Verizon Wireless customers in Arizona and across the country finally will gain access to the iconic Apple iPhone on Feb. 10, ending AT&T's 3 1/2-year monopoly on the wildly popular smartphone.
Apple's new relationship with Verizon was announced Tuesday, ending months of speculation about the match between the top smartphone maker and leading wireless carrier.
The deal heightens the competition between the nation's two biggest wireless providers as No. 1 Verizon tries to lure No. 2 AT&T's iPhone customers while AT&T offers incentives to keep them.
The companies, two of the country's biggest advertisers, are expected to roll out aggressive campaigns touting the virtues of their iPhone offers.
The big winners likely will be consumers, who will be able to access the features of an iPhone on Verizon's extensive network, and Apple, which could see sales of its phones double this year as a result of the deal.
Analysts cite potential losers as AT&T, Sprint and T-Mobile, who could see subscribers bolt for Verizon, and phone makers such as Research in Motion and Motorola, which could see sales growth slow for their BlackBerry and Android smartphones.
The deal could be costly at first for Verizon, which will have to shell out about $300 in subsidies for each phone it sells to keep them competitively priced.
Jenny Weaver, a spokeswoman for Verizon Wireless in Chandler, said customers who are eligible for an upgrade will be able to order an iPhone 4 on Feb. 3, a week before they are made available to the public.
With a new two-year service contract, the cost will be $200 for a 16-gigabyte phone and $300 for a more powerful 32-gigabyte model. The prices are comparable with AT&T.
Verizon will not offer the entry-level 8-gigabyte iPhone that AT&T sells for $49.
Weaver would not say how many of Verizon's 93 million wireless clients are eligible for an upgrade but did note the firm expects record iPhone sales.
"We believe there is a lot of pent-up demand," she said.
Steven Jim of Phoenix is a Sprint customer who plans to upgrade to an iPhone with Verizon when his contact is up. He has wanted an iPhone but was concerned about the reliability of AT&T's network.
Although AT&T has sold more than 25 million iPhones through its exclusive agreement with Apple, many customers have complained about the carrier's spotty coverage and dropped calls.
Verizon is expected to capitalize on AT&T's network shortcomings in its iPhone-marketing campaign.
A recent Consumer Reports survey ranked AT&T last in customer satisfaction in metro Phoenix, behind Verizon, Sprint and T-Mobile, with poor marks for data, texting and reliability.
A recent survey by investment banker Credit Suisse indicated that 23 percent of AT&T's iPhone users would switch to Verizon given the opportunity. Only 3 percent would be willing break their existing contracts and pay a penalty to do so, however. Most AT&T customers have two-year service contracts with the carrier, and many recently took advantage of incentives to renew.
Still, Credit Suisse estimates that AT&T could lose 1.4 million subscribers to Verizon right off the bat and millions more throughout the year as contracts expire.
Not everyone is unhappy with AT&T, though.
Doug Allen, who was visiting Phoenix from Washington, D.C., bought an iPhone from AT&T when they were first offered in 2007 and said he is completely satisfied with the service. "I have no reason to switch," he said.
The iPhone will run on Verizon's 3G network instead of the much faster 4G network the carrier rolled out to its Valley customers in December.
AT&T contends that its souped-up 3G network is faster than Verizon's and that iPhone customers would sacrifice download speed by switching. AT&T is likely to stress its network speed in its battle with Verizon to retain and attract iPhone customers.
Although the iPhone will run on Verizon's slower 3G network, the company plans to add four Android phones to its 4G network by midyear.
While Apple's exclusive agreement with AT&T helped launch the iPhone, the deal may have served limit Apple's growth and helped foster the growth of BlackBerrys and Androids.
Market-research company comSource Inc. estimates 61.5 million people in the U.S. owned smartphones during the three months ending in November, up 10 percent from the preceding three-month period. BlackBerry maker RIM lost 4 percent but still led with 33.5 percent of the smartphones in use. Google's Android phones gained 6.4 percent to displace Apple at No. 2 with 26 percent of the market, while Apple held at 25 percent with a 0.8 percent gain in market share.
JPMorgan analyst Rod Hall estimated in a research note that Motorola could lose 4 million phone sales to Apple this year as a result of the Verizon deal and that RIM could lose 2.5 million sales.
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by Max Jarman The Arizona Republic Jan. 12, 2011 12:00 AM
Verizon, AT&T compete for iPhone customers
Carrier comparison
Verizon Wireless
- Selling point: More robust network. Fewer dead zones and dropped calls.
- iPhone sales: Start Feb. 10.
- Projected volume: 9 million to 13 million units (2011 estimate).
- Price: $200 for 16 gigabyte phone; $300 for 32 gigabyte model.
- Headquarters: Basking Ridge, N.J.
- Current number of wireless customers: 93.2 million.
AT&T Wireless
- Selling point: Faster speeds for downloading music and videos and for surfing the Internet.
- iPhone sales: Since June 2007.
- Sales volume: 11 million units (2010 approx.)
- Price: $200 for 16 gigabyte phone; $300 for 32 gigabyte model; $49 for 8 gigabyte.
- Headquarters: Dallas.
- Current number of wireless customers: 92.8 million.
by Max Jarman The Arizona Republic Jan. 12, 2011 12:00 AM
Verizon, AT&T compete for iPhone customers
