Verizon to sell Apple's iPad

SAN FRANCISCO Fri Oct 15, 2010 4:10am IST

A host shows off the back of Apple's  ''iPad'' , a new tablet computing device, after its launch event in San Francisco, California, January 27, 2010. REUTERS/Kimberly White/Files

A host shows off the back of Apple's ''iPad'' , a new tablet computing device, after its launch event in San Francisco, California, January 27, 2010.

Credit: Reuters/Kimberly White/Files

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SAN FRANCISCO (Reuters) - Apple Inc is turning to Verizon Wireless to help sell the iPad in time for the holidays, loosening its cozy ties with AT&T Inc.

The surprise move disrupts the relationship between Apple and AT&T Inc, which carries the iPhone exclusively and was initially tapped to provide the iPad's mobile data plan when the tablet computer launched last spring.

The iPad will be available in both Verizon and AT&T stores on Oct. 28, the companies said separately on Thursday. The iPads will be priced the same by both carriers, but Verizon's will come bundled with a mobile Wi-Fi hotspot in order to work on its network.

Verizon Wireless has roughly 2,000 stores -- fewer than AT&T's 2,200.

Shares of Verizon Communications Inc closed up 0.7 percent, while AT&T shares rose 0.1 percent. Apple climbed 0.7 percent.

BTIG analyst Walter Piecyk said the decision to sell the iPad through Verizon was likely an easy one. Apple was initially forced to limit the number of distribution channels as it ramped up iPad production, but no longer.

"They want to sell as much product as possible, and this clearly sells more product," he said. "If my perception is that Verizon's network is better than AT&T's, then by all means, why wouldn't Apple sell it there?"

Investors are already anticipating that Apple will launch an iPhone that is compatible with Verizon's network sometime early next year. Analysts said the decision to sell the iPad through Verizon -- the No. 1 U.S. carrier -- only served to reaffirm that view.

"Clearly you're priming the channel for additional products," said Cowen and Co analyst Matthew Hoffman.

He said selling the iPad will allow Verizon's retail sales force to become familiar with the tablet's software -- and also prepare them to sell the iPhone. The two devices share a common operating system.

JP Morgan analyst Mark Moskowitz said in a research note: "We think the move nicely sets the stage for a wider and deeper relationship with Verizon."

NEW CHANNELS

Verizon Wireless's roughly 2,000 stores will sell three Wi-Fi-only models of the iPad starting Oct. 28, because the iPad's mobile technology is not compatible with Verizon's network.

Verizon will provide a mobile high-speed connection by bundling the iPad with its portable hotspot, with prices ranging from $629 for the 16-gigabyte (GB) iPad to $829 for the 64 GB model.

In six months on the market, the iPad has eaten into PC sales and spurred a slew of copycat devices.

Apple sold more than 3 million iPads in the June quarter, and might outpace that in the September quarter. Analysts expect the company to sell more than 20 million next year.

Verizon Wireless, a joint venture of Verizon and Vodafone, will offer an iPad monthly data plan for $20 a month, which would allow 1 GB of data usage.

The iPad already runs on AT&T's 3G network, and the carrier's retail stores will offer models that include Wi-Fi and 3G and also start at $629, running up to $829.

AT&T offers a 250-megabyte plan for $14.99 a month, and a 2 GB plan for $25.

The iPad is available at Apple stores and big box retailers like Best Buy and Target, and will be arriving at Wal-Mart on Friday .

(Reporting by Gabriel Madway and Ritsuko Ando. Editing by Robert MacMillan, Matthew Lewis, Gary Hill)

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