Ever since AT&T released the iPhone, the question of “when will the iPhone come to Verizon?” has been on many peoples’ lips. And unless you live under a rock, you heard the answer to that question last week: iPhone 4 is coming to Verizon Wireless in February. But what does that mean for Verizon and AT&T, iPhones and Android, and finally—your enterprise?
ABI Research believes the iPhone will become an important addition to Verizon’s portfolio and will entice many AT&T customers at the end of their contracts who are not satisfied with AT&T’s network or plan options. However, the Verizon Wireless Droid sub-brand has developed into the “mother ship” that launched Android’s attack on Apple’s market share and mindshare.
“Historically, the iPhone was able to grab market share rapidly in an Android-free environment, but things may be different when fighting on Android’s home turf,” notes Michael Morgan, senior analyst at ABI Research. “The Verizon iPhone hotspot offering highlights how this device will become the front line for mobile operators battling over their service offerings.”
Verizon will offer the 16GB model for $199.99 and the 32GB model for $299.99, both with a two-year contract. These prices are highly comparable to AT&T’s prices. However, AT&T recently lowered the price of the iPhone 3GS to $49.99, so they can still tout the lowest-prices iPhone available. In addition, AT&T is also offering refurbished iPhone 4s in the 16GB model for $100 less than the retail price.
In addition, Verizon Wireless, as of Jan. 16, has ended its “New Every Two” program in which subscribers received a credit of $30 to $100 toward a new phone every two years. It is also discontinuing its early upgrade policy. This will add up to more costs for existing Verizon customers wishing to upgrade to the iPhone 4.
Prices for data plans were not announced.
The biggest difference between the iPhone on AT&T and the iPhone on Verizon is the disparity between the networks themselves. AT&T’s iPhone currently makes use of high-speed downlink packet access (HSDPA) on AT&T’s GSM network, which carries a theoretical maximum of 14Mbps for downloads. Verizon’s CDMA network uses EVDO Rev. A, which carries a theoretical maximum of 3Mbps for downloads. As such, AT&T’s network is theoretically faster than Verizon’s where the iPhone is concerned. Actual speeds will vary depending on interference, the number of people using the network, etc.
AT&T’s GSM network allows the iPhone to use voice and data capabilities simultaneously. In addition AT&T’s users can use their iPhones worldwide since GSM networks exist outside the U.S. CDMA networks exist primarily in the U.S. and China.
iPhone 4 on Verizon Wireless will offer Personal Hotspot capability allowing customers to connect up to five Wi-Fi-enabled devices, a feature not available through AT&T. It is unlikely that AT&T will add this functionality until it completes the build-out of its LTE network. Verizon said in its announcement last week that it has been testing its 3G service with “thousands” of CDMA iPhones and is confident that its 3G network will be able to support the increased demand for data.
Due to the CDMA network, the Verizon iPhone won’t be able to get push notifications while the user is on a call, and nothing that uses data will be updated until the user ends a call. In addition, voice calls will interrupt anything the user is doing over the data connection. Receiving a phone call will mean that the user will have to choose between interrupting a data transfer--which could include using the Personal Hotspot feature to share the 3G connection over Wi-Fi or just downloading an app--or simply ignoring the call. This feature, while something an existing AT&T iPhone user would miss, might not be so bad for existing Verizon users who are accustomed to the CDMA network and its lack of simultaneous voice and data capability.
iPhone vs Android devices
To date, Verizon Wireless has relied heavily upon Android-based devices to capture and develop its smartphone customer base, while AT&T customers primarily stick with the iPhone, according to ABI Research. Research from Nielsen indicates that 40.8% of U.S. consumers who bought a smartphone in the last six months purchased Android devices, while 26.9% chose iPhones and 19.2% opted for BlackBerrys.
Industry and financial analyst estimations for 2011 Verizon iPhone sales vary widely between 5 million and 15 million units. ABI Research expects the iPhone to level the playing field between AT&T and Verizon, but, says Morgan, “The impact may not be as severe as some are anticipating.”
The uptake of iPhones on Verizon’s network is likely to happen gradually. Reasons for this include current AT&T iPhone subscribers who are stuck in the middle of their contracts and not willing to pay an early termination fee to switch to Verizon, and the fact that the Verizon iPhone 4 isn’t the top-of-the-line smartphone in Verizon’s portfolio the way it is in AT&T’s.
When AT&T announced the iPhone 4 last year, it was clearly the best smartphone on the AT&T network. The same is not true for the iPhone 4 on Verizon. There are several Android devices being launched in 2011 that far exceed the functionality and capabilities of the iPhone 4. “Without a doubt though, the iPhone 4 on Verizon Wireless will still sell millions to the masses who are moving from feature phones and those locked into the Apple ecosystem,” says Matthew Miller of ZDNet.
“Current competition for the iPhone 4 on Verizon includes the Motorola Droid X, Motorola Droid 2, HTC Droid Incredible, Motorola Droid Pro, and Samsung Fascinate,” continues Miller. “It will be interesting to see if owners of these smartphone[s] switch over to the iPhone 4 or if they stick with their Android device and wait to see what Apple brings out for a new generation product.”
New Verizon Android devices released in 2011 will be on Verizon’s 4G LTE network. There is no LTE iPhone version on the horizon, and AT&T’s 4G LTE network is still months off.
“The new devices we know that are coming to Verizon that include support for the 4G LTE network include the HTC Thunderbolt, Motorola Droid Bionic, LG Revolution, and Samsung 4G LTE (no official name yet),” says Miller. “These devices all run Android 2.2, with likely upgrade or launch with Android 2.3, have 4.3 inch displays, and dual-core…hard core smartphone geeks likely won’t even consider the iPhone 4 with these four new powerful smartphones launching in the next few months, especially if they get a taste of the 4G LTE speeds.”
The iPhone moving to Verizon will give IT managers one more reason to support iPhones. “Mobile service provider choice is important on smartphones and tablets, both to provide good network coverage to employees and also to keep competition high hence prices low,” explains Ted Schadler, VP and principal Analyst, Forrester Research. “AT&T Mobility’s lock on iPhone in the U.S. was one reason some firms have been reluctant to support iPhone. With iPhone-on-VZW (not to mention the aggressive $30/month introductory pricing for an unlimited data plan), that barrier is gone.”
This increased availability of the iPhone will lead to the increased consumerization of IT. “Verizon Wireless has been driving the consumerization of Android devices; it will now also spend some money promoting and selling iPhone-on-VZW,” explains Schadler. “This will only increase the osmotic pressure’ of employees aka consumers bringing their personal devices to work.”
There will also be increased pressure on IT managers to create a smart mobile strategy. “If you haven’t already, pull together a mobile team that spans IT and business roles to lay the groundwork for your mobile strategy,” says Schadler. “The mission: mobilize absolutely everything. Start with a device management strategy so you can provision and secure Apple and Android (and Windows 7 and Symbian and webOS and…and…and…) devices in addition to the RIM BlackBerry devices you already support.”
Verizon will continue a marketing push behind Android devices even as it promotes the iPhone 4. Verizon initially touted Android precisely because it didn’t have the iPhone and it wanted to offer an iPhone-equivalent alternative. AT&T will push more marketing for the 12 Android phones it plans on launching this year as well as for Windows Phone and BlackBerry devices. AT&T is the only operator to support all major mobile OSes.
“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 All Things Digital. “A lot of people who bought Android phones were buying it in lieu of an iPhone because they couldn’t get one on the Verizon network. 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.”
Whether this is true remains to be seen, but one thing is sure, the iPhone has come to Verizon, and industry watchers will have an interesting storyline to follow in 2011.