Hearing about Google (GOOG) teaming up with Verizon (VZ) Tuesday had me, and others, thinking a potential Apple (AAPL) and Verizon partnership could be squashed.
Not to worry, iPhone users who are dying for Apple to sell iPhones under the Verizon banner. Verizon executives told reporters Tuesday on a conference call that Google's partnership with Verizon does not preclude others from forming a relationship with the telecom giant. OK, so does a Google-Verizon phone threaten Apple iPhone sales?
In a word, no. Certainly Verizon's network trumps AT&T's network. Yet, until Google proves it can help produce a phone that changes the mobile-phone landscape the way the iPhone did, Apple has little to worry about.
"I don't believe the Android phones will be a huge threat to Apple, but definitely something to watch," Brian Marshall, senior analyst at Broadpoint AmTech, told DailyFinance. "I think Android-based handsets are more of a piecemeal approach as opposed to the best-of-breed form factor Apple has with its elegant hardware design and software innovation."
The iPhone is a cool fashion statement phone that is simple to use, as the Motorola (MOT) RAZR-phone once was. If Google can couple ease-of-use with cool-looking fashion accessory into a phone that folks start talking about, then Apple should be concerned. The deal between Verizon and Google doesn't change that. "Apple creates an elegant solution that their competitors can't do right now," said Marshall, a former tech hedge fund manager.
Even saddled with the not-ready-for-prime-time AT&T network, which reportedly drops 30 percent of calls in New York City, Apple has been able to sell iPhones over the past three years by lowering its price and adding software applications, known as apps. There are 75,000 of them.
Apple has sold iPhones to folks who want to upgrade to a phone that doesn't appear to be difficult to use. Typical cell phone users think of cell phones in two categories: old-fashioned flip-style phones, which are usually free or less than $50 with two-year contracts, and so-called smartphones, which can be intimidating. Apple makes their phone appear to be less so with their ads showing a finger easily clicking on apps or making a call.
Another issue with the Google and Verizon family of phones is, there will be too many. Lowell McAdam, Verizon CEO, told reporters and analysts on a Tuesday call that "the next several weeks we'll begin to announce the initial devices in this family of devices that you'll see from us over the next several years." U.S. automakers in Detroit sell families of cars. Not the best approach because it confuses customers.
Consider this scene: Guy who just bought his new Google phone from Verizon, bragging to his pal, "Hey, let me show you my new Google phone, it's so cool!" Pal: "Which Google phone? The cousin or the brother-in-law?" Guy sheepishly chuckles and puts Google phone back in pocket. Keep it simple, as my ninth-grade English teacher, who wore sneakers and skirts everyday, annoyingly implored countless times.
There are a few iPhones. The $100, $200 and $300 versions, in essence. Customers pay more for more memory and a video camera. Yet, people think of them as one phone because they all have the same design, look and feel. To compete with Apple and AT&T, Google will have to match that familiarity similarity with its three phone carrier partners in the U.S.
Verizon's McAdam and Google CEO Eric Schmidt took veiled shots at AT&T. Schmidt said on Tuesday's call, "Everybody knows that Verizon's data network is the best in the U.S., by far. Reach, scalability and performance, there's no question." McAdam added, "The partnership we announced with Google unites the speed, reliability and intelligence of the Verizon Wireless broadband network."
OK, we get it. AT&T's network is seriously lagging as it's taxed by iPhone users slowing its data-network. To take advantage, Google and Verizon have to deliver a smartphone that challenges the iPhone's look and feel.
Anthony Massucci is a senior writer and columnist for DailyFinance. You can follow him on Twitter at hianthony.
Managing your Portfolio
Keeping your portfolio and financial life fit!View Course »