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Apple, Verizon in disagreement over CDMA iPhone pricing - report

As Apple and Verizon are rumored to be in negotiations for a summer 2010 CDMA iPhone launch, the nation's largest wireless carrier and the handset maker are believed to be at odds over pricing.

In a new note to investors Tuesday morning, Maynard J. Um of UBS Investment Research said that a new iPhone is expected to launch in mid-2010. Whether that phone would be available for Verizon's CDMA network remains to be seen.

"We believe a CDMA-iPhone is also in the works," Um wrote, "though believe Verizon Wireless and Apple may currently be apart on pricing."

Even if Verizon and Apple can't work out a deal, Um said he believes a CDMA phone is still a possibility. Potential handset launches in China and/or Japan, where carriers operate other CDMA networks, could occur this year.

Last fall, conflicting reports within chip maker Qualcomm suggested a Verizon-capable iPhone could arrive in mid 2010. Whether that handset would be a dual-mode world phone, or a Verizon-only CDMA model was disputed.

Though Qualcomm plans to release dual-carrier chips that would allow future phones to work on CDMA/EVDO carriers such as Verizon and Sprint, as well as rival 3GPP carriers using UMTS/HSPA+ technologies like AT&T and T-Mobile, those chips will not arrive until the second half of 2010. Some have said that timeframe would not allow Apple to release a dual-mode phone until 2011 at the earliest.

And others believe a Verizon iPhone deal is more wishful thinking than anything else. Given that both Verizon and Apple are focused on consumer control, analyst Shaw Wu with Kaufman Bros. previously predicted that the conflicting interests of the two companies would get in the way of an agreement.

Um's note Tuesday would suggest that to be the case. Currently, it is estimated that Apple gets a favorable $700 average selling price per iPhone, subsidized through exclusive carrier AT&T. Compare that with the ASP of the Motorola Droid, exclusive to Verizon, which costs an estimated $450 per sale.

Um also noted that he does not expect Apple to announce any new products at CES 2010 this week. But he does expect new products to be announced by the end of January, as the Cupertino, Calif., company is expected to hold an event on Jan. 27 at the Yerba Buena Center for the Arts in San Francisco. New products, he said, could include typical refreshes of the Mac Pro, a processor upgrade for the MacBook Pro, and a new iPod shuffle. Additionally, speculation of late has reached a fever pitch that the company will unveil a 10-inch touchscreen tablet device in January, and the product will ship in March.

"Given the tablet is generally expected," Um said, "its functionality and appeal will be the determinant of how the stock reacts following an announcement."

Hybrid tablet-netbooks are expected to have a major presence at CES this week, Um said. He also expects netbooks to improve with more power and functionality, thanks to faster processors. Many hardware makers are looking to use CES as an opportunity to beat Apple to market for a tablet device.