TECH VIEW: IPhone 4 Debuts With Renewed Carrier Hopes

24th Jun 2010 12:53

By Therese Poletti A DOW JONES COLUMN As some lucky consumers start to receive their new iPhones in the mail and others line up today at Apple Inc. (AAPL) stores, speculation has returned that the company is talking about adding another carrier. It's about time. The demand for the new iPhone 4, even before it goes on sale today, has exceeded Apple's and AT&T Inc.'s (T) expectations. The companies received over 600,000 pre-orders last week, and AT&T's website was overburdened with the deluge. Apple said it was the largest number of pre-orders it had ever seen for a product. This huge demand alone for the new smart phone is indicative of the additional traffic that will probably be hitting AT&T's already burdened (but they are working on it) network. It's not clear how many of the 600,000 plus pre-orders are new customers. AT&T is making it easier for current customers to get a new iPhone, by waiving penalties for contracts that expire this year, but it's unlikely that this rush of orders is coming from only existing AT&T customers. The Wall Street Journal technology columnist Walt Mossberg reviewed the iPhone 4 and called it "a major leap in the iPhone with lots of improvements," but that it was a "mixed bag with AT&T." Analysts believe adding more carriers in the next year will be an essential part of Apple's growth strategy for the iPhone. "The reality is that Apple has saturated the AT&T customer," said Ashok Kumar, an analyst with Rodman & Renshaw. Just this week, two Wall Street analysts again predicted that Apple will finally embrace new carrier deals, starting next year with Verizon Wireless, a joint venture of Verizon Communications Inc. (VZ) and Vodafone Group PLC (VOD.LN VOD), according to one analyst at Barclays Capital. "Channel checks by our communications equipment and semiconductor research partners give us greater confidence that Verizon will get an iPhone in early 2011," wrote James Ratcliffe, an analyst with Barclays Capital, adding that he doesn't think the addition will be a "seismic event" in the wireless business, "although we do expect it to result in a modest spike in AT&T churn," referring to the term for customers switching to a new carrier. Shaw Wu, an analyst with Kaufman Brothers, has gone against the prevailing grain, predicting that Apple's first deal will be with T-Mobile, a unit of Deutsche Telekom AG (DTEGY, DTE.XE). Wu believes another carrier may be announced "likely by the first half of 2011, perhaps as soon as this fall," with T-Mobile leading the way. Officials at Verizon, T-Mobile and Apple all declined to comment. Apple does not generally comment on unannounced products. Having another carrier selling the iPhone would mean Apple is developing another version of an iPhone with new chips that would let it run on other types of networks than AT&T's. Another factor fueling speculation is that a new feature of the iPhone 4 is its George Jetson-like ability to make phone calls using video. In an acknowledgment that this application is going to be another draw on bandwidth, Apple said that video chat will only be available for the first year over WiFi networks. But even at that, it's likely going to experience latency, as we saw in the demo of the iPhone 4 earlier this month, when Apple Chief Executive Steve Jobs asked people in the audience to turn off WiFi on their laptops during the keynote at the Worldwide Developer Conference. If Apple wants its customers to eventually be able to use the video chat feature over cellular networks, it's going to need better network support, and it's probably waiting for the deployment of next generation 4G networks. If the prevailing wisdom is right, an expanded network for the iPhone will be on the way soon. But it won't be soon enough for the first iPhone 4 customers. (Therese Poletti is a special writer for MarketWatch. She can be reached at 415-439-6400 or via email at [email protected].) (END) Dow Jones Newswires June 24, 2010 07:53 ET (11:53 GMT)