Two Promotional Apple iPhone - AT & T and Verizon

After months of fighting between Verizon, Apple and AT&T, the latest ad from Apple shows it's all one big happy family, showing the Verizon iPhone 4 and AT&T iPhone 4 side-by-side with the tagline "Two is Better Than One."

The ad is set to the Blue Danube (or An der schönen blauen Donau), the famous Johann Strauss waltz. It shows two iPhone 4s simultaneously scrolling, surfing, checking iBooks, using FaceTime, and more, all identically, before the AT&T and Verizon logos appear, followed by the tagline "Two is better than one."

Past ad campaigns by Verizon have mocked the AT&T network and the iPhone on it. Now that the popular smartphone is on the Verizon network, any anti-iPhone (and pro-Android) commercials will be a thing of the past.

One difference missing from the commercial, and one thing that Verizon iPhone buyers need to remember, is that voice and data calls cannot be made simultaneously on CDMA network. That means that if, say, you are listening to an Internet radio station, when a call comes in, the station feed will automatically terminate. Once the call ends, you will be reconnected.

Looking at it from the other direction, if you were on a call, you couldn't suddenly go to Yelp at the same time. In this case, you won't disconnect from the voice call; it just won't work.

Watch the video below.

Verizon's off-contract iPhone 4 price $50 more than AT&T

It's been said before that Verizon is the priciest U.S. carrier, and it certainly hasn't done anything to discount that belief with something just noticed in their FAQ. The unsubsidized, full retail price for the Verizon iPhone is $50 more than the same price for the AT&T iPhone.

Here's what the FAQ says re: Verizon iPhone 4 pricing:

$199.99 for the 16GB model, and $299.99 for the 32GB model, with a new 2 year agreement. iPhone 4 will also be available for purchase at full retail price - $649.99 for the 16GB model, and $749.99 for the 32GB model.

For the 16GB model, AT&T charges $599 and for the 32GB model,a $699.

It's unclear why Verizon is charging more for their version of the iPhone 4, but the most obvious thing that comes to mind is the CDMA chipset inside the device. While $50 compared to the full retail price of the device is small, it's still an interesting additional difference between the two iPhone 4s.

Apple retail stores seen carrying universal iPhone 4 bumpers

The Verizon iPhone isn't quite here yet, but a newly designed bumper case, that fits both the AT&T and Verizon versions, is. We noted earlier that some third-party cases, as well as Apple's own bumper cases, would need slight modifications to fit the new Verizon iPhone.

While the Verizon iPhone is mostly unchanged externally from the AT&T iPhone, there were some changes made to the metal band around the exterior, which functions as an antenna for the device. Because of this, the mute button was moved. The new bumper case has a wider opening for the mute switch, and that's the only change.

In addition to moving the mute switch slightly, the Verizon iPhone has 4 antenna gaps, while the AT&T design has only 3. Aside from that, it's pretty much the same device, except, Verizon would claim, that it runs on a more reliable network. Meanwhile, AT&T would claim it runs on a slower network.

For ourselves, speed doesn't count for much if the network is overloaded. The countdown to the Verizon iPhone 4 continues, with pre-orders beginning for existing Verizon customers on Feb. 3. You can see the unboxing video below.

AT&T's bottom 7.5 percent coverage-wise to get free Microcells

AT&T's 3G Microcell, along with other such devices for other carriers, is used to improve signal quality in areas with poor reception. Many believe that's the entire nation, but the company itself has been test marketing free Microcells in really bad areas, and its about to expand that program nationally.

Beginning on January 23, AT&T will be sending out mailers inviting customers determined to be qualified for the program to sign up for a free Microcell. AT&T has selected the "top 7.5 percent of 3G wireless customers identified as likely to experience poor in-building coverage at home or in small offices."

The catch is that you are committed to AT&T service for a year. If you exit before then you have to either return the MicroCell or pay the Microcell's upcoming new (and raised) price of $199.99 minus $16.67 for every month that you've had it.

This verbal agreement to keep the Microcell a year has no effect on your current service plans or your eligibility for an equipment upgrade.

A femtocell like AT&T's Microcell uses your home of office's broadband to give you a better signal. To the device, it's as though it's attached to a tower, but it's attached to the femtocell instead. For places with marginal coverage, it can be the only way to get a good signal.

In a way, this is a great deal for those who get it. In another way, it's not, as it tells you AT&T considers you in their worst 7.5 percent in terms of coverage.

The first Verizon iPhone ad: 'It Begins'

And so it begins: the blitz of Verizon iPhone commercials has seen its first "entry."

The ad begins with a clock showing 11:59. The ad moves on to show additional clocks, a person tapping his finger, implying people waiting, but for what? Obviously, the Verizon iPhone.

More clocks, a person kneading their hands together in nervous anticipation, and more clocks. Then more nervous behavior by people, over which you hear:

“To our millions of customers ..."

Tapping feet.

"Who never stopped believing this day would come."

The clock shown earlier at 11:59 now hits 12:00. A girl smiles.

“Thank you.”

iPhone 4 logo.
Verizon logo.
The tagline: “It Begins”.
Cue the launch date: 2.10.11.
"Rule the Air"

Here's hoping the expected Verizon iPhone Super Bowl commercial wows us.

Best Buy planning pro-AT&T iPhone push due to lack of Verizon devices?

Apple doesn't really care if you buy a Verizon or AT&T iPhone, just that you buy an iPhone. While you would assume that AT&T and Verizon care, it appears that Best Buy cares, too: a newly discovered Best Buy playbook document is set to help associates answer questions about the Verizon iPhone, and not in a good way.

Not only does Best Buy diss the Verizon iPhone, it does so in a way that's pretty similar to something seen online recently: in fact, they lifted a BGR post, word for word, including a update sentence at the end. This is the only page visible in the leak, but it's likely they took the entire content of the original BGR post.

No 4G

Verizon’s entire presence at CES last week was focused on one thing and one thing alone: 4G. Its LTE network is now live in 38 markets and a flurry of 4G phones will launch in the coming months. But the iPhone… the smartphone millions of Verizon Wireless subscribers have been dying for… is a 3G device.

We knew Verizon’s iPhone 4 would be a CDMA phone for a number of reasons, but 3G is so 2010. Sprint launched its first 4G phone with minimal WiMAX coverage and it ended up being the fastest-selling phone in the carrier’s history. Now, we won’t see a 4G iPhone from Verizon until 2012. That means while millions of Android phones are surfing Verizon’s 4G airwaves later this year, iPhones will still be puttering along at EVDO speeds.

Post updated to remove a reference to FaceTime over 3G, which will not be available on Verizon’s iPhone 4.

Why would Best Buy push customers away from the Verizon iPhone and toward the AT&T version? The only thing that comes to mind is that Best Buy won't have the Verizon version on-hand when the device launches on Feb. 10. Apple and Verizon had previously said that only Verizon and Apple would have the devices at launch, with partners receiving them later.

However, the Verizon iPhone showed up in Best Buy's inventory system recently, leading some to wonder if in fact Best Buy would have it on hand. This anti-Verizon, or perhaps, pro-AT&T planning seems to point to an answer of "no."

AT&T to launch new SMS plans, raise activation fees

AT&T is about to change its messaging plans, though it's unclear why.  It could be about Verizon, especially with competition with that carrier's iPhone. It could also be a response to free text messaging rivals which are intrude on carriers' cash cows. Whatever the reason, it's coming.

The new plans were shown off in a leaked Best Buy image obtained by GearLive on Jan. 19. The two new plans will run $10 for 1,500 or $20 for unlimited. Going extinct after Jan. 23, except for those grandfathered in, are the $5 / 200 message plan and the $15 / 1500 message plan. On that day, AT&T will also be raising its activation fees to $36.

Of course, SMS messages piggyback on top of the control channel, so it actually costs carriers nothing. Despite this, text messages are their cash cow. If people get too used to using some IM service, or even Google Voice to avoid paying SMS fees, it will really hurt their bottom lines.

On the other hand, it's a lot easier to use the regular SMS app on your phone than to use an IM app (which your best friends may not use, anyway).

Hacker pair involved in 2010 iPad 3G AT&T data breach arrested by the FBI

On Tuesday morning, two members of the group Goatse Security, who hacked into AT&T's customer database last year and delivered close to 120,000 e-mail addresses of iPad 3G owners to Gawker, were arrested by the FBI. The pair, Daniel Spitler, 25, and Andrew Auernheimer, 26, used a "brute force" attack and an AT&T security hole to gather the email addresses.

The pair used the fact that iPad 3G's SIM has an ICC-ID, a 19-digit code that AT&T associated with a user's account and email address. AT&T used the ICC-ID to pre-populate a field containing the owner's email address when the user needed to login and check account status. By attempting ICC-IDs until they got a "hit," the pair was able to gather the email addresses.

AT&T was supremely embarrassed by the incident. Among the notables outed when the story first broke were luminaries such as New York City Mayor Michael Bloomberg, ABC News' Diane Sawyer, movie titan Harvey Weinstein and New York Times Co. CEO Janet Robinson.

In a statement, U.S. Attorney Paul Fishman in New Jersey said:

"Hacking is not a competitive sport, and security breaches are not a game. Companies that are hacked can suffer significant losses, and their customers made vulnerable to other crimes, privacy violations and unwanted contact."

Each of the two was each charged with one count of fraud and one count of conspiracy to access a computer without authorization. Each of those charges carries a maximum punishment of five years in prison plus a $250,000 fine.

Although Goatse Security notified AT&T of the breach after harvesting the data, the U.S. Attorney's statement noted that in chats, it was made clear that the group wasn't doing this to be altruistic. Instead, Fishman said,

"Those chats not only demonstrate that Spitler and Auernheimer were responsible for the data breach, but also that they conducted the breach to simultaneously damage AT&T and promote themselves and Goatse Security."

Last year, Auernheimer was arrested on drug charges. Authorities were actually searching his home for evidence related to the AT&T - iPad investigation.  Auernheimer is pictured above in a booking photo from that arrest.

Hesse: No comment on 'Sprint iPhone'

Now that a CDMA version of the iPhone exists, could Sprint be next to get its hands on Apple's best-selling device? When asked on Friday, Sprint's CEO Dan Hesse had no comment on the matter.

It's true that during the Verizon - Apple press conference on the Verizon iPhone, it was made clear that the CDMA version of the iPhone was not exclusive to Verizon. In fact, it's already been said that CDMA handsets are heading for carriers in South Korea, Japan and China. Those handsets are being built by new Pegatron, while Foxconn continues to build AT&T's iPhones and Verizon's, as well.

Sprint is the nation's 3rd largest carrier, and just as Verizon does, it uses a CDMA network. Sprint has openly coveted the iPhone in the past, but so did Verizon. Meanwhile, while some wonder about Sprint, what's to prevent AT&T from distributing the iPhone to T-Mobile?

After all, T-Mobile is a GSM carrier, just as AT&T is, so a conversion for T-Mobile's network would simply involve modifying the GSM iPhone to handle the proper frequencies on T-Mobile's network, which differs from AT&T's.

Since some areas of the country, despite what Verizon and AT&T would like us to be believe, are better served by Sprint and T-Mobile, why not more carriers on the iPhone? The more the merrier, many would say (although the main carrier they want for the iPhone is, naturally, Verizon).

Verizon iPhone: too late to kill Android, but it will hurt it

The fanboys have erupted on both sides of an argument that may not be settled for a year, or more, if then. The Verizon iPhone: will it kill Android, or at least, seriously hurt it, or not?

Some are saying this is the first time we will see a real battle between Android and the iPhone. In reality, if it is a battle for subscribers, it should be remembered: Verizon is one carrier, in one country. Since, depending on what market research firm you listen to, Android has already surpassed iPhone globally, it's unclear that Android will lose, at least globally.

In fact, in September of 2010, Gartner forecast that Android would challenge Symbian, for the top spot globally, by the end of 2014. This, of course, is on the global scale. What about the U.S.?

Android

Looking at it from a fanboy perspective, Dan Lyons, Newsweek writer and Android fanboy (he switched to Android in May of 2010). His view is that the Verizon iPhone is too late.

As he notes, a year ago Apple could have crushed Android, which was still pretty new, with a Verizon iPhone. The only big player at that time was, really, the Motorola Droid. Since then, a number of extremely good devices have launched (e.g Droid X, Droid 2, Samsung Galaxy S, Droid Incredible), and with newer Android versions, the software's capability has expanded.

In addition, those who use Google services (Gmail, Maps, Calendar, Voice, more) will never see the same level of support on iPhone as they do on Android. It's obvious why: it's Google in both the cloud and your device. If you don't care about Google integration, that's not as important. If you do, it is.

Lyons also brought up the one iPhone vs. multiple form factors argument. It's true that with iPhone you will have at most two designs a year. You will also, most likely, never have a hardware keyboard. In America, that may not be as much a negative, as many see the iPhone as a status symbol. Clearly, not all think that way, and want something that fits there, and many countries are far more individualistic in terms of devices than the U.S. is.

Lyons also calls Apple a "control freak." His reference here is to the closed model that Apple has: only App Store purchases allowed on the device, again the one form factor, and an approval process for the App Store once called draconian.

Michael Arrington, editor of TechCrunch is another such strong Android supporter, as Lyons notes.

iPhone

John Gruber at Daring Fireball is a well-known iPhone support. He rebuts each of Lyons' assertions. For example, although Lyons compares the iPhone to the Model T because of its limited form factors, Gruber notes that the Model T was a massive hit.

Lyons says he switched to Android to get to Verizon and its superior network. He said that since then he has grown to love Android, and it's too late for him. As Gruber points out, that doesn't mean its too late for others.

While Lyons called Apple a "control freak," Gruber called that attention to detail design, rather than over-control.

Our Take

• Android is great and has a number of different form factors.
• iPhone is great, but comes in one new form factor a year and is very closed.
• AT&T's new Motorola Atrix 4G Android device is powerful, and is bound to attract buyers.
• Verizon is estimated to sell somewhere between 9 and 13 million iPhones this year.

Can't we all just get along? They're both great platforms, and they both have hundreds of thousands of apps. Lyons is definitely right in one thing: the Verizon iPhone won't kill Android. It's too late for that.

One country, one carrier, that's what the Verizon iPhone means. It will definitely impact Android. But this is not a fight that will end quickly.

Survey shows 26 percent of AT&T iPhone owners will switch to Verizon iPhones

Although AT&T has been downplaying the possible impact of the Verizon iPhone on its customer base, a survey by ChangeWave Research points to very bad news for the wireless carrier.

A survey of 4,050 U.S. wireless customers, conducted just before Verizon announced that it will start begin shipping its version of the iPhone 4 as of Feb. 10, 2011, indicated that 16 percent of AT&T customers surveyed will switch once the iPhone comes to Verizon. Additionally, more than 1/4 of current iPhone owners (26 percent) say they will leave AT&T for Verizon.

Even without the Verizon iPhone as a factor, the churn rates for the carriers show bad news for both AT&T and T-Mobile. 15 percent of both those carriers customers plan on switching carriers in the next 90 days. Only 10 percent of Sprint's customers plan on switching, and a mere 4 percent of Verizon's.

Of the AT&T switchers, 69 percent cite issues with either coverage or dropped calls. Just 17 percent said cost was behind their switch (and those probably wouldn't be too happy with the cost of Verizon's service).

Despite the fact that 27 percent of the above listed dropped calls as the reason they would leave AT&T, according to ChangeWave's data, AT&T's dropped call numbers have improved quite a bit. In September, 6 percent said they had dropped calls. In December, only 4.7 percent said they experienced a dropped call. That still pales next to Verizon's numbers: only 1.7 percent experienced a dropped call in December.

Is the Verizon iPhone 'death grip' free?

Apple said it had to make some modifications to the design of the Verizon iPhone in order to make the device compatible with the carrier's CDMA network. In doing so, did it take the time to eliminate the well-publicized "death grip" scenario. A small set of unscientific tests seems to point in that direction.
The tests are unscientific because they were made using sample devices, meaning an extremely small sample set, and using various manual techniques to create the scenario whereby holding the iPhone 4 in a bare hand can cause dropped calls, signal attenuation, or slowed data flow. The most famous of these techniques was to bridge the antenna gap in the lower LHS of the iPhone 4.

That was the position which Steve Jobs famously said was simply holding the phone the wrong way.

So far, at least three tests have been run, and they all don't seem to indicate, at least, the same sort of issue. SlashGear, PC Mag, and Ars all did testing. PC Mag did manage to knock one bar off the signal level.

Of course, we won't really know until devices reach the hands of end users. As with the original iPhone 4, that's when the reports came flooding in, to YouTube and other sites. Even then, Apple never admitted any wrongdoing, stating that all phones had that sort of issue, although most did not see it to the extent as on the iPhone 4.

Some staunch defenders also chimed in on Apple's side. Still, "Antennagate" did result in a free case campaign by Apple.

We'll know more as more testing continues. We'll know for sure when Verizon's iPhone reaches end users on Feb. 10.

AT&T iPhone to get mobile hotspot service in iOS 4.3: rumor

The Verizon iPhone has two significant advantages over its AT&T brethren: unlimited data and a mobile hotspot. Now there's a rumor that at least one of those shortcomings on the AT&T version will be addressed in a future iOS update, 4.3.

The version of iOS spotted on the Verizon iPhone at Verizon's iPhone announcement was iOS 4.2.5. While the iPhone allows tethering by cable or Bluetooth, Verizon's mobile hotspot feature is more versatile, allowing up to 5 devices to be connected to what appears to the devices to be a wi-fi network.

The report originally came from iPhoneHellas.gr, which correctly predicted the release date of iOS 4.0.1, and in 2008, the release of iOS 2.2.

Verizon's mobile hotspot service allocates 2GB of data for use by end users. It does so while still allowing unlimited smartphone data, by accounting for the data transferred in a "different bucket." AT&T, if this come to fruition, would probably use the same system, particularly since the iPhone on AT&T is limited to 2GB of data overall.

Third-party iPhone 4 cases may face issues with moved Verizon controls

Verizon's iPhone had to have some tweaks to work on the network, and apparently some of that extended to the metal band antenna that extends around the exterior of the phone. As you can see from the image above, there's an extra notch that results in controls being moved. That said, many cases will no longer fit properly.

In particular, Apple's bumper cases will not fit the new Verizon version. It's not all bad news, however. The company is already reworking its bumpers to fit the new Verizon iPhone 4. It's unclear when those will be available, or if they already are, but it's a few weeks until the launch.

As far as third-party manufacturers go, you bet there are more than a few who are going to have to rework their cases.

Verizon Affirming The iPad Local 3G Network

Francis Shammo, chief financial officer of Verizon Communications Inc., confirmed what we already assumed: Verizon will soon have an iPad that can connect to its network without use of additional hardware. Currently, Verizon sells the iPad, but 3G connectivity for those who want it comes via a MiFi hotspot, which can provide connectivity for up to five devices.

Simply stated, there will soon be a CDMA version of the iPad. Whether that comes in the form of an iPad 2, which was already reported to be coming in three versions (CDMA, GSM, and wi-fi only), or sooner than that, is unclear.

Since October, Verizon has been selling the iPad, along with its MiFi mobile hotspot device for $629.99 to $829.99. That pricing is the same as the 3G-connected version, which can connect directly to AT&T’s network.

It's been expected for some time that with a Verizon iPhone would also come a Verizon iPad. Unlike the iPhone, there won't be any shortcomings vs. the AT&T network with regards to simultaneous voice / data support, as the iPad is not a phone.

Apple usually runs its devices on an annual refresh cycle; since the iPad is due for a refresh in April, the odds are that Apple will wait until then to introduce CDMA support with an iPad 2. Of course, that's all speculation, at this point.

Verizon iPhone refresh cycle: will it be brought in line with AT&T's?

Verizon introduced its version of the iPhone 4 on Tuesday. Now the question is, how will Apple handle refreshes of the Verizon iPhone, in the future?

One report theorizes that Verizon may get an off-cycle refresh every year. What that would mean is that Apple would refresh the iPhone annually, in June / July, and then refresh the Verizon iPhone in January / February, off-cycle.

Another option, proposed in the same report, is that Verizon sticks with the iPhone 4, skipping the iPhone 5, for perhaps an 18 month period while awaiting a more mature Verizon LTE network, and a nascent AT&T LTE network.

We see both of those scenarios as doubtful, however. Verizon very much loses in that way, with most of those people who like to be on top of new techology already thinking that a six-month old smartphone is obsolete. After all, it's that sort of "need to upgrade" thinking that the Best Buy "Buy Back" program is built on.

The report notes that "Apple has to balance meeting international demands" with Verizon demand. Although many forget it, there are plenty of CDMA networks around the globe. In fact, even during the press conference Verizon was asked --- and answered --- the CDMA iPhone is not exclusive to Verizon. There is yet no reason to believe that other CDMA networks will not receive their own iPhones.

Finally, since Verizon has confirmed that a CDMA iPad is coming, we predict that the two companies are going to become closer, and that would best be served, at least for Verizon, by the company and any other CDMA carriers receiving iPhone updates at the same time as AT&T and other GSM carriers do.

As far as LTE goes, it will definitely be more stable this summer. We're not sure that a Verizon iPhone update in the summer would carry LTE, but instead of an LTE upgrade Verizon might just add International roaming capability, then do an LTE refresh in 2012.

Refreshing the Verizon iPhone too soon is likely to tick off those who adopt the Verizon iPhone now. Of course, an 18 month wait for a new Verizon iPhone seems unrealistic in an industry where months equal a lifetime. An off-cycle refresh seems unlikely as well, as that would keep Verizon behind AT&T in terms of the latest and greatest iPhone version.

Our guess is that, despite the possible obstacles, with a CDMA iPad coming, Apple will release a CDMA iPhone and GSM iPhone at the same time, later this summer. We'd also think Apple will work with other CDMA carriers as well: Bernstein Research’s Toni Sacconaghi, believes that Apple could boost the iPhone’s potential market by as much as 25 percent if it agreed to sell CDMA iPhones at five global carriers: Verizon (done), Sprint, China Telecom, KDDI in Japan, and LG Telecom in S. Korea.

Verizon iPhone 4 announced; should users buy now or wait for the summer's iPhone 5?

John Oliver, representing "The Daily Show" at the Verizon iPhone event, expressed the feelings of many U.S. consumers just prior to the event. He said, or rather shouted, "F*ck yeah! Thank you! Oh, thank God! Thank you!"

Indeed, as expected, Verizon announced that the iPhone was coming to the Verizon network. Also as expected, it's the iPhone 4. And, finally, also as expected, there was no sign of Apple CEO Steve Jobs. Instead, Apple COO Tim Cook was in attendance.

Since it's the iPhone 4, in terms of the hardware, the only difference is the CDMA chipset, as opposed to the GSM chipset in the AT&T version. Although this event was about the Verizon iPhone, it should be noted that other CDMA networks exist globally so it's likely they will be supported as well, since it is a non-exclusive deal, they said.

In terms of the voice / data call issue with CDMA (CDMA does not support both voice and data at the same time), there have been no changes to allow that with the iPhone 4. There is a modification to the CDMA spec, SVDO, that allows simultaneous voice and data, but it hasn't been adopted by any carrier yet, and it appears the Verizon iPhone won't be the first, either.

Pricing is the same as on AT&T's network: $199 for 16GB, $299 for 32GB, but Verizon will include its mobile hotspot service, which will support up to 5 devices. Pre-orders begin Feb. 3 for existing Verizon only, with devices in retail on Feb. 10, and online orders opening up for all.

Potential Verizon iPhone buyers may need to think a little, before jumping on the bandwagon. As we've pointed out before, a new version of the iPhone, most likely including a CDMA version, will appear in the summer. Should buyers hop onto this phone now, they will then be unable to upgrade to the iPhone 5 (or whatever it's called).

Also, a CDMA version of the iPhone 4 will be significantly slower than the iPhone 4 on AT&T, as several have already noted with real-life testing. That said, in areas of the country where congestion on AT&T's network don't allow full-speed, it is assumed that Verizon's network will be more capable of handling the load, and being able to connect, and not drop calls, is an attraction.

No ability to use voice / data simultaneously may surprise people, but as Tim Cook said during the press conference, people will adjust.

On the plus side, the 5-device mobile hotspot is huge. There was no pricing information given, but other devices on Verizon's network require an extra fee for hotspot use, so the iPhone will almost certainly have it as well.

Finally, users will be able to have an unlimited data plan on the iPhone 4 on Verizon. That's not possible on AT&T, at least unless a user was "grandfathered in."

Will you move from AT&T for the Verizon iPhone? Will you upgrade your Verizon phone to an iPhone 4? Comment below.

Following AT&T's lead, Apple lowers iPhone 3GS price to $49

Apple has followed AT&T's lead and lowered the price of new iPhone 3GS models to $49. AT&T earlier lowered their price for the 2009 model, in what was widely believed to be a move done in anticipation of the Verizon iPhone.

The pricing change is just a price match by Apple, but both moves also serve as an admission by Apple and AT&T that sales of the iPhone 3GS GSM model will drop with a Verizon iPhone 4 out in the market. It is unlikely that Verizon will sell an iPhone 3GS version.

The practice of continuing to sell the prior year's model began with the introduction of the iPhone 3GS in 2009, when Apple continued to sell the iPhone 3G at a $99 price point, but with only 8GB of storage. When the iPhone 4 was launched, the "introductory" or "low cost" iPhone model was changed to the iPhone 3GS.

iPhone subsidies may cost Verizon as much as $5 billion in 2011

Nearly four years of pent-up demand by users who wanted a Verizon iPhone means Verizon is bound to sell millions of the devices. That success may not exactly be a good thing for Verizon, at least short-term: the subsidies involved may be so high as to cut significantly into Verizon's profits.

According to a Bloomberg report, Verizon may spend as much as $3 billion to $5 billion the first year it has the iPhone, in subsidies. Carriers pay subsidies to device manufacturers to reduce the cost of devices to consumers, which is why they ask consumers to sign up for service contracts.  Consumers who choose to buy phones without a contract see the "true cost" of the device.

While the company will make that back from the service contracts folks will have to sign up for, it will take some time for that to happen.  In fact, James Ratcliffe, an analyst at Barclays Plc in New York, estimates Verizon will sell at least 9 million iPhones this year. He assumes a subsidy of about $350, which would mean Verizon would  pay $3.2 billion in subsidies this year.

Meanwhile, John Hodulik, an analyst at UBS AG. Hodulik said Verizon may sell as much as 13 million iPhones. He estimates a $400 subsidy, which would come to a total of $5.2 billion.

Hodiluk believes that Verizon will add 2.1 million new subscribers this year, surpassing its largest rival, AT&T for the first time since 2008 (which, coincidentally, was the year the iPhone 3G went on sale). AT&T is estimated to only add 650,000 subscribers in 2011.

It takes AT&T about six months to make back the cost of the iPhone from customers’ data plans, iSuppli’s senior analyst for wireless communications, Tina Teng told Bloomberg. Given that Verizon will most likely pay the same price as AT&T for the smartphone, Verizon's profits for the first two quarters should be most affected.

Holulik believes the first-year loss will reduce earnings-per-share from Verizon from $2.26 last year to $2.20 in 2011.

Apple Stores to drop restocking fee policy beginning January 11th

January 11 is already going to a special day for Apple (though more so for Verizon). While AT&T's exclusivity is widely expected to be a thing of the past starting tomorrow, so is the 10 percent restocking fee at Apple retail stores for those trying to return items within the 14 day return window.

The report comes via 9to5Mac. Prior to tomorrow, when you returned an opened product to an Apple Store, you would be charged a 10 percent restocking feem even if you were exchanging it, perhaps for an iPad with more storage.

It may or may not be related to tomorrow's Verizon iPhone announcement, but it's certainly a good time to announce a new policy, with all the publicity ongoing, anyway. It's unclear if this is an across-the-board (meaning all Apple products) policy or not.