Apple Inc. (NASDAQ: AAPL) and Verizon Wireless (NYSE: VZ) had been dancing around each other so long that it was starting to seem like they would never get together. It looks like the wait is finally over, but the inevitable Verizon and Apple union isn’t taking the form most were expecting, at least not initially. Apple’s wunderkind smartphone, the iPhone 4, will not be coming to Verizon’s existing 3G network or their impending long-term evolution 4G network. No CDMA iPhone, no Verizon iPhone 5. Those products might be coming in the future. For now, the computer technology company and the telecom company are partnering up with an existing product, one that’s seen such great success in just six months on the market that analysts are predicting it will soon be the 4th highest selling technology segment in the Western world. The iPad is coming to Verizon on October 28th.
In a full-page advertisement on their homepage, Verizon announced that starting Thursday, October 28th the company will sell three models of the Cupertino, California company’s tablet computer, none of which will be equipped with the 3G network technology included in current iPad models supported by competing telecom AT&T (NYSE: T). Verizon iPad users will instead purchase a MiFi Mobile Hotspot device with their iPad. The MiFi Mobile Hotspot is a portable wireless router manufactured by Novatel Wireless (NASDAQ: NVTL) and is supported in the United States by both Verizon and Sprint (NYSE: S). iPad users have been able to leverage MiFi Mobile Hotspot devices for Internet connections since the tablet was first released last April but the partnership with Verizon marks the first time that their shared functionality have been used as a major selling point.
Verizon iPad customers will have three options, a $629.99, 16GB iPad and MiFi Mobile Hotspot package as well as $729.99, 32 GB and $829.99, 64GB configurations. Customers will also sign up for month-to-month, no obligation data plans for their new devices, the lowest tier of which will be $20 per month for 1GB of data. The iPad will be available for purchase on both Verizon’s website and in their nationwide retail chain. The Wall Street Journal is reporting that 3G iPad models will be available at Verizon’s retail outlets but there is no information regarding the 3G line in Verizon’s announcement.
The solution is not ideal for Verizon, Apple, or its customers given that this is the first retail option for the iPad that requires users to purchase not one but two devices. (The new deal does however benefit Novatel Wireless investors; shares in the company are up 8% today after the announcement of Verizon and Apple’s new partnership.) This can be viewed as a stopgap product and a dowry that hints strongly at a future when Apple is providing a devoted 4G iPad for Verizon in addition to a Verizon iPhone that may be CDMA or a fifth-generation device suited for the telecom’s LTE network. The companies’ new iPad partnership also casts rumors of a new tablet PC from Motorola (NYSE: MOT) using Google Inc.‘s (NASDAQ: GOOG) Android operating system debuting this fall in a whole new light. Did plans for a flagship Verizon tablet in 2010 fall through? Did Apple offer Verizon a more attractive plan in the long term?
Apple’s long-standing mobile partner, AT&T, will also begin selling the iPad at their retail outlets starting October 28th, offering the same six models of the tablet they have through their online store since April 2010. AT&T has been preparing its investors for the loss of its exclusive support for Apple’s mobile devices since last summer when rumors of the iPhone coming to Verizon and T-Mobile USA (FWB: DTE) reached a fever pitch last summer. AT&T still has the upper hand in the iPad market, thanks to their 3G network support. It is only a matter of time though until Verizon and other carriers launch their 4G networks. Apple’s iPad 2 will be right there, available to any and all customers.
As of this writing, Anthony Agnello did not own a position in any of the stocks named here.
