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

Posted:
in iPhone edited January 2014
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.
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Comments

  • Reply 1 of 53
    All I can say is it will be one effin crazy day when they go on sale for VZ.
  • Reply 2 of 53
    timuscatimusca Posts: 120member
    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.
  • Reply 3 of 53
    povilaspovilas Posts: 473member
    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.
  • Reply 4 of 53
    jmmxjmmx Posts: 341member
    Are components really that much more expensive?
  • Reply 5 of 53
    Quote:
    Originally Posted by Povilas View Post


    Or not.



    Or yes. What are you thinking? shits going to sell millions.
  • Reply 6 of 53
    bsenkabsenka Posts: 799member
    I'd gladly pay more for a CDMA iPhone.
  • Reply 7 of 53
    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 $200 for an iPhone (which probably costs them around 7-800$).
  • Reply 8 of 53
    djmikeodjmikeo Posts: 178member
    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.
  • Reply 9 of 53
    ...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.
  • Reply 10 of 53
    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.
  • Reply 11 of 53
    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).
  • Reply 12 of 53
    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.
  • Reply 13 of 53
    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 they?ll find a marketing scheme.
  • Reply 14 of 53
    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.
  • Reply 15 of 53
    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.
  • Reply 16 of 53
    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".
  • Reply 17 of 53
    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. \
  • Reply 18 of 53
    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?
  • Reply 19 of 53
    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.
  • Reply 20 of 53
    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.
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