Apple already sells the iPhone to Verizon users: iPod touch
March 30th, 2010
Daniel Eran Dilger
Rumors about Apple launching a CDMA version of the iPhone are being bandied about again, but the AT&T deal for the iPad indicates that Apple is happy with one mobile partner in the US, so far. But everyone’s overlooking the fact that Apple already sells the iPod touch to America’s CDMA users.
.Launching a new smartphone platform involves a lot of work, particularly in the US where the big four firms are split between GSM/UMTS and CDMA/EVDO; there’s even frequency differences between AT&T and T-Mobile, which prevent phones from working optimally between those two carriers.
Apple has remained firmly in the AT&T camp in the US, even while it has spread the iPhone around globally by using multiple carriers in several markets. Analysts like to guess how much more money Apple would be making if the iPhone were available from every carrier.
The downside to a Verizon iPhone
Rolling out a CDMA iPhone would ostensibly allow people who need or want Verizon to buy it, rather than the Droid or some other LG phone trying to act as a facsimile. But nobody seems to note that there would also be a variety of downsides:
– CDMA doesn’t support the iPhone’s advertised ability to talk while using data.
– Verizon wouldn’t be likely to ditch its other partners to aggressively promote the iPhone.
– Apple would have to fight Verizon over sales and support ownership and VCast bundling.
– The exclusive value to AT&T would wane, eroding Apple’s biggest partnership.
Additionally, Apple already has an iPhone to sell to Verizon and Sprint subscribers: iPod touch. And now the iPad. Sure, they can’t use it as their phone, but they’re still buying up the device in large numbers. Apple sells nearly as many as it does the iPhone.
The mobile market is not just smartphones
If any market share statistics company wanted to flatter Apple in the way that Gartner and IDG worked tirelessly to flatter Microsoft in terms of PC share, then they would include iPod touch sales into the smartphone mix, giving Apple nearly twice as much market share while diluting everyone else’s in the market for mobile devices.
Neither Android nor the webOS nor WiMo nor Symbian nor BlackBerry has a web browsing MP3 player like the iPod touch. In fact, the only thing even remotely similar is Microsoft’s Zune HD, which doesn’t run the same software as the company’s WiMo platform, nor is it even selling in any meaningful quantity. It hopes to turn this around a year from now when it hopes to have WP7 and the Zune helping each other out, but that’s still a vaporware dream, not anything close to reality.
One might think that creating a smartphone without the complex phone part would be easy, and therefore be puzzled that Google and Palm and RIM aren’t all trying to line up an iPod touch of their own. One only has to look at the last decade of iPod sales to see that competing against Apple isn’t as easy as it might seem. Even consumer electronics heavyweights like Sony and Microsoft were repeatedly left bruised and bleeding by Apple’s first foray into mobile media playback.
What iPod touch does for the App Store
The iPod touch serves an important role in shoring up support for the App Store. iPod touch users download significantly more apps than iPhone users, according to AdMob; around 12 new apps per month, compared to around 9 per month for the iPhone or Android smartphone users. Those users also download twice as many paid apps on average than smartphone users.
That’s partly why the App Store sees twice as many paid apps downloaded per user compared to Android Market or Palm’s webOS Catalog. Of course, there’s also a lot more available and worth buying in the App Store, but it’s also because there are far more iPhone OS users representing a wider spectrum of interests, something that the iPod touch helps fuel.
AdMob also says that 78% of iPod touch users are under 25 (and 65% were under 17). That’s a demographic that is more open to gaming and exploration of new content. Those young users are also less likely to have an expensive phone than business users, for whom a pricy smartphone plan is less of an issue.
The firm also notes that “19% of smartphone users currently own or are likely to purchase an iPod touch in the next six months.” While it might be understandable that 24% of iPhone users have or plan to get an iPod touch, a full 12% of Android users and a whopping 22% of webOS users also have or plan to buy one. Anecdotally, it often seems to be BlackBerry users who want access to the App Store and iTunes but for whatever reason can’t get an iPhone. AdMob didn’t survey any BlackBerry users.
If you can’t sell em iPhones, sell em iPod touches
So while a lot of attention is being fixated upon whether Apple will launch a phone for Verizon, it’s clear the company has been doing the next best thing (if not the better option altogether) for three years now; offering an alternative that a fifth of smartphone users are open to buying in addition to their existing phone.
The popularity of the iPod touch means that even users who can’t or don’t want to buy the iPhone are still buying iPhone apps, and therefore adding value to the App Store ecosystem that draws users to the iPhone. At the recent South by Southwest conference, panelists with no particular reason to shill for Apple were regularly telling film and music people armed with Androids and BlackBerries that if they wanted to avail themselves of the mobile apps that were being talked about, they needed to get an iPhone.
A surprising number of TV ads for everything from insurance companies to music stores are also promoting the iPhone for Apple, as are newscasts and other shows that promote their apps and podcasts in iTunes next to an iPhone logo. This kind of market presence isn’t going to disappear just because Google is floating a new Android model every month.
Verizon is currently working to dump as many Droids and BlackBerries on the market as possible before Apple releases its next fourth generation iPhone, with each new Verizon smartphone now tied to a contract sporting a very expensive new cancelation fee.
As a hardware seller, Apple can’t compete with two-for-one free phones being subsidized by mobile companies desperate for subscribers and Google’s own adware. But it can continue selling those users the iPod touch, which they’ll continue to buy because of strong word of mouth and leading user satisfaction rankings.