Rumors have popped up that Verizon is paying Apple to shun rival networks T-mobile and Sprint. Isn't this anti-competitive and illegal?
Inside sources have reportedly spoken to Apple analyst Shaw Wu, revealing that Verizon has become very keen to accept Apple's offer of business to get the iPhone on its network. So keen is the big V, in fact, that it "may be willing to pay for exclusivity to itself and AT&T."
But with so many long-standing rumors connecting Apple and Verizon, why is the U.S.'s biggest cell phone network only now bending toward Apple? Wu references the iPhone's rocketing sales—at 14.1 million last quarter alone—which places Apple in the "driver's seat." He also bad-mouths Android (which has begun to "lose some of its luster") and BlackBerrys, which Verizon thinks won't be rejuvenated by the touch-friendly BlackBerry OS6, or at least rejuvenated enough to have a "material impact" on the smartphone market.
We do believe this rumor may have a grain of truth in it. While Android is indeed on a march, the fragmented market doesn't have the pizazz of Apple's product. As smartphones begin to appeal to more users (50% of U.S. phones will be smartphones in 2011, according to one recent report) then the iPhone as a complete package, with a strong brand image and a simple message, will begin to penetrate into more "average man" segments of the cell phone market—possibly capturing more sales than the slightly geeky-seeming Android OS, or business-centric BlackBerrys.
Apple and Verizon have crossed swords before, but the reports have always stated the biggest bone of contention was control: Apple's trying to smash the existing network-centric business model model, and Verizon loves to brand everything about its phones. But it's totally plausible that Verizon is now ready to accept Apple's terms and conditions, afraid that Apple may follow the path of least resistance (since it wouldn't have to re-engineer the device) and launch the iPhone on T-Mobile and Sprint
But we're skeptical that Verizon would "pay" Apple to play the game this way, because it smacks of cartel behavior, and would almost certainly attract the wrath of business regulators.
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