Jan. 11 (Bloomberg) -- Google Inc. may lose
business as Verizon Wireless starts selling Apple
Inc. ’s iPhone, giving the carrier’s customers a
new alternative to smartphones running the
Android operating system.
Verizon is set to announce plans in New York
today to bring the iPhone to its network,
according to a person familiar with the matter. A
Verizon iPhone may cannibalize about 2 million
Android phone shipments a year, said Dan Hays,
partner at management consultant firm PRTM.
Gartner Inc. says 20.5 million Android devices
were sold in the third quarter.
“A lot of people who bought Android phones
were buying it in lieu of an iPhone because they
couldn ’t get one on the Verizon network,” said
Charlie Wolf, a Needham & Co. analyst in New
York.
At AT&T Inc. -- now the exclusive U.S. iPhone
carrier -- the device accounted for 80 percent of
smartphone purchases in the third quarter, said
Gene Munster, an analyst at Piper Jaffray Cos. in
Minneapolis. If that ’s any indication, many
Verizon Wireless customers will pick the iPhone
over Android- based devices. Even Verizon ’s
existing Android users may switch, he said,
estimating that as many as half may opt for the
iPhone.
Apple would ship about 9 million iPhones this
year through a partnership with Verizon, Munster
predicted. That ’s in addition to 11 million units
through AT&T. He estimated that AT&T shipped
15.6 million of the devices last year.
While Apple manufactures and maintains strict
control over the handsets that run its software,
Google supplies Android to a range of phone
makers, such as Motorola Mobility Holdings Inc.
and Samsung Electronics Co.
First-Quarter Sales
Android has become a top-seller in the U.S.,
according to ComScore Inc., accounting for 26
percent of the smartphone market in November,
compared with 25 percent for the iPhone.
BlackBerry maker Research In Motion Ltd. was
first with more than 33 percent.
Tero Kuittinen, an analyst with MKM Partners LP,
said sales of Android phones at Verizon in the
first quarter may be cut in half as a result of a
Verizon iPhone introduction. Still, he doesn ’t
expect the impact to last because the carrier will
likely begin promoting its faster long-term
evolution network in the second quarter.
Several Android-based LTE-compatible phones
are set for release in the first half. An iPhone on
the LTE network may not be available until later,
said analysts including Kuittinen.
For now, “most of the LTE marketing spend will
go to Android,” Kuittinen said.
Trading Up
Apple may do a better job than Google in helping
get more Verizon users to switch to a
smartphone for the first time, said Carl Howe, an
analyst at the Yankee Group, a consulting firm in
Boston. About 38 percent of AT&T customers
use a smartphone, compared with about 30
percent of Verizon’s, he said. IPhone users’ bills
are about $120 a month, compared with about
$40 to $80 for users of a regular feature phone,
according to Howe.
“If they can get people who are currently on
feature phones to upgrade, that would be huge
because smartphone users pay a lot more, ”
Howe said.
Google representatives didn’t immediately
respond to requests for comment outside regular
business hours.
Google would benefit if AT&T starts to more
heavily promote Android devices after losing its
exclusivity with the iPhone, Kuittinen said. This
quarter, Motorola will roll out through AT&T its
Android-based smartphone that sports a so-
called dual- core processor, capable of handling
more tasks simultaneously. The new handset is
likely to be heavily promoted, he said.
AT&T’s Response
“Now that AT&T has an incentive to promote
Android more than it’s done until now, Android
there will grow,” Kuittinen said. “It’s going to
compensate for much of the decline at Verizon.”
AT&T has been cutting prices for the iPhone and
upgrading its network to keep customers from
switching to Verizon. The company reduced the
price of the iPhone 3GS, a generation behind the
current version, to $49 last week. The company
suffered from customer complaints about
dropped calls and slow speeds as traffic from the
device overwhelmed parts of its network.
Even if iPhone software gains ground in the U.S.,
it may lose share globally as consumers abroad
snap up Android-based phones, said Will
Stofega, program director at research firm IDC in
Framingham, Massachusetts.
--With assistance from Olga Kharif in Portland,
Douglas MacMillan in San Francisco and Amy
Thomson in New York. Editors: Lisa Wolfson,
Tom Giles.
Source: Http://www.businessweek.com/news/2011-01-11/google-s-android-is-likely-to-lose-out-as-verizon-sells-iphone.html
business as Verizon Wireless starts selling Apple
Inc. ’s iPhone, giving the carrier’s customers a
new alternative to smartphones running the
Android operating system.
Verizon is set to announce plans in New York
today to bring the iPhone to its network,
according to a person familiar with the matter. A
Verizon iPhone may cannibalize about 2 million
Android phone shipments a year, said Dan Hays,
partner at management consultant firm PRTM.
Gartner Inc. says 20.5 million Android devices
were sold in the third quarter.
“A lot of people who bought Android phones
were buying it in lieu of an iPhone because they
couldn ’t get one on the Verizon network,” said
Charlie Wolf, a Needham & Co. analyst in New
York.
At AT&T Inc. -- now the exclusive U.S. iPhone
carrier -- the device accounted for 80 percent of
smartphone purchases in the third quarter, said
Gene Munster, an analyst at Piper Jaffray Cos. in
Minneapolis. If that ’s any indication, many
Verizon Wireless customers will pick the iPhone
over Android- based devices. Even Verizon ’s
existing Android users may switch, he said,
estimating that as many as half may opt for the
iPhone.
Apple would ship about 9 million iPhones this
year through a partnership with Verizon, Munster
predicted. That ’s in addition to 11 million units
through AT&T. He estimated that AT&T shipped
15.6 million of the devices last year.
While Apple manufactures and maintains strict
control over the handsets that run its software,
Google supplies Android to a range of phone
makers, such as Motorola Mobility Holdings Inc.
and Samsung Electronics Co.
First-Quarter Sales
Android has become a top-seller in the U.S.,
according to ComScore Inc., accounting for 26
percent of the smartphone market in November,
compared with 25 percent for the iPhone.
BlackBerry maker Research In Motion Ltd. was
first with more than 33 percent.
Tero Kuittinen, an analyst with MKM Partners LP,
said sales of Android phones at Verizon in the
first quarter may be cut in half as a result of a
Verizon iPhone introduction. Still, he doesn ’t
expect the impact to last because the carrier will
likely begin promoting its faster long-term
evolution network in the second quarter.
Several Android-based LTE-compatible phones
are set for release in the first half. An iPhone on
the LTE network may not be available until later,
said analysts including Kuittinen.
For now, “most of the LTE marketing spend will
go to Android,” Kuittinen said.
Trading Up
Apple may do a better job than Google in helping
get more Verizon users to switch to a
smartphone for the first time, said Carl Howe, an
analyst at the Yankee Group, a consulting firm in
Boston. About 38 percent of AT&T customers
use a smartphone, compared with about 30
percent of Verizon’s, he said. IPhone users’ bills
are about $120 a month, compared with about
$40 to $80 for users of a regular feature phone,
according to Howe.
“If they can get people who are currently on
feature phones to upgrade, that would be huge
because smartphone users pay a lot more, ”
Howe said.
Google representatives didn’t immediately
respond to requests for comment outside regular
business hours.
Google would benefit if AT&T starts to more
heavily promote Android devices after losing its
exclusivity with the iPhone, Kuittinen said. This
quarter, Motorola will roll out through AT&T its
Android-based smartphone that sports a so-
called dual- core processor, capable of handling
more tasks simultaneously. The new handset is
likely to be heavily promoted, he said.
AT&T’s Response
“Now that AT&T has an incentive to promote
Android more than it’s done until now, Android
there will grow,” Kuittinen said. “It’s going to
compensate for much of the decline at Verizon.”
AT&T has been cutting prices for the iPhone and
upgrading its network to keep customers from
switching to Verizon. The company reduced the
price of the iPhone 3GS, a generation behind the
current version, to $49 last week. The company
suffered from customer complaints about
dropped calls and slow speeds as traffic from the
device overwhelmed parts of its network.
Even if iPhone software gains ground in the U.S.,
it may lose share globally as consumers abroad
snap up Android-based phones, said Will
Stofega, program director at research firm IDC in
Framingham, Massachusetts.
--With assistance from Olga Kharif in Portland,
Douglas MacMillan in San Francisco and Amy
Thomson in New York. Editors: Lisa Wolfson,
Tom Giles.
Source: Http://www.businessweek.com/news/2011-01-11/google-s-android-is-likely-to-lose-out-as-verizon-sells-iphone.html
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