Apple, Verizon Took Years to Clear IPhone Differences
Jan. 12 (Bloomberg) — Verizon Communications Inc. President Lowell McAdam works a few miles from the New York auditorium where he announced yesterday's deal to offer Apple Inc.'s iPhone. It took him four years to get there.
Context & Ripple Effects
Lowell McAdam's announcement closes a negotiation arc the corpus has tracked for over a year: an early disagreement between Apple and Verizon over CDMA iPhone pricing was reported in January 2010, Verizon's chief executive signaled his interest in carrying the device that April, and commentary like 'Whither Verizon?' spent mid-2010 asking whether the carrier would ever get it. Bloomberg's angle is that the deal took four years of clearing differences between the two companies.
The payoff is concrete: Apple confirmed the iPhone 4 goes on sale at Verizon Wireless on February 10, 2011, ending the iPhone's run as a single-carrier product. Coverage of the announcement spread across outlets including Silicon Alley Insider, which focused on how Verizon's retail programs were shifting ahead of the release.
First-order effects
- Verizon Wireless gains Apple's flagship device on February 10, converting four years of pursuit into shelf inventory just weeks after McAdam's announcement.
- Apple exits single-carrier distribution for the iPhone, adding a second network — built on CDMA, per the earlier pricing dispute — to what was previously one exclusive channel.
Second-order effects
- The incumbent carrier holding the iPhone until now faces its first real competitive loss on the device, and must respond with pricing or service offers to defend its subscriber base.
- Supporting a second radio technology forces Apple's supply chain to build and stock two iPhone variants, raising manufacturing complexity in exchange for addressable-market reach.
Third-order effects
- If the pattern holds, exclusive handset-to-carrier lockups lose their value as premium devices go multi-carrier, shifting negotiating leverage toward device makers and away from network operators.
- Carrier-specific hardware variants may become a transitional cost: as the industry moves toward devices that span networks, the CDMA-versus-GSM split that shaped this negotiation becomes a constraint on Apple's design cycle.
The trend: Smartphone distribution is moving from single-carrier exclusivity deals toward multi-carrier launches, with device makers like Apple using carrier competition to capture more leverage.