The announcement of Apple's (AAPL) iPhone coming to Verizon (VZ) renewed enthusiasm for both stocks as many analysts and observers predicted large sales figures. The average analyst seems to be predicting 9-10 million units sold by Verizon in 2011; this article highlights a few analyst predictions in that range.
I think that such predictions overestimate the demand for a Verizon iPhone. I think that the device has relatively limited appeal, and there are factors (both internal and external) that can influence sales negatively. The three main groups of consumers who are likeliest to purchase iPhones may not produce enough sales to meet expectations.
The largest group of potential iPhone buyers will come from Verizon's cache of smartphone virgins. Out of Verizion's nearly 100-million customers, there are still plenty using dumbphones; the demographics of this group are probably wide-ranging, from 16 year olds on family plans to 60 year olds inquiring about AARP discounts. The image of simplicity that the iPhone radiates, along with the most powerful smartphone brand name, should convince some of these holdouts to upgrade to the iPhone. The sales to this group will likely be affected by Verizon's plan pricing, as cheaper data plans will obviously lure more consumers than very expensive or harshly-capped ones will.
The next largest group of potential Verizon iPhone buyers may be defectors from ATT. There will surely be some ATT iPhone users who have enough disposable income and cannot deal with ATT network issues (that only occur in some areas) to take the steps necessary (cancelling plan, trading in hardware) to switch to Verizion. But there are barriers to such switching beyond the cost and inconvenience of doing so; many ATT users who have gotten used to multitasking won't be able to do that on the Verizon network, and that alone may be able to keep some people from switching. Additionally, this group of consumers is probably savvy enough to know that better versions of the iPhone are coming soon (4g network/iPhone 5) and may wait a better product before switching.
The last group of consumers is existing Verizon customers who may look to replace an Android phone with an iPhone, but I do not expect this group to be very large. Based on my personal experiences with 18-23 year old Android-phone owners, they own the phone because they wanted an Android phone, not because they couldn't get the iPhone - people who wanted the iPhone badly enough switched to ATT years ago to get one. There probably are some Android owners who aren't completely satisfied and will give the Verizon iPhone a try, but I wouldn't expect a massive swing in sales from companies like Motorola Mobility (MMI), the maker of the Droid family, to Apple's products.
There are definitely other factors that may affect the success of the iPhone at Verizon. If Verizon chooses to throw promotional muscle behind the iPhone and saturates media with advertisements and urges in-store personnel to push the device, sales may be relatively strong. If Android 2.3 devices continue to come to market (and to Verizon), the iPhone loses some of its luster. As mentioned before, the pricing and details of data plans are also going to be crucial in luring customers or turning them off.
But perhaps most importantly, Apple is now a company that cannot simply meet expectations - they must crush them. If, one year from now, they report that they did sell 10, 12, or 14 million iPhones through Verizon, that may not be enough to satisfy investors and analysts that have learned to expect astronomical beats. Success, as normal companies measure it, is simply not good enough for Apple, and I don't believe that an environment exists in which a Verizon iPhone can blow out expectations.