Verizon, the largest cell phone company in the US, was plagued by some misgivings before the resplendent release of the widely coveted iPhone 5. According to analysts at J P Morgan, most Verizon iPhone users fall short of their 20-month upgrade cutoff in September, making new customers and non-smartphone customers the primary buyers for the Verizon iPhone 5. As a result of this, Verizon’s marginal wireless profits were estimated to dip from 50% to 48% this quarter post the release.
However, come Friday the 21st, all Verizon customers were in for a surprise! For the first time ever, the new iPhone came factory unlocked out of the box. Thus, Verizon users could use AT&T, T-Mobile and other carriers’ SIM Cards on their iPhone, and can use a local nano-SIM while traveling abroad. No need to unlock, no hassles. Verizon officials have confirmed that they intend to keep the phone unlocked.
Of course, contract rules still apply and Verizon iPhone 5 users wishing to switch to other carriers will have to shell out the usual exorbitant early termination fee. Further, the 4G LTE Data Network, which is the fastest in the market, will not be accessible via any carrier other than Verizon. Users of the Verizon iPhone 5 can enjoy voice and other (slower) data services on AT&T, T-Mobile and Sprint. But, on the up side, Verizon users can sell their phones to users of any other carrier.
Does this unprecedented surprise have something to do with the dim sales predictions for Verizon? It might, if you consider these factors:
1. Verizon’s vanguard move is a one-of-its-kind attraction for the new customer segment. This augmented flexibility means that someone in the market for an iPhone, who is not bound to any carrier, will prefer Verizon over its competition.
2. Verizon’s existing customers are not going anywhere! Even if they can use other carriers on their iPhone, it doesn’t mean that they can do it for free, at least until their contracts expire.
Add these two factors together, and you get a win for Verizon!
It’s hard to quantify this win at this stage. With over 5 million iPhones sold worldwide in the first weekend, all phone carriers are facing a predominance of demand than supply. However, as the frenzy simmers down, a winner will soon emerge among the companies. And this unlocked phone seems to promise to catapult Verizon into that winning pedestal.
