Why The Verizon iPhone Is Going To Be Huge: Only 26% Of Verizon Subscribers Have Smartphones
Apple probably would have been better off if it had started selling the iPhone at Verizon a year ago, as it probably would have stifled Google Android from becoming such a strong competitor.
Context & Ripple Effects
The question hanging over this launch has been live since at least May 2010, when Apple Outsider's Whither Verizon? piece framed how much of Apple's US momentum depended on ending the AT&T exclusive. With Verizon's fourth-quarter results showing a wireless subscriber surge even as earnings fell short — the same-day pickup from CNET's Between the Lines blog — the carrier arrives at the iPhone launch with volume but an unusually shallow smartphone base.
Silicon Alley Insider's argument rests on that base: only 26% of Verizon subscribers carry smartphones, so the addressable pool of upgraders dwarfs the installed iPhone base at AT&T. The counterfactual in the piece — that a Verizon launch a year earlier would have starved Google Android of its run — turns the delay itself into part of the story.
First-order effects
- Millions of Verizon feature-phone users become first-time smartphone buyers with the iPhone as the default flagship choice, giving Apple its first non-AT&T US channel.
- Google Android loses its uncontested position on Verizon's shelves and marketing spend — the carrier whose Android push drove its 2010 gains now sells the rival platform.
Second-order effects
- AT&T must defend its iPhone base on price and network claims rather than exclusivity, while Android handset makers competing for Verizon shelf slots face a competitor with Apple's marketing gravity.
- Verizon can steer upgrade subsidies toward iPhones, shifting the mix of devices it promotes and squeezing margins or co-marketing dollars out of Android OEMs dependent on its volume.
Third-order effects
- If the 26% penetration figure holds as the pattern across carriers, US smartphone growth runs through carrier-by-carrier feature-phone upgrades rather than early-adopter churn — making handset distribution deals, not hardware specs, the decisive competitive lever between Apple and Google.
- The end of US flagship exclusivity points toward a market where every major platform ships on every major carrier, collapsing 'which network' as a reason to choose one phone over another.
The trend: US smartphone platform share is being decided at the point of carrier upgrade — the conversion of large feature-phone bases like Verizon's into smartphone buyers, rather than switching among existing smartphone owners.