Gene Munster must have one of the more fun analyst jobs on Wall Street; as Piper Jaffrey's senior Internet research analyst he has become the go to guy for speculation on how many [name your favorite iDevice] Apple is going to sell in the next period. He has to be one of the few research analysts that have actual consumers reading their research. It's interesting then that he forecasts Verizon to sell only 2.5MM iPhones in 2011; that's compared to 5.2MM iPhones that AT&T sold in the third quarter 2010 alone.
Let's take Gene's assumption that Verizon doesn't start selling the iPhone until "midway through the March quarter." That means roughly 2/3 of the year remain, with the holiday season being the peak season anyways, so let's say they could have sold 25% more if they started selling Jan 1. That's a run rate of barely 3M vs >20M for AT&T. Other analysts are betting even lower.
Explanations of how these numbers are derived are vague (and being a former management consultant whose job was sometimes to size markets I know that these calculations are often more than a bit hand-wavy), but one thing I am willing to bet on: Verizon could make them higher if they wanted to - but they don't.
A lot of people forget that AT&T didn't used to have the worst service until they started carrying the iPhone and their networks became overburdened. They've already caught up to Verizon in capital expenditures per subscriber, and yet it hasn't helped their image (and arguably their coverage) at all. If I'm Verizon, I'm simultaneously thrilled and terrified by the prospect of millions of bandwidth guzzling iPhone users on my network. I'm going to do everything I can do manage expectations and do a gradual iPhone ramp-up to test whether my network really is as good as I think it is before I go all out in promoting the iPhone. Since carriers have a lot of control over what phones get sold through their network via relative levels of pricing and promotion levels, Verizon has the ability to do this. It might seem foolish to all the iPhone lovers out there who are dying to move to Verizon, but from Verizon's perspective they are doing the right thing. They've built their brand on "It's the network," not "It's the phone," and no device, not even the iPhone, is worth risking that.
One thing's for sure - it's a good time to be in the backhaul business!
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