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Monday, January 10, 2011

Apple's Verizon iPhone could cannibalize 6.5M sales from AT&T

Though the arrival of the iPhone on Verizon is expected to increase overall U.S. iPhone sales for Apple, the effect on carrier AT&T is expected to be significant. Analyst Gene Munster with Piper Jaffray said in a note to investors on Monday that he believes the launch of a Verizon iPhone will increase total 2011 U.S. handset sales for Apple by 2.5 million, a number he cautioned "may be conservative." In all, Munster sees AT&T selling 11 million iPhones, and 9 million from Verizon.

Munster sees Verizon activating 25 million total smartphones in calendar year 2011. If Apple does indeed account for 9 million, the handset maker would sell 36 percent of the smartphones on Verizon's network. Munster's model places Apple with a much lower share of smartphone sales that the iPhone currently enjoys at AT&T. In the September 2010 quarter, Munster estimates that the record 5.2 million iPhones activated by AT&T accounted for about 80 percent of all smartphones sold by the carrier.

In addition, analyst Shaw Wu with Kaufman Bros. issued a note to investors on Monday in which he said Verizon arguably needs the iPhone more than Apple needs Verizon.

"The reason that VZ arguably needs the iPhone now more than ever is as it has lost share to AT&T over the last two quarters as Android momentum slows here in the U.S. (as per carrier subscriber data)," he said. "We also believe VZ is willing to pay to keep the iPhone exclusive on its network and AT&T. Because of this, we believe the iPhone isn't likely to appear on T-Mobile USA and/or Sprint until later."

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