Verizon iPhone talks seen as Apple counterattack on Android
With speculation of a CDMA iPhone compatible with Verizon's network renewed this week, one prominent analyst said he believes Apple's alleged negotiations could be more about competing with Android than anything else.
Shaw Wu with Kaufman Bros. issued a note to investors Wednesday morning in which he reiterated his belief that a deal between Apple and Verizon is more complicated and costly than most people assume. While he believes such a deal is inevitable, given the carrier's 90 million wireless customers, both Verizon and Apple are very interested in economic and customer control, and are likely to butt heads.
But because Android is positioning itself as an alternative to the iPhone, and is gaining share in the overall smartphone market, Apple may be looking to take on Google's mobile operating system directly by a jump to Verizon. Wu said a Verizon iPhone would most greatly impact Google and the Android platform.
"We would not be surprised if volumes drop dramatically as customers flock to a real iPhone as opposed to a mediocre imitation," Wu wrote. "In our view, web surfing, multimedia, apps and multi-touch remain very strong AAPL hallmarks."
The analyst also said that Verizon would need to give up a lot in order to reach a deal with Apple. For example, the wireless provider would pay Apple double or triple the subsidies it currently pays other smartphone makers. Given that, Wu said it may make more sense for Apple to reach a deal with Sprint or T-Mobile, both of which are far more likely to agree to Apple's terms.
Wu's note came in response to a report from The Wall Street Journal on Monday, which said Apple is working on two new iPhones, including one for the Verizon network. Sources told the paper that CDMA iPhones are not scheduled to go into mass production until September.
In December, Wu stated he believes a "complicated" Verizon iPhone deal is unlikely to happen in 2010. Though Verizon is the top prize in terms of the four major U.S. carriers, Wu said both Verizon and Apple have found success by focusing on "customer control." In that sense, he believes their similarities are what will keep them apart.
As for the other two major wireless carriers in the U.S., a potential jump to T-Mobile could be the simplest choice for Apple. Though the 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.
But Apple executives, in January, made a clear effort to demonstrate they are happy with their partnership with AT&T. The company also attempted to downplay speculation that the iPhone would become available on multiple carriers in the U.S., with Apple's chief operating officer, Tim Cook, stating multi-carrier strategies are not necessarily the best option for every country.
"I don't want to imply that would happen in every market or that we are headed that way in every market," Cook said in the company's quarterly earnings call. He also specifically defended AT&T and said the nation's second-largest wireless carrier is working to alleviate coverage concerns across the country.
Shaw Wu with Kaufman Bros. issued a note to investors Wednesday morning in which he reiterated his belief that a deal between Apple and Verizon is more complicated and costly than most people assume. While he believes such a deal is inevitable, given the carrier's 90 million wireless customers, both Verizon and Apple are very interested in economic and customer control, and are likely to butt heads.
But because Android is positioning itself as an alternative to the iPhone, and is gaining share in the overall smartphone market, Apple may be looking to take on Google's mobile operating system directly by a jump to Verizon. Wu said a Verizon iPhone would most greatly impact Google and the Android platform.
"We would not be surprised if volumes drop dramatically as customers flock to a real iPhone as opposed to a mediocre imitation," Wu wrote. "In our view, web surfing, multimedia, apps and multi-touch remain very strong AAPL hallmarks."
The analyst also said that Verizon would need to give up a lot in order to reach a deal with Apple. For example, the wireless provider would pay Apple double or triple the subsidies it currently pays other smartphone makers. Given that, Wu said it may make more sense for Apple to reach a deal with Sprint or T-Mobile, both of which are far more likely to agree to Apple's terms.
Wu's note came in response to a report from The Wall Street Journal on Monday, which said Apple is working on two new iPhones, including one for the Verizon network. Sources told the paper that CDMA iPhones are not scheduled to go into mass production until September.
In December, Wu stated he believes a "complicated" Verizon iPhone deal is unlikely to happen in 2010. Though Verizon is the top prize in terms of the four major U.S. carriers, Wu said both Verizon and Apple have found success by focusing on "customer control." In that sense, he believes their similarities are what will keep them apart.
As for the other two major wireless carriers in the U.S., a potential jump to T-Mobile could be the simplest choice for Apple. Though the 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.
But Apple executives, in January, made a clear effort to demonstrate they are happy with their partnership with AT&T. The company also attempted to downplay speculation that the iPhone would become available on multiple carriers in the U.S., with Apple's chief operating officer, Tim Cook, stating multi-carrier strategies are not necessarily the best option for every country.
"I don't want to imply that would happen in every market or that we are headed that way in every market," Cook said in the company's quarterly earnings call. He also specifically defended AT&T and said the nation's second-largest wireless carrier is working to alleviate coverage concerns across the country.
Comments
Apple may be looking to take on Google's mobile operating system directly by a jump to Verizon.
If this happens it would not be a "jump to Verizon." A jump is when you leave one place and land on another instead. Apple isn't going to discontinue offering iPhones through AT&T.
I've long been skeptical about Apple offering a Verizon CDMA phone in the twilight of that technology. As time continues to run out on it, the option becomes less and less attractive as a business case. However mounting a counter-attack against Android may affect that calculation.
BTW, simply as one data point, put me down as someone who has experienced both very good coverage and excellent customer service from AT&T. But then I don't live in NYC or SFO.
Why Verizon? There's T-Mobile and Sprint. Apple could go for them instead.
Because Apple might not want to continue giving Google uncontested access to all of Verizon's customers. Apple needs to contain the cylon menace.
Why Verizon? There's T-Mobile and Sprint. Apple could go for them instead.
Why add a smaller, probably less capable network to the mix. Although unpopular, I hate the idea of Apple developing and building more than one iPhone for the same version product - it ultimately takes away effort from making the product better when the effort is split.
Before anyone hollers it is nontrivial to do a phone - just cause Apple has one does not mean that you can 'just change the radio'. That is why it takes Engineers and a long approval process.
BTW: I have never had any problems with signal, dropped calls etc. and happen to think AT&T's coverage here and in the other portions of the country I have lived in has been good.
If this happens it would not be a "jump to Verizon." A jump is when you leave one place and land on another instead. Apple isn't going to discontinue offering iPhones through AT&T.
I've long been skeptical about Apple offering a Verizon CDMA phone in the twilight of that technology. As time continues to run out on it, the option becomes less and less attractive as a business case. However mounting a counter-attack against Android may affect that calculation.
BTW, simply as one data point, put me down as someone who has experienced both very good coverage and excellent customer service from AT&T. But then I don't live in NYC or SFO.
I'm on my 3rd iPhone. The first two I had the coverage was extremely bad in San Francisco. And even worse in my specific area of San Francisco. And so I had switched back to the Blackberry. But about 4 months ago a friend swore up and own that the situation is largely resolved in San Fran. I bought another iPhone and I can easily tell you it's been totally fine here. Dropped calls almost don't exist in my area. Once a month or longer between a single dropped call where as I used to get 3 or 4 in a single conversation. I also own a VZ MiFi, which only did about 800k up and down. My Blackberry on VZ, same location did 1.7mb down and 80k up. Strange huh? Well, the iPhone blows those numbers away on AT&T in the same area now.
I'm sure not every place is as resolved as my area, but from my own point of view, AT&T has not only fixed any issues I had, they are doing better than VZ by far. I have no intension of switching to VZ as I honestly feel that would be a step backwards.
1. Verizon USA (and any other compatible CDMA network)
The Verizon iPhone will be a limited run (15-20 million units over two years) due to the fact that in a few years, LTE 4G will be available on both Verizon and AT&T networks. The only caveat here is that Verizon will need to concede its infamous desire to control the handset, otherwise, I don't see Apple giving in to them.
2. China Mobile
Just too damned big to ignore. (500 million customers!!!)
Why Verizon? There's T-Mobile and Sprint. Apple could go for them instead.
Apple will not want to get into the business of making too many versions of its phones. So far it has been one version that works world wide.
Why Verizon? There's T-Mobile and Sprint. Apple could go for them instead.
Because verizon has the largest customer base with the most mature network. In other words, the highest possibility for sales and profit. Sprint's is network smaller than verizon and uses wimax, not LTE while having half as many customers. And T-Mobile USA has by far the least mature network and the least amount of customers.
bump Verizon.
Why add a smaller, probably less capable network to the mix. Although unpopular, I hate the idea of Apple developing and building more than one iPhone for the same version product - it ultimately takes away effort from making the product better when the effort is split.
Before anyone hollers it is nontrivial to do a phone - just cause Apple has one does not mean that you can 'just change the radio'. That is why it takes Engineers and a long approval process.
BTW: I have never had any problems with signal, dropped calls etc. and happen to think AT&T's coverage here and in the other portions of the country I have lived in has been good.
In the end Apple's interest in expanding the platform will over come its interest in maintaining radio compatibility. I don't believe Apple is at all interested in selling a smart phone, what they want to build and sell are devices that run the iPhone OS platform.
They're working on their 4th generation phone and have gained a lot of experience over the passed three years. It is time to expand, even if it's a limited expansion.
With speculation of a CDMA iPhone compatible with Verizon's network renewed this week, one prominent analyst said he believes Apple's alleged negotiations could be more about competing with Android than anything else.
Shaw Wu with Kaufman Bros. issued a note to investors Wednesday morning in which he reiterated his belief that a deal between Apple and Verizon is more complicated and costly than most people assume. While he believes such a deal is inevitable, given the carrier's 90 million wireless customers, both Verizon and Apple are very interested in economic and customer control, and are likely to butt heads.
But because Android is positioning itself as an alternative to the iPhone, and is gaining share in the overall smartphone market, Apple may be looking to take on Google's mobile operating system directly by a jump to Verizon. Wu said a Verizon iPhone would most greatly impact Google and the Android platform.
"We would not be surprised if volumes drop dramatically as customers flock to a real iPhone as opposed to a mediocre imitation," Wu wrote. "In our view, web surfing, multimedia, apps and multi-touch remain very strong AAPL hallmarks."
The analyst also said that Verizon would need to give up a lot in order to reach a deal with Apple. For example, the wireless provider would pay Apple double or triple the subsidies it currently pays other smartphone makers. Given that, Wu said it may make more sense for Apple to reach a deal with Sprint or T-Mobile, both of which are far more likely to agree to Apple's terms.
Wu's note came in response to a report from The Wall Street Journal on Monday, which said Apple is working on two new iPhones, including one for the Verizon network. Sources told the paper that CDMA iPhones are not scheduled to go into mass production until September.
In December, Wu stated he believes a "complicated" Verizon iPhone deal is unlikely to happen in 2010. Though Verizon is the top prize in terms of the four major U.S. carriers, Wu said both Verizon and Apple have found success by focusing on "customer control." In that sense, he believes their similarities are what will keep them apart.
As for the other two major wireless carriers in the U.S., a potential jump to T-Mobile could be the simplest choice for Apple. Though the 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.
But Apple executives, in January, made a clear effort to demonstrate they are happy with their partnership with AT&T. The company also attempted to downplay speculation that the iPhone would become available on multiple carriers in the U.S., with Apple's chief operating officer, Tim Cook, stating multi-carrier strategies are not necessarily the best option for every country.
"I don't want to imply that would happen in every market or that we are headed that way in every market," Cook said in the company's quarterly earnings call. He also specifically defended AT&T and said the nation's second-largest wireless carrier is working to alleviate coverage concerns across the country.
Even if this is true...I really wonder if Verizon's network could handle the bandwidth needed for the iPhone. While they do have a large range of 3G coverage, the speed is really lacking. It would take a big investment on Verizon's part to get a handle all the data that regular iPhone users expect. Then, of course, their is the issue with the other phone manufacturers that Verizon has in their arsenal. Wonder how that would feel about that. This will be interesting to watch.
Because Apple might not want to continue giving Google uncontested access to all of Verizon's customers. Apple needs to contain the cylon menace.
I have doubts that they'll do it but you can't argue with the obvious business strategy of going to the network people don't want to leave and offer them the device they wish they could have.
I'm expecting a major jump in the stock from an official announcement. $10, $15, $20/share in a day?
CDMA is dead. The sooner those networks realise it, deal with the cost and reconfigure their network the better.
I've seen it done in 12-18 months alongside a high quality CDMA network and the changeover was seamless. Now thankfully no more awful CDMA products come and split the market even further, infuriating customers and killing everyone on differences and higher prices as a result.
Island of Misfit Toys.
IOW, it'll be a cold day in H#&&...
(Even if the ad was much more of a stab at AT&T than Apple.)
Seeing the iPhone sold by Verizon is about as likely to happen as a Beatles reunion (and just about as possible, IMHumO
I think Apple would rather personally lay siege to Google headquarters than climb into bed with Verizon (which is about what Verizon would require/demand).
As iLogic said, "Stock manipulators..."
(Of course, one could draw vague similarities between this scenario and Apple switching to Intel -- one step backward and then three forward.
Verizon's network is already prepared to handle the iPhone. Last year they welcomed jail-broken iPhones on their network. T-Mobile and Sprint would have to upgrade their networks and trust me, Sprint would need to big time and eliminate all of their dead zones.
jail-broken iPhones on Verizon? HOW? they use different comm techniques. the iPhone doesn't work on CDMA which is what verizon uses.