Verizon Wireless on Tuesday unwrapped its highly anticipated
version of the Apple Inc. (AAPL) iPhone, ending AT&T Inc.'s (T)
exclusive hold over the blockbuster smartphone and shaking up the
smartphone industry.
Verizon Wireless said the iPhone 4 will be available beginning
Feb. 10, with certain Verizon Wireless customers able to preorder
Feb. 3. The phone, priced the same as the AT&T version, will
not work on the carrier's recently launched superfast network.
Prices for the data plans weren't immediately disclosed. John
Stratton, chief operating officer of Verizon Wireless, said Verizon
would provide more details on pricing ahead of the Feb. 3 preorder
date. He declined to comment on if the lack of a pricing plan,
suggesting a new option was in the works.
Verizon Wireless getting the iPhone marks a major shift in the
competitive dynamics between the nation's two largest carriers,
with AT&T losing its largest advantage. The partnership, which
has been in the works for roughly two years, also will serve as a
test of Verizon Wireless's network and reputation for reliable
service.
Apple, meanwhile, gets access to Verizon Wireless's 93 million
customers, essentially doubling its potential customer base. The
addition of a second carrier underscores the notion that even a
buzz-worthy company such as Apple can't ignore the expanding
influence of rival Google Inc. (GOOG).
"Two industry innovators are coming together to deliver
something to customers that they've been hungry for for years,"
Verizon Communications Inc. (VZ) President Lowell McAdam said at a
launch event in New York. Verizon jointly owns Verizon Wireless
with Vodafone Group PLC (VOD).
Tim Cook, chief operating officer for Apple, said the two
companies struck a multiyear agreement but noted it wasn't
exclusive. Chief Executive Steve Jobs did not attend the event.
AT&T responded by issuing the following statement, "For
iPhone users who want the fastest speeds, the ability to talk and
use apps at the same time, and unsurpassed global coverage, the
only choice is AT&T."
One of the biggest questions is Verizon Wireless's ability to
handle the iPhone on its network. The two companies have been
working together and sharing their technical know-how for the past
two years.
"The level of cooperation between the engineers for both
companies has been as high or higher than any product we have
worked on," Stratton told Dow Jones Newswires.
The carrier has been on the road testing with the iPhone for
months, and Verizon Wireless CEO Dan Mead said he was pleased with
where they were. "We are ready for this launch," Mead said.
Verizon Wireless and Apple opted to sell a 3G version because
they had to make a decision early on, Stratton said.
Cook added that the first-generation of chips that can ride on
Verizon Wireless's 4G network would have "forced design compromises
we would not make." Instead of waiting for newer chipsets, Apple
went ahead with the 3G version because Verizon customers said they
wanted the iPhone now, Cook said.
A 16 gigabyte Verizon iPhone will sell for $199.99, while a 32
gigabyte model will go for $299.99, each with a two-year customer
agreement.
Apple is likely to get a significant marketing push from Verizon
Wireless. Marni Walden, chief marketing officer for the carrier,
said the marketing campaign "will be a substantial effort." She
declined, though, to comment on the specific amount and added that
the marketing also would ride on the built-in buzz around the
product.
"(The iPhone) doesn't take a backseat to any product we
deliver," Stratton said.
Verizon Wireless gets the iPhone as Apple begins to lose some of
its buzz to Google's Android platform. While Apple still has the
largest U.S. market share among smartphone operating systems, more
new customers purchased an Android phone in recent months,
according to Nielsen Co.
Analysts' estimates for the Verizon Wireless iPhone vary. The
carrier could sell 9 million iPhones this year, outstripping the 6
million AT&T is expected to sell, according to Barclays
Capital. IHS iSuppli said the Verizon iPhone should boost global
iPhone shipments 25% to 61.2 million this year.
The iPhone will likely leave a lot of other players on the
defensive. Heavy demand for the iPhone could take Verizon's focus
and marketing support away from smartphones that run on Google's
Android system as well as the carrier's current suppliers of
high-end smartphones, such as Research In Motion Ltd. (RIMM),
Motorola Mobility Holdings Inc. (MMI) and HTC Corp. (2492.TW).
A Verizon iPhone also raises the pressure on those U.S. carriers
that don't have the iPhone, specifically Sprint Nextel Corp. (S)
and T-Mobile USA, a unit of Deutsche Telekom AG (DTEGY). Spokesmen
for both carriers weren't immediately available for comment.
AT&T has been preparing for the loss of exclusivity for
months. It invested heavily in improving the coverage in New York
and San Francisco, its two biggest problem cities. Last year, it
doubled the early-termination fee for its smartphone users and
allowed iPhone customers to upgrade early in exchange for a new
two-year service contract.
During the Consumer Electronics Show last week, the company
redubbed its network "4G" as it reiterates the speed advantage of
its service over the CDMA technology used by Verizon Wireless.
AT&T also has diversified its lineup, further embracing Google
and committing to a dozen Android smartphones for the year.
The Verizon Wireless version of the iPhone is essentially the
iPhone 4 for AT&T. The only difference is the extra "Personal
Hotspot" capabilities allowing customers to use the smartphone to
connect up to five Wi-Fi enabled devices. The service will cost an
additional $20 a month.
Verizon shares recently slid 1.8% to $35.27. Shares of Apple
were off $1.73 to $340.73. AT&T shares fell 1.8% to $27.83.
-By Roger Cheng, Dow Jones Newswires; 212-416-2153;
roger.cheng@dowjones.com
(Yukari Iwatani Kane contributed to this report.)
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