Why aren't people buying the Verizon iPhone?

Reports indicate the Verizon iPhone 4 isn't selling as well as expected. Why not?

Evidence is mounting that sales for the Verizon iPhone have fallen short of expectations. CNET

For years, Verizon customers were clamoring for the iPhone, but now that the phone is here, evidence is mounting that it's more of a dud than a hit.

First, there were those short, almost nonexistent lines on launch day. Then Boy Genius Report got its hands on some "sensitive information" from a source that indicated sales numbers for the new iPhone were lower than expected (according to those numbers, the Verizon iPhone 4 was barely outpacing its AT&T counterpart four days after launch). Next, Marco Arment, the app developer behind Instapaper, reported that he didn't get the sales spike he expected with the introduction of a new iPhone (this led him to speculate that the Verizon iPhone was being sold to existing iPhone or iPod Touch owners). And just today, the blog ConceivablyTech, claims that UPS was upset after it set up a special shipping program for the Verizon iPhone that turned out to be overkill, with Verizon never matching its "forecasted shipping numbers."

OK, so the Verizon iPhone isn't a bomb in the Microsoft Kin sense of the word. But the whispers are out there, getting a little louder each day: the thing just hasn't met expectations, no dropped calls and all. The question is why?

Here's a look at the possible culprits:

  • The press: Ah, the irony. Could it be the Apple-loving media is killing this iPhone? Indeed. While the Verizon iPhone 4 received generally very positive reviews, there wasn't anything really new about it (except that it rarely dropped calls), which led plenty of publications to proclaim that you should take a wait-and-see-what-Apple-has-in-June approach--unless you really "need a new phone right now."

  • The next iPhone is coming in June: If Apple is true to its iPhone schedule, it will announce a new iPhone in June that presumably offers improved performance and features, perhaps even 4G support. That's only about three and half months away. If you read CNET or any number of publications, you know that and are willing to wait--unless you need a new phone right now.

  • Bad timing: The Verizon iPhone had the misfortune of arriving after a number of strong second-generation Android models hit the market. A lot of Verizon customers, tired of waiting for the iPhone, upgraded in the last six months to those models.

  • 3GS AT&T owners are still under contract: Like a lot of other people, I bought an iPhone 3GS a few months after it came out. Real iPhone fanatics pawned their 3GS (or 3G) off on a loved one or sold it on eBay and bought an iPhone 4. But plenty of guys and gals like me stuck with the 3GS and must wait a few months more before being eligible for a discounted upgrade (I get mine in May). So even if I was interested in a Verizon iPhone today, I couldn't jump ship without being penalized.

  • AT&T's advertising has been effective: I've been shocked by the number of people who've said to me that one of the problems of the Verizon iPhone is that you can't talk and surf the Web (or access other data services) at the same time. When you ask people how often they actually do this, most say rarely, but they like to know the option is there. (A few people have cited the example of making a restaurant reservation on Open Table while talking on the phone with a friend.) Not coincidentally, AT&T has been pounding people with the no simultaneous voice-and-data message from the day the Verizon iPhone launched. It's been working.

  • The iPhone isn't as hot as it once was: At one point, the iPhone was way ahead of its competitors. Not so today. So while Verizon customers may have been pining for years about not being able to purchase an iPhone on their beloved network, as I said, plenty of good alternatives have come along, making them pine less.

So there you have it. As much as the Verizon iPhone 4 has been hyped, a lot of market forces are actually conspiring against it. And despite Verizon's reports of record preorders , real or not, they don't always translate into monster sales.

On the bright side, it doesn't look like Verizon will have to worry about its network being overwhelmed by data-sucking iPhone users. The ramp-up will be more gradual, with the real spike most probably coming when a truly new Verizon iPhone becomes available. Whether that will come in June--or whether it will have 4G support--is anybody's guess, but that lack of clarity is what's keeping many folks on the fence.

Comments?

Update: After this story posted, Verizon CEO Daniel S. Mead refuted claims of low iPhone sales and in an interview with The Wall Street Journal (subscription required) said that the carrier had sold more iPhone 4s during its launch period than any product so far. However, Mr. Mead said Verizon wouldn't release iPhone sales figures until the company's next earnings release.

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