Summary
The unsubstantiated rumor in USA Today of a Verizon iPhone defies the traditional migration of master distribution contracts to specified exclusiveness and options with rights of first refusal for future products.
Analysis
The USA Today article about a Verizon iPhone seems to be an unsubstantiated rumor to maximize search and behavioral targeting. Earlier in the week during the quarterly results, Apple’s interim CEO had stated that CDMA “doesn’t really have a life to it after a certain point in time”. He also supported AT&T as “the best wireless provider in the
The AT&T and Apple contract will follow the traditional disposition of master contracts after the initial agreement. Schedules will be added to allow AT&T to have continued exclusiveness on the 3G model of the iPhone. The 3G Schedule will have terms for sales performance by AT&T and support by Apple to ensure that both parties are committed. Additional Schedules will probably be drafted for LTE smartphones and other emerging devices. The LTE Schedules will be designed for AT&T to have the first option for the devices if justified by the build out of the LTE network. If Verizon leads in LTE network, AT&T loses the option and Apple can pursue Verizon. Verizon will probably have a contract with similar LTE options. We can expect Apple to smartly play market share and opportunity costs between AT&T and Verizon. As the interim CEO stated during the first quarter results, the Apple goal is “one phone for entire world”.
