Apple and Verizon will Kiss and Make Up

I don't really believe that Apple and Verizon have severed ties for good. There's too much money at stake on both sides. The current activities are just a pillow fight. Maybe plate throwing.

In a figurative sense, every morning Steve Jobs looks at his Numbers spreadsheet and is dismayed to find out how many iPhones Apple has not sold because it's not available from Verizon. Similarly, Ivan Seidenberg looks at his Excel spreadsheet and estimates, because he doesn't have the iPhone, how much money he's losing and how much pain he could be causing AT&T.

I find it hard to believe, and this is my opinion, that discussions are over forever. He's what I'm thinking, based on the stories I've read.

  • Each company realizes how much money there is to be made.
  • Ivan Seidenberg, under pressure, came back to Apple and made an overture. "Here's what we want."
  • Steve Jobs said: "No. This is how we sell the iPhone."
  • They tussled for awhile, neither side gave in, and talks broke down.
  • Now Verizon is having a hissy fit. They're running TV commercials, "There's a map for that," set to the kind of music Apple uses that poke a finger in AT&T's and Apple's eye. The embracing of the Droid phone is a counter punch.

In time, each company is going to realize that these antics aren't helping either company make a boatload of money or appeal to customers. The pissing contest will continue for a few months while each CEO ponders the big bucks being lost.

The trend in this chart suggests what will drive Verizon's eventual decision.

SAI chart, smartphone market share

Credit: Silicon Alley Insider Chart of the Day: Oct 27

Eventually, Apple's iPhone will become so formidable in its market share of smartphones that Verizon will agree to Apple's terms - just to get into the game. By the spring of 2010, with an estimated 150,000 iPhone apps and Droid sales that didn't meet expectations, Verizon won't have a choice.

Of course technology is always easier than politics. Chipsets can be created that get the job done in terms of Verizon's CDMA and emerging 4G network. That's an engineering detail compared to the powerful personalities and politics in place.

Whenever I see this kind of corporate friction on the surface, I know there's something brewing underneath.

Finally, if Verizon thinks that geeky ads for the Droid and a long list of technical features will appeal to customers, as opposed to tech writers, they are mistaken. Even PCWorld has its doubts. Apple's competitors are throwing all the old-school techniques at the iPhone, and they're not going to work.

In my opinion.