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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.

 
Previous Comments

Fantasy land.

10/28, 12:19pm reply

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

chefpastry

Mac Enthusiast

Joined: Nov 2005

+8

Not News

10/28, 12:23pm reply

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.

njfuzzy

Fresh-Faced Recruit

Joined: Apr 2001

+9

No iPhone for Verizon

10/28, 12:28pm reply

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

Mr. Strat

Fresh-Faced Recruit

Joined: Jan 2002

+7

comment title

10/28, 12:36pm reply

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!

appleuzr

Fresh-Faced Recruit

Joined: Aug 2006

+2

CDMA

10/28, 12:47pm (1 reply) reply

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.

boris_cleto

Fresh-Faced Recruit

Joined: Sep 2002

+2

So after the AT&T deal ends...

10/28, 01:21pm reply


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.

olePigeon

Clinically Insane

Joined: Dec 1999

+3

Re: No ipHone for verizon

10/28, 01:41pm (1 reply) reply

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?

testudo

Fresh-Faced Recruit

Joined: Aug 2001

0

I'd like an iPhone!

10/28, 01:44pm (1 reply) reply

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!

joesporleder

Fresh-Faced Recruit

Joined: Jul 2009

+2

Snake oil, the whole lot of you!

10/28, 02:02pm reply

...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.

DiabloConQueso

Fresh-Faced Recruit

Joined: Jun 2008

+3

this is bunk

10/28, 02:04pm reply

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

charlituna

Fresh-Faced Recruit

Joined: Sep 2009

0

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