Verizon iPhone To Have Major Impact on Wireless Carriers (AAPL, VZ, VOD, T, S, DTEGY, GOOG)

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Now that Verizon Wireless has struck a deal with Apple Inc. (NASDAQ: AAPL) to offer the iPhone on Verizon’s wireless network, everyone expects the carrier to profit handsomely from the deal. But what about everyone else?

There has been speculation of a land rush to Verizon Wireless, a joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone plc (NASDAQ: VOD), once the iPhone 4 ships in mid-February. A new survey by ChangeWave indicates that as many as 15% of AT&T (NYSE: T) customers are either very likely or likely to change carriers in the next 90 days. And that survey was completed before Verizon announced the availability of the iPhone.

Yet, when people were asked if they’d switch from AT&T if Verizon offered an iPhone, 60% of respondents said they would not and only 16% said they would. The rest said they weren’t sure.

ChangeWave notes that current iPhone users were the most likely customers to make the switch to Verizon Wireless. More than one in four said they would leave as soon as the iPhone was available, and among all AT&T subscribers who say they’ll switch, 41% said they’d change within 90 days and another 31% said they’d change within the first 12 months.

We’ve already noted that Sprint Nextel Corp. (NYSE: S) could lose customers to Verizon Wireless because Sprint will not offer the iPhone.  The same might be said for T-Mobile, a subsidiary of Deutsche Telekom AG (OTC: DTEGY). Even Sprint’s true 4G network with its blazing speed is not enough to overcome the allure of the iPhone.

If Verizon Wireless is expected to be the big winner among the carriers, what happens to Google Inc. (NASDAQ: GOOG) and its Android operating system? Android-powered handsets offered by a variety of makers have surpassed Apple iPhone/iOS handsets in US market share, according to comScore.  Mobile ad network Millennial Media confirms comScore’s report , noting that 46% of impressions on Millenial’s network come from Android, compared with 32% from iPhones.

The issue is whether Android-powered phones will be able to keep up this growth now that the iPhone is available to 93 million Verizon Wireless customers? Android phones have driven smartphone sales for Verizon and there is little doubt that iPhone will capture some of those sales. Current Verizon/Android users probably still have a year left on their contracts, so they are not likely to switch until the contracts are up. AT&T is set to lose a quarter of its iPhone customers to Verizon within 90 days of the switch, but these customers would most likely not have made the switch to an Android-powered phone in any event.

That leaves current Verizon customers wanting to upgrade from a feature phone to a smartphone. Are they more likely to choose an Android phone or an iPhone? A betting man would probably side with Apple, simply because of its legend in the marketplace and because Verizon is likely to advertise availability of the iPhone very heavily.

Android is likely to lose some steam at Verizon Wireless and pick up some steam at AT&T, so it’s too early still to say whether the Verizon iPhone will hurt Android much. But it definitely could.

For now, Apple and Verizon are the only sure winners in the iPhone sweepstakes.

Paul Ausick

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