The impact on Verizon Wireless
The existing market was roughly 14.5 million for the latest 12 months. If we project that for full calendar year 2010, let's call it 17 million. That is up from 10.3 million for calendar year 2009 so the iPhone showed growth of 65 percent in the past year. Note this is slower growth than the iPhone did globally (85 percent).
Is there a market segment in the USA, which has customers on Verizon today, who want an iPhone and can afford it, and have not gone to AT&T? Of course there is. But note, of those customers who once were on Verizon who have over the past 3.5 years gone to AT&T to get the iPhone - I would argue this is by far the bigger part of Verizon's true iPhone-hungry customer base. They have already gone to AT&T, and a Verizon iPhone for those customers is at best a chance to win them back. Note, some will not shift, even if they would prefer the Verizon network.
Will Verizon be able to steal customers from rivals with the iPhone, perhaps a bit, more from metroPCS, Sprint and Alltel (CDMA providers) than GSM providers AT&T and T-Mobile, but there is some potential for that. Again, AT&T has had plenty of time to do that, and securing those customers on long-term AT&T contracts, so it is not likely to be a big segment that Verizon can even hope to target. If AT&T has been capturing a third of iPhone users as new customers - mostly stealing from rival networks, that market was roughly 5.6 million US consumers.
I would argue that Verizon will not be able to match this level out of all customers taking an iPhone, Verizon will cut into AT&T's customer base, but its rate will be less. There will be early buzz about Verizon and an early spike yes, but if we look at the full year 2011, no, it will not be that big. There will be some who explicitly want a CDMA standard phone - for those the Verizon iPhone is the only choice.
There will be some customers who are very 'loyal' to Verizon either in a real loyalty sense, or perhaps because of their phone number or Verizon is the telecoms provider at their employer, or in Northeastern USA, the customer may be on a Verizon family telecoms plan with the fixed landline phones, etc. For those existing Verizon customers, there will be some segment of totally new iPhone customers who were not valid candidates to buy one from AT&T. I would argue this is far less than 10 percent of all new iPhone customers in 2011.
There will be some customers who hate AT&T and they will of course take the first chance to abandon AT&T and jump (often back to) Verizon. These are not new iPhone customers. This is for Apple moving money from one pocket to another. For the carriers in the USA, it will be typical churn and loyalty war between the networks.
There will be offers AT&T will make to existing iPhone customers, to try to entice them to stay, and there will be penalties for leaving before the contract is completed. Most customers who want to abandon AT&T will wait until their contract period is done. So even for this total market, note that almost exactly half of them will not even be able to shift to Verizon during calendar 2011, half will do so in 2012 (of customers on 2 year contracts).
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