iPhone on Verizon: The Wait is Over

(Reuters) – After
waiting three-and-a-half years Verizon Wireless customers will finally
get their hands on Apple Inc’s iPhone next month.

The top U.S. wireless operator
ended months of speculation and anticipation from impatient consumers on
Tuesday by announcing that it would begin selling a version of the
iPhone 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 preorders would not begin until February
3.

The new device 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 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 preorders begin, said Verizon Wireless
Chief Executive Daniel Mead, who is preparing 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outdated only months later if Apple upgrades the iPhone on its typical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 of the slim,
touchscreen iPhone 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 are $199.99 for the 16-gigabyte model or $299.99 for the
32-gigabyte model — comparable to what AT&T charges.

Apple
said its Verizon Wireless deal was not exclusive, potentially leaving
the door open for operators such as Sprint Nextel to sell iPhone as
Sprint uses the same mobile technology as Verizon. Sprint declined to
comment.

One upgrade in the new
device compared with AT&T’s iPhone 4 is that it will act as a
so-called personal hotspot, which could connect as many as five
different devices to the Internet via the phone’s short-range Wi-Fi
radio.

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.

Todd Rethemeier, an analyst with Hudson Square
Research, agreed, saying that "as many as Apple can manufacture in that
first year, Verizon will sell."

He added, "The average person, who has stuck with Verizon for the past three years, was suffering from iPhone envy."