After months, even years of anticipation Verizon announced Tuesday that they will offer the iPhone 4 for its customers on February 10th. Not only does this mark the beginning of Verizon offering the iPhone, but it also marks the end of AT&T's exclusivity over the device since it first debuted in 2007. This event absolutely opens the floodgates to all sorts of discussions about the future of these two carriers, Apple, and the iPhone itself, not to mention the rest of the cell phone industry. Below Andy and Chris will conduct a point/counterpoint discussing the following subjects: What the release of the iPhone to Verizon means for AT&T, What it means for Verizon, What it means for Apple, and What it means for CDMA vs GSM iPhone. See our discussion after the jump.
What this means for AT&T: The Fleeing Masses
I predict that the shift from AT&T to Verizon will not be as quick as one may think. People are smart, and they can figure out that AT&T's network was slowed because 100% of iPhones were on the network. I think there will be a few people who will flee AT&T right away for Verizon, but not an overwhelming majority, because a lot of people will figure out that if they wait until these people leave then the network will operate normally again. The problem with this is that a LOT of people will realize it, and then this will lead to much more retention than what other analysts are predicting.
I also predict that the ensuing panic AT&T thinks it will be in for will force them to reduce prices on their services, particularly their iPhone services.
In my opinion, a mass exodus of AT&T iPhone users to Verizon is inevitable. For years, there has been outcry from iPhone users against AT&T and their services; both with their network capabilities and their customer service. If you want to take a simplistic approach, this can be boiled down to two words: dropped calls. This has been the bane of iPhone users on AT&T and many feel that they have never been able to experience the full potential of their iPhone due to the fact that AT&T's network simply can't handle the data usage and traffic. With the announcement of Verizon's deal with Apple, there have already been initial reports on how many people might flee to Verizon. According to Bloomberg, anywhere from 1 to 6 million AT&T users will make the switch to Verizon, and my money is something closer to the higher number.
It is important to note though that even if say, 6 million users jump to Verizon, AT&T would lose about $6 Billion in revenue, only about 10% of their wireless sales for 2011. What this tells me is that it's not the initial shift that will be intriguing to watch, but rather where Verizon and AT&T stand in a few years after all the dust has settled.
What this means for Verizon: The Network Struggle
I predict that Verizon's large network will be able to sustain all the iPhone users that will transfer from AT&T, and want to upgrade from within. This will, in turn, balance the two networks. Instead of another network getting the same slowing and crashing issues that AT&T's network had, the two carriers will share the burden between all iPhone users. For simplicity's sake, say AT&T had 1,500 iPhone users. Verizon would take 500 of them, and then upgrade 500 of their own internal customers making both carriers have 1,000 iPhone users a piece, instead of one having 0, and the other having 2,000. Verizon also has several smartphone devices to choose from, such as all of their Android phones, and people can use as well. All these things mean that there is no cause for alarm when it comes to network issues.
While I agree that Verizon probably would not announce a huge move like this unless their network was prepared for it, I think that current Verizon customers do have some cause for concern. To me, it's not necessarily those who are going to switch to Verizon or current customers that will upgrade to the iPhone, but rather those Verizon customers that will not be upgrading to the iPhone. Will their experience with Verizon be affected due to the incoming iPhone crowd.
What this means for Apple: The Big Man on Campus
Apple has had the most popular smartphone in the U.S.A. for a long time. Only recently did Android phones surpass Apple in terms of popularity, but we need to take a few factors into play though: Apple has only had 1 phone, and 1 network to offer it on. Android has only passed it in popularity due to the fact that EVERY cell phone manufacturer makes an Android phone, and they are on EVERY carrier. I think that says a lot about Apple, and once America's largest carrier gets it, the iPhone will be skyrocketed into history as the most successful phone, ever.
Now is the time for OS platforms like Windows Phone and Android to step it up before it is too late. They need to realize that iPhone's move to Verizon could be a crack in the flood gates. Verizon's deal with iPhone is non exclusive, meaning that other carriers like Sprint and T Mobile are probably positioning themselves to sign the iPhone to their networks as well. If Android and Windows can play to their strengths, that being power in numbers, they might still be able to carve themselves a part of the market share. It is true that before Verizon, Apple was only available one network, but these OS providers should not stray from what they are doing best. In order to beat Apple, they'll have to continue to let every carrier push their phones, or else Apple will take over the game.
What this means for CDMA vs GSM iPhone: Resale Value
I predict that once the CDMA (Verizon's) iPhone comes out, it will be a big hit with sales. The iPhone will be sold out of Verizon's inventories extremely quickly, and the only place you will be able to find one will be on eBay... for a LOT of money. Supply and demand dictates everything, and since the CDMA iPhone will be in the highest demand of any iPhone ever, the price will be steep, and if you happen to get your hands on one, temptation will be very high as to not resell it. Remember, 1 CDMA iPhone in the hand is worth 3 CDMA iPhones in the bush... or a new LED T.V.
While there will be an initial demand for the Verizon iPhone, and prices might be high (much like they were with the initial release of all other iPhone models) I think the overall value of the CDMA version of the iPhone will be less than the GSM version that is used on AT&T. The reason for this is because the GSM model has a much stronger appeal worldwide. The majority of networks around the world use GSM networks, those networks that use SIM cards. Right now, GSM iPhones can be unlocked and used with other networks, which keeps their value high. Whether or not the CDMA iPhone will be able to be unlocked (my money is that someone will figure it out) the issue remains that it would only be able to be used on CDMA networks, which are much more rare outside of the States. Because of this, over time I think you will see that the value of the GSM version of iPhone will have, on average, a higher resale value than it's CDMA sibling.
So there you have it. Obviously all of the points we've made today are our speculations and a lot still remains to be seen with how Verizon's introduction of the iPhone will affect not only Verizon but the whole cell phone industry. No matter how you feel about it though, this is exciting news. If you are one of the many that are contemplating the jump from AT&T to Verizon, visit us before you do and sell your AT&T iPhone to us so we can give you cash to put