A Verizon-iPhone Deal? Analyst Says "Chances High"
Apple has a lot to gain by ending iPhone carrier exclusivity in the U.S. and signing up Verizon as a second carrier partner. As I’ve noted here before, such a deal could more than double U.S. iPhone sales in the near term. That said, it does have some noteworthy downsides, top among them, the end of the estimated $450-per-iPhone carrier subsidy AT&T (T) has been paying.
That’s the word from Broadpoint AmTech analyst Brian Marshall, who believes Apple (AAPL) will bring the iPhone to Verizon (VZ) in the second half of 2010 and forfeit AT&T’s “sweetheart” carrier subsidy as a result.
“While [Apple] started off with exclusive arrangements in 2007 with the original iPhone launch, the company has since migrated towards multiple carriers per region,” Marshall wrote in a note to investors. “In our view, diverse carrier support is a key element to driving global penetration of the iPhone. Therefore, we believe the chances are high the iPhone will find its way onto the [Verizon] network in 2H10.”
Of course, should things play out that way, the iPhone will no longer be the powerful subscriber-retention tool it is today. And Marshall believes that will lower the subsidy it commands from an estimated $450 to around $300.
This might seem to imply a nasty hit to Apple’s bottom line, but Marshall figures any losses Apple might suffer would be more than made up in volume. He sees Verizon selling roughly 14 million iPhones in the 2011 calendar year. And with an average selling price of $500, that’s another $7 billion in revenue for Apple.