Last week when Steve Jobs had trouble with his iPhone during a demo at the World Developer’s Conference he asked a tech guy for suggestions, and someone in the audience yelled, “Verizon,” clearly a suggestion that AT&T doesn’t cut it. Of course, the problem wasn’t about carrier, it was a Wi-Fi issue. But it did serve to remind everyone there that AT&T’s networks – especially in cities such as San Francisco and New York – can be a little clogged at times.
The Verizon suggestion has been passed around quite a bit. Rumors have circulated that Verizon Wireless would get the iPhone this year, but then rumors said it won’t happen any time soon. That heated ad campaign showdown between AT&T and Verizon probably didn’t help Verizon’s cause any. And in all truthfulness Verizon seems to be doing OK without the iPhone. It is the number one carrier in America, and has plenty of Android handsets, BlackBerry devices and other mobile phones to keep its loyal customers happy.
So it comes as no surprise that last week Kaufman Bros. analysts put out a report that suggests that there will be a non-AT&T iPhone sooner than later, and it probably won’t be for Verizon. In fact, T-Mobile seems to be the most likely candidate, with a handset by fall or early 2011.
The reason is beyond a war of words, and more a practical measure. T-Mobile uses the same type of mobile network for its 3G phones, UMTS/HSPA, compared to Verizon’s CDMA. Thus bringing out the iPhone to T-Mobile would be easier for Apple than it would to bring it to Verizon. The other notable reason, which is just a rumor at this point, is that Verizon likely didn’t care for Apple’s terms. Again, Verizon is already the largest carrier, and while an Apple iPhone would give the carrier a boost, if the terms aren’t agreeable businesses don’t go forward. T-Mobile on the other hand is trailing Verizon and AT&T so it might be more amendable to such a deal.
But one factor that is still generally overlooked is that Apple really needs the carriers as much – and if not more – than the carriers need Apple. There are plenty of options with handsets, and the iPhone still has a ways to go to catch the BlackBerry, plus has increasing competition from Google with its Android handsets. Thus finding another carrier beyond AT&T could become increasingly more important if the iPhone is to maintain momentum.
This is clear because it isn’t so clear on how many times iPhone users are going to be willing to upgrade, and for the carriers it offers another issue – can you really sign up people for two-year contracts when you know Apple is going to have another update to the iPhone in a year. AT&T responded this year by announcing that it would relax the contracts for those who bought an Apple iPhone 3GS last year and wish to upgrade to the iPhone 4 this year. This is a bit of a win-win for AT&T as it extends the contracts for its users, but it comes at a cost. The carrier is essentially carrying those who upgrade as it still has to pay Apple for the handsets sold.