With all the buzz surrounding the Droid and Verizon’s counter-iPhone advertising campaign, many industry analysts are clamoring for Apple to release their iPhone on Verizon’s network. Others are reporting various rumors that Apple is ending their exclusive arrangement with AT&T or will be releasing iPhones for Verizon in 2010. Up until this point, I believed that Apple would not release an iPhone for Verizon until at least 2011. But even I was starting to be swayed by all the hype into thinking that maybe Apple would release an iPhone for Verizon in 2010. That was until I read this excellent article detailing how successful Apple has been with their single-vendor strategy.
The article is rather long and detailed, so I’ll sum up some of the main points here:
1) The technology in Verizon’s current network (CDMA) is different than what AT&T uses (GSM), so it would require designing a new iPhone, along with all the regulatory headaches, and then would require Apple to split their manufacturing, hurting their economies of scale. This would all be for a technology that will be obsolete in a few years. The next generation (4G) of Verizon’s network (LTE) will be the same as AT&T’s, but that will likely not be built out sufficiently until 2011 at earliest.
2) Comparison to Blackberry sales, which are sold on multiple carriers, shows that Apple is neck-and-neck. Apple simply doesn’t need to sell on multiple carriers at this time.
3) Apple would do better growing their global market than trying to capture the Verizon market in the US. Why should Apple spend their resources on a much more technologically challenging and expensive project like a Verizon iPhone, when they can keep their focus on getting more customers in the global GSM market?
4) One reason Apple has been successful is precisely because they followed a single-carrier strategy. This allowed them to dictate more favorable terms, simplify their product lineup, and successfully execute a focused marketing campaign. Other vendors must cede concessions to the carriers, have complicated product matrices, and fracture their marketing efforts across those carriers and products. Had Apple simply copied the more established vendors’ strategies, they would likely have been just another phone vendor. Instead, Apple chose not to follow the herd and single-handedly created an entirely new market.
The article also notes that Google’s strategy for their Android phones is reminiscent of the old, failed way. This does not bode well for success against the iPhone.
