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Analyst says media conflicts will halt Verizon iPhone deal
While many industry prognosticators anticipate Verizon Wireless will introduce a version of Apple's iPhone in 2010 upon expiration of AT&T's current exclusive deal, Kaufman Bros. analyst Shaw Wu contends such a scenario is unlikely to materialize, citing conflicting interests including control over mobile media and applications. In an investor note published Wednesday, Wu writes that both Verizon Wireless and Apple have risen to success by focusing on "customer control," and their shared mindset is what's likely to hamper iPhone negotiations moving forward.
"Apple runs its own App Store and VZ has aspirations to do so," Wu notes, alluding to V Cast Apps, the virtual storefront Verizon Wireless is scheduled to launch by year's end. "Apple controls the media experience with iTunes and VZ with its V Cast service. Moreover, Apple gets very favorable economics with an overall iPhone [average selling price] of $611 and at AT&T, we estimate it is higher at roughly $700. [Research In Motion], who is by far VZ's largest smartphone supplier, only has an ASP of $340. Palm's ASP is $436 and we estimate Motorola's Droid ASP is roughly $450."
Although Wu does not rule out the possibility of an Apple/Verizon Wireless partnership, he says their conflicting interests will conspire to slow negotiations, meaning a potential 2010 deal is unlikely. Instead, Wu believes it more likely Apple will strike iPhone partnerships with Sprint and T-Mobile USA, arguing both operators are more likely to agree to Apple's demands and restrictions. "While we believe VZ is likely inevitable at some point when 4G technology rolls out in 2012 or so, we believe Sprint and/or T-Mobile are more willing partners for Apple in helping maintain margins and customer controls," Wu says. "From a technology perspective, we believe T-Mobile may have an advantage with a similar 3G UMTS/WCDMA network as AT&T."
For more on the Apple/Verizon Wireless speculation:
- read this AppleInsider article
Related articles:
Survey says iPhone users more willing to pay for content
Books now one of every five new iPhone apps
Most iPhone apps downloaded on the weekend
Comments
Posted by tedcanread | December 3, 2009 - 1:16pm
"Apple runs its own App Store and VZ has aspirations to do so," Wu notes, alluding to V Cast Apps
Perhaps the analyst isn't aware that Verizon offers plenty of smart phones that have their own app stores from blackberry as htc, to the very open & I would assume obvious ANDROID, which is open sourced, You the subscriber can create your own app or interface I don't see where this article is getting much ground. UNLESS it's a stock investor that wants something to go a certain way. Verizon will/does offer it's own app store already. Weeding out everyone else is a little premature if someone had bothered to read their notes before writing.
Posted by Anonymous | December 3, 2009 - 3:12pm
I agree with this post. While VZW likes to have a total control over customer experience, it has opened up. It is permitting Android devices. While VZW might out miss on a small part of the revenue from not being able to exclusively sell content, it does not make much money from it. Its revenue/income from content hardly matters when compared with subscription revenue.
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