Verizon is expected to start selling the Apple iPhone later this month, reports The Wall Street Journal, spelling bad news for AT&T, which will no longer enjoy dominance as the iPhone's exclusive carrier. A "confident" Verizon reportedly intends to offer its customers unlimited data-use plans for the coveted smartphone — an offer AT&T, whose strained network is notorious for weak coverage and dropped calls, cannot safely match. Who are the big winners and losers from this deal? (Watch a local report about the Verizon iPhone rumors)
It will be a "banner year" for Verizon, says John Biggs at TechCrunch, who predicts that profits will surge as customers flock to the new service. Not so fast, says Larry Dignan at ZDNet. While "Verizon is a clear winner here" in terms of market share, it may not enjoy "windfall" profits. Verizon's Android sales are already so huge, getting the iPhone may not boost the bottom line that dramatically.
The deal is a "financial coup for Apple," says Douglas A. McIntyre at 24/7 Wall Street. The tech giant reportedly charges cellular service providers like Verizon "as much as $600 for each iPhone." The carriers sell the phones at a discount (but make up for it by requiring customers to sign two-year contracts for phone service). So while the deal may not be hugely profitable for Verizon, it will surely bring in lots of money for Apple.
"Competitive pressure" from Verizon should benefit "current and future AT&T iPhone subscribers," says Kurt Bakke at Conceivably Tech. AT&T may be forced to slash prices to keep its subscriber base happy. It's already dropped the price of the iPhone 3GS to $49 from $99.
Losing iPhone exclusivity "could be a big problem for AT&T," says analyst Todd Rethemeier, in The Wall Street Journal. "We have rarely seen a wireless company's stock go up" when its customer base goes down. Wall Street seems to be "underestimating the impact" of this deal on AT&T, as far as we're concerned.
T-Mobile and Sprint
The other major wireless carriers will suffer too, says Larry Dignan at ZDNet. Both T-Mobile and Sprint will be "locked out" of the competitive iPhone war, potentially losing a huge share of the market to Verizon. Could we see a merger of the two companies?
If you think that a Verizon iPhone will escape the reception and data problems of AT&T's version, says John Biggs at TechCrunch, think again. Once millions of iPhone users plug into Verizon's network, its "vaunted connectivity and coverage will plummet." They'll experience "the exact issue that has been plaguing AT&T: The curse of success."
Verizon's business users
Verizon's network doesn't allow users to "browse the Internet or send an e-mail while on the phone," reports Roger Cheng at The Wall Street Journal, which is bad news for multitasking businessmen on the move. Also, the network runs on a standard of technology that isn't available in many overseas markets. That means "the phone will work in fewer countries — a potential problem for business travelers."
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- Half the world's population lives in these 6 countries
- How a degree from Duke University dashed my dreams of buying a home
- This is why you can't trust the NSA. Ever.
- Why you should stop believing in evolution
- What Keeping Up with the Kardashians can teach America about interracial marriage
- Innocent before proven guilty? The bizarre bipartisan rush to clear Rick Perry
- The real-life events that inspired Game of Thrones' Red Wedding
- What would a U.S.-Russia war look like?
- Welcome to the age of ambivalent feminism
- This 1,600-year-old Viking war game is still awesome
Subscribe to the Week