“I guarantee that Apple will dump its exclusive deal with AT&T next year. Apple will add Verizon, and that will cover most U.S. wireless customers. Eventually, CDMA will be dumped for LTE/4G, but not before Apple sells a lot more iPhones with Verizon in late 2010.”

I suppose there is more to it than just telling the carriers that you are going to sell your phone in their stores, some sort of deal has be worked out. Will the other carriers be willing to let Apple call the shots, or at least most of them? Will the carriers be able to live without having their logo on the iPhone? Maybe, especially after seeing the success of the arrangement between Apple and AT&T.

Great respect for your comments, John - as always!

There’s another factor that you don’t bring up here, and that is user experience.  Specifically, the user experience of paying a premium twice:  once for the iPhone itself, an once for an over-burdened network.

Any illusions that Verizon would provide even a *comparable* network experience should be dispelled at once.  A Verizon deal might mean Apple sells more phones but that in no way translates into the kind of customer satisfaction that is SJ’s real fixation…it could even be a disaster for Apple.

Think AT&T hasn’t already figured this out?  That’s why they are trying to squeeze every last penny of revenue from the arrangement.  Can’t blame them, but honestly, what did Steve think they would do when they originally signed the agreement? 

AT&T has obligations to it’s shareholders as well.  They have invested in their network to try to hold onto as many customers as possible when the gravy train ends.  It’s been a balancing act for them between increased customers and network investment and only time will tell how successful they will be on holding onto the growth. Bottom line, they and everyone else knows it must end, the uncovered portion of the market will demand it.

John nails it.  ATT’s one-size-fits-all data plan keeps a lot of us from getting an iPhone.  This won’t change until the exclusive provider monopoly is broken.

Would love to trade up from my iTouch, but don’t need unlimited data, and don’t need a $40/month voice plan.  Would love to be able to pull up a map while I’m in the car, but not at a cost of $1600 for a two year commitment. 

The unlimited data plan is the true subsidy fiasco.  Moderate bandwidth users shouldn’t have to fork over $30/month for so somebody else can upload videos of their cat. 

Mostly use my iTouch to run OmniFocus and check mail and calendars.  I’m waiting for a Verizon iPhone, so I can dump my current ATT phone that can’t even make a call from my own living room.

(In the meantime, it would be nice if Apple would teach iPhone software 3.0 to let me write to CalDAV calenders on my OS 10.5 server…)

Can’t blame them, but honestly, what did Steve think they would do when they originally signed the agreement? 

I think that the original agreement was with Cingular before they were bought by AT&T.

Locally my cell coverage with AT&T is mostly very good. You might loose the signal when you snake through a tight canyon, but otherwise no problem. Of course this the 7th or 8th largest city, and metro area, in the USA. With a market that size AT&T is going to have good coverage.

Recent coverage suggests that CDMA is on its way out and that Verizon’s next-generation technology will be more compatible with AT&T’s GSM. This is important as GSM is used worldwide while CDMA is mainly used in North America by Verizon/Alltel and Sprint. I doubt Apple is interested in offering options that can only be implemented at the motherboard level. This exacerbates manufacturing complexity. Two motherboards (three if you count iPod touch) with three different memory configurations is already enough without adding CDMA/GSM chip differences that probably aren’t pin-compatible.

Short answer, you’ll see the iPhone on Verizon when Verizon joins the rest of the world, technology-wise.

My Verizon contract is up in August. If the iPhone were available on Verizon, I’d buy an iPhone 3Gs now! Unfortunately, any chance of that happening won’t be until 2010. So I’ll continue to use my iPod Touch while I wait patiently for Apple to realize that the exclusive deal with AT&T was a huge mistake.

Actually, I don’t think the original deal was a mistake. It just should have been for two years, not three.
-JM

You’re probably correct. Sorry.

Your example of getting a 3GS for yourself under a new contract and transferring the 3G to a family member probably IS possible. I’d ask.
__
So, is anyone else seeing your no-cost upgrade date in 2010? Mine is in Dec 09 which makes me wonder if they are doing a last ditch effort to lock people in as long as they can before the announcement that the exclusive agreement has ended. I got my iphone at the end of July 08.

I don’t get the huge deal Verizon folks make about waiting for an iPhone on the Verizon network. My experience with Verizon sucked! Crippled features on the handsets, absolutely atrosious customer service and spotty coverage in my area. I complained about the customer service to the shareholder service people ( I own both Vodafone and Verizon stock, quite a bit of both) and got nowhere. Since it was a compnay phone, I just quit using the dang thing and went with my personal phone through Cingular at the time. My point is, Verizon is not the panecea some think. They have the same contract terms AT&T have and are equally inflexible.

Crippled features on the handsets, absolutely atrosious customer service and spotty coverage in my area.

The crippled features on the handset was my point earlier about letting Apple call the shots. From what I understand the carriers wanted the iPhone to be crippled and only Cingular would give Apple carte blanche.

I just read that the Palm Pre can’t surf and use the phone at the same time. That the limitation was the CDMA radio. I have no idea if this is actually true or if Verizon would have the same problem. But if they did, would you still think Apple is losing millions in sales?

How about Verizon limiting the Blackberry Storm to not have WiFi. If Verizon blocks the CDMA iPhone from having WiFi, would you still think Apple is losing millions in sales?

Verizon is known for very restrictive policies on the phones on their network. Do you think Apple will get everything they want with Verizon? If not, do you still think an iPhone that has missing features will sell as well as the current iPhone?

FInally, why do you believe that Verizon will allow early adopters more subsidy dollars than AT&T? What is that based on? As far as I know, Verizon has the same sort of subsidies as AT&T. So why would S. Jobs be fuming over AT&T’s subsidized price and contract length? Do you really think Verizon is going to give out more subsidies for a lesser contract length? You are dreaming.

I just read that the Palm Pre can’t surf and use the phone at the same time. That the limitation was the CDMA radio. I have no idea if this is actually true or if Verizon would have the same problem.

I don’t have a Pre, nor I have yet to try one, so I too don’t know if it is true or not, but read this story about surf ‘n cell. The story, and some others, say you can not do that. Well from what I read if you are on WiFi, you can, but on EVDO you can not unless it is enabled by the carrier. On the plus side at least the Pre can multitask!

I’d be happy with T-Mobile.

Of course, the other option would be, if Verizon still wants to play “cripple the phone” is to simply open up the iPhone to everyone BUT Verizon.  Make a CDMA deal with Sprint, allow TMobile to utilize the current GSM one and keep AT&T in the fold.  Verizon has what, 25-28% of the US market right now?  Such a move would make the iPhone available to about 70% of US wireless customers.  I wonder how cocky Verizon would be then?

Correction, as of the 4th quarter 2008, this was the market share breakdown in the US:

Verizon 30%
AT&T 29%
Sprint 18%
TMobile 12%
All others 11%

So, open the iPhone to TMo and Sprint and you’ve got about 59% of the market (assuming the number remain static and you don’t have anyone leaving Verizon or other carriers to jump on the bandwagon).  I think such a move would give Verizon pause before they decide to dictate to Apple what their hardware can and cannot do.

While revenues are essential, they are not the goal.  The goals for Apple are three:  (1) To make an insanely great device; (2) Provide users with an insanely great experience as they use that device; and (3) given the first two forgoing constraints, achieve that penetration of the market that maximizes profits, not revenues.  Apple, under Steve Jobs, has never paid for market share with low price that are not long-term profit maximizing.  So, while I don’t disagree with the gist of Mr. Martellaro’s forgoing argument, I would modify it to substitute maximizing long-term profits, under the constraints, supra, for revenues.

I would also consider the advantages of working with one network carrier that drove Apple to negotiate an exclusive deal with AT&T.  Remember that, as Verizon’s General Counsel testified before Rep. Markey’s Committee, Verizon turned down the iPhone, because it refused to accede to Apple’s terms.  AT&T, on the other hand, was willing to make the necessary modifications to its network; give Apple the freedom to control the physical design, functions, and capabilities of the iPhone, except where it impacted AT&T’s business model; and give Apple the right to brand and market its iPhone.  And AT&T was willing, prior to the App Store, to give Apple a slice of subscribers’ subscription revenue.  Prior to the iPhone, wireless network carriers (Carriers) controlled all of that, and Verizon refused to surrender that control, initially, for example, telling Apple that the iPhone couldn’t do WiFi, because, prior to the iPhone, Verizon did not permit any cell phone on its network do WiFi so as to force Verizon’s customers to use their minuets on the network to communicate and access the web and thereby protect and enhance Verizon’s revenues.

Apple was also able to strike a deal with AT&T that probably improved the users’ experience, at least for those users who are able to get reception.

Perhaps, the iPhone’s tremendous success has made Verizon regret its decision to reject the iPhone on Apple’s terms and shown Verizon and the other Carriers that more profit is to be made by letting the smartphone OEMs innovate, rather than suppressing innovation to protect legacy revenues.  However, the question of whether another exclusive deal is both profit maximizing for Apple and provides the best user experience for the majority of Apple’s customers, as opposed to U.S. distribution with two or more Carriers, is a difficult questions that involves more than maximizing market penetration or capturing what could be additional, yet unprofitable, revenues, no matter how much I and, I am sure, the vast majority of Mr. Martellaro’s other readers wish to keep pants on his hindquarters where they belong.

John nails it.  ATT’s one-size-fits-all data plan keeps a lot of us from getting an iPhone.  This won’t change until the exclusive provider monopoly is broken.

Would love to trade up from my iTouch, but don’t need unlimited data, and don’t need a $40/month voice plan.  Would love to be able to pull up a map while I’m in the car, but not at a cost of $1600 for a two year commitment. 

The unlimited data plan is the true subsidy fiasco.  Moderate bandwidth users shouldn’t have to fork over $30/month for so somebody else can upload videos of their cat. 

I’m waiting for a Verizon iPhone, so I can dump my current ATT phone that can’t even make a call from my own living room.

Ditto on all that. The iPhone is definitely a landmark device, but it’s growth potential is going to drop like a rock if Apple can’t either a) come up with an iPhone Lite (or iPhone Nano, as some have guessed the possibility of) with lesser features & a cheaper plan, or b) bring the iPhone to more carriers, with more flexible price plans.

$1600 was definitely a no-go for me, too… that’s a whole freakin’ computer, for chrise’ sake. In fact, what I didn’t spend on a 2 year iPhone plan is going to go towards one of the new Macbook Pro’s that was just released.

If there was a plan that was, say, $30-35 a month with a $10 or so data plan available, I would seriously consider an iPhone. Until then - like you, Tim, I’m sticking with my iPod Touch.