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OCTOBER 7, 2010
Apple Readies Verizon iPhone
AT&T Inc. is about to lose its lock on the iPhone.
Apple Inc. is making a version of its iPhone that Verizon Wireless will sell early next year, according
to people familiar with the matter, ending an exclusive deal with AT&T and sharpening the
competition with Google Inc.-based phones.
While Apple is on track to sell 40 million iPhones
across the globe this year, the touchscreen handset
is facing pressure in the U.S. from phones running
Google's Android software, which have been heavily
promoted by Verizon Wireless, the biggest U.S.
carrier by subscribers.
Walt Mossberg and Marcelo Prince discuss the possible
benefits and drawbacks of having the iPhone on
Verizon's wireless network, including whether it will
suffer some of the same problems that have plagued
AT&T. Plus, Verizon readies 4G service.
Apple plans to begin mass producing the new iPhone
by the end of the year, and it would be released in
the first quarter of 2011, these people said. The
phone would resemble the iPhone 4 currently sold
by AT&T, but would be based on an alternative
wireless technology used by Verizon, these people
The new iPhone spells the end of the exclusive arrangement that AT&T has had since 2007, when
Apple Chief Executive Steve Jobs introduced the original iPhone. Since then, the iPhone fueled much
of the AT&T's growth.
Verizon Wireless has been meeting with Apple, adding capacity and testing its networks to prepare
for the heavy data load by iPhone users, according to one person familiar with the matter. The carrier
is seeking to avoid the kind of public-relations hit that AT&T took when the boom in data-hungry
iPhones overtaxed its network, especially in New York and San Francisco.
The move would give consumers more choice in
terms of networks and perhaps pricing. Verizon's
network is untested in terms of whether it can
withstand millions of iPhone users, but studies by
Consumer Reports and others have concluded
Verizon has a better network than AT&T. Verizon
also still offers unlimited Internet data plans.
The iPhone is finally coming to the Verizon wireless
network as Apple gears up to produce a CDMA version
of its popular smartphone that will be available in the first
quarter of next year. Marcelo Prince and Julia Angwin
Digits: A Verizon iPhone: How Many Would
Verizon to Launch 4G in 38 Cities This Year
Motorola Sues Apple Over Patents
Apple is facing increasing pressure to find new
avenues of growth in the U.S. market as most AT&T
customers who wanted the iPhone have now bought
them. Meanwhile, phones running Google's software
—built by Motorola Inc., HTC Corp. and others—
have surged this year.
Android smartphone subscribers in the U.S. reached
10.9 million as of August, from 866,000 a year
earlier, according to comScore Inc., a market
research firm. In comparison, there were 13.5
million iPhone subscribers at the end of August, up
from 7.8 million last year, comScore says.
Separately, Apple is also developing a new iPhone model, said
people briefed on the phone. One person familiar said the fifthgeneration iPhone would be a different form factor than those
that are currently available, said one person familiar with the new
iPhone plan. It was unclear how soon that version would be
available to Verizon or other carriers.
At a press conference Wednesday, Verizon Communications Inc.
President Lowell McAdam declined to comment on whether his
company would soon sell an iPhone. "At some point our business
interests are going to align," he said, referring to Apple. "I fully
expect it, but I don't have anything to say."
A spokeswoman for Apple declined to comment. The Wall Street
Journal in March reported on Apple's plans to build an iPhone
that works on code division multiple access, or CDMA, technology
used by carriers like Verizon Wireless and Sprint Nextel Corp.
Toni Sacconaghi, a Sanford Bernstein analyst, estimates Verizon could add more than 10 million U.S.
iPhone customers, adding it could help stem the rapid adoption of devices that run Android.
It was unclear whether Sprint Nextel and CDMA operators in
countries such as South Korea, Japan and Latin America would
get the CDMA iPhone as well.
Many Verizon customers have been clamoring for the iPhone
for years. "This is the longest running tease in the history of
consumer products," said Garret Bedrin, a 31-year-old Apple
fan in Glen Rock, N.J., who plans to buy a Verizon iPhone as
soon as it's available. "As loyal as I am to Apple, I won't leave
Verizon," he said.
John Donovan, AT&T's chief technology officer, wouldn't
comment on whether AT&T is losing exclusivity next year but
said iPhone buyers would have reason to chose his network
over Verizon's. AT&T's network lets users browse the Web
while making calls, while Verizon's can't, he said.
"It's not like we sit around and don't prepare for the future,"
Mr. Donovan said in an interview Wednesday, noting AT&T
also has compelling offerings in Android phones, as well as
Research In Motion Ltd.'s new BlackBerry Torch.
AT&T has been taking steps all year to answer concerns about a
loss of exclusivity, adding new phones to its lineup. It has also
said more than four-fifths of its contract subscribers are on
family or business plans, which make switching to a new carrier
more burdensome.
Apple's CDMA iPhone is being made by Pegatron Technology Corp., the contract manufacturing
subsidiary of Taiwan's Asustek Computer Inc., said the people briefed on the matter. A spokesman
for Pegatron declined to comment.
Apple originally decided against developing a phone for Verizon to focus on a version based on GSM,
a more prevalent mobile technology used by AT&T and most mobile operators in the world, people
familiar with the decisions have said.
Verizon, in those earlier discussions, balked at Apple's requirement that Verizon not allow its retail
partners to sell the phone, people familiar with the discussion said at the time. Verizon also declined
to give up its ability to sell content like music and videos through its proprietary service, these people
This time around, Apple considered a dual-mode phone that would let users roam on GSM-based
networks, one of the people briefed said. But the company ultimately went with a device that would
only work on a CDMA network. Qualcomm Inc. is providing a key chip set for the new iPhone,
according to a person familiar with the matter. A spokeswoman for Qualcomm declined to comment.
—Roger Cheng and Spencer E. Ante contributed to this article.
More on the iPhone
iPhone Coming to Verizon
Verizon to Launch 4G in 38 Cities This Year
Motorola Sues Apple Over Patents
Vote: Will you switch cellphone or service?
Carriers Vie for Mobile-Phone Plans
Topics: iPhone
Write to Yukari Iwatani Kane at [email protected]
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