Should Verizon Customers Hold Out for the Apple iPhone 5?
Verizon Wireless (VZ) can expect to see its sales surge his year now that it finally has its hands on the Apple iPhone, analysts say. They predict the largest U.S. carrier will see a large boost in February, when Verizon Wireless launches the iPhone 4. But Verizon could see another boost in July if Apple launches its next-generation iPhone, says Ross Rubin, executive director of industry analysis for research firm NPD Group.
Historically, Apple (AAPL) has introduced new versions of its popular iPhone in June, with July typically marking the largest month for sales, according to Rubin, whose research firm tracks monthly iPhone sales. July tends to mark the largest monthly sales month because folks living on two-year iPhone renewal contracts got their start back in June 2007, when the first iPhone came out.
"February will probably have a bigger bump in sales, because there will be more competition on the Verizon network in July when all the [Long Term Evolution] handsets that were announced at [the Consumer Electronics Show] will be available," Rubin says. Verizon's 4G LTE network is designed to run at a blazing-fast speed, which could potentially give Apple's iPhone 5 a run for its money.
Will Customers Wait for the iPhone 5?
Folks who are weighing whether to buy an iPhone 4 or to wait for an iPhone 5 are likely to make the decision based on when their current contract expires -- and whether they have a family plan that allows all family members to switch contracts at the same time, according to Deutsche Bank analyst Jonathan Goldberg. Such timing and contractual issues will likely be a bigger decision point than the phones' features, he says.
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But what features are we talking about? A number of industry-watchers predict that any upcoming Verizon iPhone 5 will likely include global phone capabilities via the addition of a Global System for Mobile Communications (GSM) chipset.
Roughly 70% of carrier networks overseas use GSM. And although Apple makes a GSM-only iPhone for AT&T (T), it didn't include the technology in its iPhone 4 for Verizon. Instead, the Verizon iPhone uses a Code Division Multiple Access (CDMA) chipset, which runs on Verizon's older CDMA network.
"Some people may wait for a bigger and better deal with the iPhone 5, but the iPhone 4 is here and now," Goldberg says. "The average consumer doesn't pay attention to tech blogs or product road maps to even know an iPhone 5 is coming."
That may be too bad for consumers, because once they sign a two-year contract with Verizon or rival AT&T, they'll be locked in -- unless they're willing to pay a penalty fee to break their contract or pay the full price for a new phone without any rebate help from their carrier. A Verizon Wireless spokeswoman notes that upgrades are allowed only if a customer's contract has expired.
"No Inkling" of What's Coming
But not much is yet known about the features for Apple's next iPhone, Rubin says, and consumers would be foolish to hold out for the unknown.
"At this point, there is no inkling of what the next iPhone will bring," Rubin says. "In the spring, Apple usually gives us the next version of its iOS [mobile operating system], and that may give us an inkling then. But I can't imagine someone holding off a purchase without knowing anything except for some notion it will be better."
Apple may be considering adding LTE capabilities to the Verizon iPhones, for example, but Rubin doesn't expect that to occur for at least a couple of years. He thinks Apple will wait for LTE chipsets to mature and for Verizon's LTE network to expand.
In a recent report, Forrester Research analyst Charles Golvin wrote that Verizon could win big if it convinces Apple to add LTE capabilities to the iPhone.
"[LTE] is the future '4G' technology path for both Verizon and AT&T," Golvin wrote. "Verizon's LTE network is live today for roughly 100 million Americans, delivering jaw-dropping, if scantly utilized, speeds; AT&T will not launch until later this year. If Verizon can convince Apple to accelerate its incorporation of LTE, the carrier will be able to deliver a significantly accelerated iPhone experience to more customers than its competitor when the product launches -- and attract a significant number of the first wave of buyers, including the Apple acolytes."
That's just what Verizon love would to see.
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