iPhone 4 Arrives at Verizon Wireless: Who Will be the Biggest Winners?


On February 10, we’ll begin to find out how much the Verizon Wireless +iPhone4 combination impacts competitors’ market shares.  I completed a project a year ago that included conducting a primary survey on mobile service and device customer satisfaction, and brand preference.  Results showed an  overwhelming interest in the above – the most desirable service provider combined with the most desireable device. 

But a lot has happened between then and now.  Unlike many commentators, I think that in the near term, adoption of this combination probably will say more about Apple vs. Android and Microsoft than it will about Verizon Wireless vs. AT&T Mobility.  Here’s why:

1.       Most people and businesses would want to keep their current phone numbers.  Although wireless number portability exists (WNP), there have been no significant mass migrations to really stress test carrier systems (the FCC has specified that wireless porting should be completed within a 48-hours window).  In particular, business customers will need to think this through—if they switch, how will they deal with service unavailability windows in which they have no control over the start time?  And what about contingency plans in the event that carrier problems prolong this window? 

2.       Most wireless customers are on term contracts – consumers 1 or 2 years, most businesses-2 years (some 1 year).  So, without financial incentives, the market won’t move swiftly.  Verizon Wireless could accelerate migration by offering to rebate customers for the switching expenses they would incur, but I think this is highly unlikely on anything except a very significant enterprise deal. 

3.       Verizon Wireless’ advertised 3G footprint doesn’t always live up to customer expectations, particularly in areas with less dense populations.  Given the company’s strategic focus, I expect this to continue going forward.  This matters – right now, one of my F 500 clients is switching from Verizon Wireless back to its former provider due to 3G coverage issues. 

4.       Bottom line:  Assuming ATT does nothing to try to stem the tide, I think people will think about switching more than we’ll see them switch this year.

5.       But ATT is doing something.  It’s offering new data plans.  It’s also publicly said it’s speeding up both its HSPA+ and LTE deployments.  So much so that several sources tell me of some ATT budget cuts in areas not remotely related to wireless.  Since ATT hasn’t revised its Wall Street earnings forecasts, clearly that money is going somewhere else.

6.       Thus the impact of this highly desirable provider-device combination on wireless carrier migration, even after 1 year, may be less than Verizon Wireless desires and ATT fears.

But this year, the impact on device share could be a very significant story.  For 2011, I’d venture to say that 70%+ of the Verizon Wireless iPhone 4 activations will be from current Verizon Wireless customers.  How much will that eat into Android’s and Microsoft’s future growth?  We’ll literally know in a matter of months.

What does this mean to UC users?  If your company is considering using FMC functionality on devices that include the iPhone 4, it’s natural that you’d want to do this with one service provider.  But depending on your employees’ calling and use circumstances, some of the issues I discussed above could impact the speed at which you’ll really be able to migrate to one provider, or even the desirability of doing so.   Obviously you’ll need to do some homework to make an accurate assessment.  However, there’s one certain benefit:  having greater device/provider choice can be very helpful in your negotiations with mobile providers.  And you can take advantage of that benefit at your very next contract negotiation.   

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