A Verizon iPhone in 2011 will certainly shake up the smartphone market, but it may not add much to Apple's overall numbers as most of the early adopters will be people simply switching from AT&T to Verizon, said Piper Jaffray analyst Gene Munster in a research note released today.
Now factoring in the likely launch of a Verizon iPhone during the first half of 2011, Munster expects Verizon will add around 2.5 million iPhones on its own next year but cannibalize around 6.5 million from AT&T.
Under this scenario, the number of iPhone units sold through AT&T will drop 30 percent next year as U.S. consumers shift toward Verizon, and AT&T subscribers wait for their contracts to expire before they can jump ship to Verizon. As a result, Apple will likely sell a total of 20 million iPhones in the U.S., according to Munster, with AT&T accounting for 11 million and Verizon for 9 million.
What if a Verizon iPhone fails to materialize next year? In that case, Munster believes AT&T will still sell around 17.5 million iPhones on its own.
Despite ongoing complaints about AT&T's network (it was recently pegged as the worst carrier nationwide by Consumer Reports readers), the company has still captured a huge number of customers through the iPhone. Though AT&T offers a variety of smartphones, the record 5.2 million iPhones that it activated during its recent third quarter represented about 80 percent of all the smartphones it sells.
The number of iPhone activations at Verizon may account for a much smaller percentage of its total smartphone numbers. Munster is estimating that of the 25 million smartphones that Verizon is expected to activate next year, only 9 million, or 36 percent, will be iPhones.
Munster concedes that his overall forecast could prove conservative. If AT&T manages to sell 15 million iPhones next year, the same number as it did this year, and Verizon is able to sell the same number, Apple would see 30 million iPhones sold in the U.S. between the two carriers.
Neither Apple nor Verizon has yet to confirm a Verizon iPhone, let alone a possible launch date. But Piper Jaffray's model calls for the phone to debut midway through the first quarter of next year.