iPhone 5 Speculation: Two Models?

NEW YORK ( TheStreet) -- I have no actual knowledge of the iPhone 5's details, but many people have asked me to provide my best estimate as to what the iPhone 5 will have and won't have. I am basing this article strictly on the logic ofmy own knowledge of the smartphone marketplace, including Apple's ( AAPL) public statements. I haven't talked to anybody at Apple or any of Apple's carrier partners about the iPhone 5.

Physical design: I believe Apple is likely to introduce a new physical design for the iPhone 5 that combines the design languages from the MacBook Air, the iPod Touch and the iPad 2. This would mean a return to the slightly rounded or beveled backside, perhaps chiseled somewhat in the vein of the MacBook Air. Unlike the iPhone 4's glass back, the iPhone 5 would have an all-metal design similar to the iPad 2.

Screen size: Most likely, it will be the same as the iPhone 4. Why mess withsuccess? That said, Apple could try to push the boundaries on minimizing the bezel, causing the screen size to increase slightly, or for the device to become narrower. Either way, it would only be a matter of a millimeter or two.

Screen resolution: The same as the current one - 960 x 640; not a chance of any change here.

NFC: Until at least December 2010, I was convinced the iPhone 5 wouldmake a huge deal about near-field communications. The public chatter in more recent months would lead us to believe that NFC is not going to be part of the iPhone 5. I still give it at least a 50-50 chance that Apple would at least include the NFC hardware in the iPhone 5, even if it wasn't yet ready to introduce any NFC software or services, such as iPay. After all, Research In Motion ( RIMM) will have NFC in every BlackBerry starting this August-September, and Google ( GOOG) will be pushing NFC hard before 2011 is over. Can Apple really afford to be behind here? Can iPay afford to wait?

LTE: This is really the big one. Apple dropped a hint at the Verizon ( VZ) press conference in January that it will be conservative with the implementation of LTE, primarily because of battery and other performance concerns. I believe the market realities are becoming such that it may be unwise for Apple to delay the introduction of LTE any more, in the face of 3 competitive smartphones on Verizon with LTE today ( Samsung, HTC and LG) and one more on the way by August ( Motorola ( MMI)). I guess it would be OK for Apple to introduce LTE perhaps as late as November 2011, but if the iPhone 5 hits the market by the end of September 2011, it implies that the iPhone 6 won't be available until June 2012 at the earliest, and that would create a dangerous bridge too far for Apple to attempt to cross. This is truly a 50-50.

Unified CDMA World Phone: At a bare minimum, the Verizon/Sprint version of the iPhone 5 will include full global GSM/HSPA compatibility. Verizon's iPhone 4 already has the Qualcomm ( QCOM) 6600 chipset -- just like the Motorola Pro on Verizon -- but doesn't include a SIM card or the GSM/HSPA antenna. Aside from the LTE question, the big question is whether the GSM/HSPA version that will be shipped to AT&T ( T)and most international carriers will actually be the exact same hardware as the Verizon/Sprint version. I think it will be, assuming there is no LTE version.

So what will be the new distinction with the iPhone 5 that everybody will be talking about? If I am right in my guess, there will be two models of the iPhone 5. One model will have GSM/HSPA and CDMA/EVDO in the hardware. It will be run by every carrier outside the U.S., plus presumably Sprint ( S) and T-Mobile in the U.S., if they get an iPhone at all.

The other iPhone 5 model will be the same thing, plus LTE at 700 MHz.It will be sold on two carriers -- AT&T and Verizon. Verizon obviously launched LTE at 700 MHz last December in most large cities, and is already covering well more than 110 million people. AT&T will be launching a smaller number of LTE markets in 2011, with dramatic expansion scheduled for 2012 and 2013.

Let's recap and clarify. There are two most likely scenarios for theiPhone 5 as I see it:

Scenario No. 1: One version of the iPhone 5 which has GSM/HSPA andCDMA/EVDO on the relevant frequencies, sold to all carriers worldwide. Most carriers, except a few such as Verizon and Sprint, would have the CDMA/EVDO capabilities turned off in software.

Scenario No. 2: Same as scenario No. 1, except AT&T and Verizon get a separate version that, in addition to all the other standards and frequency bands, also gets LTE at 700 MHz.

Will scenario No. 1 or No. 2 prove the right one? The consensus, as closelyas it can be defined, suggests that one without LTE is more likely. If that turns out to the true, Apple is gambling that U.S. consumers will simply not know or care about LTE, which is a remarkable statement of Apple's position in the industry, and as a marketing machine. I am guessing that scenario No. 2 therefore is less unlikely than the consensus currently suggests.

At the time of publication, Wahlman was long AAPL, QCOM, GOOG and RIMM.

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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Anton Wahlman was a sell-side equity research analyst covering the communications technology industries from 1996 to 2008: UBS 1996-2002, Needham & Company 2002-2006, and ThinkEquity 2006-2008.

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