Verizon iPhone Is Not on the Near Horizon

NEW YORK ( TheStreet) -- The prospect of a Verizon iPhone has sparked more speculation, more analysis and a big new high for Apple's ( AAPL) stock.

Apple is once again reported to be preparing production of a CDMA iPhone that would be compatible with the networks of Verizon ( VZ) and Sprint ( S), according to a report Monday by The Wall Street Journal.

The report revives rumors of a Verizon iPhone, and by Tuesday analysts weighed in with their own take on the potential development.

Few analysts, however, see the iPhone landing at Verizon this year.

"A launch of a CDMA-based phone with Verizon this year is unlikely," UBS analyst Maynard Um wrote in a research note Tuesday, adding that he believes "a CDMA phone could be launched with other operators later in the year." Those other telcos include China Telecom ( CHA) and Japan's KDDI.

The rumors stir up a long-running debate over when and if Apple and Verizon will ever come to terms over the iPhone.

Apple, maker of the hottest smartphone, and Verizon, the operator of the largest U.S. network, seem to be destined for an agreement once Apple's exclusive with AT&T ( T) expires, but progress has been uncertain.

"Apple can't ignore the largest customer in its largest market," says Michael Cote, of the Cote Collaborative. "They have 90 million customers that Apple doesn't have access to. The only way for Apple to grow in the U.S. is to access those subscribers," says Cote.

But Cote says if there is a Verizon iPhone, the timing is not likely known even by Apple and Verizon yet.

For Verizon, the iPhone represents a swarm of new, big spending subscribers, but it also means Verizon is largely cut out of the revenue equation as its users become Apple customers, who will spend money at iTunes and the App Store. This conflicts with Verizon's mobile-commerce ambitions.

There are also network infrastructure issues that need to be addressed. The iPhone puts heavy demands on the wireless system, as unhappy AT&T iPhone customers have long known. Verizon would like to avoid that, and Apple could help if it developed its own supplemental network.

Similar to what Research In Motion ( RIMM) has done with its BlackBerry servers and email delivery system, Apple could provide a data center to reduce the burden on Verizon's network resources, says Cote. This could allow a so-called push system that sends iPhone subscribers updates and emails as they come in instead of requiring the phone to continually check in with the network for new info.

Beyond network management, Verizon and Apple have not seen eye-to-eye in the past and the differences are still unresolved.
Who Owns Verizon?

RBC analyst Mike Abramsky says there's a lot of work yet to be done before Verizon and Apple come together. "The two parties may still need to resolve contentious issues such as subsidies, branding, revenue share, data plans, etc.," Abramsky writes. "And Verizon just launched its own App store last week, which it may require some or all smartphones to offer," Abramsky added.

Apple shares hit an all-time high of $237.48 early Tuesday, but has since settled down slightly to $236.19 or up 2% by mid morning.

--Written by Scott Moritz in New York.

RELATED STORIES



Follow our tech coverage on Twitter and become a fan of TheStreet.com on Facebook.

More from Technology

Throwback Thursday: Intel Edition

Throwback Thursday: Intel Edition

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

Intel CEO's Surprise Exit Leaves 'Large Void' That Won't Be Easy to Fill

Intel CEO's Surprise Exit Leaves 'Large Void' That Won't Be Easy to Fill

The Winners and Losers in Thursday's Market

The Winners and Losers in Thursday's Market

Will Porsche's Electric Car Push Take Down Tesla?

Will Porsche's Electric Car Push Take Down Tesla?