Update: Analysts predict higher prices for Verizon iPhone
Size of hike depends on whether the smartphone supports Verizon's LTE network
Computerworld - Analysts say Verizon may sell its long-anticipated iPhone at a higher price than customers are used to paying for Apple's iconic smartphone, but split on how much more one could cost.
Verizon is expected to announce Tuesday morning that it will soon start selling an iPhone that runs on its network.
On Monday, analysts couldn't agree on whether the announcement will be accompanied by a price hike.
"I wouldn't be surprised if the iPhone [on Verizon] doesn't cost $50 more," said Brian Marshall, an analyst with Gleacher & Co., referring to the $199 entry-level price that U.S. customers now pay for a subsidized iPhone 4.
But Francis Sideco, a principal analyst in the wireless group at iSuppli, an El Segundo, Calif.-based research firm that specializes in calculating hardware "bill of materials" (BOM) costs, disagreed with Marshall.
"I don't perceive any material differences in BOM, IP [intellectual property] costs, or the retail price of an iPhone on Verizon if it's a CDMA-only device," said Sideco, taking the side of the $199 argument.
Unlike other analysts, Marshall said that the iPhone for Verizon will support only CDMA (code division multiples access) -- the wireless standard across the carrier's network -- rather than function in both CDMA and the faster next-generation LTE (long term evolution) network that Verizon launched in 38 markets last month.
He attributed the higher price of a CDMA-only iPhone to a bigger patent licensing bill. "There's more patent expense with a CDMA iPhone," said Marshall, "particularly with all the Qualcomm patents."
Technology from San Diego, Calif.-based Qualcomm is the foundation of the CDMA standards that Verizon supports on its network.
Marshall said the customer price of a CDMA-only iPhone could be as high as $250. Additional patent licensing fees will raise Apple's costs by a "low single digit" amount, he claimed, but the end user hike would be higher.
Sideco dismissed the idea of a price increase, saying that Apple's already paying patent fees to Qualcomm. "There's no way that with the volume that the iPhone has put up, that Qualcomm would not have asserted their IP rights, even though we haven't heard of that publicly," said Sideco.
The current iPhone operates on W-CDMA (wideband code division multiples access) networks, which are typically marketed as UMTS (universal mobile telecommunications system). AT&T's 3G network, for instance, relies on W-CDMA/UMTS.
Qualcomm also has a large patent W-CDMA portfolio, Sideco noted.
Sideco would not bet on either option -- CDMA-only or dual mode -- because credible arguments could be made for both. His take: a 50-50 chance for each.
"A CDMA-only iPhone would go against Apple's mantra to be the premier producer of smartphones," Sideco point out. "LTE is the thing that people are talking about this year."
- As iPad sales slump, Cook hijacks analysts' fast-uptake explanation
- Android mobile ad traffic beats iOS for first time
- The iPad's expected ebb, and the search for why
- Apple customers downsize iPhone, iPad storage in March quarter
- Apple has bigger plans than just song ID with Shazam deal
- Automakers show off in-vehicle Wi-Fi, new smartphone interfaces
- First-to-market means diddly when it comes to smartwatches
- Apple slates WWDC for June 2-6, sets up ticket lottery
- Nadella to Cook on Office revenue sharing: Drop dead
- Microsoft scraps 'Windows-first' practice, puts Office on iPad before Surface
- Silicon Valley's 19 Coolest Places to Work
- Is Windows 8 Development Worth the Trouble?
- 8 Books Every IT Leader Should Read This Year
- 10 Hot Hadoop Startups to Watch
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- Logicalis eBook: SAP HANA: The Need for Speed Without timely business insights, organizations today can suffer logistical, manufacturing, and even financial disaster in a matter of minutes
- Neustar 2014 DDoS Attacks and Impact Report For the third consecutive year, Neustar surveyed hundreds of companies on distributed denial of service (DDoS) attacks. The survey reveals evidence that the...
- Acxiom Case Study This case study, which focuses on Acxiom, explores how the company was able to secure employee data, reduce migration costs and boost productivity...
- Windows® XP Migration: Protect and Secure Critical Data With the end of the Microsoft Windows XP operating system's lifecycle on April 8, 2014, businesses are faced with the decision to migrate...
- Top 4 Digital Signage Fails Join RMG Networks for a look at four of the most common reasons digital signage fails in corporate businesses. Learn about strategies to...
- Building Tomorrow's Infrastructure Listen to this podcast to discover how Crider Foods worked with PC Connection to update their IT infrastructure, while maintaining compliance and control. All Smartphones White Papers | Webcasts
Our new weekly Consumerization of IT newsletter covers a wide range of trends including BYOD, smartphones, tablets, MDM, cloud, social and what it all means for IT. Subscribe now and stay up to date!