Verizon iPhone on track for March 2011 debut, says analyst

AT&T may pre-emptively slash iPhone prices on Black Friday to corral customers

Apple is on schedule to launch an iPhone capable of making calls on Verizon's network early next year, most likely in March 2011, a research analyst said today, citing sources among Asian parts suppliers.

"It's on track," said Brian Marshall, an analyst with Gleacher & Co. who watches Apple. Marshall had first pegged March as the launch for a Verizon iPhone five months ago.

"It won't be just for Verizon," Marshall added. "There are international carriers that use CDMA, like KDDI in Japan, so I expect that Apple will make a big global push, not only in the U.S."

CDMA (code division multiple access) is the mobile standard used by Verizon's network, and differs from the more widely-used GSM (global system for mobile communications) technology that drives AT&T's network. All carriers currently selling the iPhone base their networks on GSM.

Marshall was responding to questions prompted by a Wall Street Journal story last week that said Apple is manufacturing a CDMA-capable iPhone, and that Verizon would start selling the device early next year.

Rumors about an iPhone compatible with Verizon's network have been rampant for months, and pop up on a regular basis. The last time such speculation made news was in August, when reports surfaced that a long-time iPhone maker had opened a new factory, possibly to crank out CDMA iPhones in secret.

An iPhone on Verizon would mean big sales for Apple, said Marshall. "Apple will sell an additional 11.5 million units with Verizon," he said, referring to his 2011 sales and earnings models. "[Sales at] AT&T would go down only a couple million, but Verizon would sell at least 11.5 million in 2011."

Apple sold 17.2 million iPhones worldwide in the first half of 2010.

Marshall hasn't put a number on global sales of a CDMA iPhone next year, but said that the total upside for Apple would be "pretty tremendous."

Previously, Marshall had also heard from other sources that a Verizon-Apple partnership would start some time before next year, with Verizon selling Apple's Wi-Fi iPad . Those sources told Marshall the iPad would go on sale at Verizon stores as early as Black Friday, referring tp the Friday following Thanksgiving Day in the U.S. Black Friday is the traditional kick-off for the Christmas shopping season, when retailers typically slash prices and offer loss leaders to get consumers into their stores. This year Black Friday is Nov. 25.

Today, Apple announced that iPads would go on sale at 2,000 Verizon stores starting Oct. 28 . The Verizon iPads will be sold in combination with MiFi mobile hotspots.

Verizon can sell the Wi-Fi iPad because that version of Apple's tablet doesn't require a mobile service plan. In the U.S., AT&T is the only carrier that now offers iPad data plans for the current CDMA-based 3G model.

Black Friday will also mean sales at AT&T, said Marshall, if his sources have the story straight. "AT&T will discount the iPhone on Black Friday by as much as $100 in an attempt to collect more subscribers before next quarter," he said.

Consumers must agree to a two-year contract with AT&T when they purchase an iPhone at the subsidized prices of $199 and $299. Last June, AT&T doubled its early termination fee to $350 , triggering speculation that the increase was a way for the carrier to lock in customers before it lost its iPhone exclusivity.

Apple usually runs special prices on Black Friday for the Mac and iPod lines, but it has never discounted the iPhone.

Apple faces increased competition from smartphones running Google's Android operating system, one reason why many Wall Street and industry analysts have assumed that AT&T will soon lose its exclusive deal.

According to the most recent data from Nielsen, Android-based phones accounted for 19% of the U.S. market, more than double January's share . Recent purchasers leaned even more toward Android, with 32% of them having picked a Google-powered phone. The iPhone's share of recent purchases fell to 26% from January's 32%, said Nielsen.

Last week, Lowell McAdam, Verizon's president, acknowledged the renewed iPhone talk , but declined to comment. "This is one of those things that rolls out every few weeks whether there's a basis for it or not," McAdam said during a news conference when asked his thoughts about the Wall Street Journal story.

"What I've always said is I expect at some point in time our business interests are going to align," McAdam said, referring to Apple. "But I don't have anything to say today about timing."

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer or subscribe to Gregg's RSS feed . His e-mail address is gkeizer@computerworld.com .

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