Tuesday, January 11, 2011

Why Verizon's Big iPhone Deal Has Risk, Not Just Reward

It's official: Verizon Wireless is going to be selling the Apple iPhone 4. Nothing has been said so far about rights to sell the iPad, though.

It's easy to see the upside for Verizon Wireless as it now can sell and support the Apple iPhone. The iPhone is an iconic device and the inability to sell it obviously hurts any mobile provider that doesn't offer the device. Beyond that, the iPhone exclusivity arguably has allowed AT&T to gain some customers Verizon Wireless was not able to compete for, including, doubtless, many former Verizon Wireless customers.

But there are challenges, as well. Verizon Wireless might have to spend $3 billion to $5 billion to subsidize customer purchases of the device in 2011 alone, based on the expected $400 per iPhone subsidy Verizon will absorb. That will hit profit margins, a concern analysts have had about AT&T as well.

No comments:

Consumer Feedback on Smartphone AI Isn't That Helpful

It is a truism that consumers cannot envision what they never have seen, so perhaps it is not too surprising that artificial intelligence sm...