According to a new report Friday, Verizon Wireless is definitely getting Apple's iPhone. Fortune magazine added its credibility to similar reports from other sources, including The Wall Street Journal and The New York Times, who say the popular smartphone is headed to the main rival of the current U.S. exclusive carrier, AT&T.
Fortune said it has "confirmed" that a Verizon iPhone will be released in early 2011, calling it a "fait accompli." The magazine said its information was independently verified from reports originating at other media.
Up To Nine Million Units
According to some estimates, the iPhone could sell as many as eight million or nine million units next year if offered through Verizon. About 22 million iPhones have been sold in the U.S.
This could spell big problems for AT&T, which has built its subscriber growth around the device. According to a survey by Credit Suisse, 18 percent of AT&T iPhone users said they would consider switching carriers if the iPhone was available on Verizon, which likes to call itself "the nation's most reliable" wireless network.
Of course, there's the problem of getting what you wish for. AT&T's network has had to deal with the huge data needs of iPhone users, a fate that would undoubtedly confront Verizon as well.
Verizon reportedly was in the running to be Apple's exclusive carrier partner at the iPhone's launch, but turned it down because of Apple's insistence on control over the device and the size of Apple's cut from service fees. Apple also had concerns about Verizon's CDMA network technology, which isn't compatible with most other network technology worldwide, as AT&T's GSM is. Verizon has recently been building a 4G LTE network, but the Fortune assumption is that the Verizon iPhone will be CDMA.
Cutting Out the Carrier?
Whether or not Verizon gets the iPhone, the days of carrier-driven access to smartphones, particularly the iPhone, may be limited. On Thursday, news reports indicated that Apple is working with Gemalto, a SIM-card manufacturer, to develop a special card for its smartphone in the European market. The custom card would allow European customers to purchase the iPhone over the web or at a brick-and-mortar retailer, such as the Apple stores, and activate the phone through Apple's App Store.
This use of a SIM card, which carries subscriber ID information used by carriers, would cut carriers out of the sales and marketing picture. Instead of getting an iPhone through, say, T-Mobile in Germany, customers would buy the iPhone and then choose a carrier.
If this route is successful, it could reduce a carrier's role from being the source of the iPhone purchase and a key partner in the customer relationship to a commodity based largely on price. It could also radically change the dynamic of subscriber loyalty, since the cost of moving from one carrier to another would not be tied to iPhone availability, but would be as simple as updating the SIM's flash memory.