A 3G iPhone Will Rock Cell Industry Again

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According to the head of AT&T (T), Apple (AAPL) will launch its 3G iPhone next year.

If the current handset has one major Achilles Heel it is that, working on AT&T Wireless’s 2.5G network it is much slower than most other smartphones for critical uses like working on the internet and downloading data.

There is no telling how many people have held off buying an iPhone because of the backwards network set-up, but it is a cutting edge device lacking a cutting edge network. Adoption is bound to pick up sharply once the handset combines function with speed.

All of this has to be very good news for the earnings pictures for AT&T and Apple going into 2008 and 2009. More consumers should move to AT&T to get an iPhone with a faster wireless connection. That increases the amount of money they make from calling and data plans. Apple gets revenue for its handset and a piece of the revenue from the AT&T calling plans.

A 3G iPhone is a big deal. It should send another wave of buyers to AT&T stores and will almost certainly make life more challenging for RIM (RIMM) and Palm (PALM) which make a great deal of their money from 3G smartphone devices.

The handset deck is about to get shuffled again.

Douglas A. McIntyre