Munster: Apple made two big mistakes when it launched the iPhone

December 7, 2010, 3:40 PM UTC

No, they weren’t the sealed battery and the lack of Adobe Flash support

Apple Store, Regent Street, London. Photo: Engadget

“We believe that Apple has made two meaningful errors since its entrance into the iPhone business in 2007.”

That’s how Piper Jaffray’s Gene Munster begins the answer to his own question — “(When) will Apple launch the iPhone on Verizon?” — one of 12 “unanswered questions” he asks himself in a note to clients issued early Tuesday.

And what were those errors? In his words:

  1. The company did not originally subsidize the iPhone, but it quickly corrected this error by offering the original iPhone at a lower price shortly after its release, and offering the iPhone 3G at a subsidized price one year after the original iPhone launched
  2. We also believe that Apple’s exclusive agreement with AT&T has limited demand for the device. We expect Apple to correct this issue by the end of [the first half of 2011] and add Verizon to the list of carriers that sell the iPhone in the US.

Munster points out that the U.S. is the only remaining country of the 89 countries in which the iPhone is sold that involves an exclusive agreement. (Some countries, such as China, have only one carrier, but those deals are not exclusive.)

According to Munster, the fact that only AT&T (T) carries the iPhone — and Verizon (VZ) still doesn’t — is the only reason Google (GOOG) Android phones are outselling iPhones in the U.S:

Click to enlarge. Source: PJC

“As an example, in countries where the iPhone is available on multiple carriers and competes with Android, we see the iPhone outselling Android. The greatest factor in the success of Android has been Verizon. Customers are loyal to their carrier, and once Verizon gets the iPhone, we believe Android’s success in the US will be tested.”

The remainder of Munster’s 11 questions involve various aspects of Apple’s (AAPL) business, from its plans to expand its Cupertino headquarters to the impact of iPad sales on Apple’s gross margin. If you want to know more about any of his answers, you only need to ask.

[Follow Philip Elmer-DeWitt on Twitter @philiped]