Verizon iPhone sales slowing down ahead of iPhone 5

Verizon Communications executives told Goldman Sachs Group analyst Jason Armstrong to expect a slight drop-off in iPhone sales when the carrier reports  second-quarter results. “iPhone sales will likely be a touch below the 2.2 million,” Armstrong told Bloomberg BusinessWeek. Company executives told the analyst that sales of other smartphones were “above expectations”. For comparison, Verizon in the seven weeks of the iPhone sales during the first quarter activated 2.2 million units.

Not to worry, the drop-off was expected. Verizon customers, like everyone else, realize a new iPhone is most likely coming out this Fall so they aren’t keen on locking themselves out of the latest hardware by signing new iPhone 4 contracts. As a rule of thumb, consumer preference for current-generation hardware suffers in the quarter preceding a next-gen product launch.

According to latest Nielsen data, Android growth in the US is slowing down while iPhone is picking up steam. Android is still the leading smartphone platform with a 38 percent of the US market versus 27 percent for Apple’s iPhone. However, Apple’s share has grown from 10 percent of all new smartphone purchases at the beginning of 2011 to 17 percent of smartphone purchases this year by May. New purchases of Android-based handsets in the same period remained flat at 27 percent. The leveling off for Android and iPhone’s increasing growth should be contributed to the Verizon iPhone, supporting the notion that Apple’s exclusive distribution agreement with AT&T had been a limitation in the United States.