Verizon iPhone 4 Fails to Generate Expected Wave of AT&T Defectors
"Our proprietary survey of over 75 locations selling the Verizon iPhone largely supports our view that the VZ iPhone launch, while material to both Verizon and AT&T, is not likely to radically reshape the industry landscape," says James Ratcliffe, a Barclays analyst, in a research note.
Expected Storm of Customers Turns into a Trickle
Ratcliffe believes that, at best, Verizon attracted an incremental 90,000 to 100,000 more AT&T defectors during its iPhone 4 launch Thursday, compared with its normal defection rate. And based on those figures, which he extrapolated from comments made by Verizon executives, Ratcliffe notes the rate of AT&T (T) disconnects is roughly in line with his earlier projections -- that 480,000 AT&T disconnects are likely to happen in the first quarter, compared to a year ago.
"It surprised me and everybody that sales were slow," said Jonathan Goldberg, a Deutsche Bank analyst. He believes it's likely Verizon and Apple will sell more iPhones as customers roll off their AT&T contracts. And Goldberg doesn't expect Verizon and Apple (AAPL) to be sitting on a ton of iPhone 4 inventory as the summer approaches and Apple rolls out its next iPhone version. "Apple has over 20 years of experience in managing inventory," he says.
Wall Street Estimates All Over the Map
Earlier in the week, as iPhone 4 launch day approached, Wall Street couldn't make up its mind on earnings estimates for Verizon. On Monday, according to a Thomson Reuters research analyst, four of 38 analysts who follow Verizon lowered their recommendations for the carrier and one raised them. On Tuesday, one lowered their recommendation, while two raised them the following day. And since Thursday, when the Verizon iPhone launched, one analyst lowered expectations.
One thing that may give Verizon's iPhone sales a pop would be a cheaper and smaller version of the iPhone. According to a Bloomberg report, Apple is working on such a design -- and is toying with the notion of selling it for $200, without a two-year carrier contract. That is currently the price of the cheaper iPhone 4 that comes with a two-year contract.
Apple is reportedly eying the smaller form and price structure change as a means to push back the rapid advances made by Google's Android smartphones.