On iPhone coming to Verizon (or not)

I just wrote a moderately lengthy comment to this article:


The article argues that Apple won’t bring the iPhone to Verizon, essentially because they benefit too much from the streamlined manufacturing of one single 3G/3GS/4 model for the entire world.  I disagree and wrote a comment stating as much.  Since nobody reads comments, I thought I’d post here too.

I disagree for these reasons:

1: There’s enough market opportunity to make an iPhone on CMDA, even if only sold in one country and only for 2-3 years (until LTE is common).  Every other phone manufacturer does it, and for good reason.  Even if Apple only sold an additive 1M CMDA units per year, that’s $400M-$600M revenue, more than enough to compensate for additional R&D.  1M is a very low estimate in my opinion.

2: Many people love (or are stuck with) Verizon.  Family plans with overlapping contract terms, or just perception.  Many people want an iPhone but can’t due to the Verizon issue.  They walk into a Verizon store, say “I want an iPhone” and are told “not here.”  Some will switch to AT&T, but most will stick with Verizon and buy something that looks pretty much like an iPhone.  Lately, that’s Android.  That’s a sale that could have gone Apple’s way.

3: Apple is very interested in market share when they have a compelling product in a new or open space.  This is new.  Witness the aggressive pricing on the iPad – half what folks expected.  Within a year, I’m sure we’ll see a “free with contract” iPhone of some variety.

4: Apple HATES Google right now.  It’s changed from friends, to friendly competition, to a blood feud.  Nearly all Android sales are lost iPhone sales.  Serious geeks aside, the #1 reason Android users tell me they bought one was their carrier didn’t have the iPhone.  Apple would be willing to lose money to quell this transition.

The biggest challenge is reaching an agreement with Verizon.  Verizon knows all this.  Apple needs Verizon more than Verizon needs Apple.  This is a change from the pre-Android days, when Verizon was losing customers to AT&T due to the iPhone.  They are no longer losing that many, because they have the Android.  The Android is certainly a lesser product, but it’s close enough that average consumers can be sold on it, and be reasonably happy with it.  So Apple won’t get as much money or control as they have with AT&T, but in the end they’ll reach an agreement.