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Apple to lose massive iPhone subsidies with Verizon?

updated 12:05 pm EDT, Wed October 28, 2009

Tradeoff may be worthwhile, says analyst

Apple will lose its current "sweetheart" US carrier subsidy if and when it signs an iPhone deal with Verizon, says Brian Marshall of Broadpoint.AmTech. The analyst argues that a Verizon iPhone will arrive in the second half of 2010, but with Apple unable to pressure the carrier into paying the same subsidy per phone required of AT&T, thought to be $450. A more likely Verizon figure is pegged at $300, which may contribute to thinning Apple margins.

The sacrifice may be worthwhile if Verizon sells an anticipated 14 million iPhones during 2011. At an unsubsidized cost of $500 per device, such sales would theoretically generate an extra $7 billion in revenue for Apple. Exact numbers could vary depending on how closely Verizon matches past AT&T performance; roughly 90 percent of September postpaid additions at AT&T were iPhones, and currently, the device represents a full 4 percent of the carrier's postpaid subscriber base.

The major obstacle to a Verizon iPhone remains technology. Whereas present AT&T models depend on GSM and HSPA, the most common cellular standards, Verizon primarily uses CDMA and EVDO. Convergence is generally expected to happen when both companies adopt LTE, also known as 4G. LTE networks may not be widespread until at least 2011.




by MacNN Staff

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Comments

  1. chefpastry

    Joined: Dec 1969

    +8

    Fantasy land.

    This is nothing more than conjecture. This is not "news".

  1. njfuzzy

    Joined: Dec 1969

    +9

    Not News

    I agree with chefpastry... This isn't news. It's someone's published guess.

    However, if it IS true, then it just means the phone WON'T be coming to Verizon. Which would certainly explain why Verizon recently decided to get really negative with their Anti-iPhone advertising. They know Apple won't let them have it without an appropriate subsidy/margin, Apple isn't budging, so they won't be selling the iPhone.

    My guess is we will see it on T-Mobile. They are more desperate to make a deal, and use the same frequencies as the existing iPhones. Also they have been smart enough not to talk about it.

  1. Mr. Strat

    Joined: Dec 1969

    +7

    No iPhone for Verizon

    There's no way Apple would let Verizon cripple the iPhone as they're so fond of doing with their other phones.

  1. appleuzr

    Joined: Dec 1969

    +2

    comment title

    I hate Verizon but eventually the iPhone will come to Verizon. This guy makes it sound like Verizon has Apple right it wants them and they have all the bargaining chips. He is sadly mistaken if he thinks Apple will just roll over and take it up the a** to get their phone on at Verizon.

    I believe there was a recent story on MacNN talking directly to this situation. The Verizon CEO was on his hands and knees begging Apple to make a version for Verizon.

    Personally I hope it never gets to Verizon. In my experience VZ subscribers have got some sort of cell phone coverage chip on their shoulder. Let em have their Blackberry's and their Droids. If they want the iPhone make em switch!

  1. boris_cleto

    Joined: Dec 1969

    +2

    CDMA

    Apple is never going to make a CDMA phone. Not going to happen. EVER. iPhone will be on Verizon as soon as they roll out 4G LTE and not a moment sooner.

  1. olePigeon

    Joined: Dec 1969

    +3

    So after the AT&T deal ends...


    So after the AT&T deal ends, people will [i]choose[/i] to be vendor locked to Verizon? Why?! $450 for a phone that only works on one carrier, and only in the U.S. Sounds ridiculous.

    Stick with GSM. After the AT&T c*** is over, you'll be able to use your iPhone on any carrier you want in nearly any country in the world that has cell phone towers.

  1. testudo

    Joined: Dec 1969

    0

    Re: No ipHone for verizon

    There's no way Apple would let Verizon cripple the iPhone as they're so fond of doing with their other phones.

    And where does it say Verizon will start crippling the phone?

  1. joesporleder

    Joined: Dec 1969

    +2

    I'd like an iPhone!

    However, Verizon is the only game in town for my area of Kansas (was originally Kansas Cellular that got bought out by Alltel whom just got bought out by Verizon). Appleuzr says "make them switch"! HA. A lot of friggin good that'd do if AT&T doesn't offer service in my area!

  1. DiabloConQueso

    Joined: Dec 1969

    +3

    Snake oil, the whole lot of you!

    ...and out come the crystal balls again, both in the article and in the comments.

    People have been claiming to be able to predict the future since the dawn of mankind, I suspect. I don't have any reason to believe any of you are any better at it than the phrenologists or palm readers of days gone by.

    None of you have any inkling as to whether or not Verizon will get an iPhone, whether Verizon begged Apple for the iPhone in the first place, or what kind of restrictions and/or subsidies Verizon and/or Apple would agree to. You also have no clue as to what talks or communications have taken place between Apple and Verizon, so please stop claiming that you know.

    Just wait and see and quit claiming to know what the future will bring. Speculating and rumor-mongering are one thing -- flat-out claiming to know the future is another.

  1. charlituna

    Joined: Dec 1969

    0

    this is bunk

    first off, Apple is more likely to deal with the growing illegal unlocking by not dumping on exclusive carrier to go with another exclusive carrier. it is more logical to just unlock the phone. with that comes the math that either only Apple will sell the phone at full price, or those that want to sell it subsidized will have to buy it from them at full price and they can charge the customer however they wish.

    second, this article, like so many has not addressed the issue that Verizon uses a totally different phone technology than the iphone. so what about the cost of making a CDMA phone for Verizon, switching over to CDMA or having both in the phones. how will that affect the iphone and is it a reasonable cost to make any such change.

    third. it is against all logic to allow a partner to straight up insult a potential partner while a deal is going on. so, what about those Droid ads, hmm

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