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Verizon Wireless is expected to announce tomorrow that it will start selling Apple’s iPhone.This is obviously great news for Verizon, which finally gets its hands on the iPhone. Until now, it has been sold exclusively via Verizon’s archrival, AT&T.
And it’s obviously great news for Apple, which gets a huge new distribution channel.
Who else stands to benefit or suffer?
Verizon has missed out while rival AT&T has had an exclusive on the iPhone. Now it stands to attract several million new subscribers -- including many from AT&T -- and upgrade many of its subscribers to a smartphone data plan for the first time.
This is great news for Verizon. (Though the cost of subsidizing iPhones could tweak its margins at first.)
The mobile industry is all about distribution, and Verizon is likely about to become Apple's #1 or #2 iPhone distributor in the world. This is a huge victory for Apple.
We estimate that Apple will sell 10 million Verizon iPhones this year, for some $6 billion in revenue.
Google's Android has gotten a LOT of help from Verizon while it was trying to compete fiercely with the iPhone. Almost half of the Android phones used in the U.S. are on Verizon, according to comScore's most recent data (Nov. 2010)
Assuming Verizon will start putting significant marketing muscle behind the iPhone, that could only be bad news for Android.
Especially because most people aren't going to come into the Verizon store to play with an iPhone and then walk out with a Droid -- the iPhone is still the better all-around user experience.
Losing iPhone exclusivity was inevitable for AT&T, so it's not a huge surprise, but it's definitely a negative. Having exclusive iPhone sales in the U.S. has been great for AT&T's subscriber growth and retention stats.
AT&T will inevitably lose some subscribers to Verizon, and will sign up fewer new iPhone subscribers from other carriers. It won't be a bloodbath, but it won't be a good thing.
The silver lining: Losing some iPhone subscribers to Verizon could take some strain off AT&T's network -- not much, but maybe a little. And perhaps AT&T's margins may improve if it subsidizes fewer iPhones. But then again, it may now have to spend more money on marketing.
If Verizon is putting less muscle behind Android, that likely means fewer sales -- or at least slower sales growth -- than Motorola, HTC, Samsung, and other have been used to.
The good news is that the smartphone market itself is still growing fast enough that there will be plenty of other opportunities. Especially if AT&T puts more behind Android -- which, judging by its cheerleading behind Android at CES, seems likely.
Qualcomm is king of CDMA, the wireless technology that powers Verizon's 3G wireless network. So it could see an uptick in sales as a result of the Verizon iPhone.
How well Qualcomm does depends on how deeply Apple integrates it -- whether it's only for Verizon iPhones, or if it uses a Qualcomm multi-network chip on all future iPhones.
One idea of the future: 'If Apple were to cut over to Qualcomm more aggressively, we believe the firm could do 75M--80M iPhone units per year beginning in mid 2011, contributing about $750M of annual revenues to Qualcomm, or about $0.27 of EPS,' FBR analyst Craig Berger wrote last November.
With millions of new iPhone owners, that's millions of new potential buyers for iPhone apps.
This should be especially good news for those developers near the top of the app charts, such as the team behind 'Angry Birds,' and iOS-focused (not Android-focused) developers, such as Tapulous, Ngmoco, etc.
Besides getting a big blitz event to cover (Verizon's press conference Tuesday in New York), Apple and/or Verizon may go on an ad blitz to promote the new partnership. That could be good news for TV networks, newspapers, magazines, blogs, etc.
In theory, a CDMA iPhone could also be sold at Sprint. But Verizon likely has an exclusive on it for several months or maybe several years.
The end of iPhone exclusivity may wind up in T-Mobile's favour first. But Apple would have to build a special version for T-Mobile's 3G network, which uses different radio bands than AT&T's. So we'll see.
Anything that's good news for Apple is often bad news for Microsoft. But it's possible that AT&T will put more weight behind Windows Phone 7 now that it's losing iPhone exclusivity. And if Android loses some favour, perhaps Microsoft's handset customers -- Samsung, HTC, etc. -- will push harder on Windows Phones.
Millions of new customers means a much wider audience reach for Apple's iAds. Good news for the folks selling them.
If the iPhone saturates Verizon's network the way it did to AT&T, that could mean more cell towers and more capacity. Potentially good news for cell tower companies like American Tower (AMT).
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