Apple 2.0

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Report: Apple has cut a sweet deal with Verizon for the iPhone

December 6, 2010: 9:29 AM ET

Verizon said to be eager to keep the hot-selling smartphone away from T-Mobile and Sprint

According to a report to clients issued Monday by Kaufman Bros.' Shaw Wu, Apple (AAPL) got the terms it wanted from Verizon (VZ) for the version of the iPhone expected to be released by the carrier in early 2011.

Citing industry and supply channel checks, Wu writes that he is "picking up that iPhone economics to Apple are likely to be favorable, similar to that offered by AT&T."

"This is important," he writes, "as many, including ourselves, have been concerned that VZ iPhone economics could be less favorable given the strength of Android and higher cost of components, particularly those associated with CDMA."

According to Wu, Apple's hand was strengthened by the 14.1 million iPhones sold last quarter, the share gains AT&T (T) made against Verizon over the past two quarters, and reports that Google's (GOOG) Android has started "to lose some of its luster" for Verizon.

"Last but not least," he concludes, "we are hearing that VZ does not want iPhone, the hottest selling smart phone, available on T-Mobile USA and/or Sprint and may be willing to pay for exclusivity to itself and AT&T."

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for

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