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The debate about whether a Verizon iPhone is coming is no longer up for speculation. Verizon Wireless (s vz) confirmed one of the most talked about rumors in technology by unveiling the iPhone 4 (s aapl) on its network today at an event in New York. “We welcome this game-changing device to our network and to our Verizon family,” said Dan Mead, CEO of Verizon Wireless.
The device, available for pre-order for existing Verizon customers on Feb. 3, is very similar to the current iPhone on AT&T (s t) but will work on Verizon’s 3G CDMA network. It will sell for $199.99 for a 16 GB version and $299.99 for a 32 GB unit. Mead said the phone will become broadly available at Verizon and Apple stores on Feb. 10 and will come to Verizon resellers later. While the phone is largely the same as its GSM counterpart, it will offer a personal Wi-Fi hotspot feature to connect five Wi-Fi devices. Also, because it’s a CDMA device, the iPhone 4 will not be able to handle voice calls and a data connection at the same time. Mead declined to talk about data pricing for the iPhone 4.
Apple COO Tim Cook appeared at the event and said Apple was extremely pleased to partner with Verizon and offer the iPhone 4 to Verizon’s customers. He said the partnership is multi-year but non-exclusive. “We are incredibly excited to bring the iPhone experience to Verizon’s 93 million customers. Both of us think there is a tremendous opportunity,” Cook said. “This is the start of something big.”
Cook said Apple took at look at LTE but said the faster network would require design changes that Apple wasn’t happy with. He said Apple was also anxious to answer the No. 1 desire of consumers for a Verizon iPhone. Mead said Verizon is prepared for the added strain of the iPhone 4 and has tested the iPhone 4 on Verizon’s network. He said the company has added capacity to handle the additional users it expects. “We have advanced the capacity and built margin into the network throughout the country so we are ready for this launch,” Mead said.
There are still questions to be answered. It’s unclear how easy it will be for Verizon customers still on contract to upgrade to the iPhone 4. There’s no sense if the next iPhone 5 for CDMA will quickly follow this version later this summer, when it’s expected to debut. It’s also not clear if Sprint (s S) could also be in line for the iPhone at some point, though Cook said Apple had been in talks with Verizon about the phone all the back to 2008 and began testing the device a year later.
Verizon, if you recall, actually had first crack at the iPhone but reportedly turned Apple down. The move allowed AT&T to become the leader in smartphones with an estimated 38 percent of its devices smartphones, compared to 30 percent for Verizon.
While Verizon has made up for the lack of the iPhone with a bevy of Android (s goog) devices, recent data suggested the carrier was having a hard time keeping up with iPhone sales in the third quarter. Verizon’s vaunted network, tops in the latest Consumer Reports survey, will be under the spotlight with the addition of millions of new iPhone users but should be up to the challenge. As my colleague Kevin pointed out, Verizon has prepared its network for a lot of data and is rolling out 4G LTE, which should also ease overall demand.
Analysts believe Apple could see a significant bump of 9 to 12 million iPhone units in 2011 thanks to its Verizon deal. Apple sold about 15 million iPhones in the U.S. last year through AT&T.
The effect of the iPhone may not be immediate on AT&T. Credit Suisse recently estimated that AT&T had about 18.4 million iPhone subscribers at the end of last year, with 15.9 million, or 86 percent under contract. Many users will have to pay to get out of their contracts if they want to jump immediately. And with an estimated 80 percent of iPhone users on family or business plans, switching at the end of their contract might not an easy option. Still, customer defections from AT&T to Verizon could amount of anywhere from 1 to 6 million, according to analysts.
The Verizon iPhone should heighten the rivalry between AT&T and Verizon, as both networks compete on more equal footing. AT&T, for its part, appears poised to go after Verizon on speed and will reportedly play up its speedy 3G network.
Google’s Android could see a jolt with the introduction of the iPhone on Verizon, which was the biggest U.S. carrier for Android devices. If the iPhone proves as popular on Verizon as it does on AT&T, where iPhones accounted for 80 percent of smartphone sales in the third quarter of last year, it could cut into the fast growth Android has experienced.
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