Wednesday, January 12, 2011

Addition of Verizon could boost iPhone shipments in 2011

EL SEGUNDO, USA: The Verizon Wireless announcement today that it will offer the iPhone to its subscribers will sound the starting gun for worldwide shipments of the code division multiple access (CDMA) version of Apple Inc.’s smart phone, helping boost sales of the device by about 25 percent this year, according to new IHS iSuppli research.

IHS iSuppli forecasts Apple will ship 12.1 million CDMA iPhones through Verizon and other global CDMA wireless carriers in 2011. This will increase global iPhone shipments to 61.2 million units for the year, up 24.5 percent from the 49.1 million high-speed downlink packet access (HSPDA) and high-speed uplink packet access (HSUPA) phones offered by AT&T in the United States and other carriers worldwide.

The CDMA model will play a critical role in sustaining the growth of iPhone shipments this year, with total iPhone shipments expected to rise by 33.3 percent for 2011. Excluding CDMA, shipments would climb by only 7 percent.

The figure presents the IHS iSuppli forecast of the share of iPhone shipments by air standard. CDMA shipments include both Verizon and other carriers using the standard, namely Japan’s KDDI and China Telecom.Source: IHS iSuppli, USA.

“The arrival of a CDMA version and the addition of Verizon as a carrier will significantly boost the available market for Apple’s iPhone,” said Tina Teng, senior analyst, wireless communications, for IHS. “Potential and current iPhone subscribers in the United States long have been clamoring for an alternative to AT&T.”

Rumors have circulated since mid-2009 that Apple would end its exclusive US iPhone service deal and begin to offer phones that work with the Verizon network. However, confirming the IHS iSuppli research outlook from September 2009, Apple maintained its deal with AT&T even after the expiration of their contract in June 2010 and continued the exclusive relationship into 2011.

Further, IHS iSuppli research in September 2009 indicated that Verizon might offer another Apple product, rather than the iPhone, such as a tablet. This also came true in 2010, when Verizon began selling the iPad.

Despite the addition of CDMA technology, the Verizon iPhone is not expected to be more costly to make or expensive for the consumer than the existing model now sold by AT&T. Given the current iPhone volumes, the expectation is that Apple either already has an intellectual property (IP) license from Qualcomm or is using its original design manufacturer’s license to cover its current wideband code division multiple (WCDMA)-based model.

The addition of a CDMA version does not require any material changes to this arrangement so its royalty or semiconductor costs are not likely to increase, according to Francis Sideco, principal analyst, wireless communications, for IHS. IHS iSuppli Teardown Analysis research in June, 2010 estimated the iPhone 4’s bill of materials (BOM) at $187.51—a total that has significantly declined in subsequent months.

CDMA iPhone shipments are expected to rise following their debut this year. Shipments will increase to 16.5 million units in 2012, and to 20.3 million in 2013. Shipments then will decline to 18.2 million in 2014, because of the increasing availability of versions of the iPhone with newer air interface standards.

IHS iSuppli research shows Apple to offer an iPhone compatible with the long-term evolution (LTE) 4G standard in 2012, which will allow the handset to take advantage of fast 4G networks. It is expected that both AT&T and Verizon to offer the phones, helping shipments to increase rapidly, amounting to 1.8 million units in 2012, rising to 11.1 million in 2013 and then expanding to 24.2 million in 2014.

The availability of iPhones with a variety of air standards from a number of carriers in the United States and elsewhere will contribute to the continued expansion of global sales. Sales will soar to 98.4 million units in 2014, up from 46 million in 2010.

Source: IHS iSuppli, USA.

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