Well, it finally happened – after many years of speculation on when AT&T’s exclusivity on the iPhone would end, Verizon announced yesterday that they would be carrying the iPhone 4 starting next month. There are some slight feature differences between the iPhone 4 on the two networks:
- Verizon’s iPhone will offer wifi hotspot functionality, to go with it’s solid wireless network and lower dropped call rate
- AT&T’s iPhone will still allow users to talk and surf simultaneously on a faster (i.e. data transfer) network.
But the big story here is not on feature differences. It is about how the iPhone reach will expand now that it is on the two biggest wireless networks in the U.S. And how Android will be impacted. To date, Android has been Verizon’s answer to the iPhone and they’ve sold a ton of Android devices on their network. But now that Verizon will carry the device they have competed against for the past few years, what will happen to Android’s market share here in the U.S.? I think we’ll see it dip a bit, but the fact that it is still carried on all four U.S. wireless networks (Verizon, AT&T, Sprint, and T-Mobile) will keep it big.
I think Verizon’s plan to carry the iPhone will accelerate Android filling in the low-cost smartphone market. The iPhone is a premium product that the carriers pay large subsidies on, eating a lot of up front costs when a customer subscribes to an iPhone and voice/data plan. But Android devices, based on the free OS, cost much less for a carrier to offer and allows them to bring the price down into the sub-$100 range. Whereas as recent as last year the majority of phones sold in the U.S. were inexpensive “feature phones” that lacked many smartphone features such as large touchscreens and app downloading, moving forward we will see the smartphone filling that role, with Android (and perhaps other players such as Windows Phone and Blackberry) capturing much of the sub-$100 market and Apple filling the $100-$300 range. Apple will have competition for sure – Android, Windows Phone, HP (with WebOS) and others will fight for this territory too – but this will be the market that Apple will continue to dominate for the foreseeable future.
As with many consumer electronics products, there are magical psychological divides when someone purchases a phone: $0-$99 is a set range that many people will only spend in, whereas $100+ connotes more of a premium mobile experience. Soon that premium mobile experience will be the norm – a good smartphone can and will be had by all.