When Will the iPhone Joyride End?

Apple (NAS: AAPL) is riding high on the iPhone right now. The high-definition screen and voice-controlled platform appeal to mobile consumers like none of the competing solutions can, and Cupertino is rolling in iPhone-powered profits.

But BTIG Research analyst Walter Piecyk sees the party ending very soon.

Piecyk just downgraded Apple to a "hold" even though he believes that second-quarter results will leave Wall Street's estimates eating dust later this month. He thinks it's time to "take a breather" on the market's largest stock because the long-term iPhone story is falling apart.

In short, Piecyk expects AT&T (NYS: T) and Verizon (NYS: VZ) to end their deep-discount subsidies on Apple products before long. "We expect those policies to change as the faster upgrade rate of smartphones compared to legacy feature phones has been a costly surprise," he says. Even Sprint Nextel (NYS: S) , which committed to a long-term iPhone relationship last year, will probably see sales dropping off to protect profit margins.

Should investors listen to Piecyk? Well, I do believe that he's on the right track, because the supersized subsidy model doesn't appear to be very sustainable.

At some point, Ma Bell and friends surely will push back against Apple's greedy share of iPhone profits, and that revolt will carve deep gashes into Cupertino's profit margins. This is one of the biggest reasons I hase a bearish CAPScall on Apple right now. Moreover, AT&T has already declared that its loyalties are shifting, with a huge marketing push for the Nokia (NYS: NOK) Lumia 900 over the Easter weekend. The $150 million budget for marketing that launch is bigger than anything Ma Bell has ever spent on promoting a new iPhone model.

On the other hand, Piecyk's track record on Apple isn't exactly stellar. He has predicted the end of big iPhone sales at AT&T before, and hasn't been proved right yet. Sometimes, Piecyk's research methods look downright biased. And putting a deadline on unpredictable trends like shifting consumer preferences and wireless carrier strategies is iffy at best.

So I agree with Piecyk's conclusions but disagree on the timing. My thumbs-down call is there for the long run and designed to capture Apple's fall from grace whether it happens in 2012 or 2015. Market timing is a sucker's game.

Do you see Apple's partners tightening the subsidy belt this year, or next, or perhaps never ever? Share your thoughts in the comments box below.

At the time thisarticle was published Fool contributorAnders Bylundholds no position in any of the companies mentioned. Check outAnders' holdings and bio, or follow him onTwitterandGoogle+. The Motley Fool owns shares of Apple.Motley Fool newsletter serviceshave recommended buying shares of Nokia and Apple and creating a bull call spread position in Apple. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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