Verizon: iPhone 3GS Cost us Money, Helped Drive Innovation

iphone_balrog_verizon

While all of the 2010 Verizon iPhone/Tablet rumors are still in the air, Verizon has seen a very real loss of profit this last quarter. Their total profit was $3.16 billion, which was down from $3.4 billion one year ago. According to Denny Strigl, Verizon's president, this loss is partly due to AT&T and iPhone 3GS.

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blockquote>"When you think about what Apple has done in bringing the iPhone into the marketplace, it truly has accelerated innovation. And as we talk to all of our manufacturers, everybody has come out with their own iconic device, and I think that this has been very good overall for our customers."

Verizon is planning to launch a few iPhone competitors in the near future with the Palm Pre and the new BlackBerry Storm 2, along with some Google Android phones. Make no mistake, those are some nice phones, but none of them have an Apple logo on the back side.

2010 should be a very interesting year...

Footnote: 

Jeremy

Community editor. Tech enthusiast. All-around geek.

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There are 25 comments. Add yours.

The Reptile says:

It's not just the 3GS. My brother-in-law just gave in to the pressure from his family. This long time Verizon user has switched his family to AT&T and purchased 4 iPhones 3G's @ $99 each.

Dexter says:

My international company is switching their BlackBerry account to iPhones as soon as they can solidify a deal thanks to yours truly! ;)

Eric says:

Hope ya didn't have to kill anyone Dexter.
Our IT department declared iPhone off limits to the network. Then our CIO got one and within weeks, they were iPhone friendly. Verizon isn't talking so tough now. Maybe they'll figure out all those great phones they're talking about aren't in the same class as the iPhone and they'll try harder.

Matt says:

The iphone is not a safe device! A story was just released saying that businesses should stay away bc they are very easy to hack into! Dont check your credit cards or bank accounts on your iphones!!!

BoomBoomBAMM says:

Verizon should have taken the deal when it was on the table. Back in late 2005 Apple approached Verizon with the iphone, but Verizon was to greety and wanted to much of the profits and did not like the iphone's wifi. So Apple passed on verizon and went to AT&T. Since the launch of the iphone AT&T has taken so many of Verizon customers, and now they are hurting. Verizon had their chance and they pased. Very stupid move Verizon, very stupid. FYI I was a verizon customer, then switched to AT&T just for the iPhone.

Jroxx says:

AT&T will be home 4 the iPhones longer I think cuz AT&T is saying that there going to make there service much much better... The only thing AT&T is best at is there 3G speed preetty fast on my 3GS...

icebike says:

@MATT:
Post the link.
Iphones are no more vulnerable than any other computer. Your bank account checking is done via SSL.

TosaDeac says:

The problem Verizon is having is that they currently do not have a flagship exclusive phone...AT&T has the iPhone, Sprint the Pre, and T-Mobile the G1 Android...what does Verizon have? The Storm? The EnV series? That is why they are lusting after the Pre so hard. They need a major league player in the game to compete (more than just on the size of their network). As all the consumer research studies have seemingly shown, no one really likes their cell phone provider but they do love their phones. So many people will pick their phone first and then go to that network that provides it if the provider has at least feasible coverage where they live. I left Sprint solely for my iPhone 2 years ago and have no plans to leave as long as the iPhone is on AT&T.

Appleking says:

I really hope sprint can renegociate with palm to keep the pre for longer. Screw verizon greedy bastards. I'm test driving the pre now with my 3gs. Its a amazing phone second to only the iphone.

supermanfos says:

Man, the Palm Pre on Verizon... I am a very happy iPhone 3Gs AT&T customer. I am looking forward to the upcoming battle with the upcoming Palm Pre (Sprint & Verizon) & the HTC Hero. I was a Verizon customer for a while but my bill was always increasing for some reason & with AT&T my bill is the same amount every month. I just find it amazing how Apple only 2 years in the cellphone industry can overtake it so fast.

Frank says:

Cocky Verizon. Wants their fingers in all the pies, turned Apple down as first choice.
Screw them - they got what was coming to them.

Jroxx says:

I KNOW F**K VERIZON THERE THE STUPID ONES FOR SAYING NO TO THE IPHONE..AT&T WILL SOON BE NUMBER 1

Perry says:

I don't know why everyone hates on verizon. I've been with them for over 5 years and have never had a problem sure my bill was usually high but I justify it with beautiful service and great data speeds wherever I was (strong Treo 700w and Storm user).
Sure verizon does lock down many features and charge for every penny but with the profits you get new phones every other month and constant upgrades to their network. It is true that I switched to AT&T just for iPhone 3gs but it was mostly due to the palm and blackberry not fulfilling my smartphone needs. if apple was to strike a contract with vzw...I will gladly switch back. No i'm no way affiliated with vzw employment wise, just have been treated well by them.

Perry says:

And another thing verizon made a business decision and they are paying for it but in no way are they stupid. If you were CEO of multibillion dollar service provider and apple approached you with no known cell phone experience would you invest hundreds of thousands on a phone you weren't sure was going to be hot or flop?
Give them a break, until recently iPhone didn't even have copy and paste or voice control for gosh sakes and im pretty sure many phones if not all come with those very simple basic features.
Would you buy a new car from company with no known experience that didn't come with let's say for the sake of comparison, air conditioning or power windows????

Tony says:

Man I just left verizon on Saturday after 12 long hrs. They have really good service but there phones suk I bought the Blackberry storm when it 1st came out with that slow ass OS waited 6mths for the update and it still sucked. So happy to finally have a smart phone that wks. P.S wold still B with verizon if they would have got the iPhone. dumass

TFunkJ says:

Everyone keeps talking about how Verizon is so stupid for not taking the iPhone deal, but you're really looking at it from Verizons perspective. Apple aproached them in 2005 and offered the exclusive deal with all of their rules and had no phone to show them, just a concept. Verizon, the largest cellular provider in the US at the time, wants more specifics but Apples says they can't provide that and won't until a deal is signed. Verizon passes and ATT, who has much less to lose than Verizon, takes a chance on it..signs the deal but doesn't see a phone until 2007!
If Verizon had taken the deal and the phone had been a bust Verizon haters would be talking about how Verizon missed the boat on some other big thing because they went exclusive with a crappy phone.
3.16 billion in profit is hardly hurting, especially in this economy.
@Matt - iPhones are just as secure as any other smart phone...all are actually pretty easily hacked unless you take security precautions at the server level. We institute all of our security features at the BES level so that all communication has to travel through our network (data comms, not voice) SMS is disabled as is MMS...limits the phones effectiveness and still leaves it open to bluetooth hacking, but that requires much more proximity to the device.

Scott Lewis says:

@ Perry:
Pretty funny, dude. You love Verizon and had no problems... except a high bill. And everything being locked down. And you switched to AT&T because Verizon didn't have phones you wanted.
And to you, and the others who think Verizon was smart to turn down the deal because of the "risk" - what risk? The original iPhone and the original agreement was for Apple to sell unsubsidized phones (remember $599) that were locked to AT&T and required two year contracts. The original deal was estimated to be 10% of revenue from those customers to be paid to Apple. No sales, no royalty, it's as risk free as they come, unless you are concerned that your profit margin on cellular contracts is less than 10% (yeah right).
It was only later that both sides mutually changed that deal, since 10% was great for Apple, but AT&T had to pay it for months and months and months, and not paying a subsidy was great for AT&T (unheard of, really) - but the high price ($399) might have been limiting sales. So now that all the risk was gone, AT&T pays a royalty like they do to most manufacturers, albeit a higher one since the phone is clearly worth keeping exclusive at any cost, and $200 is way cheaper than 10% of the bill for 2 years. And Apple has a phone to sell for $99 to $299, which at the low end is cheap enough for ANYBODY to buy who is willing to buy a smartphone and at the high end ($299) is not much more than the iPod Touch. Considering how many Smartphone users own an iPod too, it starts to seem like a given that the iPhone is attractive.
I know some of the iPhone App rejections suck... but come on, Verizon disables on board GPS on all but one or two of their phones to make sure you pay $10 a month for TeleNav or get a Garmin. Welcome to life in the cellular world - closed platforms = tradeoffs.
And another thing verizon made a business decision and they are paying for it but in no way are they stupid. If you were CEO of multibillion dollar service provider and apple approached you with no known cell phone experience would you invest hundreds of thousands on a phone you weren’t sure was going to be hot or flop?
Give them a break, until recently iPhone didn’t even have copy and paste or voice control for gosh sakes and im pretty sure many phones if not all come with those very simple basic features.
Would you buy a new car from company with no known experience that didn’t come with let’s say for the sake of comparison, air conditioning or power windows????

Scott Lewis says:

Ignore the last paragraph of my comment, it was cut and paste from another user's comment helping me to respond. Whoops!

Perry says:

@Scottlewis
what's so funny? I never once in my reply said I "loved" verizon nor did I say they are "smart" for not signing an agreement with apple. For the sake of argument I was trying to make a point about the whole risk/unknown factor of the deal. Verizon HAD phones I wanted I was very happy when my palm treo 700 was first introduced and with my storm I loved (though yes even after beta updates through crackberry the phone still underperformed) but BES is definitely nothing to be messed with push email on iPhone doesn't come close. But as time went on I discovered iphone did do other things faster and easier than treo/storm so that's why I switched over.
You do make a great point about the 10% to be paid to apple and AT&T not having to pay a subsidy.
I am no way a fan of verizon and how they lock down features like gps as you mentioned but I was glad to be paying for great service. On AT&T I'm constanty cursing about how I have no 3g in my area and how little bars I have whereas I never had those problems with verizon. I work in Boston and live in Fitchburg ma. So while I'm at work yeah great 3g but I have no time to use those to my pleasure and when i'm home wow where's my great service now?
All in all I LOVE apple products and their software and innovative curve but I probably wouldve made the same decision vzw made and yes I would be kicking myself in the arse now. But as I seem to recall apple had it's flops back in the day before Jobs took the controls so I wouldve considered that. Feel free to argue or bash if you please I'm just giving my 2 cents.

Philly Z! says:

I was a long time verizon person, yes I do agree I always had full bars and happy until I needed a smartphone, verizon is a champ 4 dumbphones and can't be beat
but, I'm a grown up now and need a smartphone with wifi!!!!! I love WiFi. I will never in this day and age buy a phone or gadget without Wi-Fi
That's why I left verizon besides the whole Nazi-verizon jacking up my rates and no GPS!!!!!!!!
All their phones even a ton of their smartphones lack basics like that so they blow compared to other carriers and they are still making bad business decisions
I picked up a iPhone 3G last summer and have loved it more then any device ever!! It's glued to my hip and o love having a sim card and being able to swap it out!! Screw CDMA it's a dieing breed anyway go GSM!!!!!! And LTE for the future of Mobile life!

Andy Morgan says:

Why is Verizon stupid for passing on the iPhone when it was first offered to them, sight-unseen? How could they ink a deal with no specs, from a company with no prototype? How could Verizon have possibly known about the popularity of an Apple phone?
Hmmm, I don't suppose Apple has had any other game-changing(/creating) devices in recent times. HELLO!!!! iPod, anybody? It's the goto phrase for an entire device. No one refers to mp3 players, thet're refered to as iPods even if they aren't an iPod. Verizon is a bunch of idiots, and unfortunately, it's their customers (yes, like me) who are suffering for it.
And other iconic smartphones? There aren't any. My girlfriend has the Pre, and it seems no better than any other pda/smartphone. Iconic my ass. Verizon is NEVER going to get the iPhone (out of spite, and too little too late, now). Several execs need to be fired over this.

Paul says:

Man I'd love for verizon to get the iPhone

Lori says:

Well.....it seems that the great debate is "is it worth giving up great Verizon customer service and great coverage area to go to AT&T to get the Iphone. I have been a very long time Vertizon happy customer with a Storm. It feels too slow and many days I can't even get on Facebook, due to network error. Now I'm very seriously considering getting the Iphone because when I compared rates, I can get 2 Iphones with the data plans and unlimited tx messaging for the same cost as my verizon storm and a plain razor phone for my daughter.....Now that's a no brainer. mm? I'm really going to miss my verizon techs though that are always super nice!