Will Verizon Pay to Keep the iPhone Out of Competitor's Hands?

Rumors suggest that Verizon may pay a premium to keep the hot-selling iPhone away from its competitors T-Mobile and Sprint. In other words, they want to keep it exclusive to themselves and AT&T, and this may have helped Apple to get the terms it wanted from Verizon for the (still-rumored) Verizon iPhone.

"We are hearing that [Verizon] does not want iPhone, the hottest selling smart phone, available on T-Mobile USA and/or Sprint and may be willing to pay for exclusivity to itself and AT&T," Kaufman Bros. analyst Shaw Wu wrote Monday in a "report to clients," according to Fortune magazine.

Wu's report, based on information gleaned from "industry and supply channel sources," indicates that not only is Verizon willing to pay extra to keep the iPhone exclusive, but that the deal's economics are "likely to be favorable" to Apple, and "similar to that offered by AT&T."

Wu notes that this is important, because many people have been concerned that "VZ iPhone economics could be less favorable given the strength of Android and higher cost of components, particularly those associated with CDMA.

Wu suggests Apple's hand was strengthened by the 14.1 million iPhones sold last quarter and the market share gains made by AT&T in the last two quarters. What's more, he asserted that Google's Android platform has started to "lose some of its luster" for Verizon.

Sources also told Wu that Verizon may be looking to get its hand in on the iPhone deal, because it does "not have high hopes" for the upcoming BlackBerry 6 OS, according to Apple Insider. Verizon reportedly believes that the release of the new OS will not have a "material impact" on BlackBerry sales.

It's been predicted that a Verizon iPhone would spark a significant migration of AT&T users to Verizon. A Credit Suisse study released in September, for example, forecasted 23 percent of AT&T subscribers would bolt to Verizon if the carrier started offering the iPhone.

For comprehensive coverage of the Android ecosystem, visit Greenbot.com.

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