Daniel Eran Dilger in San Francisco
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The iPhone isn’t coming to Verizon.

iPhone cancel

Daniel Eran Dilger
USA Today published a weak bit of sensationalism under the guise of journalism, strongly suggesting there was some basis for believing that Apple would partner with Verizon Wireless to deliver an iPhone capable of working on Verizon’s network. That’s wrong, here’s why.

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Leslie Cauley based the entire article’s premise on a nebulous source only identified as “people familiar with the situation,” writing that “they declined to be named because they aren’t authorized to speak publicly.”

If there were any possibility for Apple to be in even “high level talks” with Verizon, it would not have anything to do with the iPhone appearing on Verizon’s network within the next couple years.

Cauley should have grasped that when Apple refused to comment “on the specific question of whether it is talking to Verizon” and instead sent USA Today a transcript of COO Tim Cook saying in the recent earnings conference call that Apple is “very happy with the relationship that we have [with AT&T] and do not have a plan to change it,” and that “CDMA doesn’t really have a life to it after a point in time.”

There is no chance of an iPhone for Verizon. Apple is having enough difficulty delivering optimized UMTS 3G support; rolling out a 3G EVDO version of the iPhone would result in 80 million Americans having the option of switching to the iPhone without changing to AT&T, but that would also ground the high voltage differential that is streaming premium data users to AT&T, a flow that is both sparking free press and higher profits around the iPhone.

What good is it to develop a secondary, parallel development of the iPhone to gain a standing in front of 80 million potential new customers when you lose your existing partner currently promoting the iPhone to 80 million existing customers as well as sucking the life from Sprint and syphoning the cream off the top of Verizon?

Note too that most of Verizon’s 80 million customers are not high end data customers interested in the iPhone, but people looking for a free, low-end “feature” phone and a $50 service plan. Why would Apple halve its telephony development efforts to cater to a tiny demographic of the world currently attached to a dead end mobile phone technology?

CDMA/EVDO will essentially be dead in just two years, as far as data-rich smartphones go. Verizon is aiming at building out a new LTE network to deliver a really fast mobile network that can keep up with AT&T’s. Currently, Verizon does offer better 3G coverage in certain areas of the US, but that’s where the puck is, not where it’s going. EVDO will be EDGE two years from now. In 2011, Apple doesn’t want to be back in 2007 again.

It would be ridiculous for Apple to spend a year developing an EVDO mobile stack so that it could offer potential AT&T switchers a lazier alternative for another year before everyone began wanting a mobile device faster than EVDO or today’s UMTS can deliver. That’s tomorrow’s 3GPP standard, and both Verizon and AT&T will be building LTE out in the US.

But LTE is still years away from being built out, and between now and then, there is no reason to build a CDMA/EVDO phone when Apple’s efforts can be used elsewhere and the exclusively-AT&T iPhone can instead to prove that Apple’s product is so good that people are paying extra and making do with AT&T’s still-under-construction network just to get it.

Why the story got printed

Well, no, there actually is a reason for suggesting that Verizon will get an iPhone sometime soon. That’s to mislead people and make Verizon customers relax from their ready-to-jump poise. Why switch to the iPhone now when you can wait and see if it shows up on Verizon’s network sometime real soon now?

It’s a Microsoft tactic called vaporware: you announce that you’ll soon have what everyone else is selling, depressing sales until you either have a chance to deliver your own version, or more likely, so you can profit on old technology until consumers forget about superior competition because all the superior products in the market are suffocated by your nebulous clouds of vaporware.

Microsoft was able to keep doing it as long as they could huff their fumes into the faces of enough naive pundits, assisted by an army of paid shills who pretended to be both experts and objective, when they were really just idiots on the dole with a core competency for spewing talking points.

The fact that Cauley’s article in USA Today–which was uncritically repeated by everyone else as news–was filled out by the prattling of Roger Entner, the phone industry’s version of Rob Enderle, should have been a sign. Entner is a paid shill of Verizon. He worked very hard to bad mouth the iPhone at every opportunity at its launch and has ever since.

Now is the perfect time to spread the message that Verizon users don’t have to switch to AT&T to get the iPhone, as users sit in disgust over Verizon’s crappy selection of phones including the major failure from RIM called the Blackberry Storm, and as all attention swarms around iPhone 3.0. Just wait! We’re getting the iPhone any day now, so hold your breath till you pass out. Oh hey, and if not the iPhone, then something from Microsoft or an Android phone that is just as good, just like the G1 was supposed to be so freaking awesome. Wait, don’t leave, stay a while!

The news USA Today didn’t get.

Of course, the fact that USA Today was played by a shill isn’t news. But what might be news is the story Cauley missed. If Apple had nothing going on with Verizon at all, it might have intimated that more forcefully. After all, Verizon executives were total douche bags when given the opportunity to pooh-pooh the iPhone. Why didn’t Apple rub their faces back in it?

Apple may well be in talks with Verizon, not about an iPhone (why screw up the deal with AT&T?), but with new Macs set to be released with WWLAN support for mobile networks.

After all, Apple has already learned how to sell a $700 computer for $200; you have a mobile company front you the difference and let them collect their $500 over the course of two years while providing service. Why not make MacBooks $500 cheaper using the same strategy? The iPhone is exclusive to AT&T, but Mac WWLAN support isn’t. By talking with both AT&T and Verizon, Apple can extract the best deal for subsidizing Macs using wireless networking service contracts.

That doesn’t mean that Apple’s Macs will be exclusive to Verizon; it may offer a deal to multiple providers. It may be exclusive to AT&T, with Apple only in talks with Verizon to keep AT&T scared and therefore competitive. Whatever the case, Apple has no interest in revealing its hand and screwing up its opportunity to accelerate Mac sales using its iPhone trick. That means no public comments, just hints that no CDMA/EVDO iPhone is forthcoming.

You got that USA Today? And shame on the rest of you reporters.
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35 comments

1 Trade Jim News » The iPhone isn’t coming to Verizon. { 04.28.09 at 12:14 pm }

[...] Daniel Eran Dilger USA Today published a weak bit of sensationalism under the guise of journalism, strongly suggesting there was some basis for believing that Apple would partner with Verizon Wireless to deliver an iPhone capable of working on Verizon’s network. That’s wrong, here’s why. .Leslie Cauley based the entire article’s premise on a nebulous source only [...] Go to Source [...]

2 helmsb { 04.28.09 at 12:27 pm }

I just made the EXACT same argument to one one of my coworkers. My other contention is having two competitors selling the same product is not in Apple’s best interest. Apple prides it self on simplicity. They want the average consumer to decide “I want an iPhone” and immediately know where to go. They don’t want TV ads selling one network against the other while selling their product. Apple is in the phone business not the phone service business, if it was up to them there would be only be one plan to eliminate barriers to entry even further.

3 Blad_Rnr { 04.28.09 at 12:34 pm }

Daniel,
C’mon. Enough with this crap. We’ve been waiting for your response to the Apple earnings vs. MSFT’s earnings reports last week. Don’t tell us you’ve wimped out! What gives???

4 KA { 04.28.09 at 1:10 pm }

I will not buy a computer if it has a data plan attached. I simply cannot afford it.

5 Non-AT&T iPhone not likely until a 4G roll-out. { 04.28.09 at 1:56 pm }

[...] Update:Dilger’s take on the matter, over at Roughly Drafted, mirrors some of our own opinions. Choice quote mash-up: What good is it to develop a secondary, parallel development of the iPhone to gain a standing in front of 80 million potential new customers when you lose your existing partner currently promoting the iPhone to 80 million existing customers as well as sucking the life from [the competition]? … It would be ridiculous for Apple to spend a year developing an EVDO mobile stack so that it could offer potential AT&T switchers a lazier alternative for another year before everyone began wanting a mobile device faster than EVDO or today’s UMTS can deliver. [...]

6 nat { 04.28.09 at 2:03 pm }

The “iPhone trick” would hopefully work as well as it did for the iPhone 3G. Of course the usual pundits will bring up the final cost of ownership on subsidized MacBooks while ignoring the final cost of similarly equipped PCs.

One thing I’m a little fuzzy on though is WWLAN (wide wireless local area network?) and how Verizon and AT&T provide it. It’s not part of their CDMA/EVDO nor GSM/UMTS networks, correct? Any clarification would be appreciated.

7 lowededwookie { 04.28.09 at 4:29 pm }

New Zealand Telecom is finally moving away from CDMA because they realised that it is a dying technology.

You look in any shop that sells Vodafone and Telecom phones and Vodafone phones outnumber Telecom at least 2 to 1. No one is making CDMA phones anymore except for the Japanese markets.

8 John E { 04.28.09 at 5:56 pm }

DED is exactly right. forget any CDMA iPhone ever.

and there is real potential for Apple to link wifi data plans from AT&T, Verizon, and T-Mobile too with its new touch tablet or whatever they call it. relying just on free wifi hotspots is not good enough for most people. many airports have none, a critical issue, and finding them in unfamiliar cities is doable but not really convenient (you can wind up in some crummy locations). making it easy everywhere is certainly worth a $20 monthly data plan, and the option of getting the touch tablet at half price with a $40 a month contract would look good to a lot of people. it just has to be less expensive than cellphone plans. and as to expanding it to lower the price of macboooks, that is an interesting idea that Apple might try, though somehow i kinda doubt it.

9 Etreiyu { 04.28.09 at 6:46 pm }

What are we looking at, here? A roaming-wireless connection? One of those little USB broadband dongles, only built-in? Times being as they are, I suspect many people are trying to optimise their connectivity, and there’s a definite sweet-spot between dial-up and bb; trouble is, we’re most likely talking about replacement connects, not extra connectivity. I myself have been online 25 years & never been without a connection active, have had broadband for 12 years – but my net.usage may go mobile-only, once I get off Verizon & grab the next new iPhone out. I can only afford one, and with tethering, in 3.0, that becomes possible (is there an iWeb app for the iPhone that would make site updates?)

Interesting times.

10 addicted44 { 04.28.09 at 6:48 pm }

Wow. This is the first time I think I completely disagree with you.

With the takeup of iPhone Apps, one thing Apple has realized is that there is very real money in becoming the mobile user’s platform of choice. They have a constant revenue from very little cost, since the development is done by 3rd parties. With in-app purchasing systems, this revenue model is going to shoot through th roof.

Not even being accessible to half the US population is very limiting. There is no amount of money AT&T can offer that will exceed the value of firmly establishing the iTouch as the dominant third-party app platform.

11 addicted44 { 04.28.09 at 6:52 pm }

Another important point you are completely ignoring is how easy it is for Apple to move to CDMA. They basically need to replace 1 component of the iPhone software stack, out of several hundreds. The OS is extremely well encapsulated, and I doubt it would take more than a couple of months of development by a small 2-3 person team to completely replace the GSM stack with the CDMA one.

Blackberry, Palm, Nokia and Sony have been doing this for years. Why do you think Apple can’t achieve what these companies have managed for decades?

Like you say, 4G (LTE) is still a while away. That means, although CDMA is on its way out, it will still be the dominant platform for half the US for the next 3-5 years easily. Thats a lot of iPhones being sold. Additionally, this opens up Apple to far more customers around the world, since some dominant Telcos around the world are on CDMA.

12 Joel { 04.29.09 at 2:53 am }

GSM accounted for 78% of world subscribers in 2007 and users of CDMA are also declining world-wide. Its increadibly unlikely that there will be a CDMA iPhone. Future iPhones might be equipped for WiMax or HSPA+ but I think it would be very unlikely Apple would work backwards…

“Another important point you are completely ignoring is how easy it is for Apple to move to CDMA. They basically need to replace 1 component of the iPhone software stack, out of several hundreds. The OS is extremely well encapsulated, and I doubt it would take more than a couple of months of development by a small 2-3 person team to completely replace the GSM stack with the CDMA one.”

That small team would have to test the iPhone for months. Remember how patchy the 3G connection was after deployment…? You’d have to replace existing systems dealing with SIM cards, SIM registration with iTunes, etc…

So, after you consider reality, not pundit dreams, a CDMA iPhone is never going to happen…!

13 Joel { 04.29.09 at 2:54 am }

And here’s the link for the facts above : http://www.cellular-news.com/story/30361.php

14 Zamfield { 04.29.09 at 10:02 am }

Daniel, could you the speculation that they (Apple) are working on a tablet with cellular but on a 10″ screen. In particular, I see a lot of people repeating that such a device would need its own section of the App Store to account for the difference in screen resolution. I thought Apple was vigorously pushing for resolution independence in its frameworks. Didn’t this concept make it into the iPhone OS SDK? It would seem to me that if such a device was on its way, and the frameworks all these apps have been written support it, then many, if not all of the millions of existing apps would run unmodified on a larger screen with little to no degredation in appearance. You thoughts?

15 gus2000 { 04.29.09 at 11:15 am }

And now today’s tech-media story is that Verizon is actually in talks with Microsoft, who is launching the fabled killer of iPhone. Code name: “pink” (didn’t we already use that code name for something else?)

Oh yeah, and Apple is supposedly releasing a 10″ iTouch that will be a “Kindle Killer”. How about a “Pundit Hyperbole Killer”, can we get one of those please?

16 hrissan { 04.29.09 at 1:24 pm }

$50 cheap plan mentioned in article made me laugh. You rarely find someone here in Russia spending more then $15 per month for cellular service. Providers would have to sign contract for 5 years to get $500 difference, so they do not care. As a results iPhone costs at least $700 and is sold unlocked. When the new iPhone goes on sale, I beleive those unsold iPhones 3g including demo units will be dumped here and sold for $500 and marketed as great discount. BTW what the new iPhone name is going to be?iPhone 4G? :)

17 cy_starkman { 04.29.09 at 11:28 pm }

Everyone argues back and forth.

The article in question is a mash up between two ideas. 1) Verizon saying that iPhone would be on their network in the future (LTE) and 2) That Apple has two mystery devices mentioned in the firmware for iPhone 3.0

Historically lets think about it. Apple has a history of dumping outgoing tech before its due date and not taking on new tech before it’s really ready (Maybe Steve learned from his NeXT Cube days).

So why would Apple take on CDMA? It’s finished. Australia switched off its nation wide CDMA a year ago. You can barely even get GSM phones here anymore. If its not 3G, with 2G fall back then see you later. The iPhone 3G will run on both 2G networks (if a nation or area only has GSM) and 4G/LTE when it is released. So it is currently future and passed proofed.

This is a big step away from Steve saying “folks, I’ve got this amazing idea, let’s make another iPhone model that runs nearly nowhere on earth, will creep along at dial up speeds like our first gen product and become a paperweight as the few remaining CDMA networks get switched off, we’ll call it iPhone 3.0″

Anybody who thinks this is the case is deranged.

Maybe WWLAN, but even that sounds bizarre “Yeah! what I always wanted mobile networking for my laptop that reminds me of the mid 90′s”

We shall soon see regardless. It’s more likely that Apple would be willing to make a modified stack for China and access their market than fritz around with piddly Verizon. The US market is a mere snippet of the world market, or the Chinese market for that matter.

18 enzos { 04.30.09 at 4:04 am }

@cy.. I can’t get over the spotty coverage and drop-outs our American cousins have to put up with. Then again they also got stuck with NTSC (Never The Same Color) instead of PAL for TV, so I guess it’s a pain you pay for early adoption, eh?

Whatever the case, Apple is full of people with big brains for forward thinking, and will undoubtedly be found to be riding the right horse in the long run.

19 addicted44 { 05.02.09 at 2:44 am }

@Joel
“That small team would have to test the iPhone for months. Remember how patchy the 3G connection was after deployment…? You’d have to replace existing systems dealing with SIM cards, SIM registration with iTunes, etc…”

Good points. However, these are not insurmountable costs. The question for Apple is whether these costs are worth the benefits gained by access to a large portion of the market.

“GSM accounted for 78% of world subscribers in 2007″. I think this is a red herring. Every cell phone user in the world is not the market the iPhone addresses. A majority of those users is not folks the iPhone currently targets, for 2 reasons. (1) Many countries’ cell carriers do not provide decent data plans…the iPhone is not as useful there (2) Most people just cannot afford the iPhone.

Within the market the iPhone currently addresses, I don’t think the CDMA/GSM split is as stark, simply because about 40% of the addressable market is the US (based on the fact that Apple sold about 40% of iPhones last quarter in the US) where 50% is CDMA…So simply the CDMA market within the US accounts for about 20% of the total market the iPhone can address. Then you need to add the Japanese, Chinese, S. Korean, Canadian, markets where CDMA is probably at least 50%. Minus the Chinese market, the rest are prime targets for the iPhone.

20 addicted44 { 05.02.09 at 2:51 am }

I think Gruber (http://daringfireball.net/2009/05/verizon_iphone_rumors) here does a far better job of explaining why Apple will probably not remain tied to AT&T. The last few paragraphs highlight my opinion on the issue.

21 roz { 05.02.09 at 7:10 am }

Set aside the question of what *will* Apple do. Apple is nutso about this stuff so its foolish to guess.

The real question is, would it make sense to make a CDMA iPhone for Verizon? I would still say yes. For the simple reason that as you say, “… LTE is still years away from being built out…” To me that means that there will be an audience for CDMA devices for a little while. 2-3 years is the lifespan of a cell phone. Might as well have a device for Verizon over that period, then when the LTE is ready you have a built-in audience for that new version.

22 Rob Scott { 05.02.09 at 9:05 am }

I am with Daniel on this one. No one argues that Apple will never partner with Verizon. The argument is – there will be no CDMA iPhone for Verizon because CDMA is a dying/dead tech. Two, the noise about this partnership is Verizon/Apple competitors generated FUD to stall switchers.

Will Apple end its exclusive partnership with AT&T, yes. Will Apple offer cheaper SKUs of the iPhone (and iPod touch) in an attempt to grab more market share, very likely. The point though is that Apple does not (in the immediate term) need Verizon to do any of those two things, i.e. offer cheaper versions of iPhone (and iPod touch) and increase its market share.

Also remember that iPod touch is not vendor exclusive. So when looking at the “Multi Touch/iPhone OS platform” there is not compelling reason for Apple to prematurely end its exclusive partnership with AT&T because the iPod touch is available to anyone who want an iPhone but is not prepared to switch providers.

@ Addicted44: Gruber is at pains to make his case (because he never thought about what he was doing when he carelessly posted those Verizon happy links) and he does not differ in any fundamental way to what Daniel is saying/raising. He tries to differ so to save his ass for being such an uncritical sucker. And yes, I like his take on things Apple as much as I like Daniel’s. But Gruber can be gullible at times.

23 Bites from the Apple: Swirling Down the Rumor Hole reviews, prices | eOpinions Product reviews { 05.03.09 at 11:29 am }

[...] called LTE, which makes moving to a CDMA-based provider seem like a waste of time since, as Roughly Drafted put it, “that’s where the puck is, not where it’s going.” EVDO will be [...]

24 Ephilei { 05.04.09 at 4:02 am }

WWLAN? You mean WLAN?

25 addicted44 { 05.04.09 at 11:09 am }

@Rob Scott

I think the “dyingness” of CDMA is a little oversensationalized. True, its a dead-end technology, but it still will be used for a long time by a lot of people who are likely to buy an iPhone. The replacement (LTE) will be years and decades into replacing CDMA.

Also, I’m not using Gruber as an appeal to authority. I just felt that the last couple of paragraphs in that column reflect my opinion more lucidly than I have written down.

26 GwMac { 05.04.09 at 4:14 pm }

The iPhone is already being sold in a non-GSM version in Japan. Softbank, the carrier for the iphone in Japan, uses a 3G UMTS. Japan is also a split country like the US with competing technologies offered by the big 3 namely NTT Docomo, KDDI, and Softbank. Each with competing technologies. If Apple could make a specialized iPhone for Softbank with only about 20 million customers, why couldn’t they also develop a CDMA version for the roughly 140 million American consumers using this standard? Think about that number for a second, Verizon alone has more subscribers that the entire population of the largest European countries.

Apple could easily produce a CDMA iPhone if they wanted to. Whether they choose to do so or not will not be for technological reasons or minor financial expenditures. It will be certainly be based on ulterior motives known only to Apple executives. I think AT&T have pretty much captured all the low hanging fruit and the rest of us still on Sprint, Verizon, and other carriers will stay where we are. I was with AT&T before I switched to Sprint and I had more dropped calls than completed calls. Both Sprint and Verizon have offered 3G EVDO coverage for a few years now and AT&T are still stuck on EDGE with no plans for any 3G service anytime soon. Even if they offered better coverage and 3G service to boot, I would be an idiot to give up my Sprint $30 SERO plan with unlimited data, unlimited text, and 500 anytime minutes with free calls starting at 7PM for a plan with fewer minutes, no unlimited text messaging, and anytime minutes starting 2 hours later at about 2.5 times the monthly cost. If Apple releases an iPhone for Sprint I will definitely get one, but until then there is no way in hell I will consider going back to AT&T and pay over twice as much for far inferior service and plan.

27 enzos { 05.05.09 at 4:35 pm }

Agreed, GwM; Apple *could* produce an iPhone for Verizon but it’s probably not consistent with their stated long-term goals to do so… to produce the best products on the markets (not the most product on the market).

28 Bites from the Apple: Swirling Down the Rumor Hole — What I Would Buy { 05.07.09 at 11:47 am }

[...] called LTE, which makes moving to a CDMA-based provider seem like a waste of time since, as Roughly Drafted put it, “that’s where the puck is, not where it’s going.” EVDO will be EDGE [...]

29 daGUY { 05.07.09 at 11:48 am }

Generally when Apple has an upcoming product that they don’t want you to know about, they hide it behind the usual “we don’t comment on future products” remark. In this case, though, Tim Cook specifically called out CDMA and said it “doesn’t have a life to it,” so that sounds to me like they genuinely have no plans for a CDMA iPhone.

Like others have said, I think the most likely scenario is that Apple IS talking to Verizon, but not about an iPhone…

30 addicted44 { 05.09.09 at 2:52 am }

@enzos

How does creating a CDMA version of the iPhone make it any worse? Thats like saying that Apple compromised the standard of the iPhone by opening it to Windows.

Adding CDMA will not be a major technical change, and will not add all that much towards testing and maintenance costs simply because the cell phone functions of the iPhone form a very small subset of the iPhone’s abilities.

The current cell phone standards (CDMA, GSM) are extremely old, well known, and with limited functionalities, making supporting them extremely easy.

31 staticfive { 05.21.09 at 5:12 am }

No Colonel Sanders, you’re wrong. Apple went to Verizon BEFORE they went to AT&T because they realized that the subscriber base and the CDMA technology were worth developing exclusivity with Verizon. They only chose ATT because Verizon refused to let Apple control a HUGE number of resources on the data network, activation system, and financial aspects such as plan subsidies and commissions.

To say the Apple has no interest in starting up business with Verizon is flat out wrong. They’re practically drooling over that pie of market share–anyone can see that. Fact is, when someone has a cellphone, they’re going to want to make calls, and sometimes AT&T can’t even deliver that. For this, people need CDMA, which is still inherently a better technology despite repeat GSM technology updates. As for data, all technologies are currently sufficient for the mobile platform. I don’t care what you say about rolling out the new technologies like LTE, because the truth is, every time a new data technology comes out, a carrier only utilitizes about 10-30% of the capability. EVDO Rev. A is capable of around 6Mbps throughput, and right now Verizon is limiting it to around 768Kbps-1.5Mbps. Same story goes for UMTS, you’d be amazingly lucky to get anywhere near even 50% of its theoretical limit. No one needs more than 1.5Mbps on a mobile phone with the most robust of mobile services, tethering excluded.

That said, NTE is the next logical step, but it’s only there for healthy network competition and the ability to provide the gimmicky “4G” acronym to subscribers. Ultimately, I don’t think that the technology discussion really has any bearing whatsoever on whether or not Apple wants to roll out to Verizon, as they would do well even to roll it out as-is with a CDMA radio. To say that it’s not going to happen is just plain naive

32 Joel { 05.23.09 at 4:12 am }

Still completely misses the point that Europe and the rest of the world (with the exception of one or two countries) GSM rules the roost. Apple would have to have made both a CDMA version and a GSM version for this to gain market share outside the US.

Its the same problem the Palm Pre faces. They are launching on the Sprint CDMA network. Until they launch the GSM version its just an interesting toy to us Europeans…

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