Verizon IPhone to Help Apple Boost Sales, Fight Google

Verizon Wireless’s unveiling of its iPhone this week will shift the landscape in the wireless industry, helping Apple Inc. boost sales and vie for customers against Google Inc. and Research In Motion Ltd., analysts say.

Verizon Wireless, the largest U.S. mobile-phone carrier, will introduce its iPhone at an event in New York on Jan. 11, according to a person familiar with the plans who could not be identified because the news isn’t yet public. The company will begin selling the device later in the month, the person said.

Verizon may sell 13 million iPhones this year, largely because of pent-up demand from existing customers, UBS AG analyst John Hodulik said. The debut will end Dallas-based AT&T Inc.’s nearly four-year run as the exclusive U.S. carrier for the iPhone, a period in which the device has both been a top seller and faced complaints about reception.

“It’s going to be the dominant device at Verizon as soon as it’s launched, and, I think, cannibalize the other devices they sell,” said New York-based Hodulik, who ranks Verizon shares “neutral” and doesn’t own any.

Moving to the country’s largest mobile-phone operator will give Apple the opportunity to sell to the 93.2 million customers at Verizon Wireless, which has heavily promoted phones that run Google’s Android software. AT&T, the second-largest mobile-phone operator, had 92.8 million customers at the end of September.

AT&T sold 11.1 million iPhones in the first nine months of 2010, putting it on track to sell more than 14 million for the year. Apple gets about $400 per phone, Hodulik estimates. If Verizon sells 13 million units next year, that would give Apple an additional $5.2 billion in sales. Apple’s revenue for the fiscal year ended in September was $65.2 billion.

Android Momentum

The success of Android phones, made by Motorola Mobility Holdings Inc. and Samsung Electronics Co., has put pressure on Apple to get its own device on Verizon’s network, said Chris Larsen, a New York-based analyst at Piper Jaffray Cos.

“The Droid franchise has really grown,” said Larsen, who rates Verizon shares “neutral.” “It’s got enough momentum behind it that it may not be better than Apple, but it’s certainly more pervasive.”

Last week, ComScore Inc. said Android topped the iPhone in U.S. smartphone subscribers for the first time, accounting for 26 percent of the market, compared with 25 percent for Apple. BlackBerry maker Research In Motion Ltd. had the top spot with 33.5 percent.

AT&T has been cutting prices for the iPhone and upgrading its network to keep customers from switching over to Verizon’s service. The company cut the price of the iPhone 3GS, one generation behind the current iPhone 4, to $49 last week. The company suffered from customer complaints about dropped calls and slow speeds after the traffic from the device overwhelmed some parts of its network.

Lincoln Center

Mark Siegel, an AT&T spokesman, said Verizon’s customers may suffer problems because the version of the Apple device the carrier is getting will use CDMA technology, a generation older than Verizon’s latest offering.

“The iPhone is built for speed, but that’s not what you get with a CDMA iPhone,” said Siegel in an interview. “I’m not sure iPhone users are ready for life in the slow lane.”

Verizon’s event will be held at Lincoln Center in New York at 11 a.m., Peter Thonis, a Verizon spokesman, said in an e- mail. He declined to provide any details on the event.

Natalie Harrison, a spokeswoman for Cupertino, California- based Apple, also declined to comment.

Verizon Communications Inc., the New York-based company that co-owns Verizon Wireless with Vodafone Group Plc, fell 1 cent to $35.92 at 4 p.m. in New York Stock Exchange composite trading. The shares have risen 21 percent in the past year. Apple gained $6.34 to $342.46 on the Nasdaq Stock Market, and has climbed 62 percent in the past year.

To contact the reporters on this story: Amy Thomson in New York at athomson6@bloomberg.net Adam Satariano in San Francisco at asatariano1@bloomberg.net; Olga Kharif in Portland, Oregon, at okharif@bloomberg.net;

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net; Peter Elstrom at pelstrom@bloomberg.net

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