Disparate reports this morning shed a little more light on the Verizon iPhone deal we expect to hear about at 11am (Eastern). It seems the deal may cost Verzon as much as $5 billion in subsidies in year one — but is also set to steal share from AT&T while flatlining Android device sales.
John Hodulik, an analyst at UBS AG told Business Week he thinks Verizon may sell 13 million iPhones with an estimated $400 subsidy this year — a total of $5.2 billion. Barclays analyst James Ratcliffe predicts a more conservative $3.2 billion subsidy.
The prize is deep: “A lot of people who bought Android phones were buying it in lieu of an iPhone because they couldn’t get one on the Verizon network,” said Charlie Wolf, a Needham & Co. analyst.
He argues that the appearance of the iPhone on Verizon will depress Android sales in the US. It is worth reflecting that the Apple smartphone accounted for 80 percent of AT&T’s smartphones sales in the third quarter. This makes it extremely likely Verizon folk will choose iPhone above Android in the months to come.
Gene Munster expects Apple to ship around 20 million iPhones this year via Verizon and AT&T, boosted by global shipments.
AT&T is ready to fight back, improving its network as part of its counter attack, but more specifically raising the opt out fees for early termination of contracts to painful new highs. AT&T will pushb for the argument that its network is faster than CDMA, hoping to market its way into maintaining growth.
“I expected AT&T to go big with advertising especially in major markets such as New York, where they have had issues. The cards are stacked against AT&T, because people have been waiting for Verizon to get this phone for so long, but AT&T has to protect itself,” said Dean Crutchfield, chief engagement officer of brand agency Method.
The iPhone is expected to cost around $200 on Verizon, and will ship with an unlimited data access plan, the rumor mill claims.