The Verizon iPhone Is a Game Changer

Read this and weep, Android, BlackBerry, and AT&T (NYSE: T  ) fans. The January launch of the Apple (Nasdaq: AAPL  ) iPhone on Verizon (NYSE: VZ  ) appears to have turned the tide between iPhone and Android smartphones in the United States.

The AT&T iPhone has been notorious for dropped calls and, in some densely populated areas such as San Francisco and New York, often no signal at all. A March study by ChangeWave Research reinforced the popular view that the dropped calls were AT&T's fault. Many observers wondered whether the dropped-call issue was a reason Android smartphones began outgrowing iPhones in early 2010. Nielsen's latest survey of U.S. smartphone purchases suggests that it was, and now Verizon has come to the rescue.

Nielsen's data showed that Android still outsells Apple, but Android's share of sales has stagnated at 27% while the iPhone has surged ahead to 17%, up from 10% in February. Much of Apple's gain seems to be at the expense of Research In Motion's (Nasdaq: RIMM  ) BlackBerry.

OS Share, U.S. Smartphones Acquired in the Past Three Months

Smartphone OS

Feb. 2010

May 2010

Aug. 2010

Nov. 2010

Feb. 2011

May 2011

RIM

10%

12%

9%

9%

11%

6%

iPhone

8%

7%

12%

11%

10%

17%

Android

7%

9%

15%

21%

27%

27%

Source: Nielsen.com.

A market worth fighting over
Another notable development is that mobile-phone share is shifting to smartphones. According to Nielsen's May survey, 38% of U.S. mobile consumers now own smartphones, with 55% of the new handsets purchased from March through May being a smartphone instead of a feature phone. That's up from 34% in the year-earlier period.

Foolish takeaway
Nielsen's survey bodes well for both Apple and Verizon, and it's a negative for AT&T and Research In Motion -- as if we didn't already know about RIM's woes. Even the outlook for Android phones is less robust than if they had continued to gain share. Stagnation in the Android phone market could slow growth for smartphone makers such as Motorola Mobility (NYSE: MMI  ) , Samsung, and HTC.

There are potential spillover effects into the tablet market, too. The resurgent strength of iOS in smartphones could help the iPad continue its dominance, with negative implications for tablet makers such as Motorola Mobility, RIM, Samsung, Dell (Nasdaq: DELL  ) , Hewlett-Packard (NYSE: HPQ  ) , and, soon, Sony.

What do you think: Will iOS continue regaining share? Will Android continue to tread water? An easy way to stay on top of market developments is The Motley Fool's free new My Watchlist feature. You can get up-to-date news and analysis by adding these stocks to your Watchlist now:

Fool contributor Cindy Johnson owns no shares of any stock mentioned in this story. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple and AT&T and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (9) | Recommend This Article (10)

Comments from our Foolish Readers

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 July 03, 2011, at 12:37 PM, almypal2012 wrote:

    This writer is biased. I would never get an iPhone through Verizon! You cannot multi task on Verizon's antiquated network . Verizon didn't come to the rescue of anything !! There are 100% more smart phone users on AT&T than Verizon! Why don't u mention that? AT&T has a lot more benefits with their plans than Verizon . AT&T has rollover minutes, the A list, mobile to any mobile and that's what consumers want ! So get over it and stop trying to hype up being with Verizon , because theirs nothing good about Verizon!!

  • Report this Comment On July 03, 2011, at 12:57 PM, benbimmerz3 wrote:

    I had an ATT iPhone for a couple years and traded it in for a Verizon iPhone a few months ago. The phone has been worthless. I rarely get any service and the data speeds are horrifically sloooow. Verizon customer service was rude and I just switched back to ATT. I can handle the dropped calls compared to the awful experience I had with Verizon.

  • Report this Comment On July 03, 2011, at 1:21 PM, xmustang wrote:

    Writer is clearly either biased or ignorant of current events. She puts out this article on the heels of another report predicting a slump in iPhone sales.

    http://www.minyanville.com/dailyfeed/2011/07/01/has-verizon-...

  • Report this Comment On July 03, 2011, at 4:09 PM, ConstableOdo wrote:

    Wall Street has already indicated that iOS has already lost to Android and will probably also lose out to WP7 smartphones by 2015. Since WS's conviction is so strongly in favor of Android, there mut be a good reason. One of the key reasons why Apple shares have collapsed this year. Wall Street never bets on losers and clearly the Verizon iPhone hasn't helped any since it was already an old model pitted against all the new Android hotshot smartphones.

  • Report this Comment On July 03, 2011, at 4:48 PM, Davewrite wrote:

    @ xmustang:

    the number from this article are actual numbers. The article you linked to as you say is just a 'prediction' from one analyst:

    quote

    ", Goldman Sachs analyst Jason Armstrong predicts" (predicts !!!)

    Last quarter Goldman Sachs which are quoting here predicted Apple EPS to be 5.35, Apple came in at 6.4 !! that's whooping way off. Actually ALL 50 plus pro analysts from G.Sachs, Morgan Stanley etc FAILED to predict Apple's last quarter results accurately, ALL were way to low!

    some analysts last year predicted iPad would be under 50% market-share now with over 100 android tablets: iPad is actually 95% of the market.

    I would take 'predictions' concerning apple with a big fat pinch of salt.

  • Report this Comment On July 03, 2011, at 7:31 PM, pryan37bb wrote:

    Wow. There are people out there who think that the iPhone will soon be less popular than a Windows Phone?

  • Report this Comment On July 03, 2011, at 9:53 PM, Jon408 wrote:

    Yes, I have a comment; or rather a question. Who are these people posting?

    There were a couple of posts that actually made sense, but most of them either couldn't spell, couldn't put a sentence together correctly, used too many questions marks, or repeated themselves repeatedly in a repetitiously repetitive manner!!! (sic)

    You'd think that the $29 entrance fee would clear out the bermuda grass, and perhaps it did for awhile, but the idiots are back. TMF might want to weed the garden again.

  • Report this Comment On July 03, 2011, at 10:49 PM, baldheadeddork wrote:

    @pryan37bb: "Wow. There are people out there who think that the iPhone will soon be less popular than a Windows Phone?"

    It could happen. Nokia outsold Apple in smartphones by 2:1 last year, even though Symbian has major flaws compared to Android, iOS and WP7.

    Nokia's strength for the last decade has been in Asia. They've done a great job of building their brand in the emerging markets, and that's kept them a major player even as their share in Europe and North America has fallen dramatically. It's not an exaggeration to say that taking on Nokia in Asia would be like taking on Apple for music players in the US. Maybe not impossible, but the link between the company and the product is very strong.

    It is expected that Nokia will lose some market share in the switch from Symbian to WP7. The question is, how much. Symbian sales are going to fall sharply over the next few months because Nokia has announced that it is a dead OS. But what happens when they release their WP7 models? If Nokia can sell WP7 to their core markets, then yeah - WP7 is going to pass iOS in about a year.

  • Report this Comment On July 04, 2011, at 1:57 PM, Jim98122x wrote:

    This article began with " Read this and weep, Android, BlackBerry, and AT&T fans. The January launch of the Apple iPhone on Verizon appears to have turned the tide between iPhone and Android smartphones in the United States."

    I don't see anything in the story that follows that would allow you to conclude this was a negative for AT&T.

    What IS true:

    *Verizon is now selling iPhones

    So what? That doesn't mean any significant number of people are leaving AT&T to get their iPhone on Verizon. In fact, all the data I've seen points to EXISTING Verizon customers buying iPhones, not switching from AT&T. AT&T's churn is still low. They're not losing customers to Verizon-- whether it's true or not that the CDMA version is better than the GSM version.

    Increased CDMA iPhones is good for Apple.

    More iPhone customers MIGHT be good for Verizon.

    Neither of these necessarily lead to a negative for AT&T.

    Regarding the "which is best?" arguments about tablets: Just because any number of tablets MIGHT be technologically superior to the iPad, that doesn't necessarily spell doom for Apple. I'm sure some are (or will be) better. Apple will still sell tons of iPads to tons of people who love them whether they know what they're buying or not. A superior product doesn't guarantee you the #1 spot in sales. Anyone knows that. So stop wasting your breath pointing out six ways till sunday why the iPad sucks. Consumers don't always buy rationally.

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