Daniel Eran Dilger
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Report: Apple to launch Verizon iPhone in Q3 2010

worldmode iPhone

Prince McLean, AppleInsider

A new report citing sources in the Taiwan handset supply chain says Apple has contracted to produce a UMTS/CDMA hybrid iPhone due in the third quarter of next year that will enable the company to sell a single global handset to all carriers, and specifically to Verizon Wireless in the US.

Report: Apple to launch Verizon iPhone in Q3 2010
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The report by OTR Global, provided to AppleInsider by an industry analyst, says the new “worldmode” iPhone will gain compatibility with CDMA2000 networks (including Verizon’s US network, which is currently incompatible with existing iPhone models) while retaining compatibility with UMTS 3G networks globally using a new hybrid chip produced by Qualcomm.

According to OTR’s sources, Asustek subsidiary Pegatron will build the new hybrid phone devices for Apple rather than Hon Hai, the iPhone’s current manufacturer. This decision was reportedly made to prevent the company from being “constrained by a single-source assembler.”

A smaller body

The research note also identified the new phone as having a 2.8“ screen, which is significantly smaller than the current iPhone’s 3.5” display.

Last summer, component pictures indicating the development of a smaller 2.8“ iPhone model appeared on the web next to the standard 3.5” parts currently in production, and a Chinese-language newspaper reported that an upcoming model of the iPhone would be smaller and lighter.

Without any mention of both larger and smaller versions in OTR’s report, it appears but has not yet been confirmed that next year’s iPhone will scale down in size while also gaining compatibility with all major mobile networks.

CDMA vs. WCDMA

The American technological rift between CDMA providers (including Sprint and Verizon) and GSM/UMTS providers (T-Moblie and AT&T) was widely expected to remain in place until Verizon moved to LTE, the next generation of UMTS service.

In other countries, CDMA providers have either shut down their networks and moved entirely to UMTS service (as Telstra did in Australia) or added a UMTS overlay to their existing CDMA service (as Bell and Telus just recently did in Canada). In the US, Verizon decided to do neither, and instead will only be investing in a new next generation LTE network that won’t be completed for years.

This appeared to leave little opportunity for a Verizon iPhone before 2011, but Qualcomm’s “worldmode” hybrid component enables Apple to continue offering a single iPhone version that can be sold by both AT&T and Verizon in the US, and on virtually every carrier outside the US.

UMTS is the 3G service associated with GSM providers, but it uses radio carrier technology (Wideband Code Division Multiple Access) similar to but incompatible with Qualcomm’s CDMA2000/EVDO used by Verizon. Despite the technical similarities, CDMA2000 and UMTS/WCDMA are competing, non-interoperable 3G technologies. With nearly all mobile carriers having announced plans to shift to UMTS or LTE in the future, CDMA2000 represents a dead end.

It still remains widely deployed in various markets however, including the US, where Verizon’s CDMA2000 3G network is widely regarded as having wider reach and providing better data service than AT&T’s newer UMTS 3G network. AT&T’s 3G service is rated particularly poorly in San Francisco and New York City, where coverage holes have been exacerbated by a huge influx of data-hungry iPhone users. AT&T has yet to introduce its 3G MicroCell to enable users to solve their own dead zones at home or work.

Qualcomm’s new hybrid CDMA/WCDMA chip offers the potential for a single, global iPhone that users can take to any major carrier, solving the network fractionalization problem. It also solves other issues that had served as roadblocks, including the issue of user confusion that would result from Apple selling separate CDMA and GSM/UMTS versions of the iPhone.

With one phone that works on both types of networks, any differences between the two (such as in features like conference calling and simultaneous voice and data, unique to UMTS) will be more apparently tied to the provider’s network rather than to an iPhone model itself.

worldmode iPhone

Verizon’s DROID, cancelation fee launch

Verizon’s merciless attacks on AT&T’s 3G network coverage in ads spoofing the iPhone’s “there’s an app for that” slogan were another factor which left some observers to think that Verizon could not possibly be in talks with Apple to sell the iPhone anytime soon, but the OTR report indicates that Verizon and Apple have already hammered out an agreement to sell the new iPhone model within the year.

Verizon recently launched two smartphones aimed squarely at the iPhone: the BlackBerry Storm 2 and Motorola Droid. At the same time, the provider also announced a new cancelation policy that charges users a hefty $350 when they attempt to back out of contracts involving “advanced devices.”

Last year, the company found little lasting enthusiasm from users who assumed that the original Storm would be closer to the iPhone in terms of features; whether the new fee is an attempt to penalize unsatisfied users or to profit from switchers next year, it may result in users rethinking their purchases right now.

With reports breaking the news that Verizon will be selling the iPhone within the year, sales of the Storm 2, Droid, and next year’s Palm Pre may end up repressed if customers decide they’d rather wait for the iPhone to arrive instead of facing the prospect of a major cancelation penalty and the loss of their subsidy credit by buying an alternative device now.

Droid reviews have largely described it as a second place alternative for users who want to stick with Verizon. That being the case, the prospect of a Verizon iPhone appears poised to deflate Droid sales this holiday season.

End of AT&T exclusivity

The news might not be good for AT&T either, considering that many users have switched to AT&T solely because they wanted to get the iPhone. The availability of a Verizon iPhone may cause AT&T buyers to hold off on new purchases until they see what kinds of competitive deals AT&T and Verizon will offer once the iPhone’s exclusivity with AT&T ends next summer and the new “worldmode” iPhone appears.

It does however give AT&T a year to improve its 3G network and roll out the 3G MicroCell before being hit with mass defections from iPhone users irate over service issues. AT&T can still advertise that its 3G network is faster than Verizon’s CDMA2000 coverage, and that it offers some features that CDMA2000 does not, including simultaneous voice and data and easy to use, multiple party conference calling.

AT&T has struggled to keep up with the pace of iPhone development, failing to immediately implement iPhone 3.0’s MMS and tethering features, and remaining unable to take advantage of the faster 7.2 Mbps HSPA data potential of the iPhone 3GS. The threat posed by a “worldmode” iPhone should push AT&T to deliver a year of high priority network upgrades, and potentially result in more competitive service plans.

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  • gus2000

    You know, Dan, you’re right far more often than you’re wrong. But you’re really gonna take a whollop in the comments for your prior “better dead than CDMA” position. (“I’m wrong, here’s why” lol)

    Of course there are mitigating factors in your favor: the new phone is not due for almost 1 year, there’s a new hybrid chip that does not require expansive re-engineering, etc.

    Don’t worry, the Other Punditry will come up with some reason for why this new development will destroy Apple, and then you can explain why they’re wrong.

  • http://blog.cytv.com cy_starkman

    There is one salient detail missing.

    Isn’t AT&T rolling out a 7.2mbit network now (about 2 generations behind but better late than never).

    I have read that EVDO only offers around 2mbit.

    So…..

    I still don’t understand why Apple would do this (as it will shoot up complaints and class actions etc) except to “cut them off at the pass” and get a nice strangle going so as to smash the market with the LTE iPhone.

    You know prevent other platforms from developing in the small muddy pool of CDMA

  • roz

    Will be interesting to see what happens.

  • MarkyMark

    I wonder if this rumor will turn out to just be a ploy by Apple during their renewal negotiations with AT&T.

  • stormj

    The chip that could do this has been around for a while, including when you made your last post on when this would never happen. The truth, though, is that AT&T has had two years to make it work with the iPhone and it still can’t do basic things like tethering (not that the Droid does, yet) and we were supposed to be elated at the 90s technology of MMS coming out in 2009. It was because of AT&T that the original iPhone was not 3G, even though we rationalized the GSM dependence on the rest of the world where 3G was already ubiquitous.

    In sum, all of the problems with the iPhone in the US stem from it being on AT&T. Where I live, calls drop all the time, the data latency is ridiculous.

    I don’t love Verizon or any other mobile carrier; they all have their problems, but I think competition among carriers to bring out the best in the iPhone would be good for the users and good for Apple.

    At this point, I’d give up the data in call capability of AT&T to have the call and data reliability that my wife’s Blackberry has.

    [Well to clarify, I actually wrote that it made little sense (and that there was little likelihood) for Apple to develop two separate iPhones for different markets, and that Verizon’s market in the US was not great enough to create a unique model for, and that this would introduce fragmentation problems.

    I also wrote back in Jan 2007 that people who knew about the mobile chipset industry were saying that Apple would initially have problems just getting access to the most advanced mobile network components.

    So this hybrid chip is a new development, and clearly things have changed since 2007 to the point where Apple can command pretty much any component available. Nobody who argued with me over a Verizon iPhone suggested that this would be possible in a single phone model with global reach. – Dan]

  • Dorotea

    Everyone seems to hate AT&T. I’m just not sure that Verizon is any better or that they would have done better than AT&T with the onslaught of new users that the iPhone brought to smart phones.

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  • http://bkpfd.org qka

    Count me in the “I’ll believe it when it happens” column.

    That said, I live in an area where Verizon is the only company with good coverage; for every other carrier I live in a hole, or the very fringe of coverage. AT&T data coverage in my area, where it is available, is still EDGE, not 3G.

  • http://www.sistudio.net studiodave

    Even if Verizon got the iPhone and offered the same service for half the price I will never switch back to Verizon.

  • bartfat

    Clearly this is a rumor… those people who think the iPhone will have a smaller screen are bonkers. Especially since the 100K apps in the App Store will have to be reworked to be able to take advantage of the supposed “new” model. Yes, I’ve just gotten news… hell HAS frozen over. And secondly, why wouldn’t the rumor suggest that it might also be available on T-Mobile, because that would be far more sensible (from a investment point of view) to Apple. It would basically only require the iPhone supporting an additional frequency (1700 MHz) in addition to the rest of the GSM frequencies it supports. But CDMA? Doesn’t that require an FCC filing as well, so we would’ve known about it if such a thing was already being planned for manufacturing? Of course, it could also be one of those rumors seeded by Apple themselves to distract the media from the real sources ;)

  • roz

    @bartfat
    “those people who think the iPhone will have a smaller screen are bonkers. Especially since the 100K apps in the App Store will have to be reworked to be able to take advantage of the supposed “new” model.”
    Could be smaller screen with higher resolution and same number of pixels as current, thus no reworking needed.

  • http://www.adviespraktijk.info Berend Schotanus

    @gus2000: I agree with that

  • avatera

    stormj is correct…the multi-3G chipset Qualcomm developed has been around. It’s currently in laptops under the name Gobi. Qualcomm is the one behind the development of all forms of 3G and the obvious choice. It is about time Apple and Qualcomm get together…we can only hope it’s true. By the way, Dan, it’s silly to keep saying that CDMA2000 is a dead tech, when WCDMA is just as dead when 4G LTE tech takes over. Actually, the truth is that hybrid phones CDMA/LTE as well as WCDMA/LTE will likely be around for a long, long time. CDMA/EVDO rev. B will match WCDMA/HSPA in speed next year even as LTE begins its long slow deployment. LTE will eventually provide an all IP-based voice and data service, relegating most carriers as dumb pipes. And finally, I predict that Sprint’s WiMax will change over to LTE in time…they are very closely related OFDMA technologies.

  • dpaus

    Verizon has already confirmed that they will be carrying the Palm Pre, the Palm Pixie and a third, as-yet-unannounced Palm WebOS device (code-named “Pre II”) beginning in January. They’ll be moving lots of those, Droids and Storm 2s before this arrives.

  • stefn

    Boy, this has a different feel than Daniel’s regular writing; maybe it’s the Prince persona. I am always leery when columnists are doing Apple’s work for it; in this case, spinning vaporware to produce fud.

    [Let me personally assure you that Apple’s PR group is completely oblivious of any need to create vaporware and wholly incapable of seeding stories. It’s not even that quick about defending against external FUD and misinformation. – Dan ]

  • David Dennis

    I hope the new iPhone doesn’t have a smaller screen, because I love the screen size of the current model. I have both the iPhone and the Palm Pre, and it looks from your picture like the new iPhone would be of a similar size to the Pre.

    I much prefer the current iPhone form factor because the text is much easier to read than on the Pre.

    I agree that the new iPhone with the smaller form factor would hold the existing resolution and so apps would not change.

    D

  • jdb

    Conspiracy theory time. Apple marketing was worried about the Droid launch, So they decided to float a rumor that the iPhone was coming to Verizon “soon” to derail the Droid launch. Don’t buy a Droid phone, wait for the real thing and all that.

    I don’t really believe that but other companies have done similar things in the past.

    And it looks like the Droid launch may have been a dud anyway. No lines from what I’ve read. We’ll see when the weekend numbers come in.

  • aftershave

    This report seems like horseshit. Apple isn’t going to change the iPhone screen size and fragment the market.

    Secondly, CDMA is a dead end. There is no point in selling a custom-chipped iPhone just to get on Verizon’s network. Palm and Motorola have every incentive to do such things because they are desperate, but Apple is barely meeting demand according to supply numbers.

    Don’t take my word for it, read your own site: http://www.appleinsider.com/articles/09/10/16/iphone_supply_issues_could_make_apple_disappoint_on_wall_street.html

    To sum up, Smaller screen size = no. CDMA hybrid = are you kidding me?

  • ChuckO

    Thank Allah for Apple. What a boring tech world it would be without them.

    What’s the logic of the smaller screen? Why would they do that? Does China factor into this? Would this type of phone make sense in the hinterlands of China as well?

  • broadbean

    I’m not going to dismiss a smaller screen as I wouldn’t mind smaller phones. I am assuming it will have the same resolution however, so it remains to be seen how easy it would be on the eyes and how the keyboard would feel.

    Please, please add support for 900MHz UMTS 3G!!

  • gus2000

    Some thoughts:

    1. The Apple/AT&T exclusivity is impermanent. Once Apple is free to sell to through any provider, they may as well sell through ALL providers. Why leave out part of the market if they don’t have to?

    2. We don’t know what Verizon is up to. Maybe they went to Apple and offered them everything they wanted if they added CDMA support.

    3. Maybe, though, Verizon offered Apple a great financial deal, but with operational restrictions. Thus, the iPhone with the smaller screen is the “iPhone Nano” that has limited capability and a lower price point.

    It’s all speculation at this point, and I’m not trying to prognosticate. But it’s illogical to assume that all future iPhones are going to be the same form factor with a few tweaked specs. Apple didn’t sit on its heels with the iPod and I expect a few more surprises in iPhones to come.

  • aftershave

    @gus,

    except that iPods didn’t have a giant app market.

    Anyone who suggests that apple will compromise usability by shrinking the iPhone screen (it’s just right, or cramped as is), doesn’t really know the company. People rightfully hate the iPhone’s phone application because it’s so small and hard to hit. I can’t imagine what it’ll be like on a smaller screen.

  • NormM

    Daniel,

    The Blackberry Storm 9530 is a dual mode phone that uses the Qualcomm MSM7600 chip, which does CDMA2000, UMTS, GSM, GPS and has two ARM processors. This family of dual-mode chips has been around for years (e.g., see “http://www.japan.qualcomm.com/news/releases/2006/060405_additional_chipset_support.html”).

  • roz

    This was not the scenario I was expecting. Hopefully it will work out.

    Does anyone know if this helps at all with the other standard in China?

  • http://crankyoldnutcase.blogspot.com/ The Mad Hatter

    Single chipset, single phone model. Now that would be worth the developmental costs, whereas a CDMA only model wouldn’t be worth the developmental costs. I would imagine that Qualcom was begging for their chipset to be used.

    As to the smaller screen size, the current one is difficult enough to read, a smaller screen would turn me off. However if the screen was the same number of pixels, so that no reprogramming of Apps was required, it might work. Might. It all comes down to readability.

  • luisd

    The impact of this is obviously beyond verizon and at&t. This is a single handset for the whole world! I am always surprised at how self-centred (north) Americans are. Yes Verizon will benefit, and blah blah blah, but the impact is that Apple is addressing the worldwide market. And the potential of grow there is immense.

  • stefn

    @Dan, I didn’t say that Apple PR was floating vaporware. I said that the article itself had that feel. More precisely, call it rumorware.

  • roz

    @luisd – are there other markets beyond North America that this helps?

    Personally, I would like Apple to support every carrier and protocol globally. I think makes a strong statement, so its just not about Verizon to me. But yeah, there is a lot of action going in on in the US market right now, that seems to be where the fight is taking place. Rather Apple have take on competitors no matter the network if they can.

  • http://crankyoldnutcase.blogspot.com/ The Mad Hatter

    Roz,

    There’s a lot of action going on in the US? Sheesh. There’s nothing going on in the US, and won’t be until the recession is over, if it ever is. The US is heading towards third world status, and they have no one but themselves to blame.

  • roz

    I think you have one too many T’s in your name.

  • http://www.lowededwookie.com lowededwookie

    Hang on hang on hang on.

    Everyone’s claiming Daniel is wrong for his previous article all based on a report that is not confirmed as being the case?

    Seriosly, the idea of Apple supporting a dying technology is stupid especially when you see more and more CDMA based cell companies ditching the technology for WCDMA (it’s just happened here in New Zealand with incumbent Telecom ditching CDMA for WCDMA technology in order to be able to roam more easily (forced in part by Telstra in Australia who recently shut down their old CDMA network therefore killing off access to Telecom).

    The majority of the world uses WCDMA so it makes sense to go where all the money is. It makes more business sense to go with the actual majority than the perceived majority. The idea that Apple needs to sell to Verizon to make more money is so narrow minded and typical of the blinkered view of the world that most Americans seem to have.

    LTE may be used in the future but you have to see what the rest of the world is doing before you make your move so the companies to watch at the moment are ones like Orange, Vodafone, Softbank, Unicom, etc.

    Actually China is going to be the one to watch I think. It may have slow sales starts but the potential is massive for a country with over a third of the world’s population.

  • masternav

    @stormj/avatera: while the Snapdragon chipset has been around since roughly 4Q2008 (QSD82508650 single core VLP integrated series), they just recently introduced the 45nm version, QSD8672 dual core running up to 1.5GHz, which not only handles the ARM-style app processing, but also integrates its predecessors’ cell modem and GPS function, but also adds integrated Bluetooth, high-def video recording/playback, WiFi, mobile television MediaFLO/DVB-H/ISDB-T technologies and upgrades to HSPA+. So the new chipset version is a significant upgrade on a much smaller footprint than the original. I can see why Apple would be rumored to express interest in this.

  • tundraboy

    @lowededwookie. Okay, okay, let’s not get too carried away about China’s market potential. Their per capita GDP is still around the same level as Angola, Namibia and Egypt. Though the coast is quite prosperous and dynamic, the interior is still a third world country with peasant farmers barely scratching a living. Potential, yes. But we’re not talking 3-5 years here more like a generation, at least, and assuming social strife doesn’t engulf the interior in the meantime.

    I’m not saying the demand generated by the coast is negligible but a lot of people just look at their total population and then severely overestimate China’s market size.

  • http://home.comcast.net/~daguy daGUY

    I cannot see the logic of making the iPhone smaller. Don’t you want the screen to be as *large* as possible while keeping the device pocket-sized? The current 3.5″ model already fits in your pocket quite well.

    This rumor only makes sense to me if the 2.8″ model is an additional, lower-end (free with contract?) version that lacks certain capabilities (no third-party apps or something). I can’t imagine that it would replace the current 3.5″ iPhone.

  • masternav

    @NormM: that chipset is vintage 2007 and the specs read like it. Dual mode is very retro but if you compare it to the Qualcomm Snapdragon platform it seriously lacks: running ARMv6 vs the Snapdragon ARMv7, 133 MHz ARM9 companion processor, ARM TrustZone technology, Embedded QDSP4000 or QDSP5000 DSP (CDMA2000 1X Rel. 0 / Rev. A, CDMA2000 1xEV-DO Rel. 0 / Rev. A, GSM, GPRS Class 10, UMTS, HSDPA, HSUPA, MBMS baseband), Embedded gpsOne GPS module, Qcamera, Qtv, Qcamcorder, Qvideophone vs. Embedded 600MHz DSP (GSM, GPRS, EDGE, UMTS/WCDMA, HSDPA 7.2Mbps, HSUPA 5.76Mbps, HSPA+ 28Mbps/11Mbps, MBMS, CDMA2000 1xRTT, CDMA2000 1xEV-DO, CDMA2000 1xEV-DO Rev. 1, CDMA2000 1xEV-DO Rev. B, baseband), Embedded Seventh-generation gpsOne GPS module, gpsOneXTRA Assistance and being able to be clocked up to 1500 MHz.

  • http://www.lowededwookie.com lowededwookie

    @tundraboy,

    All it would take is 1% of Chinese to buy an iPhone and that’s around 13,419,701 iPhones. Considering the coastal population is around 500,000,000 then that seems relatively achievable.

    You’re also forgetting that a large part of China’s population is spread around the world and is putting money back into China so the idea that China is very poor is not as correct as people are making it out to be.

    Given that China’s economy is booming largely due to countries outsourcing their manufacturing to China then the potential is rather large.

    Don’t discount China. There’s a lot we westerners don’t know about it due to their government hiding things from us so don’t write the nation off just yet.

  • NormM

    @masternav says, “@NormM: that chipset is vintage 2007 and the specs read like it. Dual mode is very retro but if you compare it to the Qualcomm Snapdragon platform it seriously lacks”.

    I’m not arguing that Apple should use an old chipset — they are surely aware of the QSD “Snapdragon” follow-on to the Qualcomm MSM chips used in the Blackberry Storm and the recently released HTC Droid Eris (which is also a multi-standard “worldphone”). My only point was that, since there are many existing worldphones, Dan shouldn’t have been surprised that supporting both standards is not a hardware issue .

  • masternav

    @NormM: agreed. One of the presenting issues for dual mode is the higher demand that earlier chipsets required – and thus poorer battery performance – which would have been a deal-killer for Apple early on as they tried to balance ubiquity with performance. The new Snapdragon chipsets remedy that considerably with the smaller profile and power requirements, while providing the latest in performance.

  • MipWrangler

    Those iLounge images were posted 17 months ago. What is the connection between the smaller screen size and the hybrid CDMA/UTMS baseband processor?

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