Verizon iPhone Will "Suck The Wind Out of Android's Growth"

January 12, 2011 at 4:00 am PT

It’s long been popular belief that the biggest loser in a Verizon-Apple iPhone deal would be AT&T. Since the iPhone’s debut in 2007, the device has drawn millions of new customers to the carrier and done much to revitalize its brand. There’s no question that AT&T’s iPhone-exclusivity deal was a strategic coup for the carrier and that its loss will be painful, though perhaps not as painful as some have predicted–according to AT&T, anyway.

But there’s another loser in the Verizon-iPhone deal as well: Google. Verizon is an Android stronghold. And one of the main reasons for that has been the absence of the iPhone on the carrier’s network. That’s going to change on February 10. And when it does, expect to see some migration of Verizon Android users to the iPhone.* And that may tip the scale of competition between it and Android in Apple’s favor, particularly as more and more feature-phone users upgrade to smartphones.

“The installed base of smartphone subscribers is a small percentage of the installed based of mobile phone subscribers in the U.S.,” Needham and Co. analyst Charlie Wolf told me. “Just 23 percent of Verzon’s 83 million post-paid subs (Q3 release)….Where the iPhone will have a dramatic impact is on the brand choices of feature phone users migrating to smartphones going forward. The iPhone will suck the wind out of Android’s growth on Verizon.”

Verizon’s original motivation for embracing Android was to offer its subscribers an iPhone-equivalent. Now that it’s able to offer them the real thing, Wolf feels they’ll likely opt for it over competing Android devices.

“With the iPhone soon available on Verizon, we suspect that virtually all of the subscribers migrating from a feature phone to a smartphone will choose the iPhone over one running Android’s operating system,” Wolf explained. “Indeed, the presence of the iPhone on Verizon’s network could accelerate this migration. While phones running the two platforms are priced identically, the iPhone has a brand cachet that overwhelms Android. In addition, the iPhone App Store not only carries a much wider selection than does the Android Marketplace, but the applications themselves are also superior.”

*Interestingly, Verizon’s iPhone FAQ specifically notes that subscribers can exchange recently purchased devices for the iPhone. Makes you wonder how many Christmas-given Droids will be swapped out for iPhones in the days ahead.

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Tagged with: Android, Apple, AT&T, Charlie Wolf, Google, hardware, innovation, iOS, John Paczkowski, Needham and Co., Verizon, Verizon iPhone

comments so far. Add yours.

Anonymous

Apple doesn’t operate like that. If they have something really new and cool, they will introduce it. If you bought it already, then, guess what? You still have that device you purchased. Same is true of the price of tech, it’s going to come down, so if you really can’t afford it, then you should wait. If you really need it, get it, but don’t expect that it won’t depreciate a bit. With the Apple equipment though, at least it’s worth SOMETHING for a very long time. Try to sell a 1 year old Dell computer. Then try to sell a one year old Mac. See the difference? The Mac might have costed $50 more, but it’s probably worth $300 more the next year, if you decide you really want the new model, etc… No comparison. Same is true with cell phones. A used iPhone is worth a freaking MINT compared to anything else out there. This is the kind of thing that is not lost on the average, no-techy person, BTW.
Anonymous

Actually, if it was forced on them from some Anti Apple IT goon or something, this Roid POS phone, then they didn’t really CHOOSE it, did they?
Anonymous

Better Android device? Hahaha, that’s hilarious.
Anonymous

In your mind, there is probably not much difference, we can all agree on that. In everyone else’s mind though, well, there is a difference. Pretty simple, really.
RichardL

Wrong, bbrewer.

The iPhone 3G was only discontinued June 2010. It was the entry level $99 iPhone model in Apple’s catalog up to that point.

The 2nd generation iPod touch was discontinued only last Sept. 2010. Prior to being discontinued it too was the entry model at $219. (For example, Apple ran a promotion over Summer 2010 for a free iPod touch (2nd generation model) with the purchase of a qualifying Mac model.)

Today Apple released the second beta of iOS 4.3. iPhone 3G and iPod touch 2g support are still missing, but don’t worry. I’m sure they’ll squeak them in because Apple would never sell you a product and only support it with updates for less than a year.
http://www.facebook.com/profile.php?id=743818678 Marvin Nakajima

Hmm.. Seems I have to rewrite the sentence for you..

“It could be they choose iPhone or Android because of preference, connectivity, call quality, intended use, or MAYBE IT WAS simply forced on them from work when they preferred the other phone, etc.”
http://www.facebook.com/profile.php?id=743818678 Marvin Nakajima

Sure, since better is so subjective and differs for every person. For example some may decide to wait for the 4G Android phones that will be available on AT&T alone (20 varieties over the coming year).
http://www.facebook.com/profile.php?id=743818678 Marvin Nakajima

Ok, for discussions sake, let us assume a subscriber purchases an iPhone 4 in February and an announcement will be made at the Apple Worldwide Developer’s Conference in June. (I will assume they will not make an iPhone 5 announcement at the Macworld 2011 later this month as that may affect Verizon iPhone 4 sales). June rolls around and iPhone 5 is announced.. All rejoice.. But now the ‘new’ iPhone subscribers are stuck for a while with their ‘older’ device where sure the OS can be upgraded to iOS5 but could have waited. Thus disappointment. Besides there have been arguments that a 4G iPhone will be some time in coming since Apple doesn’t want to degrade the user experience with a phone that has a short batter life. Can you see why I think another iteration of the iPhone 4 is more likely in that light?

As for resale value, I’ve never really purchased tech for the resale value. Not sure how many other do.
http://www.facebook.com/profile.php?id=743818678 Marvin Nakajima

Ok, tell me where the iPhone 4 and the recent Android devices have much of a difference in technology or performance. iPhone has some advantages and Android has others. I’m just saying compared with a year ago where iPhone was clearly superior and more well known, it is not so now. Thus the deciding factor will most likely be price for the near future.
http://blog.macb.net macbeach

Wow, I came to comment and a hockey game broke out.

Anyway, I fully expect the price of Android based hardware to drop in the coming months both in response to this and in response to the fact that there are so many selections out there. As usual Apple will maintain its hefty profit margin at the expense of penetration. Just wait till various companies start replacing feature phones with smart phones in large numbers (as a competitive advantage). Nokia will panic, as will the carriers who don’t actually have the infrastructure to support all this data traffic.
Anonymous

That’s rich. You are buying last year’s model at a huge discount, then complaining that it’s not supported long enough. Buy a clue next time, to go with the outdated tech you bought.