Yesterday, AT&T's third quarter results showed the importance of its iPhone exclusivity for its wireless subscriber growth. The single device accounted for 5.2 million of the company's more than 8 million new subscribers. It was the most iPhones AT&T had ever activated in a single quarter. Today, Verizon reported its quarterly earnings and we see a variation on that tune: the harm that can be inflicted on a service provider that lacks the Apple device in its arsenal. Its wireless new subscriber growth declined by 17% year-over-year. This shows why Verizon may be interested in the iPhone.
At this time, Verizon's smartphone offering is fairly broad. It supports several Android-based phones from Motorola and HTC. It also has a number of Blackberry devices. Then, it provides some other options, like smartphones running Palm's webOS and Windows Mobile. That's a lot, but the lack of Apple products presented a gaping hole in its lineup.
And that isn't the only hole. Another hugely popular smartphone, the HTC Evo is only offered through Sprint. Between the Evo and the iPhone, you've got two of the most advanced mobile devices in the market, and neither is a part of Verizon's lineup. If potential or existing subscribers are interested in one of those devices, then Verizon simply isn't an option.
Verizon's decline in mobile subscriber growth shows the market what the company appears to have already discovered. It must widen its shelf of mobile devices to include some of these popular options that result in potential customers going elsewhere. No matter how great its network might be, devices matter too.
That's why Verizon has already begun playing ball with Apple. Although the company has not yet officially announced that the iPhone is coming, it has taken a clear step in that direction. This month, it will start selling the iPad in conjunction with its MiFi mobile hotspot, since the device's internal hardware is not compatible with Verizon's network.
So while Verizon's decline in wireless subscriber growth might seem like a red flag, it's pretty clear that the company has already recognized the problem and is taking steps to correct the problem. If we see a Verizon iPhone in the first quarter of 2011 as many expect, you can be sure that its wireless subscriber growth will soar.
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