Massucci's Take: Verizon iPhone will come, but it may take two years

My Apple (AAPL) iPhone recently started delivering voice-mail messages a day late. But sometimes, I don't get them at all. Calls have been dropping more frequently and I find that surfing the Web using my iPhone, which operates on the AT&T data network, is a drag.

Growing more frustrated with my iPhone, I got on my work phone and called a few telecommunications analysts to ask: When are Verizon and Apple going to get together to provide the much-anticipated, long-awaited Apple/Verizon iPhone? I was particularly interested in their answers given that Verizon (VZ) announced last week that it would be launching an array of phones based on Google's (GOOG) Android operating system. My big fear was that their answer would be never.

Instead, the consensus is that an iPhone for Verizon will hit the market, but not for two years.

Neither Apple nor Verizon has announced any intention to launch an iPhone together, nor will they comment on it. But analysts say count on it. The only good news in waiting two years is that if you bought an Apple 3G S iPhone this summer and signed a two-year contract with AT&T, as I did, your contract will expire at what seems to be the right time.

That's ominous news for AT&T.
"AT&T is going to give up a lot of market share," says Walter Piecyk, a telecom analyst with Pali Research. "Once it loses the iPhone exclusivity, Verizon will be the primary benefactor." So what can AT&T do? Well, it could try to renew its exclusive agreement to hold onto its iPhone customers, but that seems a long shot.

Google (GOOG), with its Android-based phones, and Research in Motion (RIMM) with its BlackBerry phones, have already signed on with multiple phone companies to distribute their handsets. Apple will follow that path as well, says Piecyk, who rates Verizon shares a buy.

"If you're a vendor, you have to look for growth in other markets," says Zues Kerravala, an analyst at Yankee Group. Already, according to Canalys research, Apple is gaining market share like "a bat out of hell," growing from two percent to 14 percent global market share in the last year, while garnering a 23 percent market share in the U.S. Wireless carriers that are not distributing the iPhone now, will certainly want to benefit from the iPhone - and that will only help Apple to increase its market share in the U.S.

Perhaps the only true recourse for AT&T
, if it has even a glimmer of hope of remaining the only provider of the iPhone in the U.S., is to enhance its wireless networks so that they can accommodate the demands of iPhone users, not to mention the flood of wireless data devices in development that will be competing for bandwidth.

All this, of course, is something that AT&T understands. Recently, AT&T's CEO, Randall Stephenson, told DailyFinance that AT&T's "data network behaves differently with the load of demand [from iPhone users] that's being put on the network." That doesn't sound like a good thing. But he also said that he tests iPhones all over the U.S. while traveling, in an effort to improve AT&T's service, and is preparing for potentially losing the iPhone business.

It's not that the AT&T-powered iPhone is useless. If 30 percent of calls are dropped in New York City, 70 percent are successful. Plus, the service offers nifty features such as GPS which is built into the iPhone.

Even so, waiting two years for the Verizon version is disappointing and the wait could end up being longer. One reason: The next chip for the iPhone is being built by San Diego-based chipmaker Qualcomm (QCOM) and likely won't be ready until 2011, according to Charter Equity Research's Edward Snyder.

My fingers are crossed for a Verizon and Apple iPhone to be in stores by 2011. Until then I'll be picking up dropped calls all over Manhattan and doing my Web surfing mostly from work and home.

Anthony Massucci is a senior writer and columnist for DailyFinance. You can find him on Twitter at hianthony.

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