Now that Apple?s iPhone is officially coming to Verizon Wireless, the entire mobile ecosystem will feel the ripple effects?from rival carriers and device manufactuers to content providers and marketers.

When the iPhone 4 becomes available on the Verizon Wireless network beginning Feb. 10, the desirability of handsets based on Google?s Android operating system will be tested, and Reseach In Motion?s BlackBerry devices are sure to take a hit. However, if it means consumers increase their usage of the mobile Web and applications, it will mean more downloads for content producers and more impressions for advertisers.

?It is a growth opportunity for Apple, giving it access to a major new market opportunity, a whole new set of demographics for the iPhone and the applications on the iOS platform,? said Ross Rubin, executive director of industry analysis and consumer technology at the NPD Group, New York. ?That represents more potential advertising revenue and the potential for more app sales.?

Verizon Wireless is the No. 1 carrier in the United States based on the number of subscribers, many of whom will switch to the iPhone once their contract is up.

That will mean more downloads of iPhone applications of all types, from ad-supported and freemium to pay-per-download and branded.

Additionally this will lead to more eyeballs for Apple's iAd network, which could help it compete more effectively against Google's AdMob and the various independent mobile ad networks.

The Verizon iPhone increases iAd's reach, which will in turn make it more appealing for brands and agencies.

While Apple is the biggest winner here, since iPhone users tend to consume more mobile content of all kinds, surf the mobile Web more and be more comfortable with mobile payments, the Verizon iPhone should benefit a host of players in the mobile marketing and commerce ecosystems.

Rival handset makers and carriers
The iPhone 4 on Verizon?s CDMA network is essentially same as the iPhone 4 that is on AT&T?s GSM network in terms of form and functionality. Except, the Verizon version will not be able to handle simultaneous voice and data.

On the plus side, the iPhone 4 on Verizon Wireless will include new personal hotspot capabilities, letting customers use their handset to connect up to five Wi-Fi-enabled devices.

Verizon will sell the iPhone at a retail price of $199.99 for the 16GB model and $299.99 for the 32GB model with a new two-year contract.

Dan Mead, president/CEO of Verizon Wireless, Basking Ridge, NJ

Specs aside, many are speculating about the effect that the Verizon iPhone will have on competing carriers, especially AT&T. Handset manufacturers and operating systems, especially Android, are in danger.

Charles Golvin, wireless analyst at Forrester Research, said in a report that Verizon?s strong reputation for network quality will alter the calculus for many consumers and win the company several million new subscribers. Other analysts issued similar projections.

?The Verizon iPhone will attract some customers from other carriers, particularly AT&T, but most of the sales will be existing Verizon customers,? Mr. Rubin said. ?Android continues to be important to Verizon and other carriers?almost every handset announced at CES was Android-based, including those that will be compatible with Verizon?s 4G LTE network.

?To help compensate for the loss of its exclusivity agreement with Apple, AT&T will be adding a dozen Android devices before the end of this year,? he said. ?There is a market share expansion opportunity for iPhone, but we will continue to see a lot of momentum for Android.?

Mr. Rubin does predict some loss of Android share at Verizon. Even though Android?s share has been growing at AT&T, it has achieved very limited gains against the iPhone.

Verizon has a stronger Android lineup than AT&T, but Mr. Rubin believes that the iPhone competes very well with Android.

?Traditionally when Android has grown, it has done so at the expense of RIM, another company that may get squeezed in this transition,? Mr. Rubin said. ?AT&T can continue to improve their network.

?It recently announced that it is stepping up its own investment in LTE and discussed how it can provide a smoother transition path from [3G] to LTE, as there is a more significant gap between CDMA and LTE.?

Competitive smartphone market
Noah Elkin, principal analyst at eMarketer, New York, expects the overall smartphone market to grow significantly, especially as Android and Apple devices spread to more carrier networks.

There were 60.2 million smartphone users in the United States in 2010, and by the end of 2011, that number will grow 21.9 percent to 73.3 million smartphone users, according to eMarketer.

Apple's iOS platform currently accounts for 25 percent of total smartphone subscriptions in the U.S., compared to a 26 percent share for Google's Android platform and 33.5 percent for RIM?s BlackBerry, according to Jan. 6 data from comScore.

Mr. Elkin said that even as Android draws ahead of Apple's iOS in the smartphone race, the iPhone remains the standard-bearer for the category?the outright leader in mindshare if not necessarily market share.

For consumers, the availability of iPhone 4 on Verizon Wireless means more choice. And that will ramp up the competition between the various carriers and device manufacturers.

?Now buyers can almost mix-and-match carriers, device vendors and smartphone platforms to address their needs and personal preferences,? said Alex Spektor, senior analyst of wireless devices strategies at Strategy Analytics, Newton, MA. ?Verizon Wireless will need to differentiate its offering in order to attract outside of the anti-AT&T crowd.

?The availability of a mobile hotspot service is one way to differentiate, but uncapped data downloads could be another,? he said. ?As CDMA is unable to handle voice and data at the same time, we can expect frustration from previous AT&T customers not used to the restriction.
 
?The CDMA iPhone will result in a continued decline of BlackBerry handsets at Verizon Wireless unless RIM can quickly deliver a more attractive touchphone experience.?

A trend that some industry observers have noticed is that the iPhone appeals more to women than other smartphones do.

If a large percentage of female Verizon subscribers opt for the iPhone, that could shift the balance of power toward Apple.

?Even though Android had recently taken the lead in smartphone OS market share, Apple's purchase intent, especially among women, had always stayed high,? said Olivier Griot, principal at consulting firm Blue Rain Media, Boston.

?The arrival of the iPhone on Verizon evens out distribution for both platforms, and I expect to see iOS bounce back on top,? he said. ?It will be interesting to see if Verizon's network is as robust as they have been claiming the past few years."

Network strain on Verizon
There are now going to be more iPhone users, who tend to drive mobile content consumption, mobile Web and application usage, as well as interaction with mobile ads.

And then there is the question of iPhone users? notorious strain on AT&T?s network. Will the increased data load trip up Verizon Wireless as well?

?Android phones are actually even bigger data hogs than the iPhone is, so if Verizon picks up anywhere near 16 million phones this year, they will go from having the lowest smartphone penetration of the four carrier networks to the highest,? said Carl Howe, director of anywhere consumer research at Yankee Group, Boston.

?It will stress their network whether they like it or not,? he said.

Other analysts have similar concerns, especially given the prevalence of Droid devices already on Verizon?s network.

?The iPhone and other network hummers do put a tremendous strain on the network,? said Robin Burton, head of marketing at Evolved Intelligence, Bristol, England. ?An active network hummer can use up several times the network capacity of a more traditional mobile user and carriers, caught out by the strength of the rise in usage, can face network congestion as a result.?

A consequence in Britain was that roamers from a particular partner network experienced repeated problems due to network congestion. This particular roaming network lost two key corporate customers as a result of VIP dissatisfaction, per Mr. Burton.

That is why many carriers are looking at tiered data plans, although Verizon does currently offer an unlimited option.

?Personally I expect that carriers will either have to start charging by usage?no more flat-rate all-you-can-eat-plans?or will have to introduce the concept of ?gold, silver, bronze? service,? Mr. Burton said. ?Otherwise the issue has massive churn potential.?

In the emerging markets, carriers are tackling the problems of network congestion through the implementation of intelligent charging. 

This monitors available capacity and demand to create a dynamic discount and encourages traffic away from peak times and locations. 

Mr. Burton said it may be that the smarter carriers introduce a multi-strand solution: banded service quality and dynamic pricing to siphon off all of the price-sensitive, high-bandwidth activity such as music and video downloads to off-peak times.

Whatever the case may be, at this point Verizon does not seem to be too worried.

?Verizon has expressed a lot of confidence in its network,? NPD?s Mr. Rubin said. ?Over the past year, Verizon?s network has hosted quite a few handsets that make very aggressive use of the network, they have been able to offer those with unlimited data plans and customers have taken advantage.

?They have done testing and they are confident they will be able to handle the addition strain and traffic the iPhone may bring,? he said.

How do you like them apples?
Verizon and AT&T have been butting heads over their respective network capacities via snarky television campaigns for some time now.

With the Verizon iPhone, there can finally be the first real apples-to-apples comparison between the network capacity of Verizon Wireless and that of AT&T.

?Every carrier says we have the fastest, most reliable network, and that has been influencing customers? choice, but what we?re seeing now is a new way for them to compete against each other,? said Michael Morgan, senior analyst of mobile devices at ABI Research, New York. ?The free mobile hotspot is a software thing, not a hardware issue, so it based on carrier choice.

?Verizon has an unlimited data plan offering, and AT&T is going to have an answer to that,? he said. ?They will be going much more head-to-head facing the consumer, with a more affordable voice and data plan here, free Wi-Fi there.?

For marketers, they have to target both iPhone and Android devices, as Android will continue to hold a very strong position at Verizon, per ABI Research.

The bottom line for carriers is that it is going to start to change how they compete.

This also marks the first time that the iPhone is going to storm into a market where Android is entrenched.

?Android has been used by carriers worldwide as an answer to the iPhone, and in many cases, it was a good answer?Andorid devices have all of the features you can get on the iPhone, if not more,? Mr. Morgan said. ?Now the iPhone is going to come to Verizon, and it will sell as it always has, because they don?t sell on features, it is an emotive sell?this device will make you happy.

?With a feature-to-feature comparison, the iPhone might not look so great,? he said. ?Android is going to expand into lower-cost phones, while Apple will stay at the premium market?it will trade market share for margin, and if you look at the financials, it has been a pretty good trade.

?But it does put them in a risky position?if they lose that halo over the ?Jesus phone,? there is nothing else for them to hang their hat on.?

Mobclix believes that Microsoft?s Windows Phone 7 is an exciting platform and predicts that it will chip away at RIM?s market share to take its place near the top with Android and iOS.

However, in the immediate future, Apple is the biggest winner.

?Android has seen huge growth in the market, especially in the second half of 2010, and a lot of that is due to it being on multiple carriers from multiple device manufacturers,? said Krishna Subramanian, cofounder of Mobclix, San Francisco. ?It has reach, hence a lot of the marketing dollars have targeted that platform because it reaches a wider audience.

?Now that iPhone is available on Verizon as well, will Verizon customers grab an Android phone, or are they more likely to grab an iPhone?? he said. ?Developers could very well start focusing more on iPhone, and Android will take a hit as the iPhone continues to grow.

?Marketers will continue to spend dollars as long as there are users, and with Apple devices on multiple carriers, advertisers want to reach that iPhone demographic, and now they can do it in more than one place, and there will be even more users.?

Final Take
Blue Rain Media's Mr. Griot

/>