Apple's iPhone 5 will make its debut next week and analysts are busy handicapping whether Verizon Wireless will get the demand pop that never quite came with the iPhone 4.
Piper Jaffray analyst Gene Munster expects a thinner iPhone 5 to debut with a larger screen. The iPhone 4 will become the $99 special. He doesn't expect a low-end iPhone to make a debut.
If those moves happen, Verizon will finally get two flavors of iPhone in its arsenal. At the beginning of the year, Verizon expected a much larger pop from the iPhone, but a delay of the iPhone 5 sunk its plans. Meanwhile, AT&T had a lock on a $49 iPhone 3GS, a device that was used to fend off Verizon handily.
Here's a look at the last two quarters:
- AT&T activated 3.6 million iPhones in the second quarter.
- Verizon activated 2.3 million iPhones in the same quarter.
- In the first quarter, AT&T also activated 3.6 million iPhones.
- Verizon activated 2.2 million in the first quarter.
Munster seems to indicate that the dynamics are about to change. He said:
Because the iPhone 4 had been available on other carriers for over 6 months when it launched at Verizon in Feb-11, we believe many Verizon subs have been waiting for the next iPhone. We conducted a small survey of 216 mobile phone users in early Aug-11. Of those Verizon subs who do not have an iPhone but plan to buy an iPhone next, 74% are specifically waiting for the iPhone 5. At AT&T, that same metric is 53%. This pent up demand for the next iPhone at Verizon may drive numbers higher than the 4.4m units we are modeling Apple to sell through Verizon in the Dec. quarter. And our overall iPhone unit estimate of 25.0m in the Dec. quarter may prove to be conservative.
There are wild cards to ponder. For starters, it's unclear whether LTE capability will matter. Will Verizon users want an LTE iPhone? Will iPhone 4 at $99 drive more upgrades than a $199 iPhone 5? And how does Sprint's iPhone affect the equation for Verizon.
In any case, Verizon, AT&T and Sprint will drive a lot of volume. Barclays Capital analyst Ben Reitzes said:
The supply chain seems to be preparing for a strong refresh cycle as our checks indicate that the supply chain is producing well over 30 million iPhone units for C4Q11 – backing our estimate for 30.8 million units. We are upbeat about the next iPhone but we wouldn’t be surprised if we saw the iPhone 4 remain in the line-up at lower price points to fend off the competition. We believe that the potential new model in 2011 will feature a faster processor, an upgraded 8MP camera and be optimized for use with the new iOS 5. New voice recognition software could be a potentially attractive new feature.