Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
After almost five years under an exclusive relationship with AT&T Mobility, Verizon Wireless announced the iPhone last week in New York for the operator’s 93 million subscribers. This is a very important development for both Apple Inc. and Verizon Wireless that will have long-term implications to the wireless market.
I remember the day that Apple announced the iPhone back in 2007. That afternoon, a friend came up and told me they were so excited to hear about the iPhone being introduced. They were going to go to their Verizon Wireless store (where they had a family plan) and pick up iPhones for the entire family. You should have seen the look on her face when I told her it was only available through AT&T. She commented, “Why would they do that?” The answer, of course, is very simple: Apple received a reported $50 million from AT&T Mobility to have a multi-year exclusive deal.
But there’s something else going on besides just taking money from AT&T Mobility. When you’re bringing out an entirely new product, you have to control how many new things you are trying to manage at the same time. Trying to launch the iPhone on both AT&T Mobility and Verizon Wireless at the same time would likely have caused even more problems than the ones AT&T Mobility experienced with activation and higher-than-expected demand. And, if you’re Apple and you want to bring out a product that will work just about everywhere, then going with AT&T Mobility was the right thing to do since Verizon Wireless uses CDMA – a technology that is not compatible with GSM that is used in Europe and much of the developed world.
And this brings up one of the real problems for Verizon Wireless subscribers who want to get the iPhone 4: It’s not going to work in Europe and many other places outside the United States. If you take it to Europe, the phone simply won’t work. Now, to be sure, Verizon Wireless has built other phones with international capability, so it is something that ultimately can be accomplished on their iPhone with additional effort and expense. Apple will have to add an international GSM radio to the U.S. CDMA radio so that the Verizon Wireless subscriber will be able to use their iPhone in Europe and most other places around the world.
Also, note that the new Verizon Wireless iPhone 4 does not include the latest, advanced 4G network called Long Term Evolution. Again, I believe they didn’t want to risk putting their latest technology in the very first phone, especially because Verizon Wireless has not completed the deployment of the advanced LTE network.
You can be assured that the next version of the Verizon Wireless iPhone will have both international capability and LTE, which will make it an even more popular hit to subscribers than the first version. For many subscribers – especially younger kids and students who don’t have to travel to places like Europe – the initial iPhone offering on Verizon Wireless will do just fine.
iPhone 4 on Verizon Wireless will also include new personal hot spot capabilities allowing customers to use iPhone 4 to connect up to five Wi-Fi enabled devices. This works in a similar manner as current mobile hot spot devices that provide Wi-Fi access for nearby mobile devices and wireless broadband on the back end.
The personal hot spot is a very clever way to provide wireless broadband to the Verizon Wireless iPad, which is sold as a Wi-Fi only model. If the Verizon Wireless customer buys an iPhone 4 and an iPad, they can use the Personal Hotspot to provide wireless broadband access to their iPad, and to the iPod touch and the user’s Mac or PC notebook for that matter. Apple allows the Verizon Wireless subscriber to power up to five mobile devices. I expect that Apple will offer this capability on all future iPhone models.
I’m pleased to see the iPhone available on Verizon Wireless. I believe that Apple should provide the iPhone to anyone who wants to buy it no matter what wireless operator they use. Hopefully, the iPhone will officially be announced on Sprint Nextel Corp. and T-Mobile USA Inc. in the United States in the not too distant future.
J. Gerry Purdy, Ph.D. is Principal Analyst, Mobile & Wireless, MobileTrax L.L.C. As a nationally recognized industry authority, he focuses on monitoring and analyzing emerging trends, technologies and market behavior in the mobile computing and wireless data communications industry in North America. Dr. Purdy is an “edge of network” analyst looking at devices, applications and services as well as wireless connectivity to those devices.
