The iPad isn’t even in customer hands yet and already the rumor mill has re-focused on the next iPhone and, surprise, surprise, people are talking about a Verizon version… again. And again, no one is really thinking about why or why not such a move makes sense.
The pro argument is the same as ever: market share. A CDMA version of the iPhone would be compatible with the Verizon and Sprint networks. Teaming with Verizon, the biggest wireless provider in the U.S., would enable them to reach millions of new customers. But at what cost?
The argument that a CDMA version is just a matter of swapping a chip isn’t accurate. There’s also the SIM card slot, which is a small thing but it makes up a measureable chunk of a handheld device. Then there’s the resulting difference in device set-up, which isn’t an issue when the wireless provider is selling the device, but Apple sells them direct.
There’s also the ability to surf the web while on a call, which Apple has made a point to emphasize this past year. That simply isn’t possible on a CDMA network yet. Thus, a Verizon iPhone will put Apple in a position where they must backtrack on their current message and contend with an inconsistent user experience. They’ll also need to tweak the OS to deal with this.
And let’s not forget, CDMA is largely U.S. only. Access to Verizon customers would double Apple’s potential customer pool only in the U.S. From a global perspective, that’s not very much. For immediate customer growth, T-Mobile makes more sense; they use GSM and are already partners in Germany.
For most companies, these obstacles would be minor considerations compared to the prospect of pulling in more customers. But Apple isn’t most companies. If they were, they’d be selling Windows PC at a loss instead of earning 30% of the profit share with only 5% market share in the PC market. As long as the iPhone continues to pull in new customers to AT&T (and the profit that comes with it), the expense of tooling a new factory, retraining and re-equipping employees, and splitting the user experience in exchange for a modest increase in global market share makes little sense.
Right now, Apple has a sweetheart deal with AT&T, giving them a nice piece of the service revenue and allowing them to negotiate killer deals like the iPad no-contract, cut-rate 3G plan. The problems are shoddy service in some urban areas, like San Fran and NYC, and the elusive tethering plan. As Amy has pointed out, AT&T has a 100-day plan in effect, but real improvements will require long-term investment. Unless AT&T has really crappy lawyers, I suspect Apple is signed up to see those through.
All that said, nothing lasts forever. A new CDMA standard that allows simultaneous voice and data is due soon. The iPhone growth as an AT&T exclusive will eventually peak. Apple could decide to partner with Verizon at some point. I just don’t see the pieces coming together this year.