability, sales dropped." That wall was also the last straw for Palm's webOS, which since August has trickled off to nearly nothing after achieving pre-iPhone 4 sales that exceeded HTC to become Verizon's third best smartphone maker.



Three strikes for Verizon

The observation that Android isn't competing as well as Verizon once hoped, allowing the iPhone to steal Verizon's growth is "strike one" the report states. A second strike against the carrier is that, despite now having five major hardware makers in its stable, none of these are driving Verizon's unit sales growth.

Verizon's former reliance upon BlackBerry sales was not a problem because RIM was partnering with the carrier to provide "a product narrowly defined around messaging," the report stated. With Android, "Verizon is facing the prospect of a single OS supplier who may or may not maintain alignment with Verizons core profit algorithm. If they diverge, Verizons bargaining power will be strictly limited."

Strike three, the site states, is that Android is simply not competitive with Apple's iPhone. "In an apples-to-apples comparison," the report states, "in Q3 the iPhone at AT&T outsold Android at Verizon (remember, same addressable market) by a factor of 2.5. This is with a variety of devices and vendors thrown in the market. We hardly ever get to see this finely grained a comparison when looking at platforms."

The report added, "whether its due to brand, visibility or performance and in spite of 'antennagate' the iPhone is cleaning up."

Android performance bad enough to shift Verizon's stance on the iPhone

"It is perhaps coincidental that the rumors of a Verizon deal with Apple seem to have started in earnest right after August," the report said. "Its thin, circumstantial evidence, but the only evidence we have to corroborate the data above is that Verizon has been signaling more desperation."

To Verizon, the report added, "Apple may be the devil, but so could be Google. Apple was predictably evil. But Google? The devil you know is perhaps better than the one you cant predict.

"Whats more, the devil Apple seems to be helping your worst enemy way too much and the unpredictable one does not seem to help all that much."

The report concludes, "Verizon striking out means they need to change the way they play. The iPhone is a new ball game."
post #2 of 109
I would say it has alot to do with the latest subscriber numbers and ATT is catching up to Verizon and is threatening to pass them up as the #1 cell phone carrier in the US. They are certainly within striking distance. I think that's driving Verizon's interest in Apple.
post #3 of 109
...Android is "winning", I read it on teh Intarwebz.
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post #4 of 109
Quote:
Originally Posted by hill60 View Post

...Android is "winning", I read it on teh Intarwebz.

Yeah, this article should drive the fandroids and DED haters apoplectic. I'm sure they are all composing rabid 1000 word replies as I type.
post #5 of 109
Quote:
Originally Posted by anonymouse View Post

Yeah, this article should drive the fandroids and DED haters apoplectic. I'm sure they are all composing rabid 1000 word replies as I type.

I was thinking the same thing--prepare for DED as Antichrist onslaught...
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post #6 of 109
I have many friends on Verizon that are waiting for the iPhone, and in the interim continue using plain-jane phones. They have no desire to use any of the android phones.

These folks are not even what I would consider to be tech-literate. They are regular Joe's and Jane's. Yet for some reason, they see value with the iPhones (without any of my input to sway them) compared to what's available with the Android makers.

If the iPhone truly does make it to Verizon's network, it will dominate their network to such an extent that they have not seen before.

What really keeps me eating the popcorn and watching all of this unfold is what will Verizon do (or not do) in terms of keeping control of the handset, and how their network will buckle under the strain of possibly millions of new data-hog iPhones.

Will Apple allow a Verizon logo on their phone?? How's about a pre-installed Verizon-only App store? Will they accept the possibility of being only a provider of the data-pipe? Would love to be a fly on the wall to hear Apple saying "no" to all of Verizon's whining demands.
post #7 of 109
Read the original Asymco article. It deserves to be appreciated without being obfuscated by a third party, and a conditional element to the source data was also expressed.

Asymco in general is a great place for Apple analysis.
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post #8 of 109
Quote:
Originally Posted by AdonisSMU View Post

I would say it has alot to do with the latest subscriber numbers and ATT is catching up to Verizon and is threatening to pass them up as the #1 cell phone carrier in the US. They are certainly within striking distance. I think that's driving Verizon's interest in Apple.

Verizon NEVER cared about losing the number 1 crown when Cingular Wireless bought AT&T Wireless.

Verizon NEVER expanded their prepaid or MVNO offerings so that they could catch Cingular Wireless.

Verizon just concentrated on postpaid net adds and not cared a single day on losing the number 1 crown.
post #9 of 109
I think Verizon needs Apple more than Apple needs Verizon, so I think Verizon has been ready to take it.


PS: This article is Samab’s bat signal. Prepare for unrelenting defense of Verizon’s subscriber numbers.


edit: LOL I see others beat me to it. This article title alone seem antagonistic.
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post #10 of 109
Quote:
Originally Posted by solipsism View Post

... PS: This article is Samabs bat signal. Prepare for unrelenting defense of Verizons subscriber numbers.

Yeah, I think it's time for samab to come clean about who he works for.
post #11 of 109
Yeah, dive for cover!
I am not very surprised, something has not added up to my experience in my job. My employer sticks to HTC as company issue, we probably have close to one thousand of the current versions, and multiples of this going back a few years. When I was able to avoid company rules and get an iPhone I had had several HTCs on Windows. They were all crap! Almost all our employees now have Android versions of HTC, and I have yet to hear anybody being really happy with what they have got.
post #12 of 109
Quote:
Originally Posted by hill60 View Post

...Android is "winning", I read it on teh Intarwebz.

In the U.S. market as a whole, it may be. There's another third of the market that also does not carry the iPhone. Both Verizon and AT&T have a third of the market, which means while Android is available to 100% of the market and the iPhone currently available to only 30%, Android is not a proportionate amount of percentage points ahead in terms of market share.

All this data shows is that the iPhone is driving smart phone growth at AT&T at more than twice the rate as Android at Verizon. What this means to Verizon is they need to get the iPhone to lure customers into more lucrative data plans for smart phones, because Android isn't doing the job.
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post #13 of 109
I knew iphone was doing well, but I wouldn't guess 2.5x better than Android on Verizon lol. That's impressive.

My mother and little brother got an Android phone, I just got one a few months ago, countless friends seem to all be getting one, and my friend Lisa who isn't tech savvy in the slightest just got a Droid X and loves it, everyone on Verizon too.

Then again, in northern Virgina, Verizon reigns supreme in their coverage...
post #14 of 109
Quote:
Originally Posted by hill60 View Post

...Android is "winning", I read it on teh Intarwebz.

Quote:
Originally Posted by anonymouse View Post

Yeah, this article should drive the fandroids and DED haters apoplectic. I'm sure they are all composing rabid 1000 word replies as I type.

Really? It needs to be spelled out for you? ANDROID ON VERIZON. That's one carrier, guys. If Apple brings iphone to other carriers like Google has with Android, it'll be a blood bath
post #15 of 109
Everything seems to be lining up for iPhone on Verizon in 2011. Whether it's January or June is unknown and probably doesn't make a big difference. But if it doesn't come out till 2012 apple and verizon will have missed a big opportunity and while sale will do well, it will not be what they could do this year.
post #16 of 109
Quote:
Originally Posted by samab View Post

Verizon NEVER cared about losing the number 1 crown when Cingular Wireless bought AT&T Wireless.

Verizon NEVER expanded their prepaid or MVNO offerings so that they could catch Cingular Wireless.

Verizon just concentrated on postpaid net adds and not cared a single day on losing the number 1 crown.

This doesn't mean they don't care about the number of subscribers they have or being able to show investors they they dominate the smartphone market....which include those lucrative data plans and what not.
post #17 of 109
Quote:
Originally Posted by Xian Zhu Xuande View Post

Read the original Asymco article. It deserves to be appreciated without being obfuscated by a third party, and a conditional element to the source data was also expressed.

Asymco in general is a great place for Apple analysis.

That's true. I linked to it on another thread. But if anything, the original article is stating things even more strongly that is being done here. Is Daniel getting soft?
post #18 of 109
Finally...a decent article by Daniel without oodles of spin. I knew he could do it!

In any event, while Verizon is big, I still don't think it matters as much as on the global stage (to either side) as some Americans think it does.
post #19 of 109
Quote:
Originally Posted by samab View Post

Verizon NEVER cared about losing the number 1 crown when Cingular Wireless bought AT&T Wireless.

Verizon NEVER expanded their prepaid or MVNO offerings so that they could catch Cingular Wireless.

Verizon just concentrated on postpaid net adds and not cared a single day on losing the number 1 crown.

Oh, that's nuts! They didn't buy Allitel because they wanted the extra 11 million subscribers? Then why? You don't think that size was a consideration?
post #20 of 109
20 posts already, and the Android trolls have not arrived yet! Are all in their caves?
post #21 of 109
In all fairness, all this chart shows is the spike in sales after the iphone 4 release. Sales always spike in the quarter after the year's new model is released.
post #22 of 109
Quote:
Originally Posted by iStud View Post

20 posts already, and the Android trolls have not arrived yet! Are all in their caves?

Shhh.... do not molest the trolls... they are huddled around the fire hungering for troll-bait.
post #23 of 109
on apple platform, app developer makes money on both selling app and ad revenue while apple makes money on selling iphone mostly with additions from itunes' movie/music sale.

how about on driods? google is providing free andriod while htc/motorola etc makes hardware money. for andriod hardware manufacturers, all they have done so far is to match up in total volume with apple iphone. and let us assume they have equal share of total revenue, then in the end, i don't think any of them can make lots of money.

what about developer? if driod's apps are mostly free, then developer's revenue can only come through ad.

maybe google should move to a new direction. instead of open platform they pitched against apple they should emphasize user experiences. this also requires google to provide a cloud, similar to apple's itunes, to its users and enable developers to make more money. in the end, without developers' devotion to andriod platform, every one hurts.
post #24 of 109
Quote:
Originally Posted by gwlaw99 View Post

In all fairness, all this chart shows is the spike in sales after the iphone 4 release. Sales always spike in the quarter after the year's new model is released.

Thats part of the what the article states: iPhone sales on AT&T are 2.5x higher than Android-based phone sales on Verizon. Of course there will be a spike, but if Android is doing so well on Verizon there should be a spike for each new model of Android-based phone that Verizon releases, or at least an accumulative increase for Android-based phones on Verizon. That doesnt appear to be the case.
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post #25 of 109
It's absolutely precious how at the bottom of this article was a "Smartphones on Verizon" ad for Verizon WIreless. :-)
post #26 of 109
Well,

The original unlocked Droid sold well and competed well against the iPhone. ( I have one ) However, in traditional Google fashion, they release Froyo with so many major bugs that people ( myself included ) are getting tired of dealing with them and the fact that it can take up to six months to get a simple bug fix. One - Two months for Google to fix it. Then 1-2 months for the phone manufacturer to approve the update. Then two - three months for Verizon to approve it and send it out. My phone is rooted and I can get bug fixes faster by loading a hacked ROM. Otherwise I would have smashed the phone and went to a basic hand set a long time ago.

However, all newer Android phones on verizon are fairly locked down. With locked bootloaders the hacker community is not able to fix many of the bugs Google always releases like they did with the Original Droid. While not many iPhone users jailbreak their phone, a lot of Android have to root their phone just to be able to use many of the basic features after a Google bug riddled update. In my opinion, I think that the locked down and buggy nature of the new Androind phones is limiting their appeal.

Now, Android does have a few features that I like better than the iPhone.

1) Voice commands and text entry on Android is excellent. I use these features a lot. It sux on the iPhone.

2) Google maps and navigation is better on Android.

3) I have the option of using flash or not on Android. I know many people hate it, but the option is nice...

4) The file system in Android is very useful. In my work I often have to download files on my phone and transfer them to a computer when tethering is not practical. This is easy and clean on Android. It is a pain on my iPad and some time impossible depending of the file type. The iPhone needs some basic type of USB and WiFi file transfer. I think a dropbox approach is a very reasonable request. There is NO GOOD reason why I can download a file from the web and put it in a dropbox on my iPhone/iPad and use Wifi or USB to transfer it to a computer.

5) Wifi and USB teathering is free and works great on the Android phones. ( No you do not have to root the phone to do this. A one time purchase $10.00 app does it nicely )

6) You can charge the phone from any standard USB source. No special iAdapters/Cables require...

7) The Chrome to Phone App is incredibly useful. For those that do not know what it is, you can select any text or links in your Chrome or Firefox browser and send it to your phone. I love it to copy an address or technical note. Send it to the phone as text and past it into my Note app. If it is an address all I have to do it touch it in the note and it pops up Google navigation/map. I use this app several times a day... there are a couple of apps that kind of do the same thin on the iPhone/iPad, but are no where near as clean....


Other than that, I prefer the iPhone. It operates smoother and has less bugs and they get fixed faster when they do occur. It is far easier to put multimedia stuff on the iPhone. The user interface it simpler. The camera actually works. Every Android phone I have used has a very flaky camera app ( must be unstable in the core Android OS ). I get it to take a picture about 1/2 of the time when I want it to...

I really hope that the iPhone comes to Verizon in January. My droid is on it's last leg, ( Cracked glass and it went swimming ). I DO NOT want to buy one of the newer locked down Android phones. To me it kills the whole openness argument of the Android concept. I can't really use AT&T as my main phone for many reasons, so I will be forced to go to an Android phone after the first of the year if the iPhone is not available.

In my opinion the combination of: Google's buggy code, the phone manufactures sticking their stupid user interfaces in the android phones, Verizon tenancy to lock down the phones and stick their crapware in them, will kill Android as fast as it gained market share. It is sad too because the Android OS could offer an incredible phone experience if it was allowed to mature without so many people screwing with it....
post #27 of 109
Quote:
Originally Posted by solipsism View Post

Thats part of the what the article states: iPhone sales on AT&T are 2.5x higher than Android-based phone sales on Verizon. Of course there will be a spike, but if Android is doing so well on Verizon there should be a spike for each new model of Android-based phone that Verizon releases, or at least an accumulative increase for Android-based phones on Verizon. That doesnt appear to be the case.


OK, so what would have happened if they did not sell Android phones, with RIMM RIP, they would be toast.

In fact anyone who does not have an iPhone needs Android just to stay alive!!!!

One day more companies will carry Apple, however its a 2 horse race, and if that's the case regardless of who is king 2nd place is great, and everyone else is gone.

Tom
post #28 of 109
Does RIM really belong here? Most of Androids perceived collective loses are present because RIM is in the chart. Still the iPhone is going strong. The big deal is really the iPhone's high retain rate in my opinion. You don't want to see a market shrinking if you are developing solutions around a platform. It doesn't give you confidence in the platform. The iPhone feels like it will remain king in the enterprise (where this is particularly important) for a long time. It is now becoming obvious that longevity is more important then ubiquity in the enterprise market and Apple has the upper hand. Windows had both longevity and ubiquity (in the multi-provider sense, not the it is everywhere sense) in the desktop market. I think that the former is the more important ingredient that hasn't received the recognition it deserved the past decades. When your not talking about servers... Apple has a history of continually supporting a small line of products.
post #29 of 109
"An analysis of Verizon Wireless smartphone sales over the past year indicates why the carrier is suddenly demonstrating interest in Apple's iPad and iPhone"

I wouldn't say Verizon's interest in the iPhone is sudden at all. Rumors of a Verizon iPhone have been going now for almost a year if not longer.

And Android based phones are no slouch compared to the iPhone. The only reason Verizon is working on a deal with Apple is name recognition. People will buy big names regardless of needs, features, value, etc. - just ask any advertising agency.

I have an iPhone 4, and I owned the first Android phone available. I like them both, but get real; Android sales are not disappointing, but additional iPhone sales would be better.

I own a new iPhone 4 for only one reason, Radio Shack offered a great discount last week. Before last week I was set on moving to an Android based phone.

What a piece of crap article that was.
post #30 of 109
Quote:
Originally Posted by sranger View Post

Well, ...

Thanks for a calm, balanced critique.
post #31 of 109
Quote:
Originally Posted by melgross View Post

Oh, that's nuts! They didn't buy Allitel because they wanted the extra 11 million subscribers? Then why? You don't think that size was a consideration?

Verizon also didn't buy Alltel the first time around. Remember Alltel shopped around for a buyer, the private equity people bought it --- then the junk bond market collapsed and the PE firms had to resell Alltel to Verizon.

Cingular bought AT&T in 2004 --- and Verizon NEVER expanded their prepaid and MVNO offerings just to reclaim the number 1 crown.
post #32 of 109
What this article shows to me more than anything else is that ATT is toast without iPhone exclusivity.

I'm not going to question the data, just how it was presented. Yes, it's interesting to see how many motorola's sold compared to palm, or how many net units sold, but Verizon could care less about that.

From a carrier perspective, the only thing they care about when it comes to smartphones is new smartphone subscribers.

What I mean is that for a carrier:
Customer going from Motorola to HTC= $0 in extra revenue
Customer going from feature phone to ANY smartphone=$30 in extra revenue

Or to use the iphone: If ATT sells 5 million iphones in a quarter this is GREAT for apple. But for ATT what are the number of users who never had a smartphone before who picked one up?

I'm not doubting that the number could still be in apple's favor. In all likelyhood it is, especially if you ONLY consider Q3 numbers. Remember that most customers are locked into a 2 year contract, so customers who jumped on the original storm at launch are JUST starting to get their upgrades in these past few months. There are people chomping at the bit for ANY smartphone that can't get it yet.

What does matter for Verizon is that the % of users who have smartphones has increased sharply since the original Droid launched, which means a lot higher Data ARPU. Which handset maker has the biggest piece of the smartphone pie doesn't really concern them. The size of the smartphone pie does.
post #33 of 109
Quote:
Originally Posted by melgross View Post

Oh, that's nuts! They didn't buy Allitel because they wanted the extra 11 million subscribers? Then why? You don't think that size was a consideration?

They actually largely purchased them because Alltel's 3g coverage nicely complimented their own. the added consumers were a plus, but just like the Nextel buyout. The big ticket items were spectrum and coverage.
post #34 of 109
Quote:
Originally Posted by solipsism View Post

Thats part of the what the article states: iPhone sales on AT&T are 2.5x higher than Android-based phone sales on Verizon. Of course there will be a spike, but if Android is doing so well on Verizon there should be a spike for each new model of Android-based phone that Verizon releases, or at least an accumulative increase for Android-based phones on Verizon. That doesnt appear to be the case.

The problem is that the study try to imply that Verizon is in trouble because iphone is a high ARPU item.

But AT&T's ARPU went down in the same period and Verizon Wireless' ARPU went up in the same period.
post #35 of 109
Wow - "AT&T now selling 2.5 times as many iPhones as Verizon is Android models". Comparing apples and orangutans. DED really spinning the stats there. Spin doctor is spinning like a top.
post #36 of 109
The only way you can make this comparison is if Verizon had Android exclusively. That way everyone who wanted android would switch to verizon the way everyone who wants the iphone switched to at&t.
post #37 of 109
Quote:
Originally Posted by ddawson100 View Post

Wow - "AT&T now selling 2.5 times as many iPhones as Verizon is Android models". Comparing apples and orangutans. DED really spinning the stats there. Spin doctor is spinning like a top.

I'm grateful for articles like this... it helps me find the people I want on my ignore list.
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post #38 of 109
Quote:
Originally Posted by samab View Post

Verizon NEVER cared about losing the number 1 crown when Cingular Wireless bought AT&T Wireless.

Verizon NEVER expanded their prepaid or MVNO offerings so that they could catch Cingular Wireless.

Verizon just concentrated on postpaid net adds and not cared a single day on losing the number 1 crown.

And you know this because?...
post #39 of 109
And I know just where Verizon is going to get all those stockpiles of iPhones for their January launch...

The "Island of Misfit Toys" of course!

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post #40 of 109
Quote:
Originally Posted by Sofabutt View Post

I have an iPhone 4, and I owned the first Android phone available. I like them both, but get real; Android sales are not disappointing, but additional iPhone sales would be better.

I own a new iPhone 4 for only one reason, Radio Shack offered a great discount last week. Before last week I was set on moving to an Android based phone.

What a piece of crap article that was.

Give me a break, you had the first Android phone and liked it? Compared to an iPhone? You're not very demanding apparently...
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