Business and Investing

Posted on Wednesday, 12th May 2010 by James Martin

Verizon Wireless (VZ)

A recent market study report released by NPD indicated that Google Android phones outsold Apple iPhones during the first quarter. The report noted that Android powered phones accounted for 28 percent of all smartphones sold in the U.S. while iPhones represented 21 percent of the U.S. smartphone market. Apple publicly refuted the NPD report’s claims due to a variety of qualms with the study. Although the accuracy of the report will not be verified for months, it does spark an interesting debate. Most investors seem to be drawn to the classic Google (GOOG: Charts, News, Offers) versus Apple (AAPL: Charts, News, Offers) battle, but an even more interesting corporate matchup is between Verizon (VZ: Charts, News, Offers) and AT&T (ATT: Charts, News, Offers). For years, AT&T has been the leader of the smartphone pack, but Verizon seems to be gaining momentum fast. What exactly is the tale of the tape with Verizon and AT&T? What does the future have in hold for these two cell phone service juggernauts?

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Stock Analysis

Once upon a time, Verizon was practically begging Apple to release the iPhone on its network. While Verizon Wireless would still be thrilled to have the smartphone icon in its cellular lineup, it is not nearly as desperate. AT&T has managed to hold on to its top spot in smartphone sales during the first quarter of 2010, but the competition is heating up. AT&T smartphone sales accounted for 32 percent of the smartphone market while Verizon Wireless came in at a close second with 30 percent. T-Mobile and Sprint rounded out the pack with 17 and 15 percent respectfully. Verizon seems to have finally gotten on the same “smartphone level” as the once untouchable AT&T, and is hoping to steal more marketshare from the iPhone exclusive carrier. How has Verizon managed to close the gap with its archrival AT&T?

Verizon Wireless has struggled in the past to offer a comparable alternative to the iPhone. Naturally, the first step was to find a smartphone, or in this case smartphones, to fill the Apple void. Verizon seems to believe that the phone itself is not the main selling point but rather the operating system. As a result, Verizon enlisted the aid of Google’s Android operating system, which Verizon bundled with a variety of smartphones. However, Verizon knew that the new smartphone lineup was not enough, so it launched an aggressive, in-your-face marketing campaign that focused on gaining consumer exposure. It created a pop-culture buzz for its Android phones, which has been instrumental to its impressive smartphone sales. Verizon has also been trying to grow its recent smartphone success by implementing new price cuts and special two-for-one promotions.

Verizon has to be ecstatic with its smartphone campaign so far. The campaign has helped it close the smartphone gap with AT&T, and has it in a position for even more success in the future. Verizon has made its big smartphone push, but can it keep the momentum? The cellular service provider benefited significantly from the “Droid Does” media buzz and excitement, but it is important for Verizon to continue evolving its smartphone offerings. If it stands still, Verizon will fall off the smartphone market treadmill. Verizon Wireless must also be prepared to defend its newly claimed territory. There are a bevy of new smartphone developments that pose big threats to Verizon. At the very least, Verizon needs to keep a close eye on Microsoft’s (MSFT: Charts, News, Offers) Windows Phone 7, Sprint’s (S: Charts, News, Offers) 4G network, and Apple’s (AAPL: Charts, News, Offers) new iPhone release. Verizon is hoping to side step these potential threats and continue to grow its smartphone network.

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