Apple will begin mass production of the Verizon iPhone by the end of the year, with the carrier actually getting the device in the first quarter of next year, The Wall Street Journal, quoting people briefed by Apple, reported Wednesday. The new iPhone would be similar to the iPhone 4 available on AT&T, but would use a Qualcomm chip that would play a key role in connecting to Verizon's wireless technology, called CDMA.
Apple refuses to comment on future product plans, but if the report ends up being true, than it would usher in big changes in the U.S. market. For starters, the iPhone would be available on the largest wireless network in the U.S., in addition to the second largest, AT&T. Verizon has 92.8 million U.S. subscribers.
The iPhone device gets high ratings among users, but studies have shown that the major complaint with it has been the slowness of the AT&T network, which has had performance problems, particularly in major cities such as San Francisco and New York.
"There's a gold mine at Verizon," Ken Dulaney, analyst for Gartner said of what awaits Apple. "This is easy money."
For AT&T, which has had the luxury of serving iPhone fans with no carrier choices, the challenge would become convincing its customers that its network performs as well as Verizon's and there no reason for them to switch, Dulaney said. Adding to the challenge will be Verizon's rollout of its next generation high-speed network technology, called long-term evolution (LTE), which is expected to start this year. AT&T is also expected to roll out LTE, but not as soon as Verizon.
Beyond AT&T, the iPhone being available on two major networks could take some sales away from Research In Motion's BlackBerry and even smartphones based on Google's Android operating system, which represents the fastest growing segment of the smartphone market.
While there's no bigger potential market in the United States for Apple than Verizon, the carrier also would benefit by adding to its pool of potential customers millions of iPhone users who weren't interested in the other phones Verizon offered, particularly the BlackBerry and Android.
"The loyalty was to the iPhone (not AT&T)," Dulaney said.
Credit Suisse predicts that 1.4 million iPhone users would leave AT&T for Verizon, if the latter gets the smartphone early next year. However, the rate of that exodus would likely depend on the amount of time subscribers have left on the two-year service contracts they signed to get the iPhone at a subsidized price.