Verizon iPhone Likely Coming Soon

Rumors about a 2011 release of a Verizon iPhone are swirling

   

Verizon iPhone Likely Coming Soon

Since the 2007 launch of its very first model, Apple’s (AAPL) iPhone has been coveted by every cellphone user in the United States even while it’s been accessible to only a small fraction of that market. The iPhone represented an aesthetic and functional leap forward for Western cellphone technology. While European and Asian markets enjoyed versatile multimedia capable cellular technology from companies like DoCoMo throughout the ’00s, North Americans were either relegated to the functional but relatively archaic products from Nokia (NOK), LG, Motorola (MOT), and others supported by American cellular carriers or Reasearch in Motion’s (RIMM) line of BlackBerry smartphones. Apple’s iPhone was the first attractive and imminently usable alternative. The one problem was that AT&T (ATT) was the exclusive carrier of the device until 2010, effectively closing the device off from the millions of users with carriers like Sprint (S), Deutsche Telekom’s (DTE), T-Mobile, and most significantly, Verizon (VZ).

The specifics of the iPhone 4 launch seemed to signal the device’s arrival at AT&T’s premiere competitor. AT&T’s aggressive promotions encouraging existing iPhone users to upgrade to the iPhone on the cheap represented not so much customer appreciation as a bid to hold onto as many customers as possible prior to the switch over.  Verizon also spent the months leading up to the iPhone 4′s release explicitly stating that the company’s network is more than ready to support an influx of new smartphone users. (Verizon CEO Ivan Seidenberg, responding to analyst questions last January, explicitly said that his company’s work with other smartphones has laid the groundwork for a Verizon iPhone.) With Verizon set to launch the LTE 4G network next spring and Apple feeling increasing competition from the Google (GOOG) Android-powered line of Droid phones, it would only be logical for the companies to launch their co-initiative next spring.

Rumors about an early 2011 release of a Verizon-supported iPhone have been swirling since the beginning of calendar 2010. Many analysts suspected that June’s announcement of the iPhone 4 would be accompanied by an announcement of the end of AAPL’s exclusivity agreement with AT&T. Far from it. The iPhone 4 launched with Apple publicly recommitting to AT&T through 2012. That launch was then followed by a significant scandal over the iPhone 4′s faulty antenna, causing the first dip in Apple share price in months. That scandal has also cast a shadow of doubt over the Verizon iPhone’s spring 2011 release.

Historically, customer dissatisfaction with the iPhone has centered almost purely on the service provided by AT&T. Now that the failures of the product are perceived to be solely the fault of AAPL themselves, there’s increased customer satisfaction with AT&T’s iPhone service, and diminishing the public call for Verizon support. Piper Jafray analyst Christopher Larsen also points to Verizon’s stringent quality assurance as an indicator that AAPL’s imperfect iPhone 4 design may need another product iteration before the company brings it into the family. With the continued rise in popularity of their Droid line of phones, it’s questionable whether Verizon wants the iPhone or if they want to crush it.

Still, maybe Verizon’s future isn’t in Google products. GOOG announced just yesterday that they’re exiting the hardware market, with the current shipment of their Nexus One smartphone being the last to market. Is their return to a purely software-focused effort in the mobile space a sign of more direct competition from AAPL? Only time will tell. Check back here in the next 24 hours as we sift through Apple’s financial report for more evidence of the spring 2011 release of the Verizon iPhone.

As of this writing, Anthony Agnello did not own a position in any of the stocks named here.

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Article printed from InvestorPlace Media, http://investorplace.com/2010/07/verizon-iphone-likely-coming-soon/.

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