Apple (AAPL) doesn’t get much wrong. (At least, not lately.) They produce great products (including the sleek MacBook Air on which I’m writing this post, and the iPhone 4 in my shirt pocket), they are brilliant marketers and genius engineers, and they understand consumer behavior better than any company extant. They have the world’s most respected CEO, and some of the most sought after products on the Earth.
But occasionally, they screw up.
In a research note Tuesday, Piper Jaffray analyst Gene Munster asserted that Apple has actually made “two meaningful errors” since it launched the iPhone business in 2007. For one thing, he notes that the company did not originally subsidize the phone, although he notes that the company quickly fixed that issue by cutting the price of the original iPhone shortly after release, and then offering iPhone 3G at a subsidized price a year after the first version launched. That issue is no more.
The other mistake, Munster maintains, is that Apple signed an exclusive U.S. distribution agreement with AT&T (T). In short, he contends that the decision has limited demand. Like almost every one else who follows the company, Munster maintains that the company is likely to fix this issue before the end of the 2011 first half, by adding Verizon Wireless (VZ, VOD) to the list of carriers that sell the phone. Munster notes that the U.S. is the only remaining country of the 89 nations in which the iPhone is sold in which a carrier still has exclusive rights to sell the phone. (He notes that in some countries, like China, only one carrier sells the phone so far, but that the agreement is not exclusive.)
That second mistake hints at what I think was the real error: by waiting so long to offer the iPhone on Verizon, the company essentially set the stage for the huge success to date of phones based on the Google (GOOG) Android OS. Verizon Wireless is the largest U.S. wireless carrier; with the iPhone unavailable to the company’s customers, Android has been able to take substantial market share among Verizon smart phone customers. Would Android have anywhere near its current market share if Apple had introduced a Verizon iPhone 12 months ago? No, is the obvious answer.
Munster, while noting that Android phones are outselling iPhone in the U.S. right now, contends the trend can be reversed. He points out that in countries where the iPhone is on multiple carriers and competes with Android, the iPhone outsells Android phones. “The greatest factor in the success of Android has been Verizon,” Munster writes. “Customers are loyal to their carrier, and once Verizon gets the iPhone, we believe Android’s success in the U.S. will be tested.”
We should find out whether that’s true or not sometime early in 2011.
But occasionally, they screw up.
In a research note Tuesday, Piper Jaffray analyst Gene Munster asserted that Apple has actually made “two meaningful errors” since it launched the iPhone business in 2007. For one thing, he notes that the company did not originally subsidize the phone, although he notes that the company quickly fixed that issue by cutting the price of the original iPhone shortly after release, and then offering iPhone 3G at a subsidized price a year after the first version launched. That issue is no more.
The other mistake, Munster maintains, is that Apple signed an exclusive U.S. distribution agreement with AT&T (T). In short, he contends that the decision has limited demand. Like almost every one else who follows the company, Munster maintains that the company is likely to fix this issue before the end of the 2011 first half, by adding Verizon Wireless (VZ, VOD) to the list of carriers that sell the phone. Munster notes that the U.S. is the only remaining country of the 89 nations in which the iPhone is sold in which a carrier still has exclusive rights to sell the phone. (He notes that in some countries, like China, only one carrier sells the phone so far, but that the agreement is not exclusive.)
That second mistake hints at what I think was the real error: by waiting so long to offer the iPhone on Verizon, the company essentially set the stage for the huge success to date of phones based on the Google (GOOG) Android OS. Verizon Wireless is the largest U.S. wireless carrier; with the iPhone unavailable to the company’s customers, Android has been able to take substantial market share among Verizon smart phone customers. Would Android have anywhere near its current market share if Apple had introduced a Verizon iPhone 12 months ago? No, is the obvious answer.
Munster, while noting that Android phones are outselling iPhone in the U.S. right now, contends the trend can be reversed. He points out that in countries where the iPhone is on multiple carriers and competes with Android, the iPhone outsells Android phones. “The greatest factor in the success of Android has been Verizon,” Munster writes. “Customers are loyal to their carrier, and once Verizon gets the iPhone, we believe Android’s success in the U.S. will be tested.”
We should find out whether that’s true or not sometime early in 2011.
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