Verizon and Apple: When Will They Dance?

By Dr. Harsh K. Luthar

Verizon customers have been waiting to get an iPhone for several years. Most have stayed loyal to Verizon due to Verizon’s wider network. However, the hope has been kept alive that when AT&T’s exclusive hold on the iPhone ends, Verizon will add the iPhone to its offerings of smart phones.

Verizon for its part, has firmly had the “we are interested but certainly not desperate to get the iPhone” strategy in place for several years.

Verizon chairman and CEO Ivan G. Seidenberg has been suggesting for sometime now that they have iPhone on the radar. Here are two quotes from Business Week (October 26, 2009).

“This is a decision that is exclusively in Apple’s court,” said Seidenberg. “We obviously would be interested in any point in the future they thought it would make sense for them to have us as a partner. And so we’ll leave it with them on that score.”

“We have expanded our base of other devices,” explained Seidenberg. “So our view is to broaden the base of choice for customers and hopefully along the way, Apple as well as others will decide to jump on the bandwagon.”

Consistent with its general orientation of offering a broad set of alternatives to customers, Verizon has recently been pushing phones with Google’s Android software as a competitive alternative to Apple’s phone.

Verizon wants to dance with Apple but feels Apple must ask it to. Meanwhile, everyone waits.

Despite Verizon’s playing it cool about the iPhone, Verizon customers are increasingly frustrated by not having the option to get the iPhone while staying on Verizon’s better network. However,  It seems like things are now about to change and that Verizon and Apple collaboration is imminent.

Verizon ended the quarter with 222,927 employees, 7,413 fewer than it had in September.  Chief Financial Officer John Killian said the company cut 13,000 jobs on the wireline side last year, and expects a similar number of cuts this year. Customers are giving up their lines in favor of using only cell phones or phone service from cable companies

The wireless business is what is expected to continue growing. It seems to me, and probably many others, that Verizon now needs the iPhone as part of its overall wireless strategy and smartphone options.

Apple, on the other hand, surged in quarterly profit and revenue.  Apple reported a quarterly profit of $3.38 billion, or $3.67 a share, up from $2.26 billion, or $2.50 a share, a year earlier. Revenue increased to $15.68 billion from $11.88 billion.

“The growth was fueled by strong sales across most of Apple’s product lines as iPhone shipments more than doubled and Macintosh computer sales climbed 33%.”….”What this demonstrates is the strength of Apple’s brand in good and bad times,” said Bill Kreher, an analyst with Edward Jones.” For more details see the Wall Street Journal (January 25, 2010).

While Apple continues to be successful, it can see the hand writing on the wall. Verizon customers are not going to switch in masses to other carriers for the iPhone. Logically, Apple has to be feeling the pressure from its customers and shareholders for opening up the iPhone to Verizon and possibly other carriers to gain more customers.

Today (January 27, 2010), Apple will unveil its Tablet. The Apple Tablet is said to run iPhone software.

According to an Apple Partner, McGraw-Hill’s, the Apple Tablet being unveiled will be based on the iPhone operating system.  CEO of McGraw-Hill, Terry McGraw stated the following on CNBC yesterday (January 26, 2010):

Yeah, Very exciting. Yes, they’ll make their announcement tomorrow on this one. We have worked with Apple for quite a while. And the Tablet is going to be based on the iPhone operating system and so it will be transferable. So what you are going to be able to do now is we have a consortium of e-books. And we have 95% of all our materials that are in e-book format. So now with the tablet you’re going to open up the higher education market, the professional market. The tablet is going to be just really terrific.

So if the Apple Tablet will run on the iPhone software, will Verizon sell the Tablet to its wireless customers?  Will Verizon tell the customers that the Tablet is just a different looking iPhone.

Bizarre scenario? One never knows. Also the power of marketing should not be underestimated.

If Verizon customers can make wireless calls from the Tablet, it may open up a new market for Apple. Of course the Tablet would not fit in anyone’s pocket. On the other hand, many Verizon customers who have been waiting for an iPhone for the Verizon network might find that, at least for now, that is the only way to go.

Well, we are all waiting for the Apple announcement later this afternoon. Let us see what comes up!

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