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iPhone May Go to Verizon - but T-Mobile and Sprint May Not Be Far Behind

By Sidney Hill MacNewsWorld ECT News Network
Aug 10, 2010 10:02 AM PT

A new round of speculation about when -- and to whom -- Apple will award the next iPhone distribution deal kicked off Monday. This particular guessing game was fueled by reports that Apple has placed an order with Qualcomm calling for "millions" of CDMA chipsets to be delivered in December.

iPhone May Go to Verizon - but T-Mobile and Sprint May Not Be Far Behind

The implication is that those chips would go into iPhones to be distributed by Verizon, which operates a CDMA network, possibly as early as January 2011. That would make Verizon the second carrier to gain rights to distribute the iPhone in the U.S. Currently, AT&T is the exclusive supplier of iPhones in the U.S., a position it has held since the popular device's 2007 unveiling.

First to report news of the Qualcomm order and make the connection to a Verizon iPhone launch was the website TechCrunch, citing sources with "knowledge of this entire situation."

While there appears to be sound logic supporting this theory, it may only be partially right.

The iPhone in China?

"Over time, it's likely that we will see the iPhone on other carriers than AT&T," said Michael Gartenberg, a partner with Altimeter Group, "but given that carriers are phasing out CDMA technology, it's unlikely to see an iPhone being offered by carriers dependent on that technology in the short term. It would make more sense for Apple to get the iPhone to carriers that use similar technology to AT&T, which would be easier to deploy."

That line of reasoning helped spark rumors just a few weeks ago that T-Mobile -- which like AT&T operates a GSM network -- would be would be next in line to offer the iPhone.

"We have been saying for a while that early 2011 is a logical timeframe for another carrier to launch the iPhone in the U.S.," Carolina Milanesi, research VP with Gartner, told MacNewsWorld, "but that doesn't necessarily mean it will be Verizon. There is a possibility of a CDMA iPhone for China. So the orders that people are speculating on might relate to that opportunity as well."

All Carriers Have a Chance

Ultimately, it may not matter which carrier gets the second crack at selling the iPhone in the U.S, Milanesi suggested, since Apple is likely to offer the device to all the major carriers before long. In the U.S., that would mean Verizon, T-Mobile and Sprint would join AT&T in offering the iPhone

"That would make a lot of sense, and it also would be in line with what we have seen in markets such as the UK, France and, more recently, Spain," Milanesi said. "When the exclusivity deal ends, the channel opens up to more than one carrier."

However it comes about, ending AT&T's run as the sole iPhone supplier will have a major impact on the U.S. mobile phone market.

"Obviously, it will help Apple acquire customers who are interested in the iPhone but have been reluctant to do business with AT&T," Gartenberg surmised.

Bad News for AT&T

AT&T has received numerous complaints from iPhone customers about the performance of its network, and that fact alone might cause iPhone users to welcome the chance to switch carriers.

"Bringing on additional carriers certainly will drive volume for Apple, as well as for the new carriers," Milanesi asserted. "I also would expect to see some customers leave AT&T in search of a better network experience."

One analyst has quantified the potential impact of Verizon getting the next iPhone distribution deal.

"If Verizon does start offering the iPhone in early 2011 -- as I have been predicting for months -- it will have a huge negative impact on AT&T and a very positive impact on Verizon," Brian Marshall, a senior analyst with Broadpoint AmTech, told MacNewsWorld.

If Verizon and AT&T are the only two iPhone suppliers, 12 million iPhones would be activated on the Verizon Network during calendar year 2011, Marshall predicted.

At the same time, he said, AT&T would see its number of iPhone activations drop from 12 million to roughly 2 million.

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