updated 11:10 am EST, Wed December 2, 2009
Apple, Verizon policies in conflict
A deal between Apple and Verizon may take longer to materialize than normally assumed, says Kaufman analyst Shaw Wu. AT&T's exclusive hold on the American iPhone is expected to end in summer 2010, and Wu notes that adding Verizon to the list of carriers could open up a market of 89 million potential US customers, greater than AT&T's current 82 million. AT&T will likely push to have the contract extended into 2011, Wu comments.
A more significant problem is said to be the "conflicting interests" of Apple and Verizon. Both companies are described as driven by a desire for high profits, as well as customer control -- Apple through iTunes, and Verizon through V CAST. Verizon may in fact intend to offer its own mobile app store, though it has not announced any formal plans.
The carrier also enjoys high profit margins, as even the Motorola Droid is believed to have an ASP (average selling price) of just $450 per unit, as compared to the $700 AT&T pays for the iPhone. RIM's BlackBerries have an ASP of $340, while Palm devices are valued at $436. Either Apple or Verizon may be forced to make a sacrifice.
Wu argues that it may thus be more likely that T-Mobile or even Sprint could become "more willing partners" in the near term. T-Mobile has the present advantage, as it relies on the same network platform as AT&T, even if its 3G operates on a different band. Verizon may only gain the iPhone when LTE (4G) becomes available on both its network and AT&T's, which could happen as late as 2012.