The iPhone on Verizon's network will be a big win for Apple, as pent-up demand driven by users who were waiting for an alternative to AT&T drives sales of the iPhone 4.
The iPhone had been exclusive to AT&T's wireless network for four years. But rumors of an iPhone on Verizon had been circulating for at least since the introduction of the iPhone 3G before Tuesday's announcement.
Apple is projected to ship 63 million iPhones this fiscal year, said Wedbush analyst Scott Sutherland. I think it's going to be about 10 percent of those will go to Verizon. Research firm iSuppli had similar estimates, saying in a report that Apple will likely ship 12.1 million CDMA phones via Verizon.
Sutherland notes the margins on iPhones are much higher than other smartphone models, and that will add a lot to Apple's earnings, and a 5 percent boost to revenue. He expects Apple's stock price to hit $405. It currently trades at about $340.
Another factor is how many users defect from AT&T and move to Verizon. Some of that may depend on the data plan Verizon offers. At the press conference introducing the iPhone Tuesday, there was no hint given as to the price of a data plan. AT&T offers a Data Plus plan with 200 MB of data at $15 per month and a Data Pro plan with 2 GB of data at $25 per month. If Verizon were to offer some kind of unlimited plan, then it could make a dent in AT&T's subscriber base.
But AT&T has not had that much of a problem - yet - with subscriber loss. Sutherland says the company has done well at customer retention. Even if AT&T loses a few subscribers, that may be a blessing, as AT&T has had problems before with the ability of its network to handle the data traffic from iPhones.
But beyond Verizon, the fact that the iPhone 4 now works on CDMA networks opens up markets in key Asian markets such as China, where GSM phones - like those that work on AT&T's network - would have not functioned (or not as well). However, no other announcements have been made about what other CDMA networks the iPhone might be available on.
iSuppli estimates that the CDMA iPhone will boost iPhone sales some 33 percent in 2011, whereas without that the iPhone sales would only rise 7 percent. The firm also predicts that Apple will offer an LTE-compatible iPhone in 2012.