Why the Verizon 'dream phone' matters

January 10, 2011: 8:09 AM ET

The Verizon iPhone won't be big news. Until it is.

Steve & Apple Inc.

Image by marcopako  via Flickr

There are plenty of good reasons to be blase about the forthcoming Verizon iPhone, which, according to news reports, will be announced tomorrow. The arrival of an Apple (AAPL) phone for Verizon Wireless, a joint venture of Verizon (VZ) and Vodafone  (VOD),  is pretty old news. (For a recap of its path to the marketplace, see "Get Ready for Verizon's 'Dream Phone'" at Fortune.com.)

Yes, the new phone will mark first time another U.S. carrier besides AT&T (T) has the ability to offer the phone. But such competition among iPhone carriers already exists outside the U.S. India, Italy, Portugal and Switzerland are among the countries where more than one phone company offers the device.

And at the end of the day, the Verizon iPhone reportedly will be just that: the same iPhone 4 that AT&T users can now purchase, albeit with software and chips that enable it to run on Verizon's CDMA network.

"It's almost not a story anymore," sighs Mark Lowenstein, managing director of wireless advisory firm Mobile Ecosystem. "It's almost anticlimactic."

Almost.

The real story: The unintended consequences

We may think we know everything there is to know about the Verizon iPhone -- but one of the truly amazing things about the launch of the original iPhone in 2007 was the series of unanticipated consequences that followed. I'm not trying to diminish the impact of the device itself (though I initially was skeptical about its potential): The iPhone is an unequivocal success. Apple has sold more than 70 million of the devices, and in its fiscal fourth quarter it sold more than 14.1 million phones, up 91% from a year earlier.

But the iPhone did more than enrich Apple. It shook up the entire phone business, from the handset makers to the carriers to the software industry.

The iPhone accelerated carrier and handset manufacturer interest in Google's (GOOG) Android operating system for mobile phones. It forced AT&T to bolster parts of its network to accommodate the unprecedented data consumption of its users. And its multitouch screen paved the way for dozens of other touchable devices, including Apple's own iPad.

What will the Verizon iPhone bring?

I'm mildly interested in the immediate outcomes (How many Verizon subscribers will migrate to the iPhone? How many AT&T customers will change carriers?) but I'm really keen to track the unintended ones. Will the iPhone prompt Verizon to make unexpected upgrades or adjustments to its network and infrastructure? What will the long-term impact be on the other handset makers, especially Motorola Mobility (MMI), which has said its mobile handset unit will face pressure from the arrival of high-profile competition in the first quarter.

What will the heightened competition between Verizon and AT&T bring?

At its press conference Tuesday Verizon Wireless may address a handful of unanswered questions about its iPhone offer. But we won't know the most interesting answers until months, maybe years, from now.

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About This Author
Stephanie Mehta
Stephanie Mehta
Deputy Managing Editor , Fortune

Stephanie N. Mehta is the deputy managing editor at Fortune, overseeing technology coverage for Fortune. She also is a co-chair of the annual Brainstorm Tech conference, an annual gathering of tech and media thinkers. Previously, Mehta spent seven years as a tech writer at Fortune covering the telecom and media industries. She also has worked for the Wall Street Journal and the Virginian-Pilot in Norfolk, Va.

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