Report: Apple readies smaller iPhone on Verizon

New iPhone would have smaller screen; Use of hybrid chip would resolve network compatibility issues

Apple Inc. will launch a smaller "worldmode" iPhone next year that will be ready for Verizon Wireless to sell in the third quarter of 2010, according to an analyst report citing unnamed handset maker sources in Taiwan.

The new iPhone will use a hybrid chip from Qualcomm Inc. making it compatible with GSM/UMTS 3G networks (including AT&T, exclusive iPhone carrier in the U.S.), as well as CDMA2000 networks, such as Verizon's in the U.S. , according to a report from OTR Global, which is quoted by Apple Insider .

OTR's unnamed sources said that Asustek subsidiary Pegatron will build the devices for Apple, instead of Hon Hai, the current iPhone device maker.

An official at OTR reached today said he could not comment on the OTR report saying it was "proprietary for clients." Apple could not be reached immediately for comment and a Verizon spokeswoman said the company doesn't comment on rumor or speculation.

The global iPhone would also have a 2.8-inch diagonal screen, smaller than the current iPhone's 3.5-inch display, according to the report.

While many iPhone users have expressed interest in moving to Verizon's network instead of facing network problems with AT&T, the technology has so far not enabled it.

Verizon on Friday released its Droid smartphone by Motorola Inc., as one of its premiere smartphones going forward. It also released the BlackBerry Storm 2 last month.

The OTR report says that Verizon and Apple have hammered out an agreement to sell the new iPhone model next year, according to Apple Insider.

Some analysts had said that Verizon would not offer an iPhone until another faster network technology, LTE, was put firmly in place. LTE rollouts will begin next year on Verizon, but will not be fully in place until 2012.

An analyst at Broadpoint AmTech, among others, recently said Apple will probably drop its AT&T exclusivity deal next year.

The worldmode hybrid, using Qualcomm technology, will allow Apple to sell iPhones to AT&T and Verizon in the U.S., as well as other carriers globally, according to the Apple Insider report.

Gartner Inc. analyst Ken Dulaney said if the report about a worldmode iPhone turns out to be true, "then it's a smart move for both Verizon and Apple." Gartner has commented previously that "there is no better way for Apple to make a lot of money in a short of time than to sell an iPhone at Verizon."

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