Blog Post

Is LTE hurting iPhone sales on Verizon?

“We believe cumulative Android smartphones may have represented over 50% of total smartphone sales at Verizon for the first time since the iPhone 4S launch. In fact, our checks indicated sales of the iPhone 4S at Verizon were not as strong in terms of total smartphone share at AT&T and Sprint.”

This excerpt from Mike Walkley’s note out of investment bank Canaccord Genuity suggests that the total Android(s goog) device sales are even with — or better than– the iPhone(s aapl) models at Verizon(s vz)(s vod), the largest U.S. carrier. Walkley doesn’t see the same at AT&T(s t) and Sprint(s s), however, and I can only think of two reasons why: LTE networks and two-year contracts.

While all four major U.S. carriers are now publicly committed to LTE for next-generation mobile broadband networks, Verizon was the first among them to launch LTE in December 2010. The carrier says it now covers 200 million people — know as POPs, or points of presence — in 195 markets. The next closest, in terms of coverage, is AT&T, with 28 markets and 74 million POPs. Sprint plans to launch LTE by mid-year in 2012 while T-Mobile is looking to 2013.

Many Verizon customers jumped on the iPhone when the operator finally launched it roughly a year ago. Given that most purchased the handset on contract, all of these subscribers aren’t eligible for another subsidized upgrade until August of this year or later, pending any early upgrade deals from Verizon. That will surely dent Verizon iPhone sales for the next two quarters, but I think LTE is the bigger issue.

The carrier is aggressively pushing its LTE network speeds and coverage. Occasionally it offers double the LTE capacity to attract customers, and it has already said that all new smartphones going forward will be LTE-capable. After spending billions to roll out an LTE network, I’m not surprised the carrier wants to recoup its LTE investment and get customers off the old EVDO network; two things the iPhone doesn’t help at all.

3 Responses to “Is LTE hurting iPhone sales on Verizon?”

  1. AlexTech

    So how many phone, brands models to match the existing iOS? kinda sucks doesn´t it. the companies can’t be serious about saying they can compete with iPhone.

  2. The Gnome

    I’m not sure I see the “hurting” part. Android, which has like a bazillion handsets ranging from “well pay you to take 2 of these off our hands” to a few hundred $ only account for 50% of Verizon’s sales while the iPhone that isn’t even pushed by the carriers and carry’s a premium as only one handset gobbles up a nice percentage all by itself.

    Imagine if the carriers actually pushed selling the iPhone… its amazing how well this phone does in the face of all the other crap you can buy out there.

    Maybe LTE will help this fall, but after getting LTE in my iPad I’m not so sure I want to be running out of data plan after an hour of use… even tethering is a huge waste at the cost. I’m just not sure what huge benefit LTE is over the other more important phone features.

    I think people hear LTE/4G and believe thats what they need. Combine that with the geek salesman selling Androids for 2 x .01 and you have a winner.. People are dumb.

  3. Bobby Autrey

    The carriers are already hurting themselves with the ever increasing cost of data and the usage caps. Providing devices with LTE so customers can burn through their caps and risk overages seems like a good move for the carriers.