If Apple were to ink a deal with Verizon Wireless to offer the iPhone to its subscribers, it would double iPhone sales, according to two analysts. However, such a deal would have an impact on Apple's margins.
Bernstein Research analysts Craig Moffett and Toni Sacconaghi recently wrote in a research note reported by Barron's that a Verizon-Apple deal would result in Apple boosting its iPhone sales by 100 percent in units, but that such a move would likely result in a drop in revenue per phone of between $100 and $200. The analysts wrote that if AT&T were to lose its exclusive deal for the device, the carrier likely would reduce the amount it is subsidizing each iPhone from an estimated $450 to around $250 to $350.
Although Apple would boost its sales with a Verizon Wireless distribution deal, the analysts said AT&T still has a number of negotiating tactics to retain its exclusive deal for the gadget. They said the carrier could offer to further discount the price of the device, or lower its service costs.
AT&T Mobility is currently the exclusive carrier for the iPhone in the United States, and its deal is expected to last until sometime into 2010. Reportedly AT&T would like to extend that exclusivity with Apple. Around 10 percent of AT&T's postpaid subscribers already have an iPhone.
In late April, several media reports variously suggested that Apple was working on a CDMA version of the iPhone for Verizon and that the two companies were considering a partnership to bring two "iPhone-like" devices to Verizon. However, Verizon Communications CEO Ivan Seidenberg has said that Apple never seriously considered making a CDMA version of the iPhone because of the technology's limited global reach compared with GSM. He said Apple would probably be more willing to work with Verizon once the carrier switched over to LTE.
- see this Barron's blog post
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