Verizon COO: "We are not going to have any flaws on the execution of the iPhone launch"

Posted:
in iPhone edited January 2014
Having learned from network and launch issues that AT&T has suffered from in recent years with Apple's iPhone, Verizon executives said Tuesday that they are confident in their ability to handle the launch of the CDMA iPhone 4, citing extensive training, customer service hires and infrastructure investment as ample preparation.



After Verizon posted strong numbers Tuesday, executives suggested that the arrival of the iPhone could help the carrier's growth to "explode." To accomplish this, however, Verizon will need to properly execute the launch of Apple's popular smartphone in order to maintain its advantage over AT&T.



"We are not going to have any flaws on the execution of the iPhone launch," said Chief Financial Officer Francis Shammo. "If we go to customer service, we've hired over 3,000 people currently, who have been trained. And if you think about it, we launched the iPad, so that our customer service reps in our stores and in our centers could get used to the interface of the iPhone, which was a pre-launch to the iPhone. So we've trained everyone, extensive training around that."



In October, reports surfaced that Verizon was hiring hundreds of customer service staff in advance of the launch of the then-rumored Verizon iPhone.



"So if we go to the overall network, we've been preparing the network for expansion for the last year, anticipating the launch of the iPhone," Shammo continued. "So we are well-prepared from a network perspective."



"In 2004, we ushered in the area of mobile data by launching our 3G Wireless network, which made us the largest, most reliable Wireless voice and data network in the U.S," Shammo pointed out. "Now since that time, we've doubled our 3G capacity every year, consistently investing in cell sites, spectrum and backhaul, and increasing our throughput speeds. We've bulked up our 3G capacity again in advance of our iPhone launch."



Shammo's comments could be a competitive jab at AT&T's handling of the iPhone during its four exclusive launches. Last year, a tenfold increase in demand for the iPhone overwhelmed both AT&T's and Apple's servers, bringing preorders of the iPhone 4 to a halt.



Earlier this month, outages on the Verizon website on the day of the Verizon iPhone announcement prompted speculation that the carrier's launch of the smartphone could see a repeat of AT&T's struggles to keep up with demand and increased data traffic.



In order to avoid the network issues for which AT&T has become notorious, Verizon has reallocated billions of dollars from its wireline segment to develop the company's wireless infrastructure. "So if you look at the Wireline segment, our capital expenditures went down by $1.7 billion. That was reallocated back into Wireless. So Wireless increased by $2 billion, which was really the preface of building capacity on EVDO for anticipation of the iPhone usage and building out our LTE network."



Verizon also revealed Tuesday that it had sold over 37,000 stand-alone iPads through December. According to comments by Shammo earlier this month, Verizon will soon sell a CDMA version of the iPad 3G. Currently, Verizon sells the Wi-Fi only iPad bundled with the Verizon MiFi 2200 Intelligent Mobile Hotspot.



In preparation for the expected mass of new customers when the Verizon iPhone launches on Feb. 10, Verizon has changed several of its policies to both ensure profitability and a smooth launch. For example, the company discontinued its "New Every Two" program, which offered phone upgrade credits of up to $100 to subscribers who renewed their contracts.



Additionally, Verizon's return policy has been reduced from 30 days to 14 days, though Shammo asserts that "even at 14 days, it's still one of the best in the industry." Verizon will also soon launch a trade-in program allowing customers to receive credit from a third-party after trading in older devices.



To close out the earnings call, Verizon CEO Ivan Seidenberg reiterated the company's "focus on execution," coupled with a conservative plan for the iPhone 4.



"What we wanted to do with the iPhone in 2011 is pretty simple. So to put this in perspective for those of you who are into conspiracies and into looking for other meaning to life, so you would think that this is my last year, so I would want to make sure that the year went smoothly. I also wanted to make sure my colleagues didn't overpromise and get in the doghouse for the next two or three years. So I've purposely made sure that whatever they told you this morning represented a fairly conservative but doable plan."



Verizon is using a conservative consensus estimate of 11 million iPhones sold in 2011, partly because it is unsure what both supply and demand for the device will be. Even with a conservative estimate, though, the company is bullish about the near-term future.



"So the issue for the iPhone is we don't have all the answers," Seidenberg continued. "We personally believe we'll probably do better than most people think, but we didn't want to set any standard because we don't know the number of people who'll move for it, we're not sure what the inventory flows will be, we're not really sure of how all that will pan out, but we are sure, by the time we get to the end of the year, 2012 will look a lot stronger than 2011."



Seidenberg cautioned investors not too overemphasize the company's iPhone opportunity.



"We also wanted to make sure that when you think about the whole company, you don't just focus on the iPhone, but you look at the breadth of the assets that we have and the opportunities that we have to build the company. Probably the most important issue I'll close on this for 2011 is a lot of stuff written about earnings for 2011, will slide backwards because of the iPhone as opposed to going forward. Hopefully, you got this morning a sense for management that we're not accepting the idea that because we get a new iconic device in the system, that's an excuse for us to reduce our focus on growing the base in 2011."
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Comments

  • Reply 1 of 27
    nvidia2008nvidia2008 Posts: 9,262member
    (Umm... never mind)
  • Reply 2 of 27
    eriamjheriamjh Posts: 1,408member
    Verizon will not have enough phones?
  • Reply 3 of 27
    "We are not going to have any flaws on the execution of the iPhone launch."



    Riiight.



    These guys couldn't even keep their website up on the day of the iPhone announcement.



    They weren't even taking PRE-ORDERS yet, but their website still couldn't handle the traffic.



    Just from people READING their website.



    Yeah, good luck Verizon.



    After this, everybody's going to be like, "We shouldn't have been so hard on AT&T."
  • Reply 4 of 27
    pmzpmz Posts: 3,433member
    They won't have many problems, and the 2 reasons are:



    1. Availability will be slim.



    2. No one wants the iPhone 4 less than 5 months before it's replaced. Perfect opportunity for Verizon to pretend like they succeeded where AT&T struggled, though.
  • Reply 5 of 27
    Quote:
    Originally Posted by pmz View Post


    They won't have many problems, and the 2 reasons are:



    1. Availability will be slim.



    2. No one wants the iPhone 4 less than 5 months before it's replaced. Perfect opportunity for Verizon to pretend like they succeeded where AT&T struggled, though.



    If there are a lot of switchers/purchasers then availability might be tight, at least for the first month or two, but you're not giving Apple's manufacturing prowess a whole lot of credit there. Or there won't be many switchers/purchasers, but in that case you must think Apple really sucks at making phones, since they can't even meet that tiny demand. Needless to say, I think you're wrong.
  • Reply 6 of 27
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by pmz View Post


    They won't have many problems, and the 2 reasons are:



    1. Availability will be slim.



    2. No one wants the iPhone 4 less than 5 months before it's replaced. Perfect opportunity for Verizon to pretend like they succeeded where AT&T struggled, though.



    Such comments always sound so weird. You offer no proof to back up point and then contradict yourself in the same post. If no one wants an iPhone now then production and availability can?t be slim.



    Here is a chart showing iPhone unit sales for each fiscal quarter. That?s a lot of no ones buying iPhones in Q2 and Q3. I?d even say it?s the exact opposite of what you?re claiming.
  • Reply 7 of 27
    MacProMacPro Posts: 19,523member
    I suspect the vast majority of sales will be from Verizon's own customer base upgrading from other makes to Apple and other networks with no iPhone. I really don't think vast numbers will flee AT&T other than those with real needs due to poor reception in areas where AT&T have bad coverage. Over time more may switch but Verizon would have to at least have a comparable iPhone and better deals, for me at least.
  • Reply 8 of 27
    dasanman69dasanman69 Posts: 13,002member
    Quote:
    Originally Posted by scotty321 View Post


    "We are not going to have any flaws on the execution of the iPhone launch."



    Riiight.



    These guys couldn't even keep their website up on the day of the iPhone announcement.



    They weren't even taking PRE-ORDERS yet, but their website still couldn't handle the traffic.



    Just from people READING their website.



    Yeah, good luck Verizon.



    After this, everybody's going to be like, "We shouldn't have been so hard on AT&T."



    Reading and buying are two different things. The number of people pre-ordering will be significantly lower than those that just wanted to read specifics on their site.
  • Reply 9 of 27
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by digitalclips View Post


    I suspect the vast majority of sales will be from Verizon's own customer base upgrading from other makes to Apple and other networks with no iPhone. I really don't think vast numbers will flee AT&T other than those with real needs due to poor reception in areas where AT&T have bad coverage. Over time more may switch but Verizon would have to at least have a comparable iPhone and better deals, for me at least.



    I think you?re right. I think we?ll see the iPhone devour other device sales on Verizon. After that I think the next biggest migration will be from all MNOs and MVNOs that don?t carry the iPhone (IOW, not AT&T). Finally, I think AT&T will lose some customers but much less than the others and if they do I think many will be current iPhone owners that simply can?t stand AT&T but will want to wait for the iPhone 5 to to be released and/or their contract to expire before migrating.
  • Reply 10 of 27
    Here's how this is going to play out:



    Verizon has the capacity to add about 12 million iPhones to their network over the year without issue. Their network can handle that, their support and everything else is good to go without problem.



    The demand for the year is (analyst average) 11 million iPhones. I think demand will be much higher than that.



    However, what's unique here is the pent up demand. This isn't a new product. There aren't early adopters and those "waiting to see". There is a huge demand for iPhone on the Verizon network today.



    Of the demand, some are going to wait for the iPhone 5 (or whatever the upcoming iPhone is called). Some have contracts expiring this year, but a lot of people just want the iPhone and will get it immediately.



    Apple can't produce enough iPhone 4 units for Verizon.



    It's going to be a problem one way or the other. Initial demand is probably around 4-6 million, but Apple will probably only have 1-2 million available on launch day.



    But it gets worse. Even if Apple has 2 million available on launch day, the amount of people who could purchase would be far less than that.



    So expect >1 million sold on launch day. A lot of people unable to purchase. A lot of iPhones going on eBay, and even many people who waited in line going home empty handed. It will be chaos.



    Apple won't be able to ever catch up to the demand of the iPhone 4, if they announce the iPhone 5 in June/July.



    When the iPhone 5 comes out, we could see the longest lines in Apple history. If the iPhone 5 is as upgrade worth as past iPhones, lines could be 2-3 times what we've ever seen before.



    Additionally, Apple would not recover from the shortage, it will face constraints for the entire year (globally speaking). That's really not too much of a stretch as the iPhone 4 still hasn't fully rolled out around the globe in full quantities.
  • Reply 11 of 27
    dasanman69dasanman69 Posts: 13,002member
    Quote:
    Originally Posted by digitalclips View Post


    I suspect the vast majority of sales will be from Verizon's own customer base upgrading from other makes to Apple and other networks with no iPhone. I really don't think vast numbers will flee AT&T other than those with real needs due to poor reception in areas where AT&T have bad coverage. Over time more may switch but Verizon would have to at least have a comparable iPhone and better deals, for me at least.



    Well considering that VZWs first commercial thanks the millions that waited means you're stating the obvious.
  • Reply 12 of 27
    I am guessing 200k launch weekend.
  • Reply 13 of 27
    Verizon not being prepared for this launch, would be like shooting itself in the foot. They have seen the problems that ATT endured and now should understand that Verizon customers will be less understanding and sympathetic to any flaws in their launch.





    Hopefully Verizon has over prepared their network as their Iphone4 customers are going to put them through the ringer and demand the best.
  • Reply 14 of 27
    tundraboytundraboy Posts: 1,845member
    Quote:
    Originally Posted by pmz View Post


    They won't have many problems, and the 2 reasons are:



    1. Availability will be slim.



    2. No one wants the iPhone 4 less than 5 months before it's replaced. Perfect opportunity for Verizon to pretend like they succeeded where AT&T struggled, though.



    So you think you know better than Verizon or Apple who have tons of internal numbers that tell them to what extent your assertion #2 is true or not? You think Verizon and Apple got to be billion dollar companies by being stupid?



    Most smart phone buyers are not like you, they don't keep track of the manufacturers' product roadmaps. Most will just hear "iPhone", "Verizon" and if they've been waiting for the combination for years, they'll be trooping to the nearest Apple or Verizon store. They're not going to wait 5 months for a new phone whose features they have no idea of. Part of the reason is they'll just resolve to upgrade to the newer model later if the new model turns out to be any good. Nobody purchases a smart phone expecting to use that particular phone for the rest of his or her life, you know.
  • Reply 15 of 27
    The axe is about to fall, and there will be victims everywhere. ONE phone against a battalion.



    So walk into the Verizon Store, and there are many phone to choose from, sometimes more than 5 from one manufacturer, but right at one corner standing like a small giant is the iconic Apple iPhone ready to battle and win.



    Now, that's what you call competition! Blackberry is about to leave town.
  • Reply 16 of 27
    docno42docno42 Posts: 3,733member
    infamous last words...



    And talk is cheap...



    This should be fun to watch!
  • Reply 17 of 27
    nvidia2008nvidia2008 Posts: 9,262member
    Quote:
    Originally Posted by solipsism View Post


    Such comments always sound so weird. You offer no proof to back up point and then contradict yourself in the same post. If no one wants an iPhone now then production and availability can’t be slim.



    Here is a chart showing iPhone unit sales for each fiscal quarter. That’s a lot of no ones buying iPhones in Q2 and Q3. I’d even say it’s the exact opposite of what you’re claiming.



    What are the multicoloured bars? Can't figure that out.



    Edit: Colours as from image in Wikipedia

    Worldwide iPhone sales by quarter. Sales volume is in millions. Q1 is the holiday season.

    **Original iPhone

    **iPhone 3G

    **iPhone 3GS

    **iPhone 4
  • Reply 18 of 27
    nvidia2008nvidia2008 Posts: 9,262member
    Bingo... At least some people get it. Apple in 2011 and 2012 is all about how many iPhones and iPads they can make. That's all. Forget demand. Global demand is insane. In China, they can't keep up with iPhone and iPad demand. To this day! And iPad is still limited to about less than half of markets where Macs are sold, and it's already beating Mac sales numbers handily.



    Quote:
    Originally Posted by macslut View Post


    Here's how this is going to play out:



    Verizon has the capacity to add about 12 million iPhones to their network over the year without issue. Their network can handle that, their support and everything else is good to go without problem.



    The demand for the year is (analyst average) 11 million iPhones. I think demand will be much higher than that.



    However, what's unique here is the pent up demand. This isn't a new product. There aren't early adopters and those "waiting to see". There is a huge demand for iPhone on the Verizon network today.



    Of the demand, some are going to wait for the iPhone 5 (or whatever the upcoming iPhone is called). Some have contracts expiring this year, but a lot of people just want the iPhone and will get it immediately.



    Apple can't produce enough iPhone 4 units for Verizon.



    It's going to be a problem one way or the other. Initial demand is probably around 4-6 million, but Apple will probably only have 1-2 million available on launch day.



    But it gets worse. Even if Apple has 2 million available on launch day, the amount of people who could purchase would be far less than that.



    So expect >1 million sold on launch day. A lot of people unable to purchase. A lot of iPhones going on eBay, and even many people who waited in line going home empty handed. It will be chaos.



    Apple won't be able to ever catch up to the demand of the iPhone 4, if they announce the iPhone 5 in June/July.



    When the iPhone 5 comes out, we could see the longest lines in Apple history. If the iPhone 5 is as upgrade worth as past iPhones, lines could be 2-3 times what we've ever seen before.



    Additionally, Apple would not recover from the shortage, it will face constraints for the entire year (globally speaking). That's really not too much of a stretch as the iPhone 4 still hasn't fully rolled out around the globe in full quantities.



  • Reply 19 of 27
    Why are people hating on Verizon? Just because at&t had problems doesn't mean Verizon will. What excuse will everybody have if Verizon does handle the traffic, a lot of people on here contradict themselves when it comes to Verizon. Let everything play out then you can start doing your assessments. A lot of people said they wouldn't do unlimited data because the network couldn't handle and what happen, they gave you unlimited data. Verizon is basically guilty before proven innocent.. Smh
  • Reply 20 of 27
    anonymouseanonymouse Posts: 6,715member
    Quote:
    Originally Posted by pmz View Post


    ... 2. No one wants the iPhone 4 less than 5 months before it's replaced. Perfect opportunity for Verizon to pretend like they succeeded where AT&T struggled, though.



    Most people -- i.e., conservatively, 75%+ -- don't pay any attention to Apple's release cycles. Most Verizon customers who have been waiting for the iPhone will jump on it, unless their current contract terms force them to wait.
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