Verizon Could Sell 12 Million iPhones Annually
Bloomberg’s report Tuesday claiming Verizon Wireless will begin selling Apple’s iPhone in January 2011 has, predictably, inspired all manner of analyst notes reflecting on the implications of such an event. Evidently, the two go hand in hand–just like AT&T and dropped calls.
So if, come January, Verizon (VZ) were to offer the iPhone, what might happen?
Well, for one thing, the addition of a second U.S. carrier would likely slow sales of smartphones running Google’s (GOOG) Android OS a bit. “Adding Verizon would significantly blunt the competitive threat from the Android platform, whose favored status at Verizon has been critical to its building momentum,” says Oppenheimer analyst Yair Reiner. “We suspect the momentum could turn in the face of direct competition from the iPhone.”
For another, Apple (AAPL) would sell a hell of a lot more iPhones. Verizon has a post-paid subscriber base of 83 million. And according to Reiner, it would likely generate 12 million new unit sales for Apple next year. That would translate to more than $7 billion in incremental revenue and more than $3.00 in incremental earnings-per-share.
That’s a fairly bullish scenario–perhaps a bit too bullish. RBC analyst Mike Abramsky sees a deal with Verizon spiking iPhone sales, but he believes that spike would be dulled a bit by AT&T’s (T) decision to make its subscribers eligible for an iPhone 4 a year before their contracts expired and a few other things as well. “Prior Canadian and UK iPhone transitions to multi-carrier distribution [stimulated] an upgrade cycle and [expanded] the local smartphone market,” Abramsky explains. “However, this is offset by: 1) majority of potential iPhone buyers had already switched to 1st network; 2) Android smartphones now offer reasonable competition; and 3) iPhone upgrade offers at 1st carrier locks in existing users.”
Still, as I’ve written here before, a move to nonexclusivity in the U.S. would certainly brutalize AT&T’s subscriber base, at least a bit. Analysts have long said that a material number of AT&T iPhone users would flock to Verizon’s superior network given the chance.