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Thread: Don't Count on a Verizon iPhone

  1. #1
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    Cool Don't Count on a Verizon iPhone
    I hope the following finally ends the Verizon iPhone rumors!

    Don't Count on a Verizon iPhone
    Friday, May 28, 2010provided byCNNMoney.com

    It's that time of year again: The weather is getting warmer, Apple's (Nasdaq: AAPL - News) annual Worldwide Developers Conference is just around the corner, and rumors about the iPhone coming to Verizon (NYSE: VZ - News) are sprouting up.

    Don't believe it, Verizon fans. It's unlikely that Steve Jobs will announce a Verizon tie-up when he gets on stage at the WWDC event on June 7.

    The rumors have been swirling around for years because an Apple-Verizon partnership seems to make sense for both parties.

    The top reason consumers who are in the market for an iPhone decide to pass is AT&T's (NYSE: T - News) 3G network problems, which are notorious in New York and San Francisco, according to a CFI Group study. Meanwhile, Verizon has built up its reputation as the "most reliable network." Also, Verizon's 93 million wireless customers would present a huge opportunity for Apple to grow its customer base.

    Yet there are some fundamental reasons why a deal isn't imminent.

    Different Networks

    Verizon's network runs on a wireless standard called CDMA, which is incompatible with AT&T's GSM network. It's not impossible to offer phones on both networks -- Research In Motion (Nasdaq: RIMM - News) sells BlackBerry phones on every major U.S. network. But it wouldn't necessarily make economic sense for Apple.

    For one, Apple has proudly advertised that consumers can make calls and surf the Web simultaneously on the iPhone, but Verizon's CDMA network can't support that feature.

    Secondly, Verizon is set to roll out its 4G network later this year, and AT&T will unveil its 4G network in 2011. Those networks will be on a new universal, global standard called LTE, making a 4G/LTE iPhone much more cost-effective for Apple and easier to sell around the world. That would make next year or even 2012 a more likely timeframe for debuting a Verizon iPhone.

    And suppliers haven't given any indication that Apple is building a CDMA phone, according to Jagdish Rebello, principal analyst of communication systems at iSuppli.

    AT&T's Exclusivity Contract

    Apple has a five-year exclusivity deal with AT&T, according to court documents, making it unlikely that the iPhone could come to Verizon before 2012.

    Many analysts said nothing is set in stone and speculated that the terms could have been renegotiated.

    "No one has a good handle on how long that exclusivity deal runs, but those contracts usually last 90 days to six months," said Josh King, general counsel at Avvo.com and former senior corporate development executive at AT&T Wireless.

    But one big indication that AT&T's contract will continue for a while is its sweet 3G pricing deal for the iPad.

    AT&T offers unlimited 3G access for the iPad on a contract-free basis for an average of about $22 a month. Because those sales only account for 15% of AT&T's data revenue, according to data tracker Trefis, it may be part of a bigger strategy.

    "There is speculation that AT&T is offering attractively priced 3G data plans ... as part of a broader deal with Apple to maintain iPhone exclusivity for longer than the original agreement," Trefis said in a recent analyst note.

    "AT&T is our exclusive partner in the U.S. and we're very happy with that," said an Apple spokeswoman but she would not comment on Apple's plans to sell the iPhone on other carriers.

    Verizon Might Not Want the iPhone

    When Apple was searching for a network to carry its iPhone in 2007, Verizon was widely reported to have balked at Apple's demands to take a share of the company's revenue.

    Verizon said it would be able to handle the iPhone on its network, but wouldn't comment on its interest in carrying the iPhone specifically.

    "The Verizon Wireless network is optimized for maximum efficiencies and ... we can mange the growth," a Verizon spokeswoman said. "We pride ourselves on having an array of smart phones on several different operating systems."

    Recently, Verizon appears to be shrugging off the iPhone by going all-in with Google (Nasdaq: GOOG - News). Verizon's past two flagship phones have been Google Android-based phones, and the company is working with Google to launch a tablet to compete with Apple's iPad.

    Verizon also couldn't have made Apple too happy after launching a scathing "iDon't, Droid Does" campaign, in which the company went after all of the iPhone's deficiencies. And in a separate campaign, Verizon poked fun at Apple's "there's an app for that" slogan when it went after AT&T's 3G network with its "there's a map for that" ad.

    "There's a lot for Verizon to consider, including revenue sharing and how much the iPhone would fit in with what the company is doing now," said Ramon Lamas, mobile device analyst at IDC. "But right now, they're all about Google."

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  3. #2
    Quote Originally Posted by AUSTIN3:16 View Post
    I hope the following finally ends the Verizon iPhone rumors!

    Don't Count on a Verizon iPhone
    Friday, May 28, 2010provided byCNNMoney.com

    It's that time of year again: The weather is getting warmer, Apple's (Nasdaq: AAPL - News) annual Worldwide Developers Conference is just around the corner, and rumors about the iPhone coming to Verizon (NYSE: VZ - News) are sprouting up.

    Don't believe it, Verizon fans. It's unlikely that Steve Jobs will announce a Verizon tie-up when he gets on stage at the WWDC event on June 7.
    While I agree that a Verizon iPhone this summer is unlikely, these are all very flawed arguments. Contracts like these often have lots of "outs," typically involving the deal not living up to a either party's expectations in certain ways (not just sales). For example, if AT&T doesn't maintain a proper network and the quality negatively affects the Apple and iphone brands, Apple can take its business elsewhere. In order to make sure that AT&T takes it seriously, Apple must seriously entertain the option of switching to another carrier. If AT&T believed that there was no way for Apple to switch because there wasn't a CDMA iPhone then there is no reason for AT&T to even try to fufil their end of the bargain, thus, it serves Apple to keep R&D going for a CDMA phone. In addition, there are often paid "outs" in the contracts too in case one party sees more profit in breaking the agreement than would be lost in the penalty. AT&T is under constant threat of Apple exercising this as long as Apple is seriously keep their options open. The third option is that a sufficiently different product like, say, a cut-down "iPhone nano," may be exempt and able to be sold without violating the contract.

    Quote Originally Posted by AUSTIN3:16 View Post
    The rumors have been swirling around for years because an Apple-Verizon partnership seems to make sense for both parties.

    The top reason consumers who are in the market for an iPhone decide to pass is AT&T's (NYSE: T - News) 3G network problems, which are notorious in New York and San Francisco, according to a CFI Group study. Meanwhile, Verizon has built up its reputation as the "most reliable network." Also, Verizon's 93 million wireless customers would present a huge opportunity for Apple to grow its customer base.

    Yet there are some fundamental reasons why a deal isn't imminent.

    Different Networks

    Verizon's network runs on a wireless standard called CDMA, which is incompatible with AT&T's GSM network. It's not impossible to offer phones on both networks -- Research In Motion (Nasdaq: RIMM - News) sells BlackBerry phones on every major U.S. network. But it wouldn't necessarily make economic sense for Apple.
    See my example above. It DOES make sense. Just like when OS X led a "double life" when Apple concurrently developed x86 versions alongside PowerPC versions for years. This, no doubt, became a HUGE bargaining chip with IBM, Motorola, etc for PowerPC chips. When the time was right, they switched to Intel, but that was after many years of secret x86 support for bargaining purposes. (as well as being prepared for PowerPC's potential competitive performance scaling problems).

    Quote Originally Posted by AUSTIN3:16 View Post
    For one, Apple has proudly advertised that consumers can make calls and surf the Web simultaneously on the iPhone, but Verizon's CDMA network can't support that feature.
    And AT&T didn't have VVM before the iPhone. So what? In case you didn't know, it is possible to carry voice OVER the data connection. All they need to do is set up some VoIP-like "end-around," which has already reportedly been in development for a CDMA iPhone to have "feature parity." Not only that, but, say, an "iPhone nano" or even something that drops the "iPhone" name altogether ("Apple Phone for Verizon") has no reason to worry about past iPhone "simultaneous Data + Voice" promises.

    Quote Originally Posted by AUSTIN3:16 View Post
    Secondly, Verizon is set to roll out its 4G network later this year, and AT&T will unveil its 4G network in 2011. Those networks will be on a new universal, global standard called LTE, making a 4G/LTE iPhone much more cost-effective for Apple and easier to sell around the world. That would make next year or even 2012 a more likely timeframe for debuting a Verizon iPhone.
    This is the most amusingly bad part of the argument. Just like there is no HSPA 3G network in the US which can exist without being able to hand-off calls and data to prior technology (Edge/GSM) to make up for network coverage deficiencues, there will be no LTE network only devices for many years. NO new LTE network can survive without the ability to hand off calls and data to either CDMA or GSM technologies. LTE can do it. What this means for the hardware is that they STILL must be either a dual-mode device (two cellular technologies in one phone, which will kill battery life and portability) or, two seperate devices (one for CDMA carriers and one for GSM carriers). Which one do you think is more likely?

    Quote Originally Posted by AUSTIN3:16 View Post
    And suppliers haven't given any indication that Apple is building a CDMA phone, according to Jagdish Rebello, principal analyst of communication systems at iSuppli.
    If it exists, it's in prototyping. Supplier-hunting tips people off, which is precisely why they'd leave it there until they are ready to exercise their rights. The reason why they aren't so shy about unreleased GSM models is because everyone already knows and expects a new one every summer. Also, their AT&T contract likely has clauses about damaging AT&T with such public information if the switch wasn't announced or confirmed.

    Quote Originally Posted by AUSTIN3:16 View Post
    AT&T's Exclusivity Contract

    Apple has a five-year exclusivity deal with AT&T, according to court documents, making it unlikely that the iPhone could come to Verizon before 2012.
    Those who say "unlikely" choses to ignore the "outs" that typically go into these contracts. See Paramount's HD-DVD exclusivity agreement. The simple fact that the iPad agreement had any bearing on the current exclusivity agreement means that AT&T was concerned about Apple exercising just such an "out" and Apple had them right where they wanted them.

    Quote Originally Posted by AUSTIN3:16 View Post
    Many analysts said nothing is set in stone and speculated that the terms could have been renegotiated.

    "No one has a good handle on how long that exclusivity deal runs, but those contracts usually last 90 days to six months," said Josh King, general counsel at Avvo.com and former senior corporate development executive at AT&T Wireless.

    But one big indication that AT&T's contract will continue for a while is its sweet 3G pricing deal for the iPad.
    "Nothing is set in stone." I agree, which is why this is not nearly "the end of rumors" like you'd hope.

    Quote Originally Posted by AUSTIN3:16 View Post
    AT&T offers unlimited 3G access for the iPad on a contract-free basis for an average of about $22 a month. Because those sales only account for 15% of AT&T's data revenue, according to data tracker Trefis, it may be part of a bigger strategy.

    "There is speculation that AT&T is offering attractively priced 3G data plans ... as part of a broader deal with Apple to maintain iPhone exclusivity for longer than the original agreement," Trefis said in a recent analyst note.

    "AT&T is our exclusive partner in the U.S. and we're very happy with that," said an Apple spokeswoman but she would not comment on Apple's plans to sell the iPhone on other carriers.
    ALL of these quotes actually prove just the opposite: Just how flexible and fragile the re-negotiable agreement really is.

    Quote Originally Posted by AUSTIN3:16 View Post
    Verizon Might Not Want the iPhone

    When Apple was searching for a network to carry its iPhone in 2007, Verizon was widely reported to have balked at Apple's demands to take a share of the company's revenue.

    Verizon said it would be able to handle the iPhone on its network, but wouldn't comment on its interest in carrying the iPhone specifically.

    "The Verizon Wireless network is optimized for maximum efficiencies and ... we can mange the growth," a Verizon spokeswoman said. "We pride ourselves on having an array of smart phones on several different operating systems."
    These statements sound more like an invitation to me. They do not imply that they don't want the iPhone. They indicate quite the opposite to me.

    Quote Originally Posted by AUSTIN3:16 View Post
    Recently, Verizon appears to be shrugging off the iPhone by going all-in with Google (Nasdaq: GOOG - News). Verizon's past two flagship phones have been Google Android-based phones, and the company is working with Google to launch a tablet to compete with Apple's iPad.
    Ugh. As if they don't have Blackberry, WebOS, and WinMo phones too? Give me a break. Read that statement above about "varied" smartphone OSes and try saying this again.

    Quote Originally Posted by AUSTIN3:16 View Post
    Verizon also couldn't have made Apple too happy after launching a scathing "iDon't, Droid Does" campaign, in which the company went after all of the iPhone's deficiencies. And in a separate campaign, Verizon poked fun at Apple's "there's an app for that" slogan when it went after AT&T's 3G network with its "there's a map for that" ad.
    An iPhone OS 4+ phones "does" do pretty much everything they criticized it for not doing (multitasking; VoIP; 3rd party app integration, etc), though Apple's App Store will always be over-bearing and more restrictive, the phone's capabilities are now in-line.

    Quote Originally Posted by AUSTIN3:16 View Post
    "There's a lot for Verizon to consider, including revenue sharing and how much the iPhone would fit in with what the company is doing now," said Ramon Lamas, mobile device analyst at IDC. "But right now, they're all about Google."
    All about Google? Ha! It's the handset-makers who are. "Droid" may be Verizon's brand but the choice to make an Android phone is still up to the manufacturers. The partnership doesn't mean much more than "T-Mobile Sidekick" allowing TMo to sell phones from Sharp and Motorola instead of being stuck with Danger HipTop and its sequels. It liberates them but doesn't put them in control of what handset makers make. In fact, Verizon is generous enough to allow Motorola and HTC branding on their "Droid" phones.

  4. #3
    How many threads do we need on this subject.
    Same old arguments being repeated again and again

    and again and again


    and again.....
    He who asks a question looks foolish for 5 minutes. He who doesn't ask a question remains foolish forever.

  5. #4
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