Everybody and their brother has their undies in a potential knot over WSJ rumors that the iPhone will be coming to Verizon this summer.  The writing team here at JAMM has been oohing and ahhing over the possibilities…everyone except me, that is. In my opinion, this moves makes no sense, and if it is true, could be a move in the wrong direction for Apple..  Here’s why…

Picture taken from ZDNet

Everybody from Molly Wood to YUKARI IWATANI KANE, TING-I TSAI and NIRAJ SHETH (the trio of WSJ reporters) to Larry Dignan of ZDNet is reporting that the Apple iPhone has a chance at coming to Verizon this summer.  While I think its interesting, I don’t see it happening for a few very poignant reasons. Here they are in no particular order:

The Rumor is Hearsay
According to the lead in the WSJ article:

Apple Inc. plans to begin producing this year a new iPhone that could allow U.S. phone carriers other than AT&T Inc. to sell the iconic gadget, said people briefed by the company.

While the source may be credible, this is tantamount to hearsay.  The WSJ is reporting something that their sources were told by other people. Until it can be confirmed, I’m not buying in… (and that’s really crappy journalism, in my opinion.  I’m just sayin’…)

Potential Subscribers
Verizon had 87.5M subscribers and AT&T 85.5M subscribers according to an article written by Larry Dignan of ZDNet. While this has the potential of generating a great deal of revenue at $200 per handset, how many potential subscribers will they get from other CDMA markets to warrant the additional costs associated with design, manufacturing, testing, training, etc?

The USA is NOT the World Market
Despite what many are saying about the gain in potential users, 87.5M new potential users (they would be lucky to get 25% of that) is a relatively SMALL amount of users when you consider potential CDMA cell users world wide.  While decisions are made on other hands sets, effecting a much smaller potential user base, the iPhone is the iPhone, and Steve thinks its perfect the way it is (more on that in a moment).

The CDMA network here in the States is miniscule compared to the larger GSM network the world over.  There are really only a small handful of CDMA cellular networks in the world – the US, parts of Asia (parts of Japan, parts of China, North/South Korea, etc.) and perhaps a couple countries in South America. Other than that, the rest of the world is covered by GSM cellular networks, INCLUDING the areas covered by the CDMA networks in the countries I mentioned.  While Apple is a company with its headquarters in the USA, it is NOT exclusively a USA company. Its a global vendor, and it has to provide a product that can be sold to the largest possible audience in that world market.

Manufacturing Costs
I know…many of you are saying, “what [incremental] manufacturing costs?”  This is where the bigger picture stuff comes in to play (from above).  A CDMA iPhone would need to be COMPLETELY redesigned from the ground up.  You just can’t rip out the iPhone’s GSM radio and swap in a CDMA radio. The radios are different sizes and require different supporting electronics.  They also function differently; but again, more on that below. As the guts of the device are different, you have to redesign the case.  Bingo – completely new device.

This means manufacturing lines have to be created. Processes for these lines will need to be developed, and depending on the components used, some of those processes may be unique to that device.  Warehouse space, purchasing costs, personnel staffing and training costs will be incurred, etc.  It ain’t just about swappin’ one radio for another.

Support Costs
At this point you’re likely saying, “well, ok…you have me there; but at least the OS will be the same.  To an extent yes, but to a large extent, no.  The implementation of a new radio (and the software to drive it) means that the OS will interface with it differently; and there will be changes to how the iPhone does what it does and the way it does it.  I know this from my early Windows Mobile days.  Comparing a GSM WM device to a CDMA WM device, they behaved differently, acted differently, etc.  They simply weren’t the same, despite the “common” OS between them.  Knowing software development the way I do, expecting a CDMA iPhone to function exactly the same way a GSM iPhone does is ludicrous.

Over and above that, user interaction may be effected depending on how the hardware interacts with the OS and core apps. Again, I saw this in not only WM devices, but in similar model Blackberries (with different radios) as well. Given ALL that, there’s no way Steve is going to allow more than one version of the same generation of the iPhone, ones that potentially function differently from one another, to exist.  It mucks with the experience, and Steve is all about the experience.  The Apple experience is something that has been meticulously defined and refined over the past 7-10 years.  Steve doesn’t allow applications that change the way the device works into the App Store.  What makes anyone think that Apple is going to allow a same generation iPhone with a different set of functionality the opportunity of getting off the drawing table, let alone out of a manufacturing facility?

And don’t even get me started about training costs for both Apple AND Verizon when it comes to using the iPhone on their network.

Duh…The iPad
During the recent iPad announcement, I postulated (incorrectly, I might add) that Apple would partner with Verizon for the iPad. It makes more sense to put the device on a larger 3G network than the one that is already over saturated by the iPhone 3G/3G S.  This would have been a perfect time for them to announce a new wireless partner.  They chose not to.  More than that, they chose to stay with the GSM platform, and chose not to create a CDMA version of the iPad (again, one product for the world market, and not two…)

If they chose NOT to announce a new wireless partner for a completely NEW product, AND chose to stick with the GSM cellular platform instead of moving to a CDMA cellular platform to boot, the chances of Verizon getting any Apple cellular product seems to me to be slim to none.

As an aside, Apple Insider is reporting that some analysts are indicating that the CDMA version is a go; but is for the CDMA Asian markets I mentioned above.

I’m probably forgetting additional reasons why this isn’t going to happen.  There’s also the chance that I’ve missed the boat entirely AND you have a contrary opinion. In either case, I’d love for you to add your comments below and tell me what you think.

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