The effects on AT&T
This launch is obviously bad news for AT&T. It has had a very long run in being the sole provider of the iPhone, but now that run is done. I think it is inevitable that AT&T will see more of a loss of customers to Verizon than any new customers it might attract to the iPhone. Some will be normal churn and loyalty, some will be aggressive marketing by Verizon, some will be 'customer revenge' for bad consumer actions that AT&T has done in the past, etc.
So I do believe that AT&T's total sales of iPhones will stall and start to decline. Almost all of the sales at AT&T of new iPhones in the next two quarters will be contract renewals, i.e. sales to existing customers, not new sales.
Almost all new customers will sign up to Verizon now - many of those customers are of the type who explicitly did not want to sign with AT&T and waited for Verizon. So for AT&T I am modeling flat sales and gradual decline.
Recently we have seen AT&T activities to embrace new smartphones and this would mean that in AT&T stores, the emphasis of the iPhone would diminish, helping the Android based phones gain more sales in AT&T stores. Don't forget the allure of "4G" and devices such as Motorola Atrix 4G. With all that, I model the US market to run about 50 percent growth in total iPhone sales for calendar year 2011, so about 24 - 26 million iPhone units sold.
I would split the full calendar year 2011 to go about 15 million for AT&T and 10 million for Verizon. Nice sales yes, but remember, most of those 10 million that Verizon would be activating, would be former Verizon customers coming back from AT&T.
One caveat: I have separately been arguing that Apple must soon release an 'iPhone Nano' cheaper simpler version of the iPhone and release two new phone models per year. If Apple were to release the Nano model in 2011, then the total iPhone market globally would grow dramatically. This analysis of the CDMA iPhone with Verizon, is not considering the separate Apple option to release a Nano iPhone in this year.
Is this really good news for Apple? I don't think so. I think they could easily have sold 33 percent or 45 percent more iPhones this year with AT&T alone, without all the expense of the design and approval and support of a CDMA version. And it would have been far cheaper to release the same GSM version of the iPhone 4 with T-Mobile. Why not, if the exclusive contract with AT&T has run out?
Is it really true, that T-Mobile doesn't particularly "want" the iPhone? What do they know (from T-Mobile's vast European empire) that we don't? And why only Verizon on the CDMA standard? Why not both Verizon and Sprint? Again, doesn't Sprint want the iPhone?
It seems a bit strange. At least in Europe like Italy, France, UK etc., and Australia, it was clear that all carriers/operators wanted the iPhone. I do think it's a bit weird that only two of the four biggest US carriers sell the iPhone, in Apple's home market, its best-selling market after all. We have to monitor this space and try to find out why if AT&T's exclusive contract is out, why not all four (or five, or six) of the biggest US carriers are not launching iPhones. Or maybe we'll hear more deals when Apple announces its quarterly results later this month.
Clearly the US investors of Apple have desired to see the exclusive AT&T deal ended and have wanted to see the iPhone on Verizon. This is good news for Verizon, its clearly bad news for AT&T - but both of these were anticipated. But for Apple, in the US market, I don't see a meaningful bump in sales. Yes for one quarter or two, but even for the full year 2011, I don't see much impact. Not out of the US market. But maybe the gold is abroad...
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