Strategy Lesson: How Verizon's iPhone Launch Can Benefit T-Mobile
The launch of the iPhone 4 on Verizon (VZ) presents a classic competitive strategy problem for brand managers. Obviously, the move is good for Apple (AAPL) because it extends the phone's availability to Verizon's customer base. But how do you respond if you're AT&T (T) or a non-iPhone competitor, like T-Mobile (DTEGY)?
T-Mobile answered that question today with another installment of its ads that feature the girl-in-the-pink-outfit sparring with a balding, middle-aged man as AT&T. This time, AT&T has an identical twin playing Verizon. (The distraction here is that T-Mobile's new ads are basically a rip-off of Apple's old Mac vs. PC ads.) The ad claims that as neither Verizon nor AT&T have a 4G network, the new iPhone will remain a lot slower on both networks:
Having the iPhone become more available on a better network than AT&T is a disadvantage for T-Mobile, so T-Mobile is playing to its one strength: The lack of confusion in its offering. T-Mobile offers just one thing that Verizon and AT&T's iPhones do not: Android phones such as MyTouch and G2 with 4G network speed.
At the other two companies, confusion reigns. Verizon has for months been advertising its Droid phones featuring Google (GOOG)'s Android operating system, which competes with Apple's iPhone. AT&T also offers non-Apple phones. Now both AT&T and Verizon must find a way to pitch their own product portfolios in competition with their own iPhones, even though the mere announcement that iPhone was coming to Verizon has sucked all the air out of the room. Sorry, AT&T -- in this war you're screwed either way.
T-Mobile's disadvantage is thus now its advantage: It offers Android phones on a faster network. T-Mobile may not win the war against Verizon, but there's no reason it can't turn being an also-ran into a lucrative niche for Android fans. It's a great piece of positioning that managers of second-place brands ought to follow closely.
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