With the release of the Motorola Android-based Droid yesterday, Verizon Wireless is aiming to replicate AT&T's iPhone phenomenon, namely a surge in subscriber additions and average revenue per user. Of course, that phenomenon comes with strings: It required Verizon Wireless to loosen its grip on the customer, allowing customers to directly purchase data applications from third parties, bypassing Verizon's own services altogether.
Instead of Verizon's own content stores, there's Google's Android market rife with thousands of apps that Verizon doesn't get paid for when a customer downloads them. Google Maps Navigation debuted on the Droid as a free app that gives turn-by-turn directions instead of Verizon's $10 VZ Navigator service. And Google Voice and other VoIP apps will be allowed, which threaten voice revenues. Moreover, Verizon is embracing WiFi connectivity on the Droid along with a larger number of devices, including the BlackBerry Storm2.
Indeed, Verizon is learning that you have to give up control to gain subscribers. The Droid will be one of a number of Android-based devices Verizon plans to entertain, but it will still continue to have a mix of devices running on the network that will enable it to monetize content services. If customers want the Droid, they will have to pay a minimum of $70 per month--at least $40 for a voice plan (450 minutes) and $30 for an Email and Web for Smartphone plan. Pack enough of those on the network, and that's a nice bump in ARPU. Now we have to wait and see if this device becomes a true iPhone rival.--Lynnette