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Why the iPhone is NOT coming to Verizon anytime soon

I really wanted to believe.  I really did.  I am one of the biggest technophiles you’ll meet.  In fact, I held off for two generations of iPhones until I broke down and made the lateral move from Verizon to AT&T.  I was lucky enough to have family members take over my Verizon plan so my other half and I could get an account on AT&T thus securing me an iPhone 3G s and her a 3G.

iPhone with Verizon logo and red circle with line through itOne of the primary reasons I was so happy that I got to keep an open Verizon account is I kept hold of the belief and hype that an iPhone was coming to Verizon: a vPhone if you will.  I was sooooooo inclined to believe the hype that I actually waited until the second shipment of new 4th Gen iPhones instead of buying on the first day ;)  But as I continued to get my daily dose of Tech News (my RSS reader has thousands of new posts daily on Tech alone) I started to wonder if there was ever really a chance that an iPhone would come over to Verizon.  Despite Apple having a much larger base capital, Verizon rules in terms of providing the best cell phone service in the states.

So I’ve finally come to the belief that Verizon will NOT be getting an iPhone for a long time.  Here are some reasons I’ve compiled from my readings and research over time as to why  a vPhone is not coming.

NY Times Article - Even Without iPhone, Verizon Is Gaining on AT&T

In this article, written by BRAD STONE and JENNA WORTHAM, they provided the obvious in terms of reasons Verizon won’t be getting the iPhone anytime soon.  Here are some of those thoughts:

1) Droid

The Droid line of Android devices has become the flagship phone for Verizon.  The Android operating system has provided Verizon with the mobile OS that can compare quite well with the iOS (iPhone’s operating system).  Today (July 15th, 2010), Verizon released the Droid X which I picked up to replace my MiFi and use as a cell phone for business purposes.  Prior to coming over to Apple iPhone I had the original Droid from Verizon.  It was a great phone.  I purchased the Droid X recently for business and it’s even better than the original Droid.

2) Market Share Gains

The NY TImes also cites comScores metrics regarding Verizon’s and AT&T’s market shares.  It seems that  Verizon is increasing its share of the smartphone market.  Verizon has increased it’s share 6 points to 26% while AT&T came down 5 points to 40%.  When you take into consideration that smartphones are just one portion of the overall cell phone market and Verizon is coming up on a third of that specific market you can probably get an idea of the overall picture of Verizon’s dominance.  Verizon has the largest consumer network in the nation and is about to reach 33% of having the overall smartphone market.  It’s not like Verizon is in trouble of going out of business anytime soon without the iPhone.

3) Google Partnership

Although Verizon most likely doesn’t have the budget for research & development like Apple does, Google sure as shit can.  Google is one of the few companies who has the ability to compete with Apple on their level. With Verizon partnering with Google it wouldn’t make sense for Verizon to jump through mad hoops for the iPhone.  Having a strong partnership with Google and Motorola via the “Droid” Android phone gives Verizon the option of playing the negotiating field a little longer.

4) Branding

Before I was a technically inclined as I am today I used to think that Verizon was the one who actually made the phones in which I was talking on.  That’s because Verizon loves to put their Verizon logo all over the phones they sell to their customers.  You don’t see AT&T’s brand anywhere on the iPhone.  At the same time, if you purchase a phone from Verizon there is usually some type of Verizon App on the phone (Vcast or Verizon Navigator anyone?).  I can’t see any brand’s logo other than that Apple icon we all know and love being prominently displayed on their phones.  At the same time, have you ever seen an AT&T app preinstalled on an iPhone?

5) Money, Stupid

Let’s be realistic… businesses are in business because they like making money.  The object of any business is to increase the shareholder’s value as much as possible.  Unless, of course, you are AT&T who seems to be in the business of making Apple more money.

Analysts estimate that Apple brings in an average of more than $650 for each iPhone sold. Consumers pay upward of $200, and AT&T subsidizes the rest. Verizon, on the other hand, pays far less than $300 for Android, BlackBerry and Palm phones…
On top of that, Apple is the only company making money off of the apps sold via the App Store!  Besides the app creators, no other entity sees any of that money from those apps besides Apple.  Verizon and Google share revenue brought in via Android Market.  There is NO WAY, Verizon is going to pay that much money for the phone and also take in the ass with the revenue from the apps.  And there is NO WAY Apple is going to give a share of those apps to another company.  I also don’t see Apple coming down too far on the iPhone costs because Apple will most likely have to pay out more money in order to redesign and redevelop the iPhone as well as create new logistical and manufacturing plans for a Verizon iPhone because of the hardware differences.
6) THE HARDWARE WON”T ALLOW IT!

AT&T utilizes an international standard network: The GSM network.  Verizon has a primarily domesticated network standard that uses the Qualcomm CDMA/EVDO technology.  If Verizon were to stay with using CDMA/EVDO, which they aren’t, then it would mean Apple would have to redevelop new hardware for their iPhones to be used on the Verizon network.  This would create two separate types of the same product = two different skus for the same product.  This is something Apple does not normally partake in.  So not Apple will have to put more time and money into building a new product after mostly likely taking less money for their subsidized phone than they would from AT&T as well as having to split money on App sales.  However, Verizon is about two years out form integrating new standards into their network and begin using something called LTE phones as will the iPhone

The LTE iPhone will most likely due out within a year or so from what I am reading.  However, LTE is a new technology and much like 3G and 4G there are many areas who just don’t support the technology.  So what would the LTE need to fall back on?  Well for Verizon it’s be the CDMA network.  Shit out of luck there too.
Does that mean we will NEVER see a Verizon iPhone?

Never is most certainly a long time.  I believe that the opportunity to have an iPhone on the Verizon network is a definite possibility.  However, I just feel that if you really take a look and consider the opportunity costs associated with Apple bringing an iPhone to the Verizon network it just doesn’t jive with the way Apple normally conducts business.  Apple does things the way they want to and when they want to.  Verizon is in no desperate need for a flagship phone now that it has Google on its side.

It’d be crazy to say that the iPhone will never go to the Verizon network.  However, the rate at which new reports come out with a supposed Verizon iPhone have become laughable.  In the beginning, I was being the biggest sucker of them all.  I was thinking with my heart and desire instead of my common sense.  Just because I WANT an iPhone on the Verizon network doesn’t mean it makes sense for any of the two companies involved to make it happen.

So there it is.  The most obvious reasons why Verizon will NOT be bringing the iPhone to its line-up anytime soon.  When do I expect, if ever, an iPhone to be available on the Verizon network?  When you take into consideration the length of time markets change combined with the time it takes to negotiate between companies and further consider the rate at which technology changes I see a Verizon iPhone coming no early than 2014 but most likely sometime in 2015.

Am I wrong?  Are  you prone to believe that based on all of the “reports” that it is just a matter of time (within the year) Verizon unveils an iPhone?  Do I have no clue what I am talking about or do you see it my way?
Category: Business Lessons
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  • Mike

    I would love to have an iPhone but I can't see myself switching to the Shitty AT&T network. So for now, I will just keep my shitty eVTouch (and what a piece of shit it is!).

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