Photo: Dan Frommer, Business Insider
Apple probably would have been better off if it had started selling the iPhone at Verizon a year ago, as it probably would have stifled Google Android from becoming such a strong competitor. (Verizon is responsible for about half of Android devices in the U.S.)But it’s hardly too late for Apple to start doing business with Verizon, the biggest U.S. wireless carrier. The party’s just getting started.
That’s because most Verizon customers don’t yet have smartphones, but most want them, meaning that there are tens of millions more smartphones to sell over the next couple of years.
Verizon said today in its Q4 earnings report that only 26% of its 83 million “retail postpaid” subscribers have smartphone devices. (In short, these are the Verizon customers who are on long-term contracts and can buy subsidized smartphones, and it excludes prepaid customers.)
That’s up from 15% of Verizon’s 80 million retail postpaid subscribers at the end of 2009 — suggesting about 10 million (net) more smartphone subscribers on Verizon at the end of 2010 versus the end of 2009.
Verizon also says that in Q4, more than 75% of its net new postpaid subscribers were buying smartphones.
So there’s plenty of room for growth.
That 26% number of Verizon subscribers with smartphones is probably going to be more than 50% in a year or so, and it’s probably going to get near 100% at some point.
Those aren’t apples-to-apples stats, but the bigger message is that the smartphone market is still growing very rapidly. Most Verizon customers still do not have smartphones, but most people now want smartphones, judging by the 75% rate of new sales being smartphones.
So Apple’s getting in when the action is already good. And between existing Verizon smartphone subscribers who want to upgrade to an iPhone, first-time Verizon smartphone buyers, and customers Verizon can now steal away from other carriers because it offers the iPhone, Apple stands to sell a ton of its new Verizon iPhones. (About 10 million this year, we estimate.)
Good news for both Apple and Verizon.
How does that compare to AT&T, which has sold the iPhone exclusively since it launched in 2007?
AT&T doesn’t specify smartphones in its quarterly releases, but refers to “integrated devices,” which are “handsets with QWERTY or virtual keyboards in addition to voice functionality.” At the end of Q3, more than 80% of AT&T’s postpaid sales were “integrated devices,” and some 57% of AT&T’s postpaid subscribers had them, up from 42% a year earlier.
AT&T also activated more than 5 million iPhones in Q3.