Verizon Wireless, the largest U.S. wireless carrier, will start selling Apple Inc.’s (Nasdaq: AAPL, stock) iPhone 4 early next month, ending AT&T Inc’s (NYSE: T, stock) exclusive 4-year hold over the blockbuster smartphone and sending millions into long queues around the world for the gadget. For years people have been clamouring to use iPhone on Verizon’s popular network instead of AT&T.
Existing Verizon customers will be able to pre-order iPhone 4 on Feb 3, and others can pre-order beginning Feb 10. Verizon is offering the phone at the same price as AT&T – the iPhone with 16 gigabytes of storage would cost $199 with a two-year contract, while the 32-gigabyte version would cost $299. The pricing for data plans especially the unlimited plan from Verizon had not yet been determined.
However customers who plan to purchase the Verizon iPhone model has to realize that it will not be the same iPhone 4 that is sold by AT&T. And the fact that Apple does not allow either AT&T or Verizon to have their logo on the phone itself, it would be pretty difficult to distinguish between the AT&T and Verizon iPhone 4. As a start AT&T uses GSM while Verizon uses CDMA technology meaning Verizon’s version cannot transmit voice and data simultaneously.
Hence Verizon’s iPhone users will not be able to check e-mail while on a call as compared to AT&T. When asked about this limitation, Timothy Cook, COO of Apple Inc., said he did not think most consumers would mind because people place emphasis on different thing. There’re also concerns about Verizon’s network ability in taking the load but they claimed they had spent a year testing CDMA technology with the iPhone 4, and monitored the data habits of the millions of smartphones already running on their network to accurately predict the volume of traffic that a wave of new iPhones would generate.
Verizon also offered something to instil customers’ confidence – the ability to supply a Wi-Fi connection to as many as five laptops and other devices by piggybacking on the iPhone’s cellular data connection. On another note, Verizon’s iPhone will operate on the company’s 3G wireless network, rather than the new faster 4G LTE network that it is introducing. But when the iPhone is ready for 4G, which it will ultimately, the iPhone would put tremendous pressure on other Android smartphones.
The reasons why AT&T, the worst U.S. carrier in a Consumer Report, was chosen as the first partner with Apple were because AT&T uses globally favoured GSM technology and it agreed to a revenue-sharing monthly fees business model. However the revenue-sharing deal was dropped and AT&T would buy iPhone from Apple directly and resell them at subsidized rates. AT&T has paid Apple about $600 for each iPhone since then.
iPhone is Apple Inc.’s biggest-selling product, accounted to about 39% of the company’s $65.2 billion in revenue last year. Now, besides not having the privilege of stamping its logo on other manufacturer’s devices like it normally did, Verizon would also pay and estimated subsidy of $400 for each iPhone to Apple. Considering that the new phone would add about 13 million this year alone into Verizon’s sales, the subsidy is a small price to pay.
Obviously Apple is the clear winner here because new sales of 13 million of iPhone would add $5.2 billion into its coffer, not to mention the access to Verizon’s 93.2 million existing customers. Apple has sold about 15 million iPhone for AT&T network last year alone and since the phone was introduced in Jan 2007, Apple’s stock price has tripled. Can you imagine the price of Apple’s shares 3 years from now with new models such as iPhone 5, iPhone 6 and so on? Of course Google’s Android would be sweating now.
Some facts about the iPhone deal from Apple-Verizon:
– It still runs on 3G – All that excitement about Verizon’s new 4G LTE network won’t apply to the first iPhone on the network, at least not now.
– It has a new Mobile Hotspot feature – You can connect up to 5 devices to your iPhone via WiFi or bluetooth/usb and share internet access among them.
– No data plan pricing has been announced yet – Maybe new goodies at a later stage, just to get the crowd digest the good news of “iPhone coming o Verizon” first.
– Phone Pricing is the same as AT&T – $199.99 for the 16GB and $299.99 for the 32GB with a 2 year contract.
– You can’t use the internet while on a voice call – This is a limitation that all Verizon CDMA phones have and the Verizon iPhone 4 won’t change that. Maybe iPhone 5 would tackle the issue
– Limited international roaming – The Verizon iPhone 4 has no SIM card slot, which means you can’t use it in most of Europe or Asia or anywhere else with GSM-dominated networks.
– There are slight changes to button placement from the AT&T iPhone 4 – Some accessories (including the Apple bumper) won’t fit on the Verizon iPhone.
– “Death Gripping” the antenna still causes reception to drop – It’s still not a big deal, especially if you use a case with your phone.
– No preloaded Verizon-branded software – The Verizon iPhone 4 will be as it is with no new software from Verizon.
– No early upgrade option for existing customers –You’ll have to pay full price if you want the iPhone 4 on Verizon.
Other Articles That May Interest You …
- Strong Sales Show Kindle, iPad, iPhone Can Co-Exist
- Apple Earnings – The Good, The Bad and The Ugly
- Gartner’s Prediction on Mobile OS Top Market Shares
- Apple Special Event – 20 Things That May Interest You
- iPhone Antenna Issue – Sorry, No Recall