IPad’s Debut on Verizon Feels Like an Opening Act
This morning’s announcement that Verizon Wireless will carry Apple’s iPad is about as close as you’re going to get to a confirmation of a CDMA iPhone that will work on Verizon’s network before the device’s official announcement. Certainly, it’s indicative of a deepening relationship between the two companies that could presage the coming of the long-rumored Verizon iPhone, a strategic advance in the U.S. market.
For Apple (AAPL), adding a second carrier in the States–particularly Verizon–serves a twofold purpose. First, it significantly expands the iPhone’s addressable market. Verizon (VZ) has a post-paid subscriber base upward of 83 million. And according to analysts, it will 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 in incremental earnings per share. Second, it blunts the competitive threat from Android. As Bernstein Research analyst Pierre Ferragu recently wrote, “[The iPhone’s] distribution vacuum, coupled with weak competitive offerings from other smartphone manufacturers, has made Android a strong alternative platform. The key to arresting Android’s momentum then will be for Apple to broaden distribution.”
Where better to broaden distribution than at one of Android’s strongest carrier proponents? And how better to set the stage for it than by putting the iPad into that carrier’s hands before the arrival of a competing Android tablet?