Analysis: What Does Verizon iPhone Mean to The World?

The world split

Taking only the iPhone numbers, for the latest quarter for which we have global numbers (3Q 2010), I found that 39 percent of all iPhones were sold in the USA, 33 percent were sold in Europe and 28 percent were sold in the rest of the world. To understand the market sizes, the TomiAhonen Phone Book 2010 tells us that out of all smartphones sold, the USA and Europe both account for about a quarter, and the rest of the world accounts for half. If we use that split of markets, and use the rough estimate of 47 million iPhones sold for full calendar year 2010, then it would be 18 million sold in North America, 16 million sold in Europe, and 13 million sold in the rest of the world.

Europe has no CDMA

A CDMA version will not add any sales in Europe. So Apple's 16 million sales in Europe will not receive any boost out of this new variant to the iPhone 4. But Apple is seeing both growing competition from Android devices, the same effect as they saw in North America last year, Android is poised to grow bigger than Apple in Europe, led by Samsung's Galaxy class - Samsung is Europe's second-best-selling 'dumbphone' so every carrier/operator offers a vast array of Samsung phones including many Samsung cheaper touch screen featurephones.

Meanwhile Europe is Nokia's home market and 'back yard' and Europeans have been eagerly snapping up Nokia's new N8, seen by the consumers as Nokia's answer to the iPhone - and are now awaiting the E7, which looks like the 'iPhone anyone would really want' i.e. it has a 4" touch screen but also the slider full QWERTY keyboard, that costs about the same as the iPhone 4 and Nokia is set to release the E7 this quarter.

Apple's dramatic growth in global market share of smartphones stalled in 2010 as I first predicted and most major analysts have since confirmed. That was in early 2010, before the Galaxy S, before the Nokia N8, before the latest Blackberries, HTCs, LGs, and Motorolas etc. The iPhone 4 was the hot phone in the summer of 2010. It is now looking increasingly tired and old in the European market.

Expect Apple's sales in Europe to decline in the first half of 2010 and only show new growth with the next iPhone 4G expected in June of 2011. So for the full year we could see something like 20 million iPhones sold in Europe, and Apple's iPhone market share to decline there.

The rest of the world has some CDMA

World's biggest mobile telecoms market is China and good news for Apple is that China does have CDMA. The bad news is that China's biggest mobile operator, China Mobile, does not support CDMA. China's second largest operator, China Unicom, is the official iPhone provider on GSM, and it's only the newest and by far smallest Chinese operator, China Telecom who operates a CDMA network.

Apple has been struggling to sell iPhones in China, it is perceived as very expensive in the market where they have no handset subsidies and customers pay the full price for handsets (like over 80 percent of all customers in the world). So adding the smallest carrier in China will not do magical things for Apple.

What of Japan, Apple's best market in Asia? Well, there is some good news, some bad news. The good news is yes, there is also one CDMA operator in Japan, KDDI, which is slightly bigger than the current iPhone provider, Softbank, which runs obviously on the GSM evolution of 3G. But Japan's biggest carrier/operator is NTT DoCoMo, as big as Softbank and KDDI combined.

NTT DoCoMo runs the GSM evolution to 3G, so they could use the current GSM style iPhones, and NTT DoCoMo has expressed many times their desire to do so. It is not because the Japanese don't want to sell the iPhone, it's the same problem Verizon had in the USA - it's a contractual situation with the rival. Softbank has an exclusive deal in Japan. We do not know how long that lasts, but it's very unlikely that the CDMA version of the iPhone 4 now will help in any way in Japan.

What other markets have significant CDMA operations? India, South Korea, Indonesia, Taiwan, some Latin American countries and Canada. In most cases the CDMA carriers have already started their migration away from CDMA to GSM - like two of the three carriers in South Korea - so often the CDMA network is run by a carrier who already operates a parallel GSM network - and could have launched the original GSM standard iPhone already.

And then, in the markets where CDMA carriers still operate, in most cases they are one of the smallest carriers and have a tiny slice of the domestic market, like in India, Indonesia, and Taiwan etc. The total 'new' market opportunity for the CDMA variant of the iPhone is very small in the world.