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5G iPhone could get a big boost from US wireless carriers

Verizon, AT&T and T-Mobile are expected to make a big deal about the 5G-capable iPhone this fall, according to one Wall Street analyst firm, potentially offering steep discounts on the device and other promotions to gain 5G market share.

"US telcos seem more willing to promote the device," wrote the Wall Street research analysts Nomura's Instinet in a Tuesday note to investors. "The US operators have slowly elevated their rhetoric around iPhone 12 promos over the past year. Phrasing has shifted from 'quite comfortable with (low) levels of promotion' to 'super cycle isn't the term, but step up in replacements likely' to 'nothing moves the needle like the iPhone.' " We do consider the telcos much more savvy about targeting promotions than they were during the iPhone 6."

However, the analysts cautioned that they do not expect the promotions to create a "super cycle" for the forthcoming device. A "super cycle" is a marked rise in the sale of phones – often driven by gotta-have-it innovations like super-slim designs or bigger screens – that sits outside of the normal "my phone is old and/or broken" upgrade pattern.

"Apple seems to be aiming the iPhone 12 no higher than the iPhone 11," the Instinet analysts wrote, citing information from the firm's Taiwan supply chain team. "Apple has prepped the supply chain for 80mn iPhone 12s in 2H20, which is at the low end of the 80-85mn iPhone 11s Apple requested for 2H19. We interpret this to mean Apple expects to ship 65-70mn iPhone 12s in 2H20 (depending on the specifics of launch timing) vs. 75mn iPhone 11s in 2H20."

The expected release of the 5G-capable iPhone comes at an important time for the big US wireless network operators. They've all launched 5G networks and are now working to leverage those offerings to gain momentum against their rivals. Moreover, AT&T and Verizon specifically will be working to blunt the advance of T-Mobile, fresh from the close of its Sprint merger, and Dish Network, which recently entered the US wireless industry via the purchase of around 9 million prepaid customers. All of these providers likely will be looking at ways to encourage customers to not only purchase a 5G iPhone but to switch to their network when they do so.

Apple's iPhone launches are often closely watched affairs by wireless operators as well as the wider tech industry for hints about the overall direction of the market, given that Apple is viewed as a trendsetter in terms of design, technology, and marketing strategy.

The Instinet analysts reported that Apple will launch four different iPhone 12 models and that each model will include options with or without millimeter wave 5G.

Other iPhone reports indicate that Apple may no longer include headphones or charging cables with its newest iPhones, and will continue to use OLED screens. The company is also reportedly preparing for a possible slight launch delay due to the coronavirus.

Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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