News today in the WSJ (http://bit.ly/bd1E0j) that a CDMA iPhone is in the works for the end of the year. That means Sprint or Verizon, or possibly both. Verizon has the stronger network, but it will probably be down to who is willing to stump up the $600 up front price that AT&T currently pays.
Apple's business model is a bit unusual in that it gives away the blades to sell the razor. iTunes barely makes profit, but it moves iPods. The App Store probably does make decent profit, but again, it is primarily a way to move hardware. The wireless carriers are the other way around. AT&T pays buys iPhones from Apple for $600, sells them for $199, but makes it up over time with outrageously priced data plans.
As an iPhone lover who has long suffered on AT&T's woefully inadequate data network, I welcome a new carrier to share some of the load. The iPhone has singlehandedly propelled AT&T into the smartphone lead, for which they reward us by failing to invest enough in infrastructure.
I would actually like to stay with AT&T, because I am emotionally attached to GSM (like the metric system, it makes me feel all international). But will a new carrier for the iPhone make my AT&T experience better? Probably not.
I don't expect current iPhone owners to bolt for a new carrier because of the costs in doing so. You have to pay the early termination fee (ETF) to AT&T, and sign up for a new contract--and Verizon's ETF is now $250. It might happen slowly as people roll off their AT&T contracts and want the latest iPhone. It will somewhat depend on how much of an upgrade this summer's iPhone is. If it is super digital hotness, lots of people will do an early upgrade option (they all upgraded last year to the 3Gs) and bam!, there is that ETF again. If the new model is a snoozer, then perhaps next summer people will make the jump to a new carrier for the 2011 iPhone.
Many just won't bother. I like the fact that GSM lets me be on the phone and using the data channel at the same time. I know that Verizon is working on a 4G network, LTE (Long Term Evolution, I think), that will not be compatible and therefore require a new phone. Many current iPhone users are geeks, and these things will matter to them as well. Unfortunately, they are also the heavy data users.
New iPhone buyers probably consume far less data, on average, than existing owners. Sure, there will be some people whose business required Verizon who will move up from their Blackberries, but I am talking big picture here.
So, unless AT&T continues to invest to upgrade their data infrastructure, a Verizon iPhone won't ease the congestion on AT&T. But, if AT&T fears that their growth will be stunted by a Verizon iPhone, they are going to scale back their network investment to protect their quarterly profits. AT&T still thinks like a demented monopolist.
Want proof? Go into an AT&T store and buy an iPhone. Now go do the same thing in an Apple store. AT&T has decades more experience in retail than Apple. What have they learned? Apparently, nothing.
But AT&T will still manage to sell more iPhones....even a blind squirrel finds a nut every now and then, and the data use on their network will continue to grow.
Of course, I have a Verizon MiFi as a backup....when AT&T craps out, I fire up the MiFi and ride on Verizon's data network.