Verizon Wireless has unfulfilled sales commitments to Apple that may end up costing the MNO some $14 billion. The shortfall was caused by slower-than-expected sales of the iPhone and a large outstanding order. Vodafone, which owns a sizable stake in Verizon Wireless, has revealed in a filing that the latter entered into approximately $45 billion worth of purchase commitments, the bulk of which likely involve the iPhone. To cover its commitment, Verizon must sell $23.5 billion worth of iPhones this year, more than double what it sold in 2012.
Verizon’s current situation with the iPhone may not affect Apple in the short term, but if the operator is in danger of missing its own projections by such a large margin it may be evidence that interest in the iPhone is beginning to wane. Could we be seeing the early stages of a sea change in the smartphone market? We are not sure, but it is possible that Apple may be a victim of its own success – the iPhone has been so innovative and appealing that customers’ expectations may have exceeded reality. In addition, there were some widespread complaints about the iPhone 5 at its launch, such as problems with the new maps app, a purple cast on photos, and reduced durability.
The next iPhone could turn out to be a winner, and people may flock to it again, but nevertheless, the first-mover advantage that Apple has enjoyed all these years is over. With the rise of the robust and capable Android phones, there is not much of a technology gap anymore, and this parity is having a decided effect on the market. MNOs should keep this in mind when designing plans and determining phone subsidies.