Tuesday, January 11, 2011

$AAPL iPhone on $VZ: Winners and Losers

A forest has already been leveled reviewing the winners and losers with Verizon offering the iPhone. Let me add my thoughts...

First, let's look at Apple. Apple has had wild success with the iPhone and offering the 4G with a new US carrier allows access to buyers who do not wish to switch to ATT. This is simple. Apple will sell more iPhones. In addition to new Verizon users, Apple will gain buyers who switch from ATT to Verizon and buy yet another piece of hardware.

In addition to handset sales, guess what happens next? Yes. iPhone owners head to iTunes and buy music. They head to the app store and buy apps. They open the iBooks app and buy ebooks. The hardware purchase is the gateway to giving Apple a credit card for subsequent purchases.

What about ATT? This is going to be a hit to ATT. Not a huge hit, but a hit. Now, I do not plan on switching to Verizon. I'm happy with ATT. Many and maybe most are happy with ATT. But there will be some who are going to make the switch. While, at the same time, there won't be as many jumping ship from Verizon to ATT because of the Verizon iPhone, right?

ATT is trying to lock in iPhone buyers and attract new iPhone buyers with some interesting price points on the iPhone 3GS. There will be some who sign up. I don't think this will offset the number of folks who leave ATT when the 2-year contract is up.

Verizon will be a big winner with the iPhone 4. The profit margin is not with the iPhone hardware, but with the monthly subscription plan. There will be many new iPhone owners sending in monthly payments for minutes, data plans, and text messages.

Losers? I think this may be a bit of a hit to the Blackberry and maybe Windows phones. When the major carriers are offering hot products like the iPhone and various flavors of Android phones, the other phones become a third or fourth option.

Did you read where Governor Jerry Brown is confiscating the cell phones of most state workers? It will save California about $20 million a year. I think CA buys a lot of Blackberry phones, for what it's worth. Now there's a hit, as you know the state is paying top dollar for phones and plans.

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