That’s the argument put forth by Piper Jaffray analyst Chris Larsen in a research note to investors Monday. Larsen feels that the cost to Apple (AAPL) of developing a CDMA version of the iPhone for Verizon’s (VZ) network and the subsidies the company might lose by ending its exclusivity deal with AT&T (T) would be a small price to pay for the spike in iPhone sales they would create.

“Although the iPhone is a strong player in the smartphone market, expanding its multi-vendor strategy could allow it to dominate the industry, as it does with the iPod,” Larsen writes. “The U.S. market is the world’s largest smartphone market, but we believe there is a land grab in the U.S. for smartphone share.”

Expanding his argument, Larson adds, “Apple’s exclusivity with AT&T has left the door open for strong competition from competitors, such as Research In Motion’s Blackberries, Palm’s webOS smartphones and Google’s Android operating system on multiple smartphones from OEMs such as Motorola, HTC, Samsung, LG, and others. Making the iPhone available to the other 150+ million subscribers (~2/3s of subscribers) not on AT&T’s network could result in iPod like adoption.”

Keeping the iPhone exclusive–while it might enable Apple to do more innovative things, as COO Tim Cook noted yesterday during the company’s quarterly earnings call–would also give those rival devices and platforms more time to catch up. If Apple really hopes to keep its lead in the U.S. market, it must do away with exclusivity deals, the same way it’s doing away with them abroad.

That’s bad news for AT&T. Because, as I’ve noted here before, a move to nonexclusivity in the U.S. would brutalize the carrier’s subscriber base. Analysts have long said that a material number of AT&T iPhone users would flock to Verizon’s superior network given the chance.

Larsen agrees. “A move to non-exclusivity in the U.S. could have a material impact on the U.S. wireless carriers,” he writes. “AT&T could lose meaningful smartphone share, while we think all the other carriers would gain share. We believe Verizon would be the largest beneficiary of non-exclusivity and the development of a CDMA iPhone.”

Continuing, Larson explains, “With 35% of AT&T’s iPhone sales coming from new customers, we feel it is reasonable to assume the company’s total iPhone sales could decline by 30% or more and that Verizon could pick up the bulk of this lost share (why switch to AT&T for iPhone if you haven’t left by now and the device is now available through your carrier; Verizon’s network quality could be a reason to switch from AT&T).”

Digital Daily never disappoints in the headline department and OMFG, this week was no exception. John pulled some juicy nuggets out of CTIA’s semiannual wireless survey, including the staggering figure of 4.1 billion— the number of text messages Americans exchange each day. Google Voice was among the top stories again, thanks to a group of House members who asked the Federal Communications Commission to investigate the service. Digital Daily rounded out he week with comments from Qualcomm (QCOM) CEO Paul Jacobs and the cacophony that is the net neutrality debate. With a dazzling turn of phrase, Jacobs supported the idea of “traffic shaping”, or giving network managers the keys to their net-neutrality handcuffs.

Three time zones away at MediaMemo, Peter didn’t seem sure whether it was a sadder week for music sales or for music in general. Music sales are still in a slump. What may be worse, however, is that the slump was only slowed by Michael Jackson and The Beatles, neither of whom seems like a pillar for viable growth. Amid music’s slump, there may be a ray of hope in videoland. MediaMemo reported that Network TV-buster YouTube seems to be learning how to play nice with the other kids, offering certain content producers a way to channel some revenue back into their own coffers. The momentary bright spot for media quickly evaporated when it came time to talk about print. Peter followed the story of Condé Nast’s multiple magazine closings. It’s always a sad day when there are fewer beautifully composed pictures of cookies in the world.

Rounding out the week, Walt released his anticipated review of Windows 7, and proclaimed it good enough to help you get rid of that lingering Vista hangover. With installation times averaging about 45 minutes and lots of neat new features, Windows 7 may just be good enough to make you feel like having a party. Mossberg’s Mailbox was peppered with several Windows 7 RSVPs. Walt issued his usual sage advice about switching to Windows 7, as well as a quickie about personal finance software. The Mossberg Solution covered a set of new point-and-shoot cameras, each with a striking party piece. Katie reviewed the Samsung Dualview TL225, which features a second screen on the front of the camera for convenient self portraits, and the Nikon Coolpix S1000pj, which features an actual projector right inside the camera. Both cameras earned praise for ingenuity, with the caveat that those new features come with an extra price tag.

Check back early and often. There’s always room for AllThingsD.

In the consumer market, Apple (AAPL) scored 811 points out of a possible 1000, exceeding the industry average of 765. Its closest rival, LG–the only other company to beat that average, scored 776.

Apple’s performance in the enterprise market was equally impressive. The company scored 803 points out of a possible 1000. That was 79 points more than RIM, whose BlackBerry took second place with a score of 724 points, the industry average.

And what of Palm (PALM) devices and smart phones running Microsoft’s (MSFT) Windows Mobile OS? Neither had a particularly remarkable showing. Among consumer smart phone users, Palm devices scored 731, while WinMo devices from Samsung and HTC both scored 739. And among business users, Palm devices scored 688, while WinMo devices from Samsung and HTC scored 697 and 692, respectively. The study, it should be noted, was fielded between January and June 2009, so it does not account for Palm’s new Pre handset. (See charts below; click to enlarge.)

Clearly, the iPhone has gained a fair bit of traction in enterprise in a relatively short time. Who was it again who said the iPhone “doesn’t appeal to business because it doesn’t have a keyboard”?

[Image credits: MacDailyNews, J.D. Power and Associates ]

“Throughout this report we have focused on the main ‘branded’ smartphones like iPhone, Android, Pre, BlackBerry, and Treo,” the market researcher explained. “And yet there are many more smartphones in use today, manufactured by the likes of LG, Samsung, Motorola, and Nokia, running either the Windows Mobile or Symbian operating system. What’s going on with these smartphones? For one thing, many users can’t identify their operating system. While Android users know they have a phone on the Android platform, most Windows Mobile or Symbian users have no idea what operating system is running their phone.”

That’s bad news for Microsoft (MSFT) and Nokia (NOK) because not only do these “other” smart phones tend to perform the most poorly in customer satisfaction, most of their owners would like to abandon them for Apple’s (AAPL) iPhone, Research in Motion’s (RIMM) BlackBerry or the Palm (PALM) Pre.

“The ‘generic’ smartphone is unloved, unappreciated, and unlikely to encourage any devotion among its users,” CFI concludes. “Its main role appears to be as a stepping stone to a ‘branded’ smartphone….Our data indicates there is little future for the ‘generic’ smartphone. Or, to be exact, the first generation of ‘generic’ smartphones. The iPhone has clearly raised the bar, but given the performance of the initial versions of the Pre and Android, the gap is narrowing. It’s clear from our data that the Android and Pre are worthy competitors to the iPhone, and more recent versions of the BlackBerry pose a bigger threat.”

PREVIOUSLY:

• Windows Mobile 6.5 “an Amazing Engineering Feat,” All Right…
• Perhaps if They Think of Their Win Mobile Devices as Broken iPhones…
• Ballmer on iPhone: Mr. Mojo Risin’

“The commission has endorsed the local sale of the iPhone and the launch of its service within the limits of the law,” said Lee Tae-hee, a spokesman of the Korea Communications Commission. “If Apple includes location based-related details as a form of an agreement to its strategic partners such as KT, Apple’s iPhone can give location-related services here.”

Great news for Apple (AAPL). The South Korean market is a robust one, and analysts say that with the right carrier partner, Cupertino could be looking at sales over the first year ranging from 500,000 to two million. That said, they note that competing with the likes of Samsung and LG on their home turf won’t be easy. Between them, they control about 70 percent of the South Korean handset market.

“There seem to be a lot of people waiting for iPhones to go on sale here but it will not be easy for Apple to crack the Korean market as Samsung and LG already dominate the market with competitive phones,” said Jae Lee, analyst at Daiwa Securities in Seoul. “It will be difficult for Apple to steal market share significantly from the Korean makers in the short term but the iPhone could still be a threat to Samsung and LG in the long term.”

When the iPhone finally does arrive at market in South Korea, it will likely be with KT (formerly known as Korea Telecom) as a carrier partner. As Dan Butterfield over at iPhonAsia notes, KT CFO Yeon-hak Kim suggested as much this past summer. “Apple iPhone will be in our smartphone line-up,” he said in August. “iPhone will help to expand the smartphone market and will contribute to increasing the ARPU (average revenue per user).”

KT officials are telling the Korea Times that they’re looking at a November launch date. “KT has been in talks with Apple to introduce iPhones,” said a KT official. “Sometime in November, the latest iPhone model dubbed as ‘iPhone 3GS’ and its previous model will be commercialized. KT and Apple will decide on the coverage of location-based services.”

“There’s room for three to five players in this space. We don’t have to beat each other to prosper.”

– Palm CEO Jon Rubinstein

Palm CEO Jon Rubinstein likes to say smart-phone makers “don’t have to beat each other to prosper,” but it’s beginning to look like they–or, rather, Palm–might have to. Because while the Pre may have put Palm (PALM) back in the game, it’s not clear how long it can keep it there. With competition in the emerging smart-phone market ratcheting up as we head into the holidays, some analysts are predicting that Palm’s quarterly sales may decline–sharply.

“[Palm’s] guidance of a sequential decline in revenues in the second quarter implies that Pre sales are not off to the races,” Needham & Co. analyst Charlie Wolf wrote in a research note today. “Although Palm did not say what Pre sales were in the quarter, they appear to have been around 600,000 units, about 100,000 above our estimate. Palm indicated that revenues could fall to $240 million to $270 million in the second quarter, a number that implies that Pre sales could fall to 500,000 units vs. our previous estimate of 750,000 units.”

Interesting that Wolf pegs Pre sales as being above his estimate, since Palm hasn’t yet broken that number out. Indeed, in a conference call with analysts yesterday the company was so quick to dodge questions about Pre sales that I assumed it’s not an impressive number. But if the company really did ship 600,000 units as Wolf contends, that would suggest it’s doing pretty well at market, though certainly not as well as the Apple (AAPL) iPhone or Research in Motion’s (RIMM) BlackBerry. Odd then, that Palm wouldn’t disclose a hard sales number.

“The Pre and its siblings running on Palm’s WebOS software platform appear to be a serious contender in the smartphone market,” Wolf concludes. “But it would be premature at this point to declare it a winner in view of the fact that the smartphone market will shortly be overrun with new phones from Motorola and others running on the Android platform as well as new BlackBerry models in time for the holiday selling season.”

Sure, there might be room for three to five players in the smart-phone space, as Rubinstein claims. But that space is currently occupied at least seven players–Apple, RIM, Nokia (NOK), Motorola (MOT), Samsung, Sony Ericsson and Palm. Which means somebody’s got to go. So while Palm might not have to beat anyone to prosper, it may have to, to survive.

“We are no longer planning to pursue the acquisition as there has been no progress since we withdrew our offer as of Oct. 22, 2008,” the company said in a filing with the Korea Exchange. The announcement comes after the two companies inked a new seven-year NAND flash-memory license agreement, one that will see Samsung paying about half the royalty amount it paid previously.

This morning the struggling handset maker tapped Nordberg, executive vice president of Ericsson, as its new president and CEO. He’ll replace Dick Komiyama, who has apparently decided to retire, though he is smack dab in the middle of implementing the restructuring program that was intended to reinvigorate Sony Ericsson.

“The Sony Ericsson transformation program I began over a year ago is more than half way completed, and I am pleased with what we have achieved so far,” Komiyama said in a statement. “I believe it is the right time for me to begin transferring the leadership of the company to a person who is able to complete the transformation program and lead Sony Ericsson through its next phase of development.”

The right time, indeed. Over the past few years, Sony Ericsson has been overtaken in the high-end handset market by Research in Motion (RIMM), Apple (AAPL) and Samsung and beaten into submission in the low-end market by Nokia (NOK). Among the top five cellphone vendors, Sony Ericsson saw the steepest drop in sales from the first quarter, down 40 percent year-over-year, and continued losses at the joint venture have prompted some to speculate that it could be broken up.

That’s clearly not the case at the moment, though it could be if Nordberg doesn’t manage to speed up that transformation program. Said Nordberg: “Sony Ericsson has taken leadership in the music phones and the camera phones with the Cybershot and the Walkman, but there are some weaknesses in the smartphone segment and we need to restore that.”

Sony’s net loss in the quarter was 37.1 billion yen ($390 million), a brutal change from the 35 billion yen profit in the year-ago period. Still, it was smaller than the 109.6 billion yen loss analysts polled by Thomson Reuters had been expecting. That said, all three of Sony’s core electronics divisions registered losses for the quarter.

Not a good sign. Because while the company’s smaller-than-expected loss proves its cost-cutting measures have been effective, it also shows that Sony (SNE) must do more than just slash jobs and suppliers if it ever hopes to regain its position in the market. For while cost-cutting might improve Sony’s bottom line, it’s not going to make the company competitive against Samsung, Nintendo and Apple (AAPL), who’ve usurped its position in TVs, gaming consoles and media players, respectively. What Sony needs most is not more cost-cutting; it’s a new gotta-have-it product.

Seriously. It’s been, what, 30 years since the debut of the Walkman?

“I don’t think that’s likely. We’re looking and talking to a lot of laboratories and big companies around the world, like Sony and Samsung. We’re all working on wireless readers for books or newspapers or for magazines. I think they’re a year or two away being marketed in a mass way, high quality ones, and we’ll be absolutely neutral. We’re happy to have our products distributed over any device provided it’s only going to subscribers paying for it.”

— Rupert Murdoch says News Corp. isn’t working on a Kindle of its own

“If we were any more successful, we’d be bankrupt.”

– Sony CEO Howard Stringer on the company’s LCD business, May 28, 2008

About the best thing to be said for Sony’s grotesque financial results is that they came in smaller than expected. The company’s 98.9 billion yen ($1 billion) loss for the fiscal year ended March–its first net loss in 14 years–wasn’t nearly as bad as the 150.0 billion yen ($1.57 billion) figure it had predicted in January or even close to the 173.8 billion yen ($1.8 billion) analysts polled by Thomson Reuters had been forecasting. And the same is true for Sony’s fourth quarter, as well. The net loss of 165.1 billion yen ($1.7 billion) it reported was far better than the 228.7 billion yen ($2.39 billion) forecast.

Still ugly as hell, though. And according to the company’s leadership, its next fiscal year will be little different. Sony is forecasting a loss of 120 billion yen ($1.2 billion). Given that unfortunate outlook, Sony (SNE) is closing three factories in Japan, part of an ongoing effort to shore up a business ravaged by the worst recession in decades. But cost-cutting measures like that can only do so much.

As analysts note, what Sony really needs is a killer product. It is no longer the force it once was in consumer electronics, having ceded its dominance in portable music players to Apple (AAPL) and its leads in the television and videogame console markets to Samsung Electronics and Nintendo. “Their outlook gave me the impression that their business is heading for a gradual recovery,” Fujio Ando, senior managing director at Chibagin Asset Management, told Reuters. “But it would all depend on whether they would be able to start producing popular products, because right now they have no ‘Number One’ products. I see Sony’s branding power weakening.”

And that’s something of which Sony is painfully aware.

“We have two distinct challenges facing us,” Sony CEO Howard Stringer recently told the New York Times. “The first is the global slowdown, which forces us to make significant adjustments. The second challenge is the evolution of our competitive environment. New competitors [are] springing out everywhere.”

Indeed. And while Sony seems to be meeting the first challenge, albeit slowly, it hasn’t yet begun to make headway toward meeting the second. And at this point, one wonders if the company is even capable anymore. As Japanese Economy, Trade and Industry Minister and former Sony employee Akira Amari asked back in October 2006, “What has become of the Sony known for its technology?”

“Android has fast been winning healthy support among operators, vendors and developers,” said Strategy Analytics director Neil Mawston. “A relatively low-cost licensing model, its semi-open-source structure and Google’s support for cloud services have encouraged companies such as HTC, Motorola, Samsung, T Mobile, Vodafone and others to support the Android operating system. Android is now in a good position to become a top-tier player in smartphones over the next two to three years.”

If that comes it pass, it’s bad news for Palm (PALM) whose Pre handset and WebOS will be facing off against a powerful mobile triumvirate: Apple (AAPL), Research in Motion (RIMM) and Google (GOOG).