Verizon could sell 12M iPhones a year, but don't 'pop the champagne'
A Verizon-compatible CDMA iPhone could result in at least 12 million new unit sales for Apple next year, one Wall Street analyst believes, though he's not convinced the deal will actually happen in January 2011.
Yair Reiner of Oppenheimer cited a new report from Bloomberg this week, which cited two unnamed sources in reporting that a Verizon iPhone is expected to arrive from Apple in January of 2011. Such a move, which has been rumored for some time, would mark the end of iPhone exclusivity for rival wireless carrier AT&T.
But Reiner isn't completely sold on the prospect of a Verizon iPhone in early 2011. The analyst, in a note issued to investors Wednesday morning, noted that such rumors have surfaced numerous times.
"Similar speculation has emerged before, so barring independent confirmation or a press release from one of the parties, it'd be rash to pop the champagne," he wrote. "Still, it's worth considering the potential implications."
The impact for Apple would be huge, he believes, adding at least 12 million additional iPhone sales in the U.S. annually. That would amount to $7 billion in incremental revenue and more than $3 in incremental earnings per share.
"Many investors have mused about this upside, but few, we believe, have built it into their models or expectations," he said. "If this is real, it's big and it's incremental."
On AT&T alone, Apple over the last year sold 11 million iPhones to its 65 million postpaid install base of subscribers. Some of those subscribers who switched for the iPhone would inevitably move back to Verizon if Apple's handset became available on its network, Reiner said. But with Verizon's 83 million subscribers, Verizon would likely add at least 12 million net subscribers for Apple, and likely many more.
And from a strategic standpoint, Yainer said he believes it makes sense, as adding Verizon would "significantly blunt the competitive threat" from Google's Android mobile operating system. Since last year, Verizon has worked closely with Google to offer some of the best Android devices in an effort to compete with the iPhone. One new handset coming soon is Motorola's Droid X.
Weighing the possibilities of an Apple-Verizon deal, Reiner noted that AT&T made some subscribers eligible for an iPhone 4 upgrade long before their two-year contract was set to expire. He said it could have been a "last-ditch effort to lock them into new contracts before Verizon came aboard," or just the fear of a possible Verizon deal could have inspired AT&T.
On the other hand, he also noted that a January handset debut would run counter to the established iPhone refresh schedule, in which Apple introduces a new handset at its annual Worldwide Developers Conference in June.
"Would Verizon just get a CDMA version of the current iPhone 4? Would it get a new iPhone? Neither scenario makes much sense given that the iPhone just got a huge upgrade and that another isn't likely before mid-2011," he said.
Yair Reiner of Oppenheimer cited a new report from Bloomberg this week, which cited two unnamed sources in reporting that a Verizon iPhone is expected to arrive from Apple in January of 2011. Such a move, which has been rumored for some time, would mark the end of iPhone exclusivity for rival wireless carrier AT&T.
But Reiner isn't completely sold on the prospect of a Verizon iPhone in early 2011. The analyst, in a note issued to investors Wednesday morning, noted that such rumors have surfaced numerous times.
"Similar speculation has emerged before, so barring independent confirmation or a press release from one of the parties, it'd be rash to pop the champagne," he wrote. "Still, it's worth considering the potential implications."
The impact for Apple would be huge, he believes, adding at least 12 million additional iPhone sales in the U.S. annually. That would amount to $7 billion in incremental revenue and more than $3 in incremental earnings per share.
"Many investors have mused about this upside, but few, we believe, have built it into their models or expectations," he said. "If this is real, it's big and it's incremental."
On AT&T alone, Apple over the last year sold 11 million iPhones to its 65 million postpaid install base of subscribers. Some of those subscribers who switched for the iPhone would inevitably move back to Verizon if Apple's handset became available on its network, Reiner said. But with Verizon's 83 million subscribers, Verizon would likely add at least 12 million net subscribers for Apple, and likely many more.
And from a strategic standpoint, Yainer said he believes it makes sense, as adding Verizon would "significantly blunt the competitive threat" from Google's Android mobile operating system. Since last year, Verizon has worked closely with Google to offer some of the best Android devices in an effort to compete with the iPhone. One new handset coming soon is Motorola's Droid X.
Weighing the possibilities of an Apple-Verizon deal, Reiner noted that AT&T made some subscribers eligible for an iPhone 4 upgrade long before their two-year contract was set to expire. He said it could have been a "last-ditch effort to lock them into new contracts before Verizon came aboard," or just the fear of a possible Verizon deal could have inspired AT&T.
On the other hand, he also noted that a January handset debut would run counter to the established iPhone refresh schedule, in which Apple introduces a new handset at its annual Worldwide Developers Conference in June.
"Would Verizon just get a CDMA version of the current iPhone 4? Would it get a new iPhone? Neither scenario makes much sense given that the iPhone just got a huge upgrade and that another isn't likely before mid-2011," he said.
Comments
"Would Verizon just get a CDMA version of the current iPhone 4? Would it get a new iPhone?
Stay tuned to find out!
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Good morning all...
AT&Ts move to allow early updates could be nothing more than increasing the pool of potential buyers for new hardware.
Verizon is definitely better, but they rape your wallet for it. Two power hungry companies, IMO, can't work together either. Att bent over for the iPhone. I don't see verizon doing that.
My opinion, other companies will get it. Not CDMA verizon.
These wall street analysts want to drive up the stock to pad their pockets.
In other words, nothing to see here. This article means absolutely nothing.
Oh, and 2 million more phones sold? Great, but we have availability issues as it is now.
Heeeeere we go again! Believe it when I see it.
Verizon is definitely better, but they rape your wallet for it. Two power hungry companies, IMO, can't work together either. Att bent over for the iPhone. I don't see verizon doing that.
My opinion, other companies will get it. Not CDMA verizon.
These wall street analysts want to drive up the stock to pad their pockets.
"...att bent over for the iPhone..."
I don't agree with that at all.
And from a strategic standpoint, Yainer said he believes it makes sense, as adding Verizon would "significantly blunt the competitive threat" from Google's Android mobile operating system.
And to me, this is why the iPhone isn't coming to Verizon any time soon. I'd wager the insulation from government meddling because of "anti-trust" issues is worth far more than the sales of a device they can't make enough of anyway.
Since last year, Verizon has worked closely with Google to offer some of the best Android devices in an effort to compete with the iPhone.
And yet Android is still nowhere near the overall experience of the iPhone. Too many competing interests and no clearnfocus/goal will ensure that Android will always have impressive checklists of features, yet always feel lacking compared to the iPhone in overall user experience.
The real irony is since everyone can get Android and molest it to their hearts content, their is little incentive for some to try to build the Apple model around Android. How would you differentiate yourself from the "isn't that just another Android phone"?
6/2012 makes sense with the Apple/AT&T 5 year contract, with the rollout of LTE, and with the production of one model [i think] - there will still be legacy networks that will need handled - 3g on both GSM and CDMA. [someone please correct me if i'm wrong, as i'm not an expert on Cellular legacy network compatibility mumbo jumbo]
imagine that - someone posting that they're NOT an expert on something.
With LTE right around the corner - and Verizon recently joining the GSMA board - I would think that some sort of LTE compatible iPhone mid year 2011 is more likely - that way production and sales of the next gen iPhone could coincide with the deployment of LTE - just a matter of synchronizing those two schedules - and perhaps in part AT&Ts plans to move to LTE.
An LTE only iPhone is years away. An LTE phone from Verizon would also have to support CDMA.
If Apple really wants to sell phones, they will make phone available to Verizon before the holidays. Verizon could sell several million in December alone.
I guess selling 1.7 million phones in the first week or so shows no interest in selling hardware.
Could be that adding Verizon customer base would be bad publicity since the shortages and wait times would double unless manufacturing could also be doubled.
Then again there is something to be said for having a market where your product is in demand and commanding a premium as opposed to warehouses full of product that needs to be given away to make room for the over production. Not good for business to have 20 million units available on day 1 and only 12 million interested customers.
The technological challenges aren't insurmountable (simultaneous voice-data can be achieved with SV-DO -- and apparently Qualcomm has an SV-DO chip that's waiting for a handset). Apple simply isn't staffed with enough people to make the Verizon iPhone in six months. They are straining to make their own internal product release schedules. iPad was slightly late and the iPhone 4 is arguably still half-baked.
Secondly, the fact that the Verizon iPhone rumors have been continuing at breakneck pace is also an strong indication that they are not getting the iPhone soon. Apple's business partners clam up real tight when there's a deal in the works. There are far too many blabbermouths (including Verizon CEO Ivan Seidenberg) for any of these rumors (some of them patently ludicrous) to have any weight.
Expanding iPhone to T-Mobile USA is a far more likely next step for Apple. Adding a 3G chip that can handle T-Mobile's unique AWS frequency is relatively easy. T-Mobile has been quite happy over the years to have jailbroken iPhones on its network (no 3G data, just EDGE). T-Mobile's silence makes them a far more serious candidate to be the next American iPhone carrier than Verizon with their tsunami of silly rumors.
With all the things that Verizon is, this marriage is highly unlikely. Given that Verizon would like to lock down its customers' experience...
I disagree to some extent. When it comes to the smartphones Verizon doesn't touch the software all that much, especially in the case of Android. That is more in the hands of the manufacturer of the phone (which has it's own problems).
The only annoying thing that Verizon does is throw their logo onto the phone wherever they can (I have a big Verizon logo on both the front and back of my Moto Droid).
I'm sure Verizon would want a huge logo somewhere on their iPhone, but Apple would never allow for that.