), which competes primarily with AT&T (
) and Sprint (
) in the mobile business, has seen a surge in Android based phone
sales over the past few quarters. According to data from ITG
Investment Research, Verizon's dependence is clearly shifting from
Blackberry to Android based phones.
While we believe that additional revenue opportunities from
Android phones are available and less reliance on any one
manufacturer benefits Verizon, recent reports suggest that Android
sales so far come at the expense of Blackberry's and so the data
revenue impact from Android sales is limited for the time
We have a current Trefis price estimate of $31.69
, which is around 8% below the current market price.
Initial Impact is Limited
While the share of Android-based phones among smartphones sold
by Verizon is rising, it mainly results due to the replacement of
Blackberry smartphones. In 2009, Blackberry accounted for more than
80% of Verizon's smartphone sales. However according to data for
November 2010 sales, Blackberry's share is just under 20%.
Blackberry users tend to generate the highest levels of ARPU
(average monthly revenue per user) and so the benefit of Android
subscribers replacing existing Blackberry accounts is muted.
According to research firm Validas, Blackberry users tend to spend
around $95 per month, which is higher than the ARPU for iPhone
users that we estimate is around $90 a month on average. We
discussed the iPhone's impact to Verizon's data revenues in an
article last week. (See
iPhone Will Accelerate Verizon's Data Revenue
So for now, the revenue gains from the Blackberry to Android
shift appear limited, but this could change over time. In
particular, Android is well ahead of the Blackberry's app store
with over 70,000 apps vs. RIM's 10,000 or so. This could help user
engagement and lift data revenues as smartphone usage increases.
Surging Android Could Knock 10% Off RIM's Stock
Below you can see how a faster growth in
can benefit Verizon's price estimate.
You can see
the complete $31.69 Trefis price estimate for
Verizon's stock here.