Note to iPhone Junkies: Apps Will Work Fine on Verizon Network

The scads of apps available for Apple's iPhone are expected to work as well on Verizon's CDMA network as on AT&T's GSM network.
The scads of apps available for Apple's iPhone are expected to work as well on Verizon's CDMA network as on AT&T's GSM network.

With talk of Apple hooking up with wireless provider Verizon (VZ), consumers addicted to their iPhone applications need not worry about disruption in the ever growing ecosystem of iPhone developers. The scads of iPhone apps available at the Apple (AAPL) App Store will work just as well with the CDMA network used by Verizon and other carriers as they do with the GSM network used by AT&T (T), the iPhone's exclusive service provider, say analysts.

In other words, no disconnection here.

"As long as the applications are compatible with the Apple OS [operating system], it should be okay," says Vijay Rakesh, an analyst with ThinkEquity. He adds that while there may be trouble with Apple's operating system and the CDMA semiconductor chips, it's a problem for Apple to resolve with the chip maker and will appear seamless to application developers.

Apple stands to substantially increase its iPhone market by selling to Verizon's 91 million subscribers who are on its CDMA network. Currently, Apple has been under an exclusive agreement with AT&T to be the carrier for its iPhone since it launched in 2007. However, AT&T could be at risk of losing its special arrangement with Apple when its contract expires in June, Rakesh notes.

A Question of When, Not If

Many industry observers have long expected an expansion into the CDMA market by Apple's iPhone.

"CDMA has been speculated for sometime now, so it was not a question of if it would happen but when," says Deepak Sitaraman, an analyst with Credit Suisse. "The iPhone market was already attractive to developers and this will drive it up even further."

In a February Credit Suisse report, Apple had 150,000 iPhone-iPod Touch applications and a total of over 3 billion downloads. The report noted that Apple's iPhone footprint is expected to reach 39.1 million units in 2010, up 56% from 2009.

Not all software developers, however, are eager to jump on the iPhone gravy train should Apple capture an even larger audience if it signs with Verizon and its CDMA network. Apple now offers developers 70% of the revenues from applications they sell through its App Store.

Developers Don't Foresee Much Change

"I can't say that Verizon would change things for us," says Paul Kafasis, CEO of Rogue Amoeba, in an email interview. "The iPhone is already an enormous market, with tens of millions of devices out there. The size of the market really doesn't help overcome the serious issues we have with the App Store itself. The App Store would still be just as locked down as before."

Rogue Amoeba and other developers have reportedly grown frustrated with the approval process for getting their applications on the App Store.

Apple representatives did not immediately return emails seeking comment.