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Report: Apple cut Verizon iPhone orders by half

by Phil Hornshaw

From all outward appearances, moving the iPhone to Verizon didn’t create the prolonged sales explosion Apple (AAPL) and Verizon (VZ) expected to see.

Verizon has said that the iPhone 4 sold in record numbers when it was released in February, but since then, demand for Apple’s powerhouse smartphone seems to have slowed considerably. According to a story from Apple Insider, Apple has reportedly cut production of the CDMA-enabled iPhone 4 by half for the remainder of the year, and tech publication DigiTimes has reported that iPhone assembler Pegatron (4938.TW) posted a loss of about $19 million for the first quarter of 2011.

The DigiTimes report states that Pegatron’s original expectations for CDMA iPhone 4 orders was around 10 million for the year, but that’s now expected to be more around 5 million based on Apple’s orders to component makers. Apple Insider thinks that Apple has already shipped better than 3 million CDMA iPhones during the first quarter of the year. Of those, 2.2 million have been activated by Verizon and another million were thought to be sold unactivated.

But sales of the Verizon iPhone haven’t been as brisk as the hype suggested. The launch didn’t see the line-ups that Apple products usually get, and lately, HTC’s (2498.TW) Thunderbolt Android phone has been outselling the iPhone 4 at some Verizon stores.

The problem that has likely kept most customers away has been the expectation until recently that Apple would be announcing the iPhone 5 in June at its World Wide Developers Conference. Most tech news outlets now agree that announcement has been pushed back to the fall (probably September), but earlier this year when the Verizon iPhone became available, most potential buyers probably thought they were buying an old phone in the middle of iPhone’s product cycle, and were essentially signing up to be saddled with an old iPhone for another year and a half before they could upgrade to a new iPhone on a Verizon contract.

If Apple had come clean about the iPhone 5 delay then, it’s not unlikely that more users would have opted for the iPhone 4 on Verizon rather than waiting until the new phone is available. But Apple still hasn’t owned up to a release date for the iPhone 5, and is even reportedly testing a new version of its mobile operating system, iOS 5, according to 9to5Mac. Apple traditionally rolls out new versions of iOS along with new iPhones, and the company is expected to announce the new operating system at WWDC. Until then, though, all potential iPhone 4 customers have to go on is iPhone 5 speculation.

It’ll be interesting to see how the story potentially changes with the release of the white version of the iPhone 4. The long-awaited color option has been delayed and rumored for months, and was finally released today, in the middle of the product cycle again. For some reason, people seem extremely interested in the white iPhone (or at least, the tech media sure is), so if that interest is really so strong as it seems, it could bolster all iPhone 4 sales, CDMA included.