SlashGear Japan
The surest way for someone to generate attention is by making an Apple prediction. Apple has a cult following, and its product development and launch strategy is famously secretive, so the fact that your source is the lunch counter guy across the block from the Hon Hai factory in Taiwan won’t be discovered (or may even be considered authoritative!). Financial analysts are often the worst offenders – we have been promised an Apple tablet more times than I can count, assured that an iPhone nano was on the way, and where’s that iPod touch with a camera?
However, market analysts like me (and fellow SlashGear columnist Michael Gartenberg) rarely talk about specific products before they’re launched. Often, that’s because I can’t: vendors frequently tell me what they are working on ahead of time under non-disclosure agreements. Another reason that I don’t make specific predictions is that I simply hate being wrong: my job depends on my being both trustworthy and generally accurate, and I’m not about to jeopardize that for a bit of extra attention in the press.
However, for my first SlashGear column I thought I’d make an exception, since there is one question I get asked more often than any other, by clients, journalists, at birthday parties, dinner parties, at the supermarket, and even when I’m trying to pray in the synagogue: when is Apple going to bring the iPhone to Verizon Wireless?
Apple has a contractual exclusive with AT&T that expires… at some point in the future. The exact contract length was never made public, but at the time the iPhone was first launched in 2007, journalists were quoting unnamed sources that it was a five year exclusive, which would keep the iPhone an AT&T exclusive through 2012. More recent articles have said that it is actually a three year exclusive, without even quoting “people familiar with the matter.” I have my own sources, but I don’t think it matters when the exclusive ends – the contract isn’t the only thing keeping the iPhone an AT&T exclusive.
Thanks to U.S. regulatory environment and frequency allocation issues stretching back to the Reagan/Bush administration (and on through the Clinton and W Bush eras), every national U.S. carrier runs a different mix of technologies, often on different frequencies. AT&T runs a GSM/HSPA network while Verizon Wireless runs a CDMA/EV-DO network. The technologies are not compatible, so the iPhone quite literally will not function on Verizon Wireless’ network; this is not a matter of SIM locks or contractual exclusives – it just won’t work. Now you can certainly create a phone that has multiple radios in it to talk to whatever network you want to use, and HTC, RIM, and Samsung (among others) have done so, typically for phones aimed at business travelers. However, Apple is not likely to reengineer the iPhone to work on CDMA. Apple is a software company that delivers its user experience in hardware packages. Apple focuses on user interface simplicity and design, putting a lot of energy and effort behind just a few hardware platforms, and then sells them as broadly as possible. (By contrast, RIM is an engineering-driven company that brags about writing its own radio firmware to eke out potential performance gains.)
AT&T’s underlying GSM/HSPA technology is used broadly throughout the world, fitting Apple’s business model nicely, while CDMA/EV-DO is used primarily in North America and South Korea. CDMA is also a technology without a long term roadmap at this point; for 4G deployments, Verizon Wireless is moving to LTE, while the other big CDMA carrier, Sprint is already rolling out a competing (and incompatible) technology, WiMAX, with its partner Clearwire. Happily, AT&T is also moving to LTE, as are many European operators, so at some point there will almost certainly be an LTE iPhone and that iPhone will work on Verizon Wireless’ LTE network. It’s worth noting that the 700 MHz spectrum that Verizon Wireless is using for its LTE network was purchased with open access requirements built in – in other words, the carrier will not be able to lock LTE devices to its network.
So the question now hinges on when Verizon Wireless will have its LTE network up and running. Verizon Wireless is planning a 2010 rollout – hey, that’s just next year! Not so fast. It will take several years before Verizon Wireless has completed its rollout. After all, if you’re interested in Verizon Wireless for the quality of its network, you aren’t going to want a phone that only works in a dozen cities and doesn’t have the same coverage that Verizon Wireless’ CDMA network is known for. We also need to wait for the LTE chipsets to mature enough for Apple to bet on them. The first chips for any new technology are buggy or power hungry or both. It’s not just the chips; the antennas for prototype LTE phones using 700 MHz (the frequency Verizon Wireless and AT&T will be using) are currently almost as thick as the iPhone itself. The chips and antenna technologies will certainly improve I the future, but in the meantime, can you imagine Steve Jobs approving an iPhone with an external antenna? I can’t.
Based on my discussions with Verizon Wireless, with chipset providers, and with Apple, my best guess for when all these stars will align is somewhere around 2013 or 2014. At that time you should be able to buy an LTE iPhone that will work on either AT&T or Verizon Wireless.
But not Sprint.
Avi Greengart is the Research Director for Consumer Devices at Current Analysis. He can be reached at avigreengart AT gmail DOT com. Opinions here are his own.
12 Responses to “When will Verizon Wireless get the iPhone?”
timjones17 October 19, 2009
VZW kicked the i-am-an-overhyped-feature-Phone to the curb once, it’ll kick it to the curb once again when Jobs begs VZW to take the i-am-an-overhyped-feature-Phone when the exclusive contract w/ the crap AT&T network ends. Apple is happy to just simply provide products to the few fashionistas. Just like Microsoft Windows ultimately relegated Macs to the some computer fashionistas, phones running Maemo or Android or maybe some other will dominate, and continue to relegate Apple to the some phone fashionistas. Apple vs Google Android- good luck Steve, you’ll need it.
-1wkeving October 19, 2009
You must be living on a different planet. Take a look at the number of Macs and iPhones sold last quarter as announced by Apple today. How many Android phones have been sold? What is Microsoft’s current position in the market? Market cap? Products people love have more impact than products people use and tolerate.
Neutralwdeal October 19, 2009
Consider that the vast majority of those iphone sales announced today were to non-US (read: non=ATT) subscribers. Yes they are using them on global GSM/HSPA networks, but likely have a network experience superior to that of ATT customers.
Also, the issue for Apple after delivering results like today is how to maintain its growth rate. At some point Apple has to consider a CDMA version. If Verizon’s uptake rate for an iphone was like ATT’s then AAPL could easily sell an additional 10 million units — some $6+ Billion in incremental revenue.
Shareholders will demand that long before 2013.
+3timjones17 October 20, 2009
Like 90% of desktops are Windows. Apple’s not even a challenger to Nokia’s global phone dominance, most people’s phone are not and will not be from Apple. With Google and VZW marketing muscle, there’ll be alot more Android phones that’ll be sold than the 1 million Android phones T-Mobile has sold so far without advertising. Just for giggles, Big Red ought to make Steve Jobs do froghops and handstands when he begs them to take the iPhone. With the all-out marketing blitz the Apple could muster to sell its featurephone, not even mentioning Blackberry, forget about Nokia, how many billboards did it take to sell 20 million Windows Mobile handsets in 2008?
Neutralwkeving October 20, 2009
Yeah. Everyone thought Apple was dead about 15 years ago. Michael Dell even said, and I paraphrase, shut it down and give all the money back to the stockholders. Apple, with all it’s success over the past 10 years now has enough cash to buy Dell, shut it down, and give all the money back to the shareholders. They’re doing something right. Rest assured, they’re also not sitting back relishing the success they’re having. They’re working on the next thing for everyone else to copy. Well, try to copy. If you don’t like the iPhone and don’t want to use one, fine. It’s a free country, last I checked. From a shareholder’s perspective, Apple’s doing more than fine. They’re kicking the crap out of their competitors in a DOWN market.
+2timjones17 October 20, 2009
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NeutralYeah. Everyone thought Apple was dead about 15 years ago..
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Still, the fact is 9 out of 10 machines out there are run Windows. My take on this Apple sales surge, is that, lets’s take this conversation to the street. Apple products are selling like gangbusters when ordinary folks are financially hurting? Hmm, who can afford such expensive purchases in a recession? It’s the few rich who can afford ovepriced Apple products. That’s to whom Apple prices their products to. Such a hypocrites- Apple’s commercial of smashing Big Brother, and freeing the masses- what a farce. The world has turned on its head, the masses using affordable Microsoft products to gain access to technology, and Apple- the brand of choice for the BMW and Mercedes set. Yeah, take out Dell. Does Apple then have enough lucre to also take on Windows machines producer HP, Lenovo, Acer, etc? Like I keep saying, Apple’s for fashionistas.
sherwinzadeh October 19, 2009
What about the job ads coming from Apple for CDMA engineers?
I just don’t see Apple waiting around for LTE, which I agree will be around 2014. Right now AT&T is the the iPhone’s Achilles’ heel. I don’t see Apple jeopardizing their reputation for too long with AT&T’s poor customer satisfaction. Verizon’s “There’s a map for that” ad clearly points to this problem. The iPhone is way to important for Steve Jobs to risk anything on.
What about the contract? We all know from sports that contracts can be renegotiated. And Apple has a track record of getting un-conventional contract terms.
Finally, for Apple to increase it’s sales growth, the next step is to open up to multiple carriers and technologies per country and CDMA (as well as other country specific standards in the Far East) is definitely one way to do it. I just don’t see Apple waiting until 2013 to expand to these markets.
+1Apple *could* build a CDMA version of the iPhone for Verizon Wireless, Sprint, South Korea, and others. I just don’t think that it will.
Building a CDMA version and branching out beyond AT&T would certainly boost sales volumes. However, I don’t think that’s Apple’s preferred MO. Instead of building out different hardware platforms, they’d rather stick with just one and put R&D into improving the software. There are a lot of things Apple could do but generally won’t – netbooks, things with TV tuners, and anything with actual buttons. Sometimes Apple’s design decisions are based on maintaining premium margins, sometimes it’s based on aesthetics, and sometimes it’s more of adhering to a specific product development philosophy. It does this even if it means giving up some money in the short term. Of course, Wall Street isn’t complaining that Apple isn’t doing netbooks any more when Apple sells 10 million Macs in a recession, and Wall Street isn’t complaining that Apple isn’t doing CDMA iPhones when Apple sold another 7 million GSM versions.
+1sherwinzadeh October 21, 2009
I think it’s more than money, though. Apple cares a lot about the quality of it’s products and also about their public perception. If you recall recently how Schiller personally contacted developers that had their apps rejected to quiet all the negative press. I just think the negative perception of AT&T right now is so high that it’s effecting the iPhone in a negative way. They’re already making a different hardware version for China… I think that’s proof enough that they’re open to having multiple hardware versions to fill business and customer needs.
+1Vincent Nguyen October 19, 2009
Avi, whatever deal Verizon might’ve had with Apple is out the window…the iDon’t campaign says it all.
+6As you know, I wrote this column well before I gave it to you for posting, but the Droid campaign that just launched certainly would make a Verizon Wireless iPhone …unlikely in the near term.
NeutralWell that is a good point with the anti apple campaigns (two very strong showings from verizon)
Neutralbut we are neglecting that 2 devices (htc touch pro 2 and the htc imagio) are continuously selling out from VZW warehouses – and these devices haven’t even hit the stores and they’re being sold out!
This begs to question, is the iphone necessarily needed for vzw to maintain the best network supremacy it has had for a few years now…
That being said, my personal opinion, apple is not necessary at this point, in any incarnation. I think users have a strong following with htc and further developments will solidify this relationship.
Verizon is surprisingly on the move with excellent acquisitions without even having to talk to apple. I say that’s impressive