iPhone, meet Verizon

I have a BlackBerry on the Verizon Wireless Network. The iPhone I want is on the AT&T network. But I wish I could have an iPhone on the Verizon Wireless Network.

All summer long, speculation surrounded Apple Inc. and whether or not it would end its exclusive U.S. iPhone service deal with AT&T and begin offering phones that work with the Verizon network. None of the companies involved have released any official statements confirming or denying the idea. But I believe that Apple doesn’t need exclusive deals to sustain itself when it could earn more profit by extending its brand to additional outlets. The company is currently missing opportunities for economic expansion that will only hurt it in the long run.

As a consumer and as a fan of the Apple brand, I am totally in love with the idea of having an iPhone with Verizon. In fact, if Apple ever announces that it has made the iPhone Verizon-friendly, I’ll be in the Apple store the very next day, dropping the cash for a pre-order without hesitation.

In a Sept. 11 article on computerworld.com, Gartner Inc. analyst Ken Dulaney said that, while AT&T would be crazy if it stopped selling the iPhone, he thought that Apple would still be open to supporting Verizon.

“If you are beholden to stockholders to make money, there is no easier money than in your home turf through a carrier desperate for this type of device,” Dulaney said in the article.

If AT&T can report that 40 percent of iPhone activations in its first quarter were buyers who were new to the company, Verizon should know that it is missing out on that same opportunity to create that many new customers.

The longer it stays with only one company, the more Apple will miss out on creating new customers as well. Released on April 22, AT&T’s financial results for the first earning quarter of 2009 showed that activations of the iPhone had slipped to 1.6 million during the quarter. This was down from 1.9 million in the 2008 fourth quarter and 2.4 million in the 2008 third quarter.

Although these numbers don’t put Apple or AT&T in danger of failing to continue selling their product, it is proof that the market is slowing. A lot of AT&T users already use an iPhone, saturating the only network that Apple is working in. Unless Apple can convince AT&T users to upgrade their iPhone with every release of a new model, they need to expand to other service providers in order to continue bringing in new buyers.

While this touches on the power of the consumer’s wallet ““ because I’m sure I’m not the only one who would increase Apple’s stock if I could swap my BlackBerry for an iPhone ““ it also brings to light the company’s expenses in upholding its brand philosophy.

I have an iPod and I’m writing this column on a MacBook; I know that the Apple brand carries a certain weight. I understand that part of the appeal of the iPhone is ingrained in the fact that it’s offered exclusively to AT&T customers.

Actually, this isn’t entirely true: AT&T will sell an iPhone without the two-year contract for $599 and $699, depending on the memory capacity. But if the device does have a contract with AT&T, then the models cost $199 and $299. Or you can head to other countries and spend just as much on an unlocked phone.

Prices like this mean that, unless you’re an AT&T customer, you will only be able to purchase the iPhone at a hefty price. This creates a demand based on making a status statement. However, you can’t sell high-status forever. Eventually, it will stop turning a large profit and you have to present it in a new form to cater to a wider spectrum of consumers.

Apple knows this and has already done it: The more affordable Nano and Shuffle models of the iPod are now sold alongside the more expensive iPod model, and the MacBook line has expanded to include the MacBook Air. This product diversity appeals to more customers, who will be more willing to walk into a store and spend money when there’s more than one product to choose from.

Apple needs to expand their iPhone to other service providers in order to access those who don’t already have one. While this may end the appeal of exclusivity, it will gain the much more important profit. Allowing both AT&T and Verizon to share the same product will place the two companies head-to-head, creating more competitive pricing and attracting new buyers.

There is nothing that suggests that Apple can’t pursue a deal with Verizon with products other than the iPhone. They could always create a new netbook, music device or different phone model and place it exclusively on the Verizon network.

But why would a company want to spend countless hours and money researching, designing and marketing an entirely new product? In the case of the Nano and MacBook Air, Apple didn’t have to reinvent its entire brand. It adapted the products and technology it had already invested in and profited from, and continued using that formula for the new models. Why not adopt the iPhone for a second network?

I’m sure some people will tell me to stop complaining and just go buy the iPhone if I want it so badly because Apple isn’t going to bend to the little people’s wishes. And while I can tell them they’re right about my really wanting one of those phones, I’m more interested in figuring out why such a successful company is hesitating on a chance to be even more successful.

I don’t understand why Apple won’t end it’s own exclusivity in favor of a broader market. From a business standpoint, elitism only remains profitable for so long. It’d be much easier, and less expensive, for Apple to just hand the next generation iPhone over to Verizon.

Apple knows that the iPhone is profitable. It wouldn’t have to spend resources developing something brand new for Verizon. There’s still a hungry market for the current phone ““ a market that becomes even hungrier when the chance of having some flexibility in choosing a network is discussed.

AT&T would need to offer Apple the sort of deal that ends in a lot of zeroes to keep their relationship exclusive. Otherwise, I think it would be more profitable for the iPhone to begin seeing other networks. I’d be happy to set them up on a date with Verizon.

E-mail Louth at [email protected]. Send general comments to [email protected]