Last week, both the Wall Street Journal and New York Times reported that a Verizon Wireless (s vz) will sell a CDMA version of Apple’s iPhone (s aapl) early next year. Here in the U.S., that scenario could help Verizon maintain its lead of total subscribers over rival AT&T (s t) and boost iPhone sales figures by an estimated 10 million handsets per year in 2011. A CDMA iPhone offers Apple an even larger sales opportunity, as more than 543 million customers globally use CDMA networks.
To be sure, the GSM version of Apple’s handset appeals to more potential mobile subscribers: Approximately 3.45 billion people use a GSM phone in the world. Adding a CDMA iPhone option, however, increases Apple’s addressable market for an iPhone by 16 percent, says Horace Dediu of asymco, a mobile research site. The estimated sales of 10 million Verizon iPhones account for only two percent of that potential market, affording Apple a sizable opportunity to boost iPhone sales outside of the U.S.
The CDMA Development Group reports that 164 million mobile phone subscribers in the U.S. use a CDMA handset. That number pales in comparison to the 302 million CDMA handset owners in the Asia-Pacific area, a region that, until recently, hasn’t seen huge demand for Apple’s smartphone. Last month, however, Apple’s initial run of GSM iPhones sold out in China, and the pre-order process was halted due to high demand.
While discussing a CDMA iPhone in the past, readers have astutely pointed out that 80 percent of the world uses the GSM standard. So. why should Apple even consider a CDMA iPhone? If Apple sold iPhones to only 10 percent of the total addressable CDMA market, it would gain 54 million additional iPhone sales over time. With an average selling price of $600 per handset, that works out to $32.4 billion in revenue on a product with high profit margins. To put that in perspective: Apple’s total revenues for the 2009 fiscal year were $36.5 billion.
Ignoring the “small” CDMA market simply leaves too much money on the table for Apple’s iPhone, regardless of which cellular network technology is considered the world standard. And while Verizon and other CDMA carriers are rolling out 4G technologies such as LTE and WiMAX, it’s going to take a few years before these next-generation data networks are available on a national basis. That leaves Apple with plenty of time, and billions of reasons, to sell CDMA iPhones to 3G customers around the world.
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