Verizon's iPhone: CDMA-only, or CDMA/LTE?

A dual mode Verizon iPhone offering would generate much customer interest, but analysts said it's not likely this week

Verizon Wireless is expected to announce Tuesday that it will be selling Apple's iPhone, but it remains unclear whether the smartphone will be CDMA-only, or will also support Verizon's evolving LTE network in dual mode.

A dual-mode CDMA/LTE phone would have a potential subscriber base of up to 15 million subscribers this year, more than double the five million to seven million potential users of a CDMA-only version, said Dan Hays, a consultant at PRTM.

Still, Hays thinks that Verizon tomorrow will announce an easier-to-implement CDMA-only iPhone that will ship in four to five weeks. That version would cost about $US200 to $250 with a two-year service contract, he predicted.

Verizon announced last week at CES that 10 different smartphones, tablets and other devices that will support LTE by mid-year. Hays, however, said that Verizon still will find that LTE chipsets are not yet widely available and that Apple would not want to risk any problems.

Verizon launched LTE networks in 38 markets in December, and said it expects to roll out the technology nationwide by the end of 2013. LTE supports 5 to 12 Mbit/sec on downloads, about 10 times the speed of what CDMA supports today.

PRTM expects that five million to seven million Verizon iPhones will be sold in 2011, less than the 13 million predicted by other firms because CDMA will impose limits on multi-tasking and global roaming and customers won't want to break existing contracts, especially with other attractive options for Android and other phones in the Verizon line-up.

"Whether Verizon announces an LTE/CDMA iPhone is the million dollar question," Hays said in an interview with Computerworld. "They are being quite ambiguous about that, but from what I can tell so far it doesn't appear to be an LTE-capable device. Apple will jump onto LTE pretty quickly but so far. this device coming on Tuesday doesn't sound like it's LTE-capable, and I'm a bit disappointed."

Even so, a count of 5 million to 7 million would want a CDMA-only iPhone, partly because of concerns about AT&T's GSM-based network. (For three years, AT&T has held an exclusive on sales of the iPhone in the U.S.). Hays said high-end subscribers from other major carriers will switch to Verizon for this advantage.

Jack Gold, an analyst at J. Gold Associates, said he expects Verizon to announce a dual-mode iPhone for CDMA/LTE, even though most users will fall back to CDMA because the LTE network won't be complete for more than two years.

Gold also said that estimates of 15 million Verizon iPhone subscribers with CDMA is too high.

"But I am sure they will do very well with the iPhone and it will limit adoption of Android on Verizon to some extent," he said. If priced correctly, the new iPhone could dampen Android sales, he added.

Ken Dulaney, an analyst at Gartner, said that whatever direction Verizon and Apple take on the radio capability, "this [Verizon iPhone] is a big deal."

He predicted that many smartphone users who are frustrated with AT&T network service for iPhone will move over to Verizon, including many financial services workers in New York who have been especially critical of AT&T service there.

"There is money out there for this new iPhone on Verizon," Dulaney said.

"People find money under mattresses to buy lots of things they don't need right away," he added. "Just watch how many kids buy $500 Nike shoes when they come out. I have seen 5 million and 10 million estimates for [Verizon iPhone] sales. The number is probably somewhere in the middle. But who cares? The iPhone on Verizon is going to be a big success and for a while many new and re-enlisting users will buy the iPhone and not a BlackBerry or Android device."

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Tags telecommunicationMobile and WirelessNetworkingwirelesssmartphonesPhonesHaysmobileVerizon Wirelesswireless networkingAppleconsumer electronics

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