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iPhone Crisis?: Verizon Might Owe Apple Billions for Fading Popularity

By Craig Galbraith
July 12, 2013 - News

**Editor's Note: Click here for our list of June's hottest selling smartphones to see how the iPhone fared against the competition.**

Criticism over Apple's iPhone – including a perceived lack of innovation by the Silicon Valley giant – and Verizon Wireless' agreement to buy too many of the devices might wind up costing the carrier dearly.

Recent reports indicate many fewer iPhones selling in the second half of the year than at first predicted, despite the expectation that Apple will roll out the next-generation of its iconic smartphone in September. Verizon Wireless is one of the operators that was expected to sell a ton of them – but no matter how many customers line up for an iPhone 5S, it might not be enough for Big Red.

That's according to analyst Craig Moffett, who says VzW might owe Apple up to $14 billion if it can't sell enough of the devices, according to a Bloomberg report.

Verizon is required to buy $23.5 billion worth of iPhones in accordance with its agreement with Apple in 2010. Moffett says VzW is on pace to fall way short of that number.

“It is likely that Apple would be reluctant to simply ignore these commitments, since many other carriers around the world are probably in a similar situation, and a simple amnesty would set an unwanted precedent," Bloomberg quoted Moffett as saying. “It is therefore unrealistic to think that Apple won’t extract some consideration for renegotiating these shortfalls."

Neither Apple nor Verizon Wireless would comment on the article.

Apple's iPhone is still the world's most popular smartphone overall, but the company has been hurt lately by accusations that it's not innovating fast enough. Samsung's Galaxy S4, released earlier this year, has surpassed the iPhone 5 in sales at three major U.S. carriers.

It's widely anticipated that the next iPhone won't come with any major technological advancements that we haven't seen on other new devices in the past year; yet, that doesn't mean it won't be a big seller.

Follow senior online managing editor @Craig_Galbraith on Twitter.

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