Thursday, February 3, 2011

Verizon is slated to sell it's new version of the iphone next week after keeping the world waiting for 4 years. Analysts predict a stampede to sign up. Initial reviews report that the call quality, coverage and number of dropped calls (very rarely) is impressive. Yes, it is probably a better calling experience. But I think are a number of factors at work that will make the stampede non-event:

  • Most of the population is already locked into a 2 year contract of some kind. With Verizon or other carriers. The penalty for ending a contract early is expensive ($300+) as is buying an unlocked iphone. As contracts end on a rolling monthly basis, there maybe a long term trend to move to Verizon but  not an avalanche.
  • The iphone 5 (or whatever it will be called) is likely to be released this summer. One can't take their AT&T iphone and put in a Verizon SIM card to activate. Verizon's iphone is different hardware. Who wants to buy a a new Verizon iphone and have it be old technology in 5 months?
  • While Verizon's call quality is superior, it's customer service is not. Neither is AT&T's but there is downside to switching. And the rates offered are almost exactly the same.
  • Will the iphone be enough to get people to switch to another carrier? Android is gaining fast with many more models to choose from. I love the iOS but of the 3 iphones I've owned, none has made it through the 2 year contract without a major hardware or software malfunction that makes some features inoperable.  Inertia is powerful. 
So, we'll see. I think there will be a gradual shift to Verizon (5% market share) but not the stampede many have predicted. Which is too bad, actually. It would make a great business school case on how a carrier is pulled by the device which then switches once a choice is available in the marketplace. 

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