Apple, iPhone Need to Branch Out in 2012

The worlds a much different, bigger place for Apple (NASDAQ: AAPL ) here at the
close of 2011. At the beginning of the year, Apple still was bashful about its
iPhone business. Sure, the device was snatching up market share, but that didnt
mean it was time to end exclusive carrier agreements around the world. The
contracts were up , the rumors ran wild, but iPhone stuck by individual carriers
around the world. AT&T (NYSE: T ) here in the U.S., SoftBank Mobile in Japan,
China Unicom (NYSE: CHU ) in China, KT Corp. (NYSE: KT ) in Korea in January
2011, Apple was a one-telecom kind of company in many of its biggest markets.
How times change. Verizon (NYSE: VZ ) got the iPhone here in February, SK
Telecom (NYSE: SKM ) in Korea in March, and others continued to join in around
the world. When the iPhone 4S released in October, Apple spread around the love
even more, coming to Sprint (NYSE: S ) and C-Spire, a small carrier largely
based in Mississippi. Now, Apple is projected to sell approximately 30 million
iPhones over the holiday quarter. It isnt enough, though at least according to
Morgan Stanley analyst Katy Hubertys research. Released to investors on Sunday
and detailed in a Monday CNN report, Huberty found that while Apple is, as of
2011s third quarter, the second-largest smartphone vendor in the world , it lags
behind its competitors in terms of carrier support. Of the 760 mobile phone
carriers identified by Huberty around the world, just 30% carry Apples iPhone .
Meanwhile, competitor Research in Motion s (NASDAQ: RIMM ) fading BlackBerry
line is supported by 79% of carriers. If the iPhone is going to continue to grow
and retake its lead in market share from Samsung (PINK: SSNLF ), it must keep
expanding. Huberty singled out Asian markets as the sector Apple must focus on
particularly China, where China Unicom still holds an exclusive grip on iPhone
support. The question at hand: Why hasnt Apple broadened out to the maximum
number of carriers already? Older iPhone models are cheap enough to manufacture
at this point that the phone is no longer restricted to consumers with the most
disposable income (even if it hasnt yet reached the real mass-market price point
of phones like Nokias classic 1100 series). The answer might be that Apple is
waiting for a shift in access to better networks to make its move toward total
world domination. Ahead of the iPhone 4S release in October, it was heavily
rumored that Apple finally would be branching out to China Telecom (NYSE: CHA )
and China Mobile (NYSE: CHL ), China Unicoms two biggest competitors. In fact,
China Mobile chairman Wang Jianzhou was vocal throughout the year about Apple
bringing its wares to his network . It was in September though that Jianzhou
more specifically said that his company received a positive answer from Apple in
response to requests for an iPhone model built for 4G LTE networks . All signs
indicate that Apples next smartphone due in 2012 will be a significant redesign
of the current model, with a new form factor and support for LTE networks. That
release likely will mark Apples full embrace of all carriers. By 2012, the
faster but still-growing LTE networks supported by companies like Verizon in the
U.S. and China Mobile abroad will be better established and ready to support an
influx of millions of iPhone users. While larger telecoms with established 4G
networks carry the new iPhone 5, Apple will be free to offer budget-priced
iPhone models on a variety of smaller carriers with broad 3G network support.
This means not just B-list telecoms like T-Mobile USA, but also C-listers like
MetroPCS (NYSE: PCS ) and Leap Wireless (NASDAQ: LEAP ). Its a scenario that
will give Apple maximum penetration while still maintaining the high-end market,
and its attendant revenue, that has made it so successful in the space. Of
course, all of this presupposes that consumers infatuation with Apples phones is
maintained into the next year. Considering that the company sold 4 million
iPhone 4Ss within three days of releasing the device, its a good bet Apple will
hold consumer attention for some time to come. As of this writing, Anthony John
Agnello did not own a position in any of the stocks named here. Follow him on
Twitter at