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CDMA components could drive price of Apple's Verizon iPhone up $20-$30

post #1 of 54
Thread Starter 
Verizon may charge between $20 and $30 more than AT&T for the subsidized Apple iPhone price, due to the higher cost of CDMA wireless components, according to J.P. Morgan.

Analyst Mark Moskowitz with J.P. Morgan believes the Verizon iPhone could carry a slightly higher price tag following its expected announcement on Tuesday. In order to be compatible with Verizon's network, the redesigned device must include an internal CDMA radio, which he said is a more expensive component than the UMTS technology found in the current AT&T-compatible iPhone.

"The key differentiator is the cost of CDMA-related components," Moskowitz wrote in a note to investors on Monday. "While the acquisition price of the iPhone could be slightly more expensive for subscribers on Verizon, we think that there will be offsets, specifically network performance."

AT&T's network has been viewed by some as an "Achilles' heel" for the iPhone, as the carrier's network has struggled at times thanks, in part, to the popularity of Apple's iPhone. In a survey of wireless subscribers last month, Consumer Reports found that AT&T was ranked the worst carrier in the U.S., while Verizon was the top-ranked among the "big four."

Moskowitz said it remains to be seen whether Verizon's network will be able to handle an influx of new iPhone customers. But if the carrier's network can withstand the crush of handsets, it will work to Verizon's advantage.

"If Verizon can avoid network performance issues during and after a potential iPhone roll-out, then we expect a multi-year growth spurt in U.S. iPhone sales," he wrote," as meaningful levels of AT&T iPhone subscribers could migrate to Verizon for improved performance."

Another factor he noted are rumors that Verizon will offer an unlimited data plan for iPhone customers. Earlier this year, before the iPhone 4 launched, AT&T halted new "unlimited" data plans, and new customers are capped at a maximum of 2GB of data per month.

Verizon is set to hold a media event on Tuesday morning in New York City, and multiple publications, including The Wall Street Journal, have reported that the event will be used to announce a CDMA iPhone 4. It has also been suggested that Apple Chief Executive Steve Jobs could appear at the Verizon-hosted event. AppleInsider will have full, live coverage of Verizon's announcement on Tuesday.
post #2 of 54
All I can say is it will be one effin crazy day when they go on sale for VZ.
post #3 of 54
No way this will happen... if true, Verizon will simply take a bigger hit on the subsidy. I'm sure they'd much rather lose an additional $20 on each phone than lose out on locking people into contracts.
post #4 of 54
Quote:
Originally Posted by LanPhantom View Post

All I can say is it will be one effin crazy day when they go on sale for VZ.

Or not.

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post #5 of 54
Are components really that much more expensive?
post #6 of 54
Quote:
Originally Posted by Povilas View Post

Or not.

Or yes. What are you thinking? shits going to sell millions.
post #7 of 54
I'd gladly pay more for a CDMA iPhone.
post #8 of 54
Quote:
Originally Posted by TimUSCA View Post

No way this will happen... if true, Verizon will simply take a bigger hit on the subsidy. I'm sure they'd much rather lose an additional $20 on each phone than lose out on locking people into contracts.

I agree with this comment. I mean, Verizon is handing out to Droid phones for $200. Assuming they give Motorola (or HTC, or whoever is making them now) 4-500 for each unit, they are still far better off receiving only $200 for an iPhone (which probably costs them around 7-800$).
post #9 of 54
Doing a little checking based on isuppli estimates, the cost for the current ATT iPhone4 radio made by inferion is $11.72. The cost for the cdma radio on a droid incredible, made by Qualcomm is $5. Both of these are cost estimates, but It seems like the CDMA chip is actually less expensive than the ATT iPhone4 chip. Even if it were more expensive, there is no way that it would be $20-30 more in costs. That would make it as expensive as the display or memory.
post #10 of 54
...I suspect that VZW will simply take it on the subsidy. They (more than most carriers) have a thousand ways of getting that money back with the customer remaining unaware, and will likely post the same prices for the phones.

Also add to the fact that Verizon has, for the past 3+ years, been chomping at the bit to get a piece of AT&T's iPhone growth at any cost.

I have a suspicion that JP Morgan may be trying to short some AAPL and/or VZW with this one.

Now the big thing I wonder about is if Verizon will be pimping/selling Android nearly as much once this happens... Heaven knows that if they do go with the iPhone as part of their line, they probably had to make some massive (and to them, likely painful) concessions to get the rights. This in turn means that they'd be keenly interested in seeing a big return on that, which would lead me to think that they'd likely start favoring the iPhone in their advertisements, with maybe an occasional Android and/or occasional WP7 product.
post #11 of 54
Quote:
Originally Posted by alectheking View Post

Or yes. What are you thinking? shits going to sell millions.

25% of the people surveyed stated they would be out there on day one. That turns out to be approx. 24 million people. Massive crazy day chock full of sellout stores.
post #12 of 54
Quote:
Originally Posted by bsenka View Post

I'd gladly pay more for a CDMA iPhone.


Pay more for slower speed and no concurrent data/voice? No way.

This is so unlike Apple....for the first time since I can remember, Apple is introducing a new version of a product that is slower and has less features than the current version. This is a step backwards. They should have built a T-Mobile compatible iPhone instead (GSM Network).
post #13 of 54
Quote:
Originally Posted by alectheking View Post

Or yes. What are you thinking? shits going to sell millions.

I'm with you on this one.

Maybe some people are thinking that Apple is just selling the iP4 on Verizon, whereas I'm betting it will be more to the tune of iP4.5... added features, different antenna, different glass construction etc.
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post #14 of 54
Apple will remain the biggest winner. VZ will capitalize with their Business accounts NOT so much with individual accounts.
I think VZ has an obligation to equally represent all their handsets (otherwise they may end up with lawsuits from Android, Microsoft, RIM, etc ). I am sure theyll find a marketing scheme.
post #15 of 54
Quote:
Originally Posted by island hermit View Post

I'm betting it will be more to the tune of iP4.5... added features, different antenna, different glass construction etc.

nope.
post #16 of 54
Verizon should do what took AT&T almost 4 years to do...put a lot of wi-fi hotspots in big cities. I know Verizon's network has different chacteristics than AT&T, but AT&T's dumbest mistake was to just sit back and blame the antenna provisioning process in San Fran and NY as the reasons people couldn't make calls.

I know that was and is a big problem, but I hope Verizon is smarter when it comes to creative ways to get data off their network, because there is simply no way its not going to be affected by all the people upgrading from feature phones to iPhones.

Time will tell.
post #17 of 54
Quote:
Originally Posted by crustyjusty View Post

Verizon should do what took AT&T almost 4 years to do...put a lot of wi-fi hotspots in big cities. I know Verizon's network has different chacteristics than AT&T, but AT&T's dumbest mistake was to just sit back and blame the antenna provisioning process in San Fran and NY as the reasons people couldn't make calls.

I know that was and is a big problem, but I hope Verizon is smarter when it comes to creative ways to get data off their network, because there is simply no way its not going to be affected by all the people upgrading from feature phones to iPhones.

Time will tell.

SF has local politicians delaying the construction of new towers (the NOT IN MY BACKYARD syndrome). Amazing....here is AT&T saying "take our billions....we will hire thousands of workers with high paying jobs".
post #18 of 54
Quote:
Originally Posted by crustyjusty View Post

Verizon should do what took AT&T almost 4 years to do...put a lot of wi-fi hotspots in big cities.

Why isn't offering a plan without any data at all an option? Probably the easiest way to lighten the load on the network. \

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post #19 of 54
Quote:
Originally Posted by noexpectations View Post

Pay more for slower speed and no concurrent data/voice? No way.

This is so unlike Apple....for the first time since I can remember, Apple is introducing a new version of a product that is slower and has less features than the current version. This is a step backwards. They should have built a T-Mobile compatible iPhone instead (GSM Network).

Uh huh. Ever heard of the 6th gen ipod nano?
post #20 of 54
Quote:
Originally Posted by sprockkets View Post

Uh huh. Ever heard of the 6th gen ipod nano?

True....Apple removed the camera. However, I think they redesigned the nano for a different 'market segment'.....smaller/portable.
post #21 of 54
Quote:
Originally Posted by noexpectations View Post

True....Apple removed the camera. However, I think they redesigned the nano for a different 'market segment'.....smaller/portable.

They removed video playback and the awesome wheel, just to make it smaller, at the same price.

Steve Jobs though knows you are going to love it.

Oh well, there is always ebay for my favorite gen, the 3rd.
post #22 of 54
Originally Posted by island hermit
I'm betting it will be more to the tune of iP4.5... added features, different antenna, different glass construction etc.


Quote:
Originally Posted by OllieWallieWhiskers View Post

nope.

... and you know this how?

Please elaborate (or shut up).
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post #23 of 54
Quote:
Originally Posted by noexpectations View Post

SF has local politicians delaying the construction of new towers (the NOT IN MY BACKYARD syndrome). Amazing....here is AT&T saying "take our billions....we will hire thousands of workers with high paying jobs".

I wish San Francisco would just secede from the United States and become a province of China.
post #24 of 54
Quote:
Originally Posted by TimUSCA View Post

No way this will happen... if true, Verizon will simply take a bigger hit on the subsidy. I'm sure they'd much rather lose an additional $20 on each phone than lose out on locking people into contracts.

Agreed.
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post #25 of 54
Quote:
Originally Posted by noexpectations View Post

Pay more for slower speed and no concurrent data/voice? No way.

Paying more to actually be able to get a signal and make calls without the connection being dropped all the time? Yes way.
post #26 of 54
Quote:
Originally Posted by bsenka View Post

Paying more to actually be able to get a signal and make calls without the connection being dropped all the time? Yes way.

+1.

I have a feeling the CDMA iPhone will still have concurrent data / voice. I feel this is one of the main reasons it took so long to get on Verizon, this is a feature Apple would demand imo.

 

 

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post #27 of 54
Quote:
Originally Posted by noexpectations View Post

Pay more for slower speed and no concurrent data/voice? No way.

This is so unlike Apple....for the first time since I can remember, Apple is introducing a new version of a product that is slower and has less features than the current version. This is a step backwards. They should have built a T-Mobile compatible iPhone instead (GSM Network).

I agree with you on that last part especially..and add that T-Mobile needs to be included. All Apple fans no matter their network provider should have the option to get the iphone from their present provider. IMHO it really sucks to not have the choice like we do with our home ISP's for our Mac's.
post #28 of 54
I understand that it may cost a little more for CDMA version. But since the AT&T exclusive with the iPhone was suposed to go through 2012, ( going by rumors of original contract with AT&T ), maybe part of the deal is VZW has to charge more than AT&T for the first year or until the original contract with AT&T is complete?
Speculative, I know. But so is VZW even getting the iPhone at this point.
a VZW meeting for 1.11.11 doesn't say 100% for sure vzw is even getting the phone.
post #29 of 54
Quote:
Originally Posted by TimUSCA View Post

No way this will happen... if true, Verizon will simply take a bigger hit on the subsidy. I'm sure they'd much rather lose an additional $20 on each phone than lose out on locking people into contracts.

I agree...I can't see Verizon losing the price point war with AT&T over 20-30 bucks....
Can you see the commercials now for AT&T...pay $199 for the iPhone 4 or pay $229 for iPhone on verizon? Marketing and perception is everything....
I think verizon will just eat the difference and gladly accept the new customer! :-)

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post #30 of 54
Quote:
Originally Posted by EnviroG View Post

I agree with you on that last part especially..and add that T-Mobile needs to be included. All Apple fans no matter their network provider should have the option to get the iphone from their present provider. IMHO it really sucks to not have the choice like we do with our home ISP's for our Mac's.

Another point to concider is if VZW gets a CDMA iPhone will Sprint get one as well?.
Sprint was strangley silent at the CES show. VZW and AT&T and T-Mobile had product announcements but not Sprint.... Just a thought....

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post #31 of 54
Quote:
Originally Posted by island hermit View Post

I'm with you on this one.

Maybe some people are thinking that Apple is just selling the iP4 on Verizon, whereas I'm betting it will be more to the tune of iP4.5... added features, different antenna, different glass construction etc.

Let go of the antenna will you. Even the Apple discussion boards have been absolutely quiet for months now. Nobody mentions it anymore because it wasn't an issue to begin with. Same goes for the glass. Only the wacked out OCD types care.
post #32 of 54
Quote:
Originally Posted by lkrupp View Post

Let go of the antenna will you. Even the Apple discussion boards have been absolutely quiet for months now. Nobody mentions it anymore because it wasn't an issue to begin with. Same goes for the glass. Only the wacked out OCD types care.

I don't give a rat's ass either... you might have noticed I said "different", not better... but then you wouldn't have anything to bitch about so that wouldn't be any fun would it...
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post #33 of 54
Quote:
Originally Posted by LanPhantom View Post

25% of the people surveyed stated they would be out there on day one. That turns out to be approx. 24 million people. Massive crazy day chock full of sellout stores.

Set down the crack pipe. There will be no where near 24 million people out on day one. No survey said that. You are misreading the survey and applying the results to the wrong numbers.
post #34 of 54
Quote:
Originally Posted by geekdad View Post

I agree...I can't see Verizon losing the price point war with AT&T over 20-30 bucks....
Can you see the commercials now for AT&T...pay $199 for the iPhone 4 or pay $229 for iPhone on verizon? Marketing and perception is everything....
I think verizon will just eat the difference and gladly accept the new customer! :-)

Over 24 months, $30 is only 1.11% of the total cost of ownership of an iPhone. I think Verizon will suck it up.
post #35 of 54
Quote:
Originally Posted by geekdad View Post

Another point to concider is if VZW gets a CDMA iPhone will Sprint get one as well?..

point to ponder, why not just unlock those puppies. Give it to all.

I have heard the Sprint is a slightly different flavor of CDMA, or different frequencies like with t-mobile. I have also heard that Apple is interested in workin with them due to picking wimax rather than using LTE.

Course the unlock thing is moot so long as CDMA has no changeable sim and t-mobile users only get edge coverage. Then again there was that talk of a software sim that supposedly got the European carriers in a panty wad. Maybe that is attempt to cure that issue. And then we are one step closer to switching when and to whom we wish

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post #36 of 54
Quote:
Originally Posted by jmmx View Post

Are components really that much more expensive?

Yes. Dont forget licensing.

Quote:
Originally Posted by addicted44 View Post

I agree with this comment. I mean, Verizon is handing out to Droid phones for $200. Assuming they give Motorola (or HTC, or whoever is making them now) 4-500 for each unit, they are still far better off receiving only $200 for an iPhone (which probably costs them around 7-800$).

But Moto was taking the profit margin hit to compete with the iPhone. Apple doesnt have to do that.

I can see this going both ways. I can see Apple wanting the same price point across the iPhone, but I also see them wanting to maximize profits. $30 per unit is a lot its not much for the customer to pay over 2 years. In other words, its not a deal breaker. Also, from the consumers PoV it would likely be seen as Verizons fault, not Apples that they had to charge a little more.

They may also see themselves as getting a more elite product, and in fact they are because there will be less CDMA iPhones sold than GSM iPhones and that will never change! That makes economy of scale work better for the GSM iPhone. That might even make the $20-$30 difference in components and licensing too low.

Then again, Apple has more Android competition in the Verizon camp. Again, there are too many variables to tell. Wed need to get run some numbers before we can make an educated guess one way or the other.
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post #37 of 54
Quote:
Originally Posted by charlituna View Post

point to ponder, why not just unlock those puppies. Give it to all.

I have heard the Sprint is a slightly different flavor of CDMA, or different frequencies like with t-mobile. I have also heard that Apple is interested in workin with them due to picking wimax rather than using LTE.

Course the unlock thing is moot so long as CDMA has no changeable sim and t-mobile users only get edge coverage. Then again there was that talk of a software sim that supposedly got the European carriers in a panty wad. Maybe that is attempt to cure that issue. And then we are one step closer to switching when and to whom we wish

Sprint and Verizon use the same frequencies, just that they are locked to their network. You are able to "activate" a new device online I believe with Verizon (or at least switch from one Verizon device to another without calling customer service or going into a store).
post #38 of 54
Quote:
Originally Posted by charlituna View Post

point to ponder, why not just unlock those puppies. Give it to all.

Even if the had all the right HW in them to release to all it doesnt make economical sense. Its better to control your product. Thats why all these vendor and carrier deals exist in the first place.

On top of that, it likely wouldnt increase sales. Sure, youd have a lot more potential customers but if your demand is already outstripping supply adding more demand wont increase your bottom line.
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post #39 of 54
Quote:
Originally Posted by noexpectations View Post

SF has local politicians delaying the construction of new towers (the NOT IN MY BACKYARD syndrome). Amazing....here is AT&T saying "take our billions....we will hire thousands of workers with high paying jobs".

Quote:
Originally Posted by msuberly View Post

I wish San Francisco would just secede from the United States and become a province of China.

I live in San Francisco and been there all my life. Not everyone living there is a hippie, liberal, whack-job. It's a great city that unfortunately at this particular point in time has been overrun by progressives that cater to those that contribute nothing whatsoever to this beautiful city.

I think everyone living in San Francisco that raises the NIMBY card, should be required to sign a form that forbids them from using their cell phone in San Francisco since they are using another tower that is in someone else's backyard. They are just a bunch of hypocrites in the worst way.

There is a big shakeup going on right now in SF. I am crossing my fingers that this will put SF back on course. Chris Daly is out (FINALLY), we still have a moderate interim-mayor and hope for a more of the same with the new mayor, we won the America's Cup bid and that means badly needed infrastructure improvements and jobs for years to come. It's an exciting time to be in SF.

That being said, AT&T reception for me in San Francisco has been great and I am everywhere in SF. I do know some deadspots and fortunately, I rarely venture there. I also travel internationally quite a bit and Verizon for me would kill the deal. I love how my AAPL is shining though!
post #40 of 54
Now why on earth would Apple allow that cost to be past onto customers? That doesn't sound like them...
...Except that measly $130 they expect people to pay for a 3G radio in the iPad...

And, Vz customers will pay anything at this point won't they?
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