Verizon iPhone a Blow to AT&T


Verizon may be coming out with its own iPhone next year. USA Today reports:

Verizon (VZ) and Apple (AAPL) are discussing the possible development of an iPhone for Verizon, with the goal of introducing it next year, people familiar with the situation say.

It would mark the first time Apple has produced a version of the iPhone for a CDMA wireless network, which is different from AT&T’s GSM technology. Vodafone, co-owner of Verizon Wireless, already sells the iPhone in Europe.

The New York-based telecom entered into “high-level” discussions with Apple management a few months ago, when CEO Steve Jobs was overseeing day-to-day business, these sources say. They declined to be named because they aren’t authorized to speak publicly.

Jobs is on medical leave until June, but the conversations are continuing, they say. Apple declined to comment.

Nielsen’s Roger Entner, who was interviewed for the report, says that AT&T would be the biggest loser in a Verizon iPhone deal. IPhone users disappointed with AT&T’s reliability would jump ship to Verizon, the article quotes Entner as saying. Meanwhile, Apple would benefit from those users, who would need to buy new iPhones.

PC World comments

The news about talks between Apple and Verizon could also be an attempt by Apple to enhance its bargaining position with AT&T over the exclusive contract, Redman said.

But the ultimate value of having the iPhone in the inventory is to attract subscribers to lucrative data plans, the analyst said. Some customers will pay $100 or more a month to have an iPhone voice and data plan just to enjoy iPhone’s superior browsing and other functionalities, they noted.

“If you talk to iPhone users, they will tell you there is no substitute for an iPhone, and without one, you are operating at somewhat of a disadvantage,” Mathias said. “That’s a reason Verizon would want to sell it.”

I hope that Apple goes ahead with the Verizon deal. It’s the best option for consumers, the industry, and Apple itself.

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Written by Drea Knufken

Drea Knufken

Currently, I create and execute content- and PR strategies for clients, including thought leadership and messaging. I also ghostwrite and produce press releases, white papers, case studies and other collateral.