Does Verizon discourage iPhone sales? Tales from the inside

This article may contain personal views and opinion from the author.
Does Verizon discourage iPhone sales? Tales from the inside
You’ve probably seen the stories: the carriers aren’t happy about how much of a subsidy they have to pay Apple for each smartphone, and as a result some carriers may have an incentive to push competing handsets. As an experiment, CNN called around to Verizon stores in New York and discovered that sales associates were quick to push 4G Android phones over the iPhone when given an open-ended request, but were less inclined to do so when asked directly for an iPhone. And now an analyst has revealed that the Droid RAZR MAXX outsold the iPhone on Verizon during Q2 of this year, in part due to “aggressive marketing" of 4G LTE phones.

Verizon of course denies any particular bias, but what do they say behind closed doors? To find out we spoke with Verizon sales associates, and what they revealed was…well…revealing.  The representatives we spoke to reiterated that Verizon definitely does not make it official policy to push one mobile OS over another – during training sessions that were scheduled around the same time as the CNN article sales reps were reminded that it isn’t Verizon policy to “dissuade” people from buying iPhones.

It turns out that’s not the whole story though, as Verizon’s sales targets and compensation models paint a somewhat different picture. To be fair, Verizon’s main goal is to make money – like that of every other carrier business – and the easiest way to do that is to upsell customers from feature phones to smartphones. The reasons for this are obvious: smartphone customers must add data plans to their voice and text options, which adds quickly to a carrier’s bottom line. Verizon's specific target for smartphone sales varies by region, but according to our contacts can reach as high as 80% - that is 8 out of every 10 phones sold "should be" smartphones. Those numbers aren’t totally crazy – around 70% of mobile phone sales in Q2 were smartphones in the U.S., and some places do much better than the average.

Of those smartphone sales, Verizon has also set sales targets for how many phones should be 4G LTE devices – a number that we’re told is can be as high as 60%. So for a high-volume region where 80% of phone sales in an area are smartphones, the goal is that 60% of that number (or 48% of all phones sold) would be LTE devices. The kicker of course is that the only 4G LTE phones available on Big Red are powered by Android.

Store and regional managers get reviewed (and compensated) based on how well their numbers match up against sales targets. Sales associates are also rewarded for selling 4G phones; we’re told that in at least some regions they receive an extra $25 bonus for each 4G phone they sell. The results are predictable: managers and sales associates alike do their best to push 4G phones. They certainly won’t stop you from buying an iPhone or a BlackBerry, but you’re likely to hear about the benefits of 4G before you do.
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1. mas11

Posts: 1034; Member since: Mar 30, 2012

They just want what they believe is best for their customers. Why sell them an outdated phone running on their 3G network when they could sell them a modern 4G Lte phone.

4. mas11

Posts: 1034; Member since: Mar 30, 2012

Btw nice article Scott and yep it comes down to profit.

8. Pings

Posts: 304; Member since: Dec 19, 2008

It makes sense. Sell them on 4G.

5. clevername

Posts: 1436; Member since: Jul 11, 2008

Because the customer may not use that much data or need fast data speeds. Maybe they just need access to an exchange server, or perhaps they want a windows phone for the portable ms office suite. Perhaps they want an iPhone for that seamless integration with their MacBook. Or maybe they want a Droid x2 because their wallet is lookin skinny and that Bogo deal is very attractive. and one last very likely reason...maybe they don't have 4G coverage and big red has no timetable for when they will. Point is, not everyone wants or needs a 4G phone.

7. mas11

Posts: 1034; Member since: Mar 30, 2012

DROID BIONIC is a free 4G Lte device for those who have light wallets. Plus for most people 4G is beneficial, sure there are a few ppl who it wouldn't help, but for the most part it will improve your smartphone experience.

30. bubbadoes

Posts: 1225; Member since: May 03, 2012

lite wallets... i dont think so. when the phone launched it was 300.00..its just following the path of All Androids from $300 to free in 8 months...i just happen to be stuck with mine for another 13 months on contract....never again though...i will buy my next phone at contract price and vw can keep theirr new shareeverything plans and overpriced contract phones and let me keep my unlimited cause im at 12 plus gigs a month..."can u hear me now"

53. hsnshw

Posts: 2; Member since: Jun 14, 2012

That is exaclty why they are getting rid of unlimited data, because of users like you that abuse their service. "I can't hear you now, because you are an ass"

58. 14545

Posts: 1835; Member since: Nov 22, 2011

I don't consider 12 GB abuse. That's actually possible just from using the phone itself. I regularly use 4-6 and I don't do anything out of the realm of "normal" usage. Abuse is the people that use like 20-50-70 GB etc. It's not people like him that caused it, its people like what I listed. That and VZW wanted to rake in some greater profits over the slightly heavy user like above.

11. Lucas777

Posts: 2137; Member since: Jan 06, 2011

well thats why they push 4g, but dont "force" it... from the article, it appears they are not reluctant to sell iphones and in fact push iphones over any other 3g phone... it doesnt seem outrageous to me that verizon would want to sell their most recent product that brings in the most cash-- although i do wish wp and ios would get on the whole 4g thing asap..

15. mas11

Posts: 1034; Member since: Mar 30, 2012

I agree man. I looked at Verizon's WP line up before I got my DROID 4 and it's pathetic, just the HTC Trophy. AT&T has a way better selection.

38. wsucoug13

Posts: 164; Member since: May 04, 2012

AT&T has a way better selection of phones period

46. crgresham

Posts: 2; Member since: Jun 13, 2012

too bad AT&T coverage is garbage!

49. mas11

Posts: 1034; Member since: Mar 30, 2012

Unless it's a Motorola phone, but yeah AT&T did a much better job picking its line-up of smartphones.

22. -box-

Posts: 3991; Member since: Jan 04, 2012

One thing also is that Verizon wants as many smartphone users on LTE as possible to free up 3G bands for voice and text traffic, thus improving network stability. Sprint had/has the same goal with WiMax ( and now LTE) and AT&T has similar goals with its LTE.

27. blahb

Posts: 48; Member since: May 16, 2012

Having lived in a 4G market for over a year struggling with the dozens of 4G related issues with the Thunderbolt and the Galaxy Nexus during that time period, I completely disagree. IMO all current 4G customers are beta testers for the network, while most of them first time smartphone users with limited cellphone knowledge. Luckily I am informed about phones but why would a business/carrier want first time users to deal with all issues 4G introduces with a near non-existent OTA process in place at VZW to address them. This will lead to unhappy customers IMO. All VZW is doing forcing customers to 4G Android devices, pissing them off and when the device has them at their whits end they go back and get an Apple device that works seamlessly, yes on 3G. Yes that will likely change but VZW is posing a Customer retaliation nightmare IMO, and as an Android fan I don't like to see my friends say their Android device sucked so they went with an iPhone because it works. 3G works, iPhone works, 99% of users want what works. 4G isn't ready and IMO I don't think Apple is ready for 4G. I felt the next iPhone 5 would lack 4G because most of their customers didn't need it and next year it would be added once 4G becomes more mature. I mean really in the past year we have had 2 different 4G SIM variants and a third will be ratified shortly. Why would a company like Apple who makes products that just work want to hop on board with a technology like 4G while still in it's infant stages. All Apple will need to do is put an HSPA+ radio in the iPhone5 for AT&T keep it 3G on VZW and see what happens. People will flock to the AT&T "4G" network because it works. Rambling but my 2 cents

43. CRICKETownz

Posts: 980; Member since: Oct 24, 2009

B/c no new technology is perfect. When it comes to cell phone don't find the kinks in the armor until a good amount of people get on the network. Its always been that way. So yes, in a sense, you are beta testers but with the intent to fix the bugs before the whole 3G footprint is covered with a technology who's limits have been tested. you're dealing with radio waves...which is wide open to imperfections. My 4G on my bionic (used only for the 4G hotspot) works perfect...but it does cause my phone to heat up quite a bit. Pros & cons. For some reason i don't think an exodus to At&t for HSPA+ would be a likely situation...that's like saying T-Mobile is going to buy out At&t.

54. hsnshw

Posts: 2; Member since: Jun 14, 2012

AT&T works? Where have you been? HSPA+ is crap.

2. clevername

Posts: 1436; Member since: Jul 11, 2008

Damn fine piece of reading.

3. nicholassss

Posts: 368; Member since: May 10, 2012

Yeah I'm sure its actually just them pushing 4g, Last time I was in talking to someone i told them i didnt care about 4g. once i ruled out 4g it seemed like the push for the iphone was there. But it could have really just ben that salespersons opinion that that was a good phone. who knows,

6. JGuinan007

Posts: 699; Member since: May 19, 2011

Excellent article

9. mandkeee

Posts: 82; Member since: Feb 27, 2009

thats true...account manager came over store and told us that do not sell iphone.. sell 4G LTE device as much as we can.. but customer didnt look at android.... they always lookin for iphone4s

10. JcHnd

Posts: 286; Member since: Apr 30, 2012

This is actually the first "long" phone arena article that I read... and I agree on it... i don't care if the iphone is being ignored, what interest me is the fact of the 4G revenue... nice move! not for us costumers anyways...

12. Ubi2447

Posts: 131; Member since: Feb 14, 2012

Why push to sell a 3g phone on a network that prides it's self on its 4g network? Not to mention a new versus dated phone. And I'm positive that sales and revenue has a lot to do with it... so what? It's not necessarily a bias based on what [OS] is better than the other.... It's purely sales and quarterly income.

13. Sniggly

Posts: 7305; Member since: Dec 05, 2009

This is no surprise. 3G data speeds are s**tty on Verizon. I love having LTE. it was Apple's decision not to include an LTE radio. I mean, they took a year and a half to come up with the 4S. Motorola came up with the RAZR Maxx only a few months later. If Apple is supposed to be the leader of innovation, why couldn't they come up with the same battery tech that Motorola developed? They have only themselves to blame.

16. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

While I agree with you to an extent, saying that the Razr Maxx only took a few months to get out is a little overly simplistic. Basically they had to retool the case slightly and add a larger battery. For them to do that with an iphone would be a much larger undertaking, mainly because of the size of the iphone. The Razr is much taller and wider than the iphone, so there is more room for a battery of that capacity. But trying to fit the same capacity battery in the iphone would probably result in it being double the thickness. The Razr simply has much more real estate to fit a larger battery into. On a 3G iphone it would probably be pointless since by already using a non removable battery they have a larger capacity than most of their contemporaries. But at the time apple was developing the iphone no one had done anything like the Maxx, not even Moto, since they only happened upon it months later. So for them to go ahead with an LTE iphone at that time would've meant much less than a days worth of on time, & you know apple would rather leave it out than have battery performance comparable to a top of the line android phone. In effect they kinda dropped the ball by not coming up with the idea of putting an extended battery in a phone right off the bat. In this case, moto picked up the ball and ran with it. I honestly believe we'll see more phones like the Maxx (super capacity non removable battery coming standard). With the amount of juice LTE draws and the current state of battery tech, it's really the only option if you want more than a day out of your phone. I guess we'll find out what route apple is going to take this fall, but with Verizon saying that the only smartphones released this year and forward on their network must be LTE, they're kinda painting apple into a corner if they want to keep selling phones on big red's network.

20. Sniggly

Posts: 7305; Member since: Dec 05, 2009

I think you and I agree more than you think. I understand that the Razr Maxx wasn't just a few months' worth of work. I firmly believe it was developed concurrently with the Razr, because the Razr used the same ultra thin battery tech that the Maxx did. I still stand by my statement that if Apple didn't make an LTE iPhone and is now suffering the consequences, it's their own damn fault. If they're the innovators they claim to be, they would've done what Moto did and come up with an LTE phone with at least decent battery life.

44. CRICKETownz

Posts: 980; Member since: Oct 24, 2009

Apple not making what we now know as the 4S an LTE device didn't make much sense to the vast majority including myself. So yea, i would say it was Apple's fault that they went 3G rather than LTE as a person from the outside looking in. I'm sure there was a totally different rhyme to Apple's reasons that may have made logical business sense.

45. Mxyzptlk unregistered

Why don't you do some research before spewing bs. LTE was still in the baby stages then. It was a battery drain and everyone wasn't covered by it. Motorola will forget about the Razr in a few months like they always do to their other devices.

14. Whateverman

Posts: 3295; Member since: May 17, 2009

+1 Scott H. Very good article!

17. crankyd00d

Posts: 191; Member since: Oct 17, 2011

Yes good article sir. "what they revealed was...well...revealing" I quite liked that haha

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