Ever since the announcement that the iPhone would be joining the Verizon network, ending Apple’s carrier exclusivity with AT&T, the industry has been awash in speculation over how this change would affect the mobile landscape. Mobile users tend to have a certain degree of carrier loyalty, which may either come from satisfaction with the service or switching costs (both real and perceived). Of the major carriers, Verizon has the highest loyalty with 85% of its customers indicating a satisfaction level of at least 7 on a 10-point scale. It is therefore not particularly surprising that even the allure of the popular iPhone was not able to pull many happy Verizon customers away from their network.
Due to Verizon’s high customer loyalty, the iPhone’s share of the smartphone market had largely stagnated in 2010, remaining right around 25% of the market for most of the year. (Of course, the total number of iPhone users increased as the smartphone market grew, but it was not able to extend its share of the market.) Meanwhile, Android took the smartphone market by storm, jumping from 5% market share in December 2009 to 29% in December 2010, as it captured many of Verizon’s customers looking for a touchscreen phone with app market capabilities.
On January 11, Verizon made the official announcement that it would finally offer the iPhone, and the consumer interest was immediate. The number of unique visitors to verizonwireless.com jumped 28% from the beginning of the year, and was 9% higher than the same week a year earlier when Verizon was heavily promoting its new Android phones. But it wasn’t just that more people were visiting verizonwireless.com, it was what they did when they got there that stood out…
Comscore conducted an analysis of visitor behavior to verizonwireless.com during the two-week period from January 9-23, which showed an exceptionally high level of visitors both seeking information about the Verizon iPhone and ultimately completing pre-orders (on February 3) for the devices.
During this two-week period, Comscore measured more than 3 million total visitors to the Verizon iPhone landing page on verizonwireless.com. Among these visitors, 37% requested more information about the Verizon iPhone, a strong indication of interest. (A similar analysis of visitors to the Verizon iPhone landing page on Apple.com showed 60% requesting more information.)
On February 3, 2011, Verizon and Apple began accepting pre-orders at 3am, resulting in a rush from interested customers to secure their new devices. The Verizon landing page stated simply “iPhone 4. It’s here.” and promoted the 8GB version at $199 with a 2-year Verizon contract and the 16GB version at $299 with the same contract.
That day alone, millions of people visited verizonwireless.com, with 38% visiting the Verizon iPhone pre-order page. Of those visiting the pre-order page, 39% actually completed a pre-order transaction – an astounding conversion rate that doesn’t account for the number of visitors who tried to complete their order but had technical errors due to Verizon’s systems.
It will be interesting to watch Verizon’s success with Apple devices progress, especially as the new iPad is released with both AT&T and Verizon, and as Apple unveils the newest version of the iPhone this summer. Clearly 2010 was the year Android surpassed Apple; however, 2011 is shaping up to be the year Apple re-ignites its market share growth.