Have Apple-Verizon Talks Broken Down?

Posted by: Olga Kharif on October 20, 2009

Talks to bring the Apple iPhone onto Verizon Wireless’s network might have broken down, according to an Oct. 20 note from Sanford C. Bernstein analyst Craig Moffett. “Looking ahead, Verizon may have provided a clue as to the state of its (presumed) efforts to land a CDMA version of the iPhone for its network when it recently started airing ‘iDon’t’ advertisements bashing the device,” Moffett writes. “The ads set the stage for the launch of a competing device, the Motorola Droid, powered by Google’s Android operating system. Running negative ads bashing the iPhone seems an improbable way to win friends in Cupertino; it is not implausible, then, to guess that the new Droid campaign might signal a breakdown in relations between the two firms.”

The negative ad campaign points out many of the iPhone’s shortcomings, such as inability to run applications in the background. And it’s a risky move: Until now, most carriers hadn’t dared to compare their smartphones with the iPhone, though Sprint Nextel had designed a Web site comparing its Samsung Instinct with the legendary Apple device. So far, I don’t know of a single iPhone-bashing campaign that worked.

There’s a possibility that Verizon Wireless is simply using the negative campaign to apply more pressure on Apple to come to an agreement. Or, Moffett might be right, and instead of waiting for Apple to come around and offer the iPhone through Verizon, Verizon Wireless is now betting the house on rival makers’ smartphones.

Reader Comments

katch ononuju

October 20, 2009 4:39 PM

iPhone bashing won't work as tech buyers are smarter today and better informed than yesterday's crowd. we are happier that an innovation company is making our lives better with very exciting products. The iPhone is an ongoing story that is enchanting us all.the droid is a loud noise from a drowning house without the technological ecosystem to match the digital interpretations of our new realities. we are amazed that a collection of incoherent partners are being assembled to take on apple with bread and butter devices running on the android platform. Too many cooks will spoil the broth allowing apple to continue standing out from the crowd.

katch ononuju

October 20, 2009 4:41 PM

iPhone bashing won't work as tech buyers are smarter today and better informed than yesterday's crowd. we are happier that an innovation company is making our lives better with very exciting products. The iPhone is an ongoing story that is enchanting us all.the droid is a loud noise from a drowning house without the technological ecosystem to match the digital interpretations of our new realities. we are amazed that a collection of incoherent partners are being assembled to take on apple with bread and butter devices running on the android platform. Too many cooks will spoil the broth allowing apple to continue standing out from the crowd.

D9

October 20, 2009 6:25 PM

And of course, Verizon has been right in just about every assessment they've made concerning the iPhone since Apple first approached them 3 years ago.

Anatolias

October 20, 2009 7:36 PM

What planet do you people live on? It only hurts Apple to not be on the Verizon network. Verizon has the strongest network, the best coverage, and will be the first to roll out the new 4G LTE network in 2010. I've never met an iphone owner who enjoyed the horrible service (customer service and cell/data service alike) that is provided by AT&T, unless that is the only network they've known and have never experienced anything better. I myself had an iphone until I finally got fed up with the bad signal, and I live in a major metropolitan area, where service and coverage should be ideal, and switched back to my faithful never fading coverage of Verizon. AT&T service is a joke and the only reason Apple does have near as large of a market share as RIM does is because RIM is on every network and frankly I'll take a BB Curve, Bold, or Tour any day of the week over something that's tied to a network that just isn't up to par with what the public expects in a provider. All you disillusioned iphone users who have never experience a real network such as Verizon, just don't know what you are missing when it comes to great customer satisfaction.

kevin

October 20, 2009 8:23 PM

VZW is telling all the iPhone owners that they were really stupid and blind to be fooled into buying an iPhone with all these flaws. But VZW doesn't care about winning over iPhone owners.

Rather, VZW is panicking because the non-iPhone-owning VZW customers are deserting VZW in ever greater numbers. They have to do something to keep their sheep.

boomski

October 20, 2009 9:00 PM

once these companies get a clue, they will take on iphone. i believe everyone will have an iphone once that happens. it's by far the best hand-held device ever, and no matter what people say, everyone wants one. if they were available, everyone would have one.

Freddy

October 20, 2009 9:46 PM

Kevin, are you serious? Deserting VZW in ever greater numbers? Where do you get your info. from? The iphoneKevin, are you serious? Deserting VZW in ever greater numbers? Where do you get your info. from? The iphone

paul

October 20, 2009 10:36 PM

Interesting to watch the iPhone fan boys unleashed. I never really got why they love that phone so much other than the Apps. It can't run anything in the background (how is that hardware every going to run something like Google Voice, if Apple "allows" it), doesn't have a flash, no insurance. A mail system with pushes that runs in teh background. Apple utterly controls the user with the App store.

They take years to offer functions like MMS and an autofocus camera. some usable pixils, navigation and then dribble something out so the masses every year who will fork out a few hundred more to upgrade to something that other phones have been already doing for years. You can't even put a battery in the thing yourself.

I don't get it. There is a reason Apple has had such a profitable quarter. A loyal hoard of people willing to pay and pay again for inferior hardware and a locked down OS that charges as you go. They even have AT&T over a barrel taking a cut from your phone bill each month.

They better hope they are so popular a year from now, because they whole deal stinks of greed and marketing.

Apple Fanboy

October 20, 2009 11:17 PM

Steve Jobs is God and Apple iPhone is Jesus.

Nothing can beat Apple or the iPhone - nothing!

Anyone who thinks otherwise is stupid and doesn't know how awesome Apple is!

Bonnie

October 21, 2009 12:21 AM

Have Verizon/Apple talks broke down????

Verizon is trashing Apple's prize jewel: The Iphone.

I highly doubt Apple is going to "forgive and forget" such nastiness.

Kathy

October 21, 2009 12:24 AM

> most carriers hadn’t dared to
> compare their smartphones with the
> iPhone

Huh?

Everyone and their brother has been coming out with a phone to compare to the iphone.

JCM

October 21, 2009 12:34 AM

Everything comes to an equilibrium. The current Apple AT&T deal is good for Apple. Apple knows they must sell more hardware; the only way to do that is with VZW. Apple can easily negotiate a revenue share, which would be fair with the carrier. The current AT&T deal is short term focused for both AT&T and Apple; AT&T needed to stop the blood from excessive churn and Apple took advantage of the situation by squeezing AT&T, when AT&T had no choice but to cave to the usury of the mizerly Apple. Closing thoughts: Sony Walkman, Sony Trinitron. Where are they now?

travis

October 21, 2009 12:40 AM

The fact is that ad has nothing on it about Verizon. It is more likely an ad by Motorola. So there is no reason to think the ad would hurt their chances at landing the iPhone. This report is flawed.

Been there, done that

October 21, 2009 1:27 AM

In response to not knowing a better network experience - well I had to use Verizon's service due to my company having a long term deal with them. All I can say is that when I left that job to move onto another company who gave their employees the freedom to choose their cell provider, switching off of Verizon onto AT&T was one of the best perks I had! I also live in a major metropolitan area (LA to be exact) and my Verizon coverage had dead zones like I have never experienced anywhere before. AT&T has definitely had its issues, but they have always been fair in resolving them and actually has had far more reliable service for me than Verizon.

Apple Fan Boy

October 21, 2009 3:34 AM

So you all know Motorola paid for that add. Not Verizon. Bad reporting, almost as bad as NBC love of Obama.

VZW

October 21, 2009 3:44 AM

Wow Katch, that was the best example of verbal diarrhea I've encountered in a long time.

Amazing!

david

October 21, 2009 4:12 AM

I don't think you see the ad's from the perspective of Verizon or from Apple. One, Let's say you are looking for a car. Just like Verizon might be looking for an iPhone. Verizon was given the choice for the orginal I phone before AT&T; they turned it down. I am sure they have, along, with the other carriers, received an offer to contract to carry for said return compensation for the iphone 3gs and maybe the 4g when they build 4g. Just like you and me if you were going to buy a car, and you knew the price, you need to negotiate. You don't negotiate with numbers; you negotiate with the perception of value. Verizon's We got a map for that is simply saying, he Apple, look at AT&T and look at our network. We are making sure everyone knows we have the best network; we are just trying to look out for your best interests; please give us sincere consideration, we are simply the best. So then let's look at droid commericial... What does it say. I says what the iphone does not do; this car does not have leather, it does not have sun-roof, it does not have cruise control so therefore the value of this product is less than you estimate it's worth to be; and we have phones that will do all these things and not with microsoft, but with google. This is a devaluation, using competition, and basically saying, we are not needy. This is de-value comparison negotiation which will if it does not make apple too upset, will land them in the position to take the iphone at the right price. Now if Vz is truly not interested in it; then they will have to answer to the cusotmers and the shareholders; let the fun begin!

Verizon Subscriber

October 21, 2009 8:22 AM

I am Verizon Wireless subscriber and used Windows Mobile and Storm, and honestly I feel like I am married but never got a chance to get laid - is this really working?

Ronald J Waldron

October 21, 2009 9:34 AM

It always makes me laugh whenever there is a story with anything negative about the iphone how the iphone cult gets so upset. (LMAO)

Z Man

October 21, 2009 11:05 AM

This is a battle reminiscent of the early days of PC vs. Mac. Eventually they both ran the same software (kind of)and now the Mac distinguishes itself only by being cool-looking. The same thing will happen here, at some point they will all run on any wireless network (by choice or government decree) and will sell by sizzle, not by capability.

AXA

October 21, 2009 11:38 AM

The only company I know that bashes others products is Apple themselves and that too with tons of lies.

Holten

October 21, 2009 10:35 PM

Yes verizon would benefit with an iPhone. Yes, the iPhone would benefit from verizon.

I love my iPhone. I love my service with AT&T where I live. I've never had a single problem and better customer service than when I was with verizon-- shocking I know. However, given the chance I would move to verizon because I would pay less in minutes-- verizon just has that huge customer base.

To each their own. If you have something you like-- stay with it. But if putting someone else down makes you feel better about your phone then you've got the wrong one.

Stuck at att

October 21, 2009 11:08 PM

Is Verizon is smart they would be honest with their customer and give them a deal with IPhone and not screw the user like AT&T. ATT not only raised the monthly fee to 30 buck they dropped the free text messaging and they slap you with a 18 dollar charge anytime you make a change to the account.

Stuck at att

October 21, 2009 11:09 PM

Is Verizon is smart they would be honest with their customer and give them a deal with IPhone and not screw the user like AT&T. ATT not only raised the monthly fee to 30 buck they dropped the free text messaging and they slap you with a 18 dollar charge anytime you make a change to the account.

Dallas

October 22, 2009 3:50 AM

I was a Verizon customer forever. I had my phone number so long I didn't want to lose it by switching. Then number portability came along and I stayed with Verizon because I wanted "the map". Meanwhile my wife went and bought an iPhone because she tends to go with fads. Its service in suburban Portland Oregon was far better than my Verizon coverage, which dropped calls especially at and near our house. Still I stayed with Verizon. My latest contract had long expired and I finally joined AT&T on my wife's plan, getting an iPhone 3GS. I've been a technology professional for nearly 30 years, specializing in embedded processing. I simply cannot believe how great my iPhone is. I am normally very critical of every gadget I buy, being the geek that I am. There is a reason Apple is winning. I truly believe they have created the single best piece of technology in history. There. I said it.

applehuh

October 22, 2009 8:46 AM

apple.. sucks.. plain as that. all apple machines I've seen are way over priced for what you get. its like buying a Harley. you pay for the name. only thing apple has over Harley is they aren't using the same technology from the 70's. And tis true that apple is the one with the most bash adds to try to convince people apple is better. smart people know that its not though.. only dumb people with too much money believe it

J

October 22, 2009 11:49 AM

Kevin - if VZW customers are making the concious decision to switch networks, that means they are not "sheep." sheep follow without thinking. you're whole arugment is invalid, and i'm pretty sure you're facts are pulled out of thin air.

i'm sure VZW is trying to retain customers who are looking for a good smartphone (since their selction has always been lacking), but isn't this something any company trying to make a profit would (or should) do?

Joseph

October 22, 2009 1:20 PM

The rivalry between Google and Apple has been heating up for the last few years and has become more intense since the resignation of Arthur Levinson from Google. The two companies are competing against a common enemy in Microsoft when it comes the the PC market, but in the phone market Microsoft has already lost its footing.
I have become a fan of both Apple and Google and their work in raising the bar on consumer software and devices. I use Apple computers exclusively when I have the option but not because I am fanatically married to Apple, but because it is simply the most functional, lowest maintenance Operating System on the market. The iPhone lacks a great deal of functionality found even on the most basic flip phones, leaving a huge gap for a more functional phone's success. When other less forward thinking manufactures have tried to fill this gap they have release very functional phones but missed the reason Apple has had such success; its user interface and reliablity. Google now has the opportunity to fill that gap and I say more power to them.

RJO

October 22, 2009 6:36 PM

Apple & AT&T should be scared.
This phone is awesome, has a real keyboard & camera, and is on a REAL wireless network.
I remember Apple & its users' arrogance back in the 80's and now we're seeing the rest of the world gearing up to marginalize them again.
This is just the beginning...

Sherman

October 23, 2009 9:03 AM

Travis, Flawed? look at the bottom of the ad and in bright red is the verizon logo.

davis

October 24, 2009 3:42 AM

okay look at verizon commericals lately with coverage and that is true hahaha
unbeatable

Angel Rodriguez

October 24, 2009 4:04 PM

As I read the love and hate comments to Iphones and Non IPhones, I see this. There are choices that work better with most people and not with others. I don't owen an Iphone. I am looking for a smart phone. I tried the Storm, but took it back. I had it for about 5 days and hated it. I tried the new Palm phone. Took that back. Very poor touch controls. Tried the Android. It was not intuitive. Now the only reason I hadn't tried the Iphone is because, AT&T service. I had AT&T and found it to be very unreliable. I fly to airport to airport and the only service I found to work the most consistent is Verizon. Now saying that, Verizon service still isn't the best. I do have dead spots, I have to work with, but less with Verizon.
Now the argument with Apple and PC's. I use both and I find myself using the MAC more often. I'm no Apple fan boy, but Mac seems to be more intuitive and faster than my PC. Yes the Mac did cost more, but just like the old saying you get what you pay for... But Mac doesn't support as many programs as PC so I shrug my shoulders and just use both....Back to the Phone's that's why were here. I have no choice but to try an Iphone and see what the hype is all about..... stay tuned for further updates.....

TJ

October 26, 2009 8:25 PM

I've read most of the comments about how the iPhone is/isn't amazing. I worked for ATT Wireless and dealt with the iPhone far to often, in a negative way. The only the the iPhone has going for it is the apps. Apple dropped the ball in it releases for software and features on the phone itself. The iPhone is the dominating the market because its the only one out there that actually has any good features. The iPhone, as I'm sure most of you know, JUST got MMS. But was able to when the 3G was released. Apple and ATT have kept it in disabled in the ATT system so they could make a publicity stunt out of it after the 3G S was released. Sprint and VZW can't touch it with other phone just because of the misguided followers of the iPhone. For VZW's sake hope they dont get the iPhone and actually have something that can compete and/or out due the iPhone.

drew

October 28, 2009 10:08 AM

I venture to bet this is really about being a dumb carrier not about getting the phone. Vzw whats it to work or be designed around their system and not be dictated to by a manufacturer thus making them a seller of airtime (dumb carrier). ATT has been jumping through hoops to upgrade the system but i think this could happen to VZW as well. I had VZW service for more then ten years and loved it but there phone selection sucked. I last had a BB but its just not the IPhone..

HD Boy

October 31, 2009 11:31 AM

"...All you disillusioned iphone users who have never experience a real network such as Verizon, just don't know what you are missing when it comes to great customer satisfaction..." - Anatolias

Anatolias, your lack of worldly experiences are showing. Some iPhone customers ARE quite happy with their AT&T service. While it has a deservedly poor reputation in some metro areas, the truth is the AT&T network is not horrible everywhere. In fact, in many mid-sized cities, it is quite good and it is being actively improved in the largest cities that are having so many problems. If you happen to live in one of the well-covered cities and don't travel too often, AT&T may be a good solution, just as Verizon may be a poor solution if you happen to live in an area in which Verizon has no wireless licenses.

HD Boy

October 31, 2009 12:02 PM

"...I never really got why they love that phone so much other than the Apps. It can't run anything in the background.." - Paul

Wrong, Paul. In spite of what some fanboys and cellular competitors claim, Apple's iPhone does do multitasking with several key, built-in Apps that frankly are those used most often. For instance, the iPhone's address book Contacts can be searched while Google Maps is active. In fact, Contacts also are integrated right into the Google Maps search results, and mapped addresses can be added to your address book with a single keystroke. This is a great example of brilliant, clever programming and Apple's unmatched attention to detail (the Google Maps App actually is somewhat misnamed because it actually was written by Apple and merely uses Google's mapping data).

Better still, thanks to the AT&T network, you can surf the Web AND talk on the phone at the same time. For instance, you can use Google Maps to navigate while simultaneously talking on the phone. You can't do that on a CDMA (Sprint/Verizon) network.

HD Boy

October 31, 2009 12:35 PM

Verizon executives hope that the new Motorola Droid phone with Google's Android OS will give them the traction to compete with the iPhone. However, the Motorola/Google product has a significant Achilles Heal that has the tongues of Silicon Valley programmers wagging.

While the Droid is advertised as a 16GB device, it actually only comes with a meager 512MB of built-in, flash system memory FOR STORING AND RUNNING APPS! This is the dirty little secret being hidden by Verizon's initial Droid "iDon't" TV ads.

The vaunted 16GB of storage advertised (user upgradable to 32GB) is not comparable to the iPhone's flash memory. The Droid's 16GB comes in the form of an SC card that only can be used to store text, video, music and other computer data files. So, the Android OS can't really access that extra 16GB on the SD card for App storage or use!

The word is, this was designed to prevent App piracy, which is understandable. However, the limited system memory available for Apps on the Android OS is beyond absurd — and a deal breaker. Unless software engineers figure out some clever memory usage workaround, it probably ensures the Droid will be DOA as a product once hopeful customers figure out this very serious flaw.

Practically speaking, it means there will be real limits to the number of Apps customers can load and store (much less open and use) on this (and other Android) phones until (and if) Google rectifies this OS shortcoming. Android 2.0 just started shipping, so it will be awhile before the next update will be released. At the moment, we don't really know how many Apps can be loaded on the Droid, but my bet is that they probably won't be as sophisticated or powerful as iPhone Apps. This certainly means that initially, gaming will be crippled. And apparently, while Android phones do multitasking as advertised, they don't have adequate memory to fully support Apps in the same brilliant way as the iPhone, which can utilize most of its 8, 16 or 32GB (varies with each model) of flash memory to STORE OR RUN up to 66 Apps. Of course, a selection of about 95,000 Apps are available in Apple's App Store.

What good is Android's 10,000-App catalog with such limitations?

Cellular customers, as well as Motorola and Verizon executives, are kidding themselves if they think these first-generation Android products will compete directly with the iPhone. To be sure, competition will come, but it will be a slow evolution. In 2007, Apple changed the cellular industry forever and it really is three-to-five years ahead of ever other manufacturer in what now is a brand new ball game. Apple's iPhone development isn't standing still, but until other cellular vendors catch up to today's iPhone 3GS, Verizon had better update that silly Droid commercial to add...

"iDon't have adequate memory and storage for the OS and Apps."

eldernorm

November 1, 2009 9:29 PM

WOW, it just keeps going.!!!! LOL

To Anatolias and the other paid trolls here.

"What planet do you people live on? It only hurts Apple to not be on the Verizon network. Verizon has the strongest network, the best coverage"

And you are perfect, and Apple stock did not go from 80 to 200 in the middle of a recession while Verizon lost 2,000,000 customers to AT&T.

Look, use what every carrier and phone you like. But Motorola panned the iPhone and now look at them. Verizon had to buy Altel to get new customers. 4G is coming and things may chnge, but until then, the old guard had better look out. Their CEOs are falling one after another. :-)

Just a thought.
en

HaeDroid

November 3, 2009 10:44 PM

@HD Boy:
You're not taking a few things into considerations. Google's Android OS is based on *nix, so it'll perceive the 16 / 32 gig card as just another part of the filesystem in the device so it won't be like a stand-alone entity that the device is unable to use for storing apps, etc. Also, even Winblows has third party apps (think eBoostr) that interpret storage from flash drives to be used as additional memory when the system memory goes low to improve performance. It's only a matter of time, if none's available just yet, before some coder puts together a Java-based app for the Android OS that'll take convert storage from the 16 / 32 gig card as memory to run apps more efficiently if the default memory's running low.

Please be aware of advancements in technology before making such comments like the ones you made as though they're factual. It makes Apple fanboys seem even dumber.

Tommy

November 28, 2009 11:45 AM

Apple should go to Sprint it already has a 4G network in place and has overall pretty good coverage and great plans.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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