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Jan 25 2011   11:50PM GMT

Why Is Verizon Being So Conservative about Its iPhone Sales?

Ed Hardy Ed Hardy Profile: Ed Hardy

In a conference call with investors today, Verizon Chief Financial Officer Fran Shammo gave his company’s prediction for the number of iPhones it expects to sell in 2011. And it’s low. Very low. This has got me wondering why this carrier is being so conservative.

Shammo ‘s number is 11 million. At first glance that seems like a lot, until you consider that in Q3 of last year (the last quarter in which numbers are available) AT&T activated 5.2 million iPhones.

So, despite all the hype surrounding Verizon’s long-awaited launch of Apple’s smartphone, this carrier expects to sell in all of 2011 about twice units as many as its rival did in one quarter of last year? 

Glass Half Full
There are a couple of possible explanations for this. The most optimistic is simple: the wireless carriers in the U.S., like Verizon, have a tradition of under promising and over delivering. This way their customers (and investors) are pleasantly surprised when products are out earlier than had been estimated.

So this company could simply be action cautiously. If it says it expects to sell 11 million iPhones this year and then sells 20 million, it gets to talk about the huge success of this model. If it estimates that it’s going to sell 24 million and then sells 20 million, it has to explain why sales were so poor. 

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My pessimistic guess is based on this: Verizon knows things the rest of us don’t. And one of the things it might know is that it’s not going to get the iPhone 5 until next February.

Verizon is introducing its version of the iPhone 4 next month. AT&T is widely expected to introduce the iPhone 5 in June, but there’s a big question about when Verizon is going to get the next-generation model from Apple.

The best possibility is that both carriers are going to launch it at the same time, even if this means Verizon will launch a replacement for its first iPhone just four months after it hits store shelves.

The worst possibility for Verizon and its subscribers is that this carrier won’t get a new model from Apple until its current one has been on the market for a year, which would mean that AT&T would once again get to offer an Apple smartphone for more than half a year before its rival can.

Honestly, I can’t see Verizon agreeing to any such arrangement, but it would explain why this company’s CFO is being so cautious about iPhone sales projections.

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