Verizon, Sprint & T-Mobile are prepared for iPhone release

[Fire14]

Verizon, Sprint await iPhone onslaught

Analysis: AT&T confident, but rivals are quietly skeptical

While AT&T Inc. executives talk confidently about gaining market share in the wireless business after the iPhone is released, skeptical rivals have reserved their fire.

Verizon Wireless, Sprint Nextel Corp. and T-Mobile USA Inc. all say they are prepared for the iPhone, but none has offered a clear strategy to combat the introduction of the highly anticipated device.

"I'm not sure it is wise to pick on a particular product and say: 'This is the product that we want to compete head-to-head with,'" Denny Strigl, Verizon's chief operating officer, said last week. "It does not make a lot of sense to me."

Apple Inc. has designated June 29 for the debut of the wireless device, which will work only on AT&T's network. The iPhone is a first-of-its-kind mobile handset based entirely on a touch-screen design but will sport a high price tag of $500 for the cheapest model.

AT&T has repeatedly called the iPhone a "game changer," saying more than 1 million potential customers have made inquiries about the device. Many of them have declined to re-sign annual commitments with their current providers so they'll have a chance to check out the iPhone, AT&T executives say.

"We believe the big shift that will occur is it's going to be an opportunity to take share," John Stankey, AT&T's group president for operations, told investors Tuesday at a Bear Stearns conference.
Looking for an edge

Certainly AT&T could use a big winner. Although it is the largest mobile operator in the U.S. with 62.2 million subscribers, Verizon Wireless has been gaining fast.

Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group Plc has out-gained AT&T by an average of 220,000 customers each quarter since the beginning of 2006. Verizon now has 60.7 million mobile customers.

Verizon also generates higher total revenue from its wireless business than AT&T and the company's customers spend more -- $50.73 per Verizon user compared with $49.21 for AT&T, according to data from company reports.
Because the iPhone is a data-intensive device -- Web surfing and music playing are two of its most crucial features -- AT&T expects customers who choose the device will spend more each month. Data plans are priced significantly higher than voice-only service.

AT&T executives also figure that iPhone users will prove more loyal, helping the company to cut its current churn rate of 1.7%.

Churn, a key measure in the wireless business, reflects the percentage of customers who cancel service. Verizon also leads in that category with a 1.08% churn rate.

Sizing up Apple
Rival executives know Apple and its iPhone pose a serious threat. They've even put a positive spin on the device's introduction, saying awareness of the iPhone could create broader consumer demand for handsets that play music or offer speedy connections to the Internet.
"We've been anticipating, as the industry has, the coming of the iPhone," Sprint Chief Executive Gary Forsee acknowledged. Added Strigl: "I think they will have a good product. So I don't deny them that."

Nonetheless, rival operators and handset makers have expressed skepticism about whether the iPhone will truly shake up a wireless market in which the vast majority of consumers pay less than $100 for the handsets they own.
They point to the iPhone's $500 starting price tag and note that consumers would also have to sign up for more costly monthly plans.

"It's an expensive device," Forsee said. "If the customer is buying that for music, then we're going to be able to provide very significant alternatives to that at a much cheaper price point."

Effect on rivals

If Forsee's skepticism is misplaced, Sprint has the most to lose. The company has lost thousands of its best customers over the past year to AT&T and Verizon and its churn rate remains stubbornly high.


Since the start of 2006, Sprint has added just 3.56 million net customers, most of whom signed up through less profitable wholesale channels or subscribed to its cheaper prepaid service.

In the last three quarters alone, Sprint has lost more than 700,000 highly valued postpaid subscribers -- those on yearly plans who pay their bills at the end of each month.

By contrast, Verizon has added 9.4 million net customers during the same period, almost all of them postpaid subscribers signed up directly by the company. AT&T added 8.3 million net customers.

Even T-Mobile, the fourth biggest wireless operator in the U.S., has outpaced Sprint by adding 4.3 million net customers over the past five quarters.
Verizon is not immune either, but the company's relatively high consumer-satisfaction rating and the perception that it operates a superior network could mitigate losses over the iPhone.

But just in case the iPhone proves to be a huge hit, Verizon executives are plotting out their response.
"You will see you will see more products from us by year-end, so stay tuned," Strigl said

[WumpusVA]

Of course all the diehard apple and phone junkies will go out and get an iPhone in the first few months… but what about the rest of the market? I can really see this taking off for the rest of the summer and for the holiday season. After that is a big question… I mean will the ‘average’ customer be willing to cough up $500 and a lot more for service every month? I wish the 29th would hurry up and get here so we can all stop speculating.

[DAVEnavarre]

Verizon has solutions to the iPhone craze that is about to occur.

I've reviewed the iPhone and it looks like the first generation device is going to parallel the first generation iPods. I'd say, wait for the 2nd generation model to come out before buying this device.

Meanwhile, the LG 8500 Chocolate is a music phone that has a replaceable battery unlike the iPhone and can download thousands of songs OTA, whereas iPhone cannot and must be docked in order to download songs.

Also, look for the new LG8550 chocolate to kick butt on 7/9.

Dave

[MOTOhooligan]

Originally Posted by Wumpusva

Of course all the diehard apple and phone junkies will go out and get an iPhone in the first few months… but what about the rest of the market? I can really see this taking off for the rest of the summer and for the holiday season. After that is a big question… I mean will the ‘average’ customer be willing to cough up $500 and a lot more for service every month? I wish the 29th would hurry up and get here so we can all stop speculating.

I agree. You're going to have the hardcore Apple fans are going to get the iPhone right out of the gate, same with some phone junkies add some fashionistas and hipsters in there and you're going to have some strong iPhone sales for the next six months. Unless there is a severe price reduction in January 2008, look for iPhone sales to start steadily declining then.

I guess it makes sense that Apple went with AT&T since they have the largest customer base but I don't think that's going to have much bearing on who buys this phone. People who want the iPhone are going to get it regardless of which carrier is offering it. They could have just as easily gone with Verizon except that I don't think VZW would have changed the whole v-cast thing and they were wise not to.

Anyone remember the Newton? This is the 21st century version of that.

[dmapr]

Originally Posted by MOTOhooligan

Anyone remember the Newton? This is the 21st century version of that.

I remember. The good thing about Newton was that when you got tired of it after a few months of frustration, you could throw it away and not be locked in some two-year contract (I've only played with the model circa 1995, I can't vouch for any others — maybe they were actually usable).

[TeleTips Network]

Originally Posted by Wumpusva

Of course all the diehard apple and phone junkies will go out and get an iPhone in the first few months… but what about the rest of the market? I can really see this taking off for the rest of the summer and for the holiday season. After that is a big question… I mean will the ‘average’ customer be willing to cough up $500 and a lot more for service every month? I wish the 29th would hurry up and get here so we can all stop speculating.

Most American subscribers are locked into contracts and only the very diehard Apple aficianados should be expected to shell out the typical $175 early termination fee. Certainly there will be some, maybe many from the initial launch. But most of those panting for an iPhone will wait until their contract expires.

I think the more interesting action will be outside America where service typically is less tightly coupled to the handset. Phones can be purchased from large, independent stores selling possibly thousands of different phone models, few of which are tied to any single wireless service provider.

From an industry perspective, it is fascinating to watch a completely new player enter the relatively stagnant market for handsets. Apple's foray into handsets is great news for consumers, and it should be very interesting to watch this drama unfold. Don't touch that dial!

[RadioRaiders]

Originally Posted by Fire14

Apple Inc. has designated June 29 for the debut of the wireless device, which will work only on AT&T's network. The iPhone is a first-of-its-kind mobile handset based entirely on a touch-screen design but will sport a high price tag of $500 for the cheapest model.

AT&T has repeatedly called the iPhone a "game changer," saying more than 1 million potential customers have made inquiries about the device.

I don't see Apple changing the cell-phone market with a $500 phone, because not many people are willing to shell out that kind of cash for a phone. And what justifies that price tag? Just the Apple name? I haven't read it will have any new features that aren't allready in existing phones. Touchscreens exist on all PDA-style phones allready, so that's not new. Apple just removes the keypad and calls that "revolutionary"?

Apple is just trying to ride the wave of their iPod success, but I think they'll crash once they hit the cell-phone market, because there's alot of competition there from existing manufacturers with better products at lower prices. And if they don't drop that $500 price tag, they'll really go nowhere fast. Anyway, time will tell.

[Fire14]

Originally Posted by TeleTips Network

I think the more interesting action will be outside America where service typically is less tightly coupled to the handset. Phones can be purchased from large, independent stores selling possibly thousands of different phone models, few of which are tied to any single wireless service provider.

I think it will be interesting to see what Apple does in this market when trhey approach it, I think they may do the same thing & stick with 1 carrier just to play hardball if things work well for them here & with AT&T.

If they don't work well with AT&T, then I can see them selling them outright like the other handsets are sold.

[SteveW]

Originally Posted by DAVEnavarre

I've reviewed the iPhone and it looks like the first generation device is going to parallel the first generation iPods. I'd say, wait for the 2nd generation model to come out before buying this device.

Probably good advice, but Apple will be very happy if this is another iPod, as opposed to...

Originally Posted by MOTOhooligan

Anyone remember the Newton? This is the 21st century version of that.

Yes, I remember John Sculley introducing it in Symphony Hall in Boston on a hot summer day during Macworld Expo. Had to look it up that this was in 1993. Trouble was, the Newton had technical issues, never found a real user niche and turned out to be a business failure.

Originally Posted by esto

I don't see Apple changing the cell-phone market with a $500 phone, because not many people are willing to shell out that kind of cash for a phone. And what justifies that price tag? Just the Apple name? I haven't read it will have any new features that aren't allready in existing phones. Touchscreens exist on all PDA-style phones allready, so that's not new. Apple just removes the keypad and calls that "revolutionary"?

Apple is just trying to ride the wave of their iPod success, but I think they'll crash once they hit the cell-phone market, because there's alot of competition there from existing manufacturers with better products at lower prices. And if they don't drop that $500 price tag, they'll really go nowhere fast. Anyway, time will tell.

Again, that's what people said about the iPod at the time it was released. Too expensive, not innovative, too little memory, blah, blah, blah. But what made the iPod a consumer hit and a business phenomenon was the user's experience. From buying songs online, to managing your library, to syncing, to popping it in your pocket, to finding your music when you are on the go - all was made more accessible and fun than on any other device. So easy that anyone can do it. This is what Apple is best at, and has been best at for over 20 years, (Newton notwithstanding). I would not underestimate them.


SW

[Matt]

Was the iPod ever $500 for the "cheap" version, plus the potential of having to pay an ETF? Of course, not required to pay the ETF, you can wait until your contract is out if you aren't an AT&T customer....

[RadioRaiders]

Originally Posted by SteveW

But what made the iPod a consumer hit and a business phenomenon was the user's experience..... This is what Apple is best at, and has been best at for over 20 years, (Newton notwithstanding). I would not underestimate them.

No, I'm not underestimating them. I know they have a big potential, and marketing is very important. However, cell phones aren't mp3 players. There's a committment involved (ie: 2 year contract), monthly payments, coverage areas to consider, etc.

Mp3 players you just go to the store and buy, or ask for one for x-mas, and thats it. They are relatively cheap compared to phones. Any kid can get one, and there's no further committment. That's a big reason they sell as quick as they do. They are an "impule items", while phones have to be more thought through.

Also by the time people current contracts expire, the hype of the iPhone may have died out, or maybe a "bug" will be discovered with it. Or may be people have a "friends and family" plan with another operator, and they don't all want to switch to AT&T just to accomodate one iPhone user.

Anyway, nobody can predict how it will play out for the iPhone. We'll all just have to wait and see....

[MOTOhooligan]

Originally Posted by SteveW

Yes, I remember John Sculley introducing it in Symphony Hall in Boston on a hot summer day during Macworld Expo. Had to look it up that this was in 1993. Trouble was, the Newton had technical issues, never found a real user niche and turned out to be a business failure.

Yeah, I'm gonna go a little off topic here and say that the Newton, in principle, was a great idea. If it had been smaller (ie, fit in a typical pocket,) and didn't have as many glitches as it had (which were mostly fixed in subsequent versions) it would have done much better, IMHO.

I think the same can be said for the iPhone. I'll going to get into my time machine now:

If the iPhone had better battery life and had a lower price it would have done better.
-MOTOhooligan, c. 2021 AD

[AnthroMatt]

Originally Posted by SteveW

Again, that's what people said about the iPod at the time it was released. Too expensive, not innovative, too little memory, blah, blah, blah. But what made the iPod a consumer hit and a business phenomenon was the user's experience. From buying songs online, to managing your library, to syncing, to popping it in your pocket, to finding your music when you are on the go - all was made more accessible and fun than on any other device. So easy that anyone can do it. This is what Apple is best at, and has been best at for over 20 years, (Newton notwithstanding). I would not underestimate them.


SW

The iPhone may be a great success, but I am not sold on it now.

I think everyone in this country (but me) has some sort of iPod/mp3 player now. My sister has two...a nano for quick trips and a 60 or 80 GB model for all her songs/videos/pics.

With so many people already owning iPods or comparable devices, and with so many people already owning phones that can play mp3's, the device is not super-revolutionary.

I can't imagine business users (the vast majority of people with $500+ phones) will flock to the thing, as I imagine typing an email on that touch screen would be a PITA.

ANd then there is the battery life. I believe I read an article that the phone can playback 24hrs of mp3's, 6 hours of video, and offers 8 hours of talk time. But when specs are tested, I am sure Apple turned off the radio of the phone while getting video specs. I bet you can't watch a movie and conduct "normal" voice/data on that thing on a single charge, but I might be wrong. I would be interested to know how long the battery really lasts if I am watching a 2 hour movie, send/receive 50 texts, have ichat logged in, and have my email client polling the server for messages.

[Charlyee]

Originally Posted by AnthroMatt

I think everyone in this country (but me) has some sort of iPod/mp3 player now. My sister has two...a nano for quick trips and a 60 or 80 GB model for all her songs/videos/pics..

Not me either.

I am definitely not sold on the iPhone or even remotely interested in it.

Just my 2 cents.

[AnthroMatt]

Originally Posted by Charlyee

Not me either.

All right! Together we stand!

Interesting that, with the possible exception of SteveW (and he may or may not want the phone), that the people in this thread with "smartphones" don't seem sold on the iPhone. And those persons with "normal" phones don't seem to be sold either.

As with any new release, I am sure the phone will be quite popular short-term. I am more interested in how it last in the long term. I wouldn't be surprised if it is something that doesn't do so well at first, yet in a year or two, comes back much refined, much cheaper, and much more popular.

[Fire14]

Originally Posted by AnthroMatt

I think everyone in this country (but me) has some sort of iPod/mp3 player now. My sister has two...a nano for quick trips and a 60 or 80 GB model for all her songs/videos/pics.

Make that 3, my kids have them but I don't.

I also am not interested in the iPhone, mainly because I think it's been hyped up too much.
Not to say I wouldn't play with it if I had a chance but I don't think it's something I would use.

I know when I was at the store this weekend I gave my card to the Assitant Manager & Manager, due to their concerns about capacity loads in the store, even with the extra security being hired & having a limited amount of people allowed into the store at a time.

I told them to call me & I will help them with crowd control or anything else to help, like remove the stock from the store.

[TeleTips Network]

Originally Posted by Fire14

I know when I was at the store this weekend I gave my card to the Assitant Manager & Manager, due to their concerns about capacity loads in the store, even with the extra security being hired & having a limited amount of people allowed into the store at a time.

I told them to call me & I will help them with crowd control or anything else to help, like remove the stock from the store.

And the response of the Manager and Assistant Manager was what, grattitude? Incredulty? Do any of these bloody emoticons roll their eyes?