Apple May Build 4G iPhone Soon, Dominate New Market

Apple (NASDAQ: AAPL) may be in the midst of the development of a 4G iPhone. It is not clear when the product will be released, but if it is in the next few months, Apple has a chance to dominate the new, ultra-fast wireless market.

Apple observers have had strong reason to be concerned about Apple’s long-term 4G plans. Most experts believe that the new iPhone 5, to be introduced next month, will only run on 3G networks, which is the current standard. But that standard has begun to change quickly. Large carriers Sprint-Nextel (NYSE: S), AT&T (NYSE: T) and Verizon Wireless (NYSE: VZ) have recently promoted 4G capacity more than any single handset. This is a departure, at least for AT&T and Verizon, which used the iPhone as their primary promotion to get new customers.

Cellular carriers, both inside the U.S. and outside, hope that 4G speed will prompt more costumers to download video and other large data files. This, in turn, will allow the carriers to charge many customers more money for those downloads. These same companies hope that they can get more money from consumers for basic 4G service than they have for 3G service.

Apple has no product in place to compete with 4G-enabled handsets from large smartphone manufacturers, which include Samsung and fast-growing HTC. These firms have begun to take market share, and Apple needs to ensure that they do not take more.

Apple’s current 3G-enabled products may also have grown old, at least as far as consumers are concerned. Applications like video work much better on fast networks, which makes products that compete with the iPhone more attractive to the large number of people who have or will soon adopt 4G service.

The iPhone still has the most impressive market share in the smartphone business. It could further extend that share advantage in the next several years, but not without a 4G product.

Douglas A. McIntyre