Verizon announces iPhone, will begin selling units on February 10th

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Date: Tuesday, January 11th, 2011, 12:45
Category: iPhone, News

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You’ve been hankering for it for over a year.

And now it’s less than a month away.

Per Reuters, wireless carrier Verizon will begin selling a version of the phone on February 10 at the same prices as AT&T Inc.

“I’m going to switch right away. I’m going to go back to Verizon,” said Raheem Noble, 24, a New York City rapper, who was on his way to buy the device before being told that pre-orders would not begin until February 3.

The new phone puts an end to AT&T’s three-year-old status as the exclusive U.S. provider for the iPhone — but leaves questions over how much Verizon Wireless would be able to capitalize on the deal with Apple.

For one, Verizon did not say on Tuesday what it would charge for its iPhone data and service plans when the phone goes on sale. There were expectations that it would trump AT&T by offering the device with unlimited data service plans.

Verizon likely will announce those prices before pre-orders begin on February 3, said Verizon Wireless Chief Executive Daniel Mead. He said he was prepared for “unprecedented” demand.

The phone will not work all around the world because it runs on the CDMA network, which is not supported in many big markets such as the United Kingdom and France.

In addition, Verizon’s first iPhone customers may buy a phone that is outdated only months later if Apple upgrades the iPhone on its typical early summer launch schedule.

“Some buyers may want to wait for a new iPhone that is likely coming in June. I already had people coming to me asking, ‘should I wait?'” said BGC partners analyst Colin Gillis. “On the other hand, a surprising number of people just don’t want to wait.”

Some analysts, pointing to years of pent-up demand among Verizon Wireless customers, expect it to sell 9 million to 13 million iPhone 4 units this year.

Verizon, a venture of Verizon Communications and Vodafone Group Plc, said the phone would be available at 2,000 of its stores. Prices with a two-year agreement for US$199.99 for the 16-gigabyte model or US$299.99 for the 32-gigabyte model — comparable to what AT&T charges.

Still, there are some provisos to consider: A CDMA iPhone will not allow users to simultaneously support voice and data connections, the same limitation that faced users of the original iPhone connecting to AT&T’s EDGE network.

Kim Caughey Forrest, senior analyst with Fort Pitt Capital Group, which holds shares in Verizon, said she believes there are many people who have been reluctant to buy an iPhone because of worries about the quality of AT&T’s network.

As an example she cited her home town of Pittsburgh: “A lot of people in Pittsburgh are really excited about the prospect of having a Verizon iPhone. I don’t believe they are alone. I don’t think we are a unique market,” she said.

On the other hand, AT&T is expected to face its toughest year since 2004 as a result of the Verizon deal with Apple.

AT&T, which has come under fire for patchy wireless service in some cities, nonetheless added an estimated 15 million new iPhone customers in 2010. It has tried to reduce its dependence on the iPhone by adding other devices to its service.

“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,” an AT&T spokesman said following the Verizon announcement.

One problem for Verizon Wireless may be the high cost of selling Apple products, which come at a premium to other smartphones, analysts said.

Like AT&T, Verizon Wireless will have to shoulder part of the cost of the devices to convince people to sign long-term contracts.

Verizon Wireless will have to pay a US$400 subsidy for each iPhone it sells if it keeps the price in line with AT&T’s, UBS analyst John Hodulik estimated.

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