Seriously, No iPhones for Verizon!

Seriously, people: Verizon (NYSE: VZ  ) will not get an Apple (Nasdaq: AAPL  ) iPhone anytime soon. It's nothing but wishful thinking by iPhone fans growing tired of the AT&T (NYSE: T  ) network experience.

I'm not here to quote any nebulous inside source, or the usual runaround. Instead, I'm reading the tea leaves spelling out this undeniable message. First we had a print ad by Verizon and Motorola (NYSE: MOT  ) that flat-out makes fun of the iPhone. That's not how you start a partnership with Apple, friends.

This time, it's Verizon CEO Ivan Seidenberg telling us in so many words at the Goldman Sachs Communacopia Conference this week that the iPhone is not headed his way, followed by a lucid explanation of why it doesn't matter:

We have worked hard at building a franchise out of Droid, which proves that if there is an acceptable alternative to the iPhone, and a great network, and a great distribution channel, the market will go there for it. We don't feel like we have an iPhone deficit. We would love to carry it when we get there, but we have to earn it. We have to show all the suppliers that we have equal treatment, and we have a network for people to put all of their equipment on.

In other words, Samsung Galaxy S and Droids by Motorola, Samsung, and HTC are filling the iPhone void quite nicely, thank you very much, and Apple needs to get in line like everybody else if it wants to sell iPhones in our stores.

The main thrust of Verizon's strategy right now is 4G technology anyway, including the rollout of an LTE network in about 30 major markets by the end of the year. Throwing a decidedly 3G-flavored iPhone launch into that mix would take away from the marketing message that Verizon wants to convey, and nobody expects a 4G iPhone until next summer at the very earliest. And that segment of the presentation ended with a zinger: "Hopefully, at some point Apple will get with the program."

It's still in Apple's best interests to add Verizon and other CDMA-oriented networks to its iPhone reseller network, because that expands the market for this gadget by leaps and bounds both in America and elsewhere. But don't expect a CDMA iPhone anytime soon, given that both Verizon and Sprint Nextel (NYSE: S  ) are busy with their 4G programs.

Fool contributor Anders Bylund believes in magic in a young girl's heart, but not in Verizon iPhones before 2012. He holds no position in any of the companies discussed here. Sprint Nextel is a Motley Fool Inside Value choice. Apple is a Motley Fool Stock Advisor selection. The Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


Read/Post Comments (14) | Recommend This Article (12)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 24, 2010, at 9:09 AM, fanbelted wrote:

    I just don't get it. AT&T could have used this huge iphone opportunity to really build out their network and blow the doors off Verizon. This is a chance-in-a-lifetime kind of opportunity! But instead, they just sat back, raked in all the money, and ignored their customers' screams of pain. Now, not only are they stuck at the No. 2 spot in U.S. market share, but they've generated unimaginable amounts of ill-will from their millions of customers, who would jump ship if it weren't for their love of iphone. Is their board of directors run by monkeys??? Seriously, I think Apple should use some of its billions in cash on hand to buy up AT&T, then make the network build-out happen.

  • Report this Comment On September 24, 2010, at 9:13 AM, TMFMarlowe wrote:

    I dunno, man... there's an awful lot of smoke rising on this one. It doesn't make sense to me either -- roll out a CDMA phone for what, 6 months? -- but it's really starting to seem likely that there's something going on there.

    John Rosevear

  • Report this Comment On September 24, 2010, at 9:43 AM, mnosense wrote:

    iPhone doesn't matter anymore. Whoever wanted an iPhone bought it already, the others just don't care.

    iPhone is just a hype, these fans don't know the other phones. Can I say they're just dumb? Stuck with whatever Apple offers, declare that's the ultimate features.

  • Report this Comment On September 24, 2010, at 9:48 AM, TheRusty wrote:

    Bing - we have a winner! Excellent call Anders!

    It does not take any tea reading skill to see that Apple is telling Verizon "We are not like everyone else. We are the iPhone!"

  • Report this Comment On September 24, 2010, at 10:49 AM, Henry3Dogg wrote:

    American is clearly a very different language that English.

    There seems to me no logical route from the Verizon statement, to your interpretation.

  • Report this Comment On September 24, 2010, at 10:58 AM, frebra wrote:

    I have and had both AT&T & Verizon products for many years in business and home use. I plan to combine all to AT&T. As far as this 'little' customer with 825 employees, AT&T far exceeds VZ products, reliability and customer relations. Make your own comparisons ! ! VZ is overdue for M/A by whoever will have them.

  • Report this Comment On September 24, 2010, at 11:28 AM, garceman wrote:

    In my estimation, Ivan is one sharp cookie and has

    a great team around him ..

    it should be obvious to anyone that trying to have

    a business partnership with AAPL is kind of

    like lining your shorts with nettles before putting

    them on ..

    it will be much better for VZ if they can attract

    smartphone users with their own strategy , than to become hostage to an outfit like AAPL..

    So far , VZ hasn't let VOD push them around ,

    nor dictate anything to them , AAPL is like

    a nit .. a gadget maker , sure they have had

    a nice run ,but they are too maverick and

    not a good company to get wrapped up

    with .. later .. garce

  • Report this Comment On September 24, 2010, at 11:31 AM, DefunctAcct wrote:

    Verizon does not need Apple. Apple does not need Verizon. Apple is not adverse to doing business with number 2's; as is obvious in China. Apple will do what is most beneficial to its business and its partners.

    Why would Apple bother with CDMA phones for Verizon at this time when Verizon's CDMA technology is old and cannot support voice and data simultaneously? Why would Apple distract itself when its iPhone 4 is selling every unit that comes off the manufacturing line?

    All these iPhone on Verizon rumors are started by analysts who are trying to buttress Verizon values and may be manipulate Apple prices at the same time.

    T-Mobile and ATT are both moving to LTE. If Apple wants to expand its carrier in the US, Apple can easily expand to include T-Mobile.

    Sprint has been aggressively building out WiMax and has been keenly interested in the iPhone. If Apple wants to build a WiMax enabled phone with CDMA back-up, Spring is another potential partner.

    Why is everyone so easily led to believe that it must be Verizon?

    Verizon is famous for relegating device makers to "slave" status. Verizon is less about working with you and more about working for itself. Apple has a valuable brand to protect, so why should it bother with Verizon's win-only-for-me stance?

    iPhone will not be coming to Verizon any time soon. It may never happen.

  • Report this Comment On September 24, 2010, at 11:41 AM, SkippyJohnJones wrote:

    I can't see Ivan going back on those words anytime soon. It will take a major shift in market forces to get him to eat crow and begin to carry the iPhone.

    Separately, the author makes the same faulty point I have seen in countless articles about LTE (4G). Today's 3G phones all have a 2G radio built in for when high speed coverage is inadequate. Does anyone seriously believe that LTE rollout will be sufficient any time in the next 3 years to do away with CDMA or GSM completely?

    Even the new Sprint "4G" devices spent most of their time on a slower connection. Also, 4G is a battery hog. Smartphones are all pretty weak in the talk-time department because they are trying to appeal to the data needs of their customers by using the fastest radios. Apple could easily release a 4G iPhone tomorrow, but nobody could carry the thing effectively. Customers would flock to their blogs to whine about Apple's broken promises because of carriers' inadequacies, and this would be the case with Verizon just as with any other major provider.

  • Report this Comment On September 24, 2010, at 11:54 AM, DefunctAcct wrote:

    For 4G capabilities, many developing regions of the world (Southeast Asia, Eastern Europe) are betting on WiMax. Business travel often takes us to those areas.

    If Apple wants to expand beyond just LTE and GSM, WiMax is the way to go. There are many players implementing LTE and WiMax technologies; Verizon is just one lonely CDMA + LTE player limited to US soil.

    Apple can simply work with ATT (LTE), T-Mobile (LTE) and Sprint (WiMax) in the US and the same mix of players worldwide. iPhones and iPad then will easily be worldwide devices capable of accessing the airwaves around the globe. Why should Verizon's old limited CDMA demand any immediate attention?

    At this point, T-Mobile is the one US company with nearly identical technology (GSM & HSPA+ & LTE) as ATT. All current generation iPhones capable of GSM & HSPA+ will work on T-Mobile without changes. It will be a seamless experience for iPhone owners. Apple will want to do that for its customers.

    Sprint has proven that iPhone can work with WiMax, so Sprint is the next logical candidate in the US.

    Verizon has both technical (CDMA) and business (Verizon-First) barriers against the iPhone at this point. The technical barrier will go away when Verizon finally runs on LTE but the business barrier will remain. Until Verizon treats Apple's iPhone differently, Apple devices will not show up on Verizon.

  • Report this Comment On September 24, 2010, at 5:02 PM, hug4life wrote:

    I've been using Apple's hardware for a long time. But I have a phone on the Sprint network and have no plans on leaving my carrier for an iPhone, even if Verizon did add it to their catalog.

    Apple should make their iPhone available on the other major carriers. If Palm can do it with their struggling Pre and Pixi phones, so can Apple.

    I predict Android dominance in 2011, if Apple doesn't share the love.

  • Report this Comment On September 24, 2010, at 10:55 PM, DefunctAcct wrote:

    "Android dominance" is neither here nor there.

    Android-based devices are produced by 12+ manufacturers against a single iOS device maker. Of course Android-based devices will be "dominant" in terms of unit count.

    Dumb cheap cell phones overwhelm so-called smart phones today. Nokia is the lone undisputed leader in that category. So?

    Of the 12 manufacturers, none has OS capabilities. All are hardware makers. None have any ecosystem capabilities. All rely on what Google can provide. There is no differentiation, there is low profit margin, and they will race each other to the bottom.

    I fail to see why people keep talking about Andoid based devices outselling iPhone (1 iOS device) or all iOS devices, for that matter. Does GM having been world's top manufacturer mean anything to Mercedes? BMW?

  • Report this Comment On September 25, 2010, at 12:26 PM, plange01 wrote:

    verizon is doing great without iphone.when you really get down to it i doubt iphone ever added a penny to att stock!

  • Report this Comment On September 27, 2010, at 12:07 PM, Ivan0310 wrote:

    @silivalley:

    You're partially right. Apple has just happened to include a GSM chip in their hardware that is capable of supporting both AT&T's and T-Mobile's voice/data spectrums.

    T-Mobile USA and AT&T actually operate on different spectrums--their networks aren't totally compatible and only a select few phones can dance on both of their airwaves.

    Also 4G is 4G and not WiMax, a technology that Clearwire as well as Sprint Nextel will eventually abandon themselves. WiMax is kind of like a taste of a real 4G data network and not actually 4G itself. LTE is the only true 4G network which will be available from the two biggest in the country next year.

    T-Mobile on the other hand is touting their supposed 4G network when really all they plan to do is to roll out an upgraded HSPA+ (3G) network soon. AT&T has promised the same by the end of this year as well as a full-fledged LTE rollout midway next year in all 30 major markets just the same as Big Red. Moreover, I know people who have unlocked iPhones to work with T-Mobile's network, and the experience is not seamless.

    Lastly, iPhones only work with WiMax via a Clear 4G hotspot. This is using the iPhone's or any other phone's WiFi feature in conjunction with Sprint's subsidized MiFi device. Not the same as true access and compatibility with Sprint's network.

    All in all, Apple has a lot of work to do in order to make their hardware ready for non-GSM networks and considering that GSM reigns supreme in the rest of the world, they don't have much incentive to.

    The best thing in their immediate future is to prepare for LTE networks and make sure that their hardware will play nice.

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