Research Rewind: Analysts’ iPhone Predictions as Accurate as a Weather Forecast
As Research Recap noted at the time, perhaps the biggest surprise from Apple’s (AAPL) latest media extravaganza was that despite widespread anticipation there was no sign of an end to AT&T’s exclusive contract for the iPhone, or indeed of any move away from AT&T as Apple’s wireless provider.
Noted Apple analyst Ashok Kumar of Northeast Securities virtually promised that Verizon (VZ) would get to be the wireless partner for the iPad. Noting that the iPad would feature a wireless chip made by Qualcomm, Kumar said. “This discrete little fact would confirm that Apple has chosen Verizon as its telco partner.”
A search via Alacra Street Pulse for analyst comments with the keywords “iPhone exclusive” helps unravel the mystery.
Perhaps we should have been tipped off by Apple’s defense of AT&T’s network a few days before the iPad announcement. Or by the fact that nothing seemed to have leaked from Verizon. Apple may be able to keep a secret, but you’d think that if a Verizon-Apple tie-up was imminent, the news would find a way to escape via Verizon’s less controlled culture.
Perhaps we should also be careful about putting too much faith in unnamed sources: “According to an inside source close to the going-ons involved in all of this, a new tablet of some sort may not be the only thing on deck for next Wednesday though. We have been led to believe by an inside source that AT&T will lose their iPhone exclusivity on the same day, though it’s not yet clear what other carrier (or carriers) will be stepping in to also carry the phone.”
Silicon Alley Insider’s Dan Frommer offers a discussion of why there’s been no Apple-Verizon deal so far and why there will be one eventually.
He quotes Broadpoint AmTech’s Brian Marshall as saying says he’s “not 100% sure” what happened, but that the companies will still work together. “Based on some of my datapoints, I still think VZ will happen in the near-term on the iPad and in 2H10 on the iPhone.”
Kumar remains confident Apple and Verizon have a relationship. He thinks that Verizon support for the iPad will still be announced at some point — perhaps in June at Apple’s WWDC conference, during which Steve Jobs could announce a Verizon iPhone, too.
John Paczkowski at AllThingsD quotes Barclay’s Capital analyst Vijay Jayant as suggesting that AT&T’s iPhone exclusivity arrangement will last through the summer, perhaps to year’s end.
“Launch of Apple’s iPad on AT&T’s network is a vote of confidence in AT&T’s network by the equipment maker,” Jayant writes. “While iPad sales are unlikely to materially impact wireless revenues in the short term, selecting AT&T to launch its second major communications product reflects Apple’s bias for the global GSM platform and the prospects of AT&T’s network capability. Moreover, it could suggest the iPhone exclusivity may continue, at least through the end of 2010.”
Despite the fact that here’s been no clear indication that Verizon will get the iPhone soon, Bernstein Research analyst Craig Moffett today lifted his rating on Verizon to Neutral from Underperform. He concludes that “iPhone-related risk now favors Verizon.”
As Eric Savitz at Tech Trader Daily notes, were Verizon to get the iPhone, Moffett contends “subscriber growth would swing decisively from AT&T to Verizon.” In fact, he thinks AT&T would initially report net subscriber declines. He concludes that “iPhone-related risk now favors Verizon.”
Pacific Crest analyst Steve Clement thinks the outlook for extending AT&T’s exclusive distribution deal may be improving. Savitz says he offers three bits of evidence:
- “The tone from Apple is improving,” and of course it is more than just tone, given they are the initial provider of of connectivity for the iPad.
- Wireless margin guidance was conservative.
- Capex guidance was aggressive.
Last week GigaOm and others reported that Jonathan Chaplin of Credit Suisse saw a 75% probability AT&T would keep its exclusive hold on the iPhone for the next 12-18 months.”And because he thinks AT&T will have so much more time as the sole provider of Apple mobile phone goodness, he figures Ma Bell will have the chance to make the last year and half’s network problems a thing of the past in the minds of consumers as it pulls out all the stops in boosting network capacity.”
This runs in direct contrast to an October note from Piper Jaffray’s Chris Larsen, who said there was a 70% chance of the iPhone coming to Verizon this year. And Tim Horan, a telecommunications analyst at Oppenheimer & Co. went further, predicting on Jan 24 that T-Mobile USA Inc. will get the iPhone this summer, followed by Verizon Wireless and Sprint Nextel Corp. in the fall, and Clearwire Corp. in 2011.
But Tricia Duryea of Moco News warns against getting too excited about an end to iPhone exclusivity in the US. “As I wrote previously, once the iPhone became widely available in the UK, there were two noticeable trends: First, increased competition did not translate into lower prices. In fact, Vodafone (which started offering the iPhone last month) is charging more over the life of a contract than any other UK operator. And, second, the competition has not led to better network coverage. Similar to AT&T, O2’s iPhone users have suffered from many network meltdowns, including one as recently as this weekend in which users had absolutely no data service.”
Predicting when AT&T’s iPhone exclusivity will end is sort of like predicting the weather. There’s always the chance to make another prediction tomorrow.
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