Verizon Launches iPhone 4, But Without LTE

Verizon Wireless duly launched its long awaited iPhone, though the only distinguishing feature of its version - apart from the CDMA radio - will be a choice of black and white color schemes (a white iPhone for other carriers has been repeatedly delayed). Hopes of a Verizon-specific device, even one with LTE, were dashed, so most of the interest will be in the impact on AT&T, and also on Verizon's other smartphone partners.

Focal Points:

• Motorola has already warned of the hit it will take from Verizon's new handset, and it remains over-reliant on the CDMA carrier. It came up with a strong defense against defections from its Droid family to the iPhone, with the CES launches of the Bionic LTE handset and the Xoom tablet, but the former will not ship until midyear. However, the lack of an LTE iPhone, probably until 2012, will be a major relief for Motorola and the other big Verizon Android partners, HTC and Samsung.
• Verizon Wireless' COO Lowell McAdam told the event in Lincoln Center, New York, that the iPhone 4 would be available on its network from February 10, with a 16Gb model priced at $199.99 with two-year contract, and 32Gb at $299.99. Existing Verizon subscribers can pre-order from February 3. Apart from the white colorway, the bid to woo iPhone users from AT&T will rest on the superior reputation of Verizon's network, and some relatively minor differentiators, such as the ability to use the handset as a personal hotspot, to backhaul up to five Wi-Fi gadgets (including an iPad). It will also rely on the data tariffs with which the carrier lures users, but these have not yet been detailed. Verizon has been reported to be planning an unlimited $30 data plan with the Apple gadget, even though it has been moving towards tiered pricing with other high-end offerings. AT&T has introduced data caps, with a $25 iPhone plan limited to 2Gbytes.
• Apple, of course, will hope that Verizon sells its iPhone to users who currently have other handsets. Sales at AT&T have been increasingly reliant on upgrades for existing iPhone owners and the base needs a new injection of growth. Apple COO Tim Cook told the launch event that the vendor was "very excited to bring the iPhone to Verizon's 93m customers and new customers who want to use the iPhone 4 on Verizon".
• McAdam said Verizon and Apple had started talking about a CDMA iPhone in 2008 and had spent much of the time since in designing and testing the product "to make sure it would come up to the standards of Verizon" - a scarcely veiled strike at the performance problems that have dogged the AT&T version. These have been blamed on the cellco's network issues, but Apple should take a share of the responsibility too, and AT&T has discussed the lack of understanding of mobile technologies among Apple teams, in the early years.
• Verizon will benefit from many of the lessons learned at AT&T, and so has clearly decided not to risk being the guinea pig this time around, for LTE. Even though Motorola, Samsung, LG and HTC have unveiled LTE smartphones that apparently come up to Verizon's famously rigorous quality standards, Apple's Cook said it was too early for an LTE iPhone, and that the first generation of LTE chipsets would "force design compromises" as well as further shipment delays for Verizon customers.
• Cook also stressed that Verizon did not have an exclusive for the CDMA iPhone. This could open the way for a Sprint version, but more importantly to Apple's attempts to grow market share in the face of the Android tide, it should lead to models being launched by other major CDMA carriers, potentially those in Korea, Japan, India and China.
• By doubling US distribution for the iPhone, Apple could gain 15m units this year via Verizon, according to forecasts by Gene Munster at Piper Jaffray, which would match his estimate that AT&T's sales will be flat at 15m too. AT&T claims it will not feel a major impact in terms of churn because most of its iPhone users are on sticky family or corporate plans, but it will find it harder to win new customers with the Apple handset, and will have to step up its efforts with other smartphones.
• However, it has been gaining fewer and fewer new subscribers as the iPhone becomes an upgrade device, and so a more important aspect of its fight with Verizon Wireless this year is likely to focus on network speeds, as it tries to persuade the public its HSPA+ system really is '4G' like Verizon's LTE.

Editor’s Note: After hearing that many of our local high school students (on Long Island) have switched to BlackBerry’s as a result of the BBM application, Experton Group conducted research to see if this is a local phenomenon.  It turns out that BB is the smartphone of choice for developing countries, such as in Latin America, due to this feature and the lower cost (1/3 of iPhone).