Analysts: Apple Needs Verizon iPhone to Counter Android Threat

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Credit: epicharmus/Flickr
Credit: epicharmus/Flickr

Along with the Sun in the morning, you can count on a Verizon Wireless iPhone story appearing almost daily on the pages of Apple watchers. Not to disappoint, two Wall Street analysts have released a report suggesting Apple needs to join forces with the wireless carrier to fend off the growth of Android.

In five quarters (or roughly just over one year), Android’s growth could outnumber the installed base of iPhones, according to Bernstein Research analysts Toni Sacconaghi and Pierre Ferragu. Indeed, the analysts say the Android platform has gone from 60,000 phones sold each day seven months ago to 200,000 phones per day. That sort of growth makes the analysts believe Android could singly push smartphone sales. By 2011, Apple and Android will control 52 percent of smartphone sales, the two analyst contend.


Because of the rapid growth of Android, the analysts expect “a more head-to-head battle for market share might emerge earlier” than previous predicted. In addition, Android could “undermine Apple’s powerful first-mover advantage and network effect that we believe has been instruments in shaping [the] iPhone’s popularity to date,” the write.

Although Apple outnumbers Android 154 to 59 in the number of carrier partners, the analysts stress it is the largest, most important carriers the Cupertino, Calif. company needs to address. Among the carriers Apple particularly needs to bring into the iPhone fold are Verizon Wireless, Vodafone Germany, NTT Docomo and China Mobile.

“We believe Apple needs to strike distribution deals with these carriers, even if it has to sacrifice some pricing power since doing so would still be accretive to company gross margins, and take away the strong foothold it currently provides to a potentially formidable competitor,” the analysts urge.

Apple may have heard all the talk. A report floated earlier this month by The China Times suggested Apple may turn to Qualcomm, rather than its usual Chipmaker Infineon to supply the baseband chipset for a supposed iPhone 5. The rumor is interesting because Qualcomm is known for its CDMA chips, a technology used by Verizon and a number of other large carriers.

[Barron’s]