Verizon, Apple iPhone talks continue toward possible 2011 launch

Shaw Wu with Kaufman Bros. issued a note to investors on Monday, in which he said he expects Apple to expand the iPhone to another carrier in the U.S. next year. Apple needs this, he said, to maintain high growth, as the company's smartphone nears saturation on the AT&T network.

The current front-runner is Verizon, which is said to be in talks with Apple for a "SVDO" iPhone which would allow both voice and data at the same time, something not possible with a traditional CDMA phone on Verizon's network.

While Wu believes that the iPhone will eventually come to Verizon, that could happen as late as 2012, he said, if Apple decided instead to go another route: both T-Mobile and Sprint.

"It is notable that signing up both T-Mobile USA and Sprint would almost be the equivalent of Verizon (in terms of subscribers)," he said. "For point of reference, AT&T has 90 million wireless subscribers compared to 93 million at Verizon, 48 million at Sprint, and 34 million at T-Mobile USA."

Wu said sources have indicated to him that important details are still being ironed out between Verizon and Apple, including technology and economics. But while the companies are in talks, he said it would be "premature" to rule out T-Mobile and Sprint.

However, the growth of Android on the Verizon network also provides Apple with an incentive to make the iPhone available on the carrier, he said. Making the iPhone available to Verizon customers would be the best way to address the growing presence of Android phones, Wu wrote.

While Apple and Verizon are said to be eying SVDO for the iPhone for now, the companies are said to be viewing that option as an interim device until a full-fledged long-term evolution (LTE) 4G phone debuts in a few years.

"From AAPL's perspective, the debate is whether it makes sense to roll out an interim CDMA iPhone sometime in 2011 or perhaps wait until LTE becomes more available in 2012," Wu wrote.

Reports of a deal between Verizon and Apple are, of course, nothing new, and have persisted for years. But recently, a number of rumors have pointed toward a January 2011 launch for a CDMA iPhone available on the largest wireless network in the U.S., Verizon.

Apple has reportedly gone as far as to build early CDMA iPhones that are currently in the engineering verification test phase. That is one step below device verification test, or DVT status, which takes place right before production. The iPhone 4 handset that was found in a bar this year was a DVT handset.