No, Verizon Wireless isn't about to start selling phones or chips, but it is going to start selling mobile apps, and that move will throw it into a whole new competitive set and further scramble a market that has been recently roiled by Google and is growing more competitive by the day.
Verizon, which has more subscribers than any other carrier in the U.S., plans to preview its app store on July 28, and will compete with Apple's iTunes App Store, Research in Motion's App Store, Nokia's Ovi as well as Plaza, which Qualcomm hopes to use to diversify its revenue stream.
The key element of Verizon's plan is that it's not going in alone: it is teaming up with the U.K.'s Vodafone, Japan's SoftBank, and China Mobile (CHL) to create a common software standard, BusinessWeek reports. Verizon will also provide tools so that developers can "code once, deploy everywhere" (okay, not everywhere, but to four fairly large networks).
When the store launches in the fall, it could reach as many as 1 billion customers, the combined total for the four operators. "I am not here to bash anybody, but if I could write one application that could touch every iPhone customer or one billion customers, who am I going to write for?" says Verizon Wireless CEO Lowell McAdam.Verizon also said it would offer developers a better revenue share than it has in the past, and a more streamlined certification process. That would certainly be a change.
The main stumbling block I see for Verizon is its reputation with customers. It's not just Verizon -- everyone hates their Internet and wireless providers, particularly in areas like New York City, where there isn't any competition to speak of. But the question is, will customers want to buy apps from Verizon when they seem so much more appealing from a practiced lifestyle marketing company like Apple? And of course, will Verizon's software development kit and revenue sharing be appealing to top developers? In an earlier post, I noted that William Volk, CEO of iPhone and Android app vendor PlayScreen, complained that it can cost $10,000 to bring an app to Verizon's market.
Verizon's move -- particularly in light of McAdam's comments -- certainly exacts a measure of revenge against Apple, which has handed AT&T a powerful weapon in the race for subscribers; the popularity of the iPhone has translated directly to new subscriber growth for Verizon's principal rival. But if Verizon manages to convince consumers that its app store is the coolest, it will put a significant dent in Apple's momentum and future sales prospects.
The move also puts Verizon on a collision course with an old foe, Google, which is pushing the idea that mobile apps will be delivered via the open Web, rather than proprietary app stores. Indeed, Web delivery has its appeal for both developers and customers: it's easier to code for a Web standard (i.e., HTML 5) than for individual app stores, and it makes apps more portable for customers who would be able to switch handsets without potentially losing their favorite apps. On the other hand, Web delivery puts customers at greater risk of downloading a virus and makes it more difficult for developers to bill users. Verizon's store would address those issues rather handily. I recently posted a piece detailing the merits of the different app store models.