LTE iPhone unlikely this year, says analyst

Cost, space sacrifices too much for Apple to swallow; look for 4G iPhone in '12, iSuppli says

Apple could launch an iPhone this year that works on faster 4G wireless networks, but it would have to make financial and design sacrifices to do so, a research firm said today.

More likely, Apple will wait until 2012 to add support for long-term evolution (LTE) networks such as the ones operated by Verizon and being slowly rolled out by AT&T , said Tina Teng, a senior analyst with IHS iSuppli.

To create an iPhone that can access LTE networks this year, Apple would essentially have to take the same path as HTC and its Android-powered Thunderbolt , said Teng.

"Based on our teardown [of the Thunderbolt], if Apple is really going to release an LTE iPhone this fall, this is the implementation it would use," said Teng.

But the Thunderbolt sports the highest bill-of-materials, or BOM, of any smartphone iSuppli has torn apart --$262, closing in on the cost of a tablet -- and is significantly larger and heavier than the iPhone.

Both would be big stumbling blocks for Apple.

According to iSuppli, if Apple used the same first-generation LTE components inside the Thunderbolt for a 2011 smartphone, the device's BOM would jump by 23% to $211 because of the extra $40 necessary to cover the costs of the LTE components.

With Apple's fondness for high profit margins, that seems unlikely.

But even more important than the additional cost, said Teng, was the fact that supporting LTE now would force Apple to boost the size and heft of the iPhone, moves that would be completely counter to its past practice of delivering as small and as thin a smartphone as possible.

The extra components for LTE would include not just the baseband processor, but also the supporting chipsets, such as those that regulate power. Teng's point was that Apple would find it impossible to pack the additional chips on the iPhone's current circuit board, requiring it to increase the physical footprint of the phone, as well as its weight.

HTC's Thunderbolt, for example, tips the scales at 6.23 oz., or 30% more than the iPhone 4's 4.8 oz., and is taller, wider and thicker than the iPhone 4.

While the iPhone 4 is just 0.37-in. thick, the Thunderbolt is, at 0.56-in., 51% thicker. In fact, the Thunderbolt is 22% thicker than Apple's first-generation iPhone from 2007.

Although Apple would be able to use a Thunderbolt-esque approach to building an LTE iPhone this year -- bundling a Qualcomm LTE chipset with separate chipsets to handle the two prominent 3G standards for an all-in-one smartphone -- comments by Apple executives led iSuppli to bet otherwise.

"The first generation of LTE chipsets force a lot of design compromises with the handset, and some of those, we are just not willing to make," Tim Cook, Apple's chief operating officer, said during an earnings call with analysts last April.

Cook's declaration, along with the compromises Apple would have to make, pushed iSuppli's analysts to conclude that an LTE iPhone was a no-go for 2011. "Our assumption is that Apple will wait until 2012," said Teng.

By then, said Teng, Qualcomm should have its next-generation LTE chipset available to OEMs.

Qualcomm's current chipset, the SnapDragon MSM8960 -- not ready when HTC started planning the Thunderbolt -- combines LTE and 3G baseband processors and a dual-core application processor into a single system on a chip (SoC). But Apple already has its own application processor, dubbed the A5, that it uses in the iPhone as well as the iPad.

Apple will want a Qualcomm combined baseband processor, but not the SnapDragon's application processor.

"Another scenario is that Qualcomm will strip out the app processor and provide a solution with just the modem components," said Teng. "Qualcomm might have this modem product next year because it makes sense, it gives OEMs more flexibility and it would save some costs for companies like Apple."

There's nothing preventing Apple from using the SnapDragon MSM8960 now, then simply disabling the redundant application processor in favor of its own A5, Teng pointed out. But that, too, would bring up cost-and-space problem.

"It's going to be interesting to see how Apple sources its components," noted Teng. "We saw the trend toward more bulky with the Thunderbolt, so is Apple going to continue innovating -- make the next iPhone thinner than the current iPhone 4 -- or will it just benchmark the iPhone against the current generation of competitors?"

She's betting on the former.

Apple will launch its next iPhone in the third quarter, probably in September , other analysts have predicted.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer or subscribe to Gregg's RSS feed . His e-mail address is .

Read more about smartphones in Computerworld's Smartphones Topic Center.

Copyright © 2011 IDG Communications, Inc.

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