Monday, April 27, 2009

Deal Not Likely Between Apple and Verizon - But Mobile Users Will Gain

USA Today, yesterday (not today), printed a report about information from folks high up in the echelon of Apple and Verizon that the two are in talks about deploying the iPhone in Verizon's network. This is dipping dangerously into rumors territory here but it's actually another point I wish to make. Whether this is true or not doesn't matter. Whether this is Apple playing ATT off Verizon doesn't matter. What matters is that this information is considered mainstream and it was leaked to the public specifically to influence the course of an deals between Apple and Verizon and Apple and ATT. So, let's take a look at how this affects the mobile market.

First, let's go through why an Apple-Verizon alliance won't happen. According to All Things Digital, Verizon didn't get into bed with Apple because of how Apple structured their deal. As recently as last week, Verizon said it was the technology. Apple said as much in last week's earnings call with analysts. CDMA doen't go global, according to statements by current Apple CEO Tim Cook. Well, apparently, even after Verizon launches LTE services in 2010, the voice portions will still be built on CDMA technology.

One likely scenario going on here between Apple and Verizon is to create a device that uses the LTE service san the voice plans. Otherwise, there won't be a deal. Here are a couple of other issues that truly matters about this article and the way information was leaked:

  • Innovation - other mobile device makers may get spooked by any Apple-Verizon alliance.  They'll need to double, no, triple their effort to come out with competitive devices.
  • ATT may want to extend their exclusive deal with Apple.  Apple is simply playing the "Verizon card" in any talk going on to cement future deals.  I'm not a financial guy but by all accounts, iPhone is help ATT stay competitive with Verizon.  
  • Another issue is the LTE technology.  VW has said their network will go live in 2010 and 2011 for ATT.  Apple can't be happy about being stuck with 3G when RIM, Sony, Microsoft, and the others get a year's head start with LTE.  Apple's talk with Verizon could be just the thing in getting ATT with the right motivation to hustle on their LTE deployment.  Don't be surprised in the next few months, ATT makes a statement about how they miraculously managed to give the green light on LTE in 2010 instead of 2011.
  • Verizon might truly be motivated to get iPhone on their CDMA network.  Worst case, VW doesn't get the iPhone and they'll go back to the media and say what they have been saying all along that Apple wanted too much control.  At the same time, it'll for ATT to spent time, effort, and resources to secure iPhone exclusivity.  By all accounts, VW is doing just fine without the iPhone.  
  • It's about control.  If VW does want iPhone on their network, they would have to agree to the original terms. And I'm guess Jobs and company have added a couple more things they want from Verizon.  Now, make no mistake.  Apple isn't trying to wrestle control of the wireless networks away from Verizon or ATT for the good of the consumers.  It's about money and control for Apple.  We, mobile warriors, may indirectly benefit from this.  
Like we've said at the top of the post, we don't see the iPhone on Verizon's network anytime soon.  Definitely not in 2010.  ATT has put too much into the iPhone to let it slip away.  But the reason for the leak about Apple and Verizon negotiating over the iPhone is obvious.  It's too put pressure on ATT.  It doesn't matter if the leak came from Apple or Verizon.  I'm putting my money on Apple.

Regardless, you can bet all the major players in the mobile market is watching any kind of develop closely.  But their jobs are clear.  Even though RIM owns the smartphone market, everyone is trying to produce an iPhone killer.  At the end of the day, if we see innovation speed up and device deployments advanced, we all win, iPhone users or not.

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