Wednesday, October 6, 2010

How the Apple iPhone brought Verizon & AT&T to their knees

Who is happy about Verizon FINALLY getting an iPhone? The answer may just surprise you...

Years ago, Apple approached Verizon about this crazy idea that they use the success of the iPod to launch their own phone. Apple wanted Verizon to carry it exclusively on their network and they said: "Sounds lets see it, first." Apple told Verizon that unless they had an exclusive deal with a carrier...they weren't going to make the phone in the first no upfront view of the phone...just had to trust that it would be appleriffic.

Verizon said no, they moved on to AT&T...and clearly the answer was a yes. Here we are, 4 generations into the iPhone and it has been RUMORED that Verizon would get an iPhone for YEARS now. In fact, ever since the iPhone came to AT&T it has been rumored that Verizon would get one. Today, we finally found out that Verizon is finally getting their own iPhone.

So, who is excited about this new release? It's not Verizon, it's not AT&T, and it's sure as heck not Research in Motion (the maker of the Blackberry). It's Apple. They really don't care who carries the that it's the most amazing phone in the universe. I don't think they will ever give back their choke hold on the mobile phone industry. I wouldn't be surprised if they made an iPhone nano to compete in the dumb phone market...just to steal the lunch money of the "other guys".

Ever since Apple has came into it's own in 2001 when it destroyed the diskman (remember those from Sony...wait...if you're under 20 years old you've never heard of Sony)...Apple has been destroying the market cap of companies the world over with new product introductions. You don't believe me? The market cap of Microsoft (MSFT) in June of 2001 was $392 it's $213 Billion (down 45% since the iPod release). Let look at Dell. It was $70 Billion in 2001...enter the new iMAC...and now it's worth $25.9 Billion (down 63% from 2001).

Research in Motion, the maker of the Blackberry was at $26 Billion in market cap when the iPhone came out in January of 2007. It grew to $78 Billion in May 2008 only to see Apple release the iPhone 3G, 3GS, and iPhone 4. Their market share is now back down to $26 Million and slipping (a loss of 67%). Finally, Sony...remember, the maker of the diskman and the walkman that we all used before the iPod. They were $68 Million in market down to $31.65 million (a decline of 53%).

Apple destroys market cap wherever it goes. You cannot compete. Their products are better, faster, crash less, are cooler...and are flat out easier to use thanks to the MAC OS.

So, what happens to Verizon when they get the iPhone...Millions of people will dump their "I need a college degree Blackberry to use 25% of what this phone can do" Blackberry Storm, Torch, or whatever the heck they have and get an iPhone. People who left VZ to begin with so they could have an iPhone will flood back. In about 6 months the Verizon network will be as bogged down as AT&T. But I thought Verizon's network was the best? You put that many data hogs on the same're going to weigh down the network. iPhone users are going to find out that it doesn't matter who's network you're on. Millions of people all streaming data to their iPhones constantly will drag any network down.

When Verizon can't draw new iPhone users to their "network"...guess what's the only tool left for Verizon and AT&T to fight each other with? You guessed it...price. I don't want to be around when they start a price war...well...not as a shareholder that is. It will be a race to the bottom like you have never seen before and shareholders of both companies will be in the crossfire. As Jim Cramer always says: "Competition is the enemy of profits".

But, really...all of this is old news if you saw our Lunch @ the Market from 09/02/2010. AT&T sold off on the news today 2.5%...can't say it'll end there so be careful. In case you missed Lunch @ the Market (L@tM) from September, here you go:

So, today Apple, the toast is to you! Good luck to Verizon and AT&T in their upcoming price war...may the lowest price...I mean :-)


  1. Based on the current technology, Verizon will suffer the same network bottlenecks AT&T does. Verizon won't be getting the iPhone with their 3G, it will be with their upcoming 4G network. Yes there will be more competition. Verizon is already phasing out unlimited data plans and pricing their tiers to match AT&T's.

  2. No. The iphone will never be what it once was . Droid will eventually beat iphones market cap.

  3. The only problem is that Google has no way to monetize the android operating system at this point.