We know, we know, these rumors have been swirling for so long now, you probably don’t believe anything anymore. But this time around, TechCrunch is reporting that a source intimately familiar with the hardware supply chain for Apple has noticed an order for millions of units of Qualcomm CDMA chipsets. Why is this unusual? Because Verizon’s wireless network requires CDMA chipsets to be present in the wireless devices that run on their network.
This can only point to one thing: Apple is revving up their supply chain for a Verizon-compatible iPhone. And because lead-times in the semiconductor market can be quite lengthy, sometimes as long as 26 weeks, we can start to forecast that a real-live Verizon iPhone looks to be a strong possibility in January 2011.
On its own, this latest bit of news is a strong prediction of AT&T’s expiring exclusivity arrangement with Apple, yet there’s more. In a SEC filing made by AT&T a few days ago, the company detailed what may happen to the company’s profitability in the wake of just such an event:
“We believe offering a wide variety of handsets reduces dependence on any single handset as these products evolve. In addition, offering a number of attractive handsets on an exclusive basis distinguishes us from our competitors. As these exclusivity arrangements end, we expect to continue to offer such handsets (based on historical industry practice), and we believe our service plan offerings will help to retain our customers by providing incentives not to move to a new carrier.”
And AT&T is even more clear in their final paragraph of their SEC filing:
“Although exclusivity arrangements are important to us, such arrangements may not provide a competitive advantage over time, as the industry continues to introduce new devices and services. Also, while the expiration of any of our current exclusivity arrangements could increase churn and reduce postpaid customer additions, we do not expect any such terminations to have a material negative impact on our Wireless segment income, consolidated operating margin or our cash from operations.”
While all of this points to the fact that AT&T is finally acknowledging that the ending of their exclusive deal to sell iPhones will certainly impact their bottom-line, in reality, it’s not like millions of AT&T customers will suddenly dump their carrier and switch to Verizon overnight. Between lengthy two-year contracts that can be expensive to break, to family plans that keep entire families locked into AT&T, as well as the cost of purchasing a new $200 CDMA iPhone will likely keep many AT&T customers in place, at least for the short-term.
Some surveys have predicted that as many as half of Verizon’s current customers will abandon their current phones for the iPhone if it becomes available to them. I find that a little unrealistic given the great line-up of Android-powered smartphones Verizon offers. Let’s hear from some of the Verizon customers out there: Would you dump your current phone in favor of an iPhone should they be offered as an upgrade? Be sure to let us know in the comments.