Verizon iPhone hits store shelves, ends AT&T’s lock on market

Savannah Selle
February 09, 2011

By Sinead Carew and Gabriel Madway

NEW YORK/SAN FRANCISCO (Reuters) – Thin crowds greeted Verizon Wireless’ launch of Apple Inc’s iPhone, falling short of what some had expected.

Verizon Wireless began selling the iPhone on Thursday, ending AT&T Inc’s more than three-year stranglehold on the device in the United States.

The lines in front of Verizon and Apple retail stores were noticeably shorter than mobs of customers that snaked around Apple stores during the summer launch of iPhone 4.

In New York, where temperatures were well below freezing, lines of about 10 to 40 people waited outside Verizon locations. In San Francisco, where the weather was much milder, only about 20 people were lined up outside the Verizon store on Market Street at 6:30 a.m.

“I came around the corner expecting to see a big line and there was nothing,” said Bruce Burbach, 48, who was first in line at 4 a.m.

Burbach is switching to Verizon from AT&T, because “the service, we hate it.”

Analysts took note of the smaller crowds.

“It is cold out but it’s a surprise that there’s not many people showing up for the launch,” said BTIG analyst Walter Piecyk, who had visited stores across New York. “They had Verizon store clerks prepared for the masses and the masses just weren’t there.”

Jim Liu, 25, was sixth in line an hour before doors opened at 7 a.m. at the Verizon Wireless store in Bryant Park, New York. Liu joined eight others on a line that started at 3 a.m.

“I have the AT&T iPhone 4 but I’ve really had it with the service,” he said.

THE DOORS OPEN

Shortly after doors opened, about 25 devices were sold at the New York location, a spokesman said.

“I don’t think the investment community was expecting a huge blow out line of first day sales. It’s not a new device,” said Mizuho Securities USA analyst Michael Nelson. “Most of the existing customers have had the chance to preorder the phone.”

Verizon, the No. 1 U.S. carrier, has seen strong interest in Apple’s smartphone ahead of the launch, after years of pent-up demand from its customers.

Analysts say Verizon could sell 12 million iPhones or more this year.

Verizon began accepting orders for the device a week ago, but cut off sales on the first day after inventory it had set aside for existing customers ran out. The phone company beat its previous launch-day phone sales record in a mere two hours.

Verizon Wireless, a venture of Verizon Communications Inc and Vodafone Group Plc, will charge $199.99 for the 16-gigabyte iPhone, with a two-year wireless plan.

The iPhone, launched in 2007, set the standard in the smartphone market, transforming Apple into one of the largest mobile phone makers on the planet.

Apple sold 16.2 million iPhones in its most recent quarter, generating more than $10 billion in sales. The smartphone is available in 90 countries on 185 carriers.

The iPhone had until Thursday been exclusively available in the United States on the network of AT&T, the No. 2 phone company. But many customers complained about the quality of its network, citing dropped calls and slow download speeds.

Early reviews of the Verizon iPhone found the larger company’s voice service worked better than AT&T iPhone service.

(Additional reporting by Liana B. Baker in New York; Editing by Kenneth Li and Derek Caney)

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