For months, the company had been working not only on testing the Apple device, but also on upgrading all aspects of its business, from big things such as expanding its network capacity, to details such as refining the process used to assign phone numbers and the one used to activate new devices.

Still, Small covered a lot of ground on launch day, beginning it inside a Verizon retail store before heading back to the company’s “war room” to make sure that the systems were keeping pace with the crush of new activations. Like any good engineer, Small said he had overprepared.

“We were prudent,” Small said on Thursday during an interview near the company’s Basking Ridge, N.J., headquarters.

In addition to reminiscing about the past, Small also talked about Verizon’s future, including the rollout of its LTE-based 4G network, as well as how Verizon plans to distinguish itself now that AT&T is launching an LTE network of its own.

On that last point, Verizon’s strongest selling point will be the depth of its network, having already deployed it in well over 100 markets, with plans to hit 175 by year’s end. AT&T is expected to point out that it has not only an LTE-based 4G network but also an HSPA+ network that is far faster than the 3G speed Verizon offers in locations where it has yet to deploy LTE.

Small counters by touting the reliability of Verizon’s 3G network, as well as the head start that Verizon has with LTE. Most people, Small said, will have a 100 percent LTE experience, and even those who don’t “will fall back to the most reliable network that is out there.”

“I think the average consumer will prefer and value the quality and reliability of our network,” Small said.

Despite some speculation to the contrary, Small believes the industry will be able to pull together and eventually be able to offer LTE cellphones that work across different carriers, even if today’s devices lack such roaming abilities.

“I think the ecosystem will certainly converge at the appropriate time,” Small said, noting that Verizon Wireless is already having talks with its global partners, China Mobile and Vodafone.

“We’ve had a fair amount of dialogue,” he said.

One area the company has been remarkably quiet on is AT&T’s pending $39 billion deal to acquire T-Mobile. While Sprint has vocally opposed the deal since day one, Verizon has sat quietly on the sidelines.

Small said he wasn’t surprised at the government’s move to block the deal, nor would he have been shocked if the deal had been allowed to proceed without objection.

“Our CEO has said this — ‘we’re here to serve our customers,’” Small said. “We’ll let AT&T and T-Mobile and others worry about other things. I think the industry has recognized and rewarded us for that.”

Verizon’s Android users are waiting for the iPhone 5. And when it arrives this fall, they’ll make the switch en masse. That’s the theory put forth by Needham analyst Charlie Wolf, who believes the simultaneous debut of the iPhone 5 on both GSM and CDMA networks will herald the beginning of Android’s share loss in the U.S.

Wolf suspects initial sales of the iPhone 4 on Verizon were less than what they might have been because the device launched on the network eight months after it debuted on AT&T and many VZ subscribers decided they’d rather wait for its next iteration before upgrading — particularly those under contract, who would have had to pay an early termination fee to switch. Why pay a $350 ETF to switch to the iPhone 4, when you may not have to pay one at all if you wait a few months for the iPhone 5? And if you have to pay it anyway, why not make sure you pay it for the newest hardware available?

“It’s reasonable to assume that a material percentage of Verizon subscribers who plan to switch were content to wait until the iPhone 5 arrived later this year,” says Wolf. “One reason Apple delayed the launch of iPhone 5 until September is that it reportedly plans to coordinate the launch of the GSM and CDMA versions of the phone. To do so in June would likely have upset Verizon subscribers who purchased iPhone 4 in the preceding months. It’s our expectation, then, that the anticipated surge in iPhone sales on the Verizon network is likely to occur this fall after Apple launches iPhone 5.”

And that’s when we’ll see some real erosion in Android’s market share in the States. In fact, it’s beginning already. According to Wolf, Android’s share of the U.S. smartphone market fell to 49 percent from 52 percent in the March quarter. Meanwhile, the iPhone’s share rose to 29.5 percent from 17.2.

According to NPD, Apple leapfrogged both HTC and Motorola to move into the No. 3 spot with 14 percent of the overall phone market, boosted by the arrival of the iPhone on Verizon. Samsung still tops the U.S. market with 23 percent, followed by LG at 18 percent.

“Apple and Verizon had a very successful launch of the iPhone 4, which allowed the iPhone to expand its market share that was previously held back by its prolonged carrier exclusivity with AT&T,” said Ross Rubin, executive director of industry analysis at NPD, in a statement. “While some of that growth came at the expense of Android operating system, Android models still accounted for half of all smartphones sold in the quarter.”

However, Android’s share of the smartphone market dipped in the quarter, NPD said, to 50 percent in the first quarter from 53 percent in last year’s fourth quarter. Apple’s iOS rose nine percentage points, accounting for 28 percent of smartphone units sold, while BlackBerry lost five points of market share, falling to 14 percent.

For the first time, smartphones overall accounted for more than half of all phones sold in the U.S., with consumers opting for a smartphone 54 percent of the time. That lead to a 2 percent rise in the average selling price of phones, to $102. The trend of more smartphones at lower average prices should continue, Rubin said.

“We’ve started to increasingly see lower-priced handsets come in, both at the major carriers and at some of the regional carriers as well,” Rubin said in a telephone interview. Rubin noted that consumers are starting to move to Android at carriers that cater to the more price-sensitive segments of the market, including carriers such as Cricket, Sprint’s Boost Mobile brand and Metro PCS.

“Despite the higher fees, consumers are adopting those handsets, as they are important to stay in touch with the rest of the world,” Rubin said.

The iPhone 4 was the top individual phone model, followed by the iPhone 3GS, Motorola Droid X, HTC EVO 4G, and HTC Droid Incredible. Overall for the quarter, smartphone sales grew 8 percent from the fourth quarter, but total phone sells fell 1 percent.

No wonder it was a blowout.

Posting second-quarter results after the bell Wednesday, the company reported earnings per share of $6.40 on revenues of $24.67 billion–an 83 percent increase over the same period a year ago. The Street had been looking for Apple to report earnings of $5.36 on sales of $23.34 billion, while unaffiliated analysts polled by Apple 2.0 had been looking for earnings of $6.33 on sales of $25.34. Gross margin was 41.4 percent compared to 41.7 percent a year ago.

It was the biggest non-holiday quarterly revenue and earnings in Apple history.

The company sold 3.76 million Macs during the quarter, a 28 percent unit increase over the year-ago quarter. It sold 18.65 million iPhones–113 percent more than it did a year ago. And it sold 2.8 million MacBooks. (see chart below).

But it sold just 4.69 million iPads; the Street had been looking for 6.2 million. Evidently the tsunami disaster in Japan and production shortages hamstrung sales. (Worth noting: the iPad 2 launched on March 10, 2011 in the States and on March 25, 2011 in 25 additional countries. Apple’s second quarter ended on March 26, 2011.)

“With quarterly revenue growth of 83 percent and profit growth of 95 percent, we’re firing on all cylinders,” CEO Steve Jobs said in a statement. “We will continue to innovate on all fronts throughout the remainder of the year.”

Looking ahead to the June quarter, Apple offered its typically conservative guidance: earnings of $5.03 per share on revenue of $23 billion. Analysts had been expecting earnings of $5.25 per share on revenue of $23.8 billion.

NOTES FROM THE EARNINGS CALL

• CFO Peter Oppenheimer: This is the highest March quarter revenue and earnings in Apple’s history. “We’re thrilled with the iPad’s momentum.”
• Mac sales for the March quarter were up 28 percent year over year, a new record. This was the 20th quarter that the Mac outperformed the broader PC market.
• Wow. iTunes hit $1.4 billion, another new record.
• There are now over 100 million books in the iBooks store.
• iPhone is now on 186 carriers in 90 countries.
• 18.65 million iPhones sold during the quarter represent 113 percent growth, year over year.
• 88 percent of the Fortune 500 are testing or deploying the iPhone.
• “We sold every iPad 2 we made during the quarter.”
• There have been well over 10 billion app downloads to date and Apple has made some $2 billion in payments to the developers who created them.
• Apple Stores continue to do very, very well. Retail revenue is up 90 percent. Apple Stores sold 79,000 Macs during the quarter, up 32 percent. A new record.
• In the next few days, Apple expects the 1 billionth visitor to its retail stores.
• Tim Cook on Japan/supply constraints: We’re very saddened by the situation in Japan and our hearts go out to everyone there….We source many components from Japan–LCDs, optical drives, NAND flash, resin coatings, foil. The earthquake and tsunami caused disruption to many of these suppliers….But as a result of outstanding teamwork we did not have any supply or cost impact from Japan quake in Q2 and we don’t anticipate any in Q3. We’ve been working around the clock with our supplier partners in Japan to ensure there are no supply chain disruptions….We do need to caution that the situation remains unpredictable, though.
• Cook on iPad 2: Demand has been staggering. We’re amazed that we are still so heavily backlogged. Really, this is the mother of all backlogs … but we’re pleased with our manufacturing ramp-up and confident we’ll be able to produce a great number of iPad 2s during the quarter.
• Cook on the prospect of an LTE iPhone: The first generation of LTE chipsets forced a lot of design compromises that we are just not willing to make.
• Cook on the Mac’s international penetration: The Mac has seen enormous growth in Asia. Sales are 76 percent in Asia-Pacific. Doing very well in Japan as well.
• Cook on iOS devices creating an opportunity for the Mac in enterprise: The iPhone and the iPad clearly seem to be creating a halo effort for the Mac. In part that’s why we’re seeing such growth in Mac sales.
• Cook on future CDMA iPhone carriers: I don’t want to get into specifics about CDMA or GSM. But we’re constantly looking to add new carriers where it makes sense.
• Cook on Android: I read yesterday that the iOS platform outreaches Android by 59 percent in the US….IPhone’s integrated approach is inherently better than Android’s fragmented approach…Android turns users into system integrators…we feel very good about where we are and our future product plans.
• Cook on Steve Jobs:He’s still on medical leave, but we see him on a regular basis. As we’ve said before, Steve continues to be involved in major strategic decisions. I know he wants to be back full time as soon as he can.
• Cook on demand for the iPad 2:I wish we could have produced more iPad 2s because there were certainly a lot of people waiting for them.
• Cook on the Samsung suit: We are Samsung’s largest customer and we value them as a component supplier. I expect the relationship with them to continue. But we felt their mobile communications division crossed the line. We tried to work it out, but ultimately decided we needed to turn to the courts.

PREVIOUSLY

• iPad Will Rule Tablet Market For Years, Says Goldman
• Second-Quarter Mac Sales Likely to Be Magical, Revolutionary
• Apple Earnings: Expect Another Barn Burner
• Steve Jobs’s Finest Product–Apple–Won’t Break Down

We won’t know for certain until Apple reports its fiscal second-quarter earnings Wednesday, but when the device first arrived at market, word was that its sales were not meeting expectations. Certainly, it failed to draw the typically large crowds that have greeted previous launches of the iPhone. And the lack of any announcement from Apple or Verizon trumpeting early sales numbers, along with the leak of some damning alleged retail data , reinforced that perception.

Of course, Verizon didn’t launch the iPhone into a market with a vast untapped demand for it. In reality, anyone who absolutely had to have an iPhone bought it from AT&T. And anyone who refused to leave Verizon to do so likely pre-ordered it from the carrier as soon as they were able to. Verizon Wireless CEO Daniel Mead told The Wall Street Journal that 60 percent of the company’s iPhone sales had been online. Viewed that way, the Verizon iPhone launch wasn’t a “real” iPhone launch. That will happen with the iPhone 5.

“We note that the Verizon iPhone launch has widely been perceived as a disappointment,” said Piper Jaffray analyst Gene Munster. “But in some ways, we see the iPhone 5 as the true Verizon iPhone launch; the first time Verizon customers will have access to a new version of the iPhone. We believe that many Verizon customers made the decision to wait and purchase the iPhone 5 when it launches instead of buying the mid-cycle iPhone 4.”

According to Apple, the new update (iOS 4.3.2) is designed to address an issue where users encountered a blank or frozen screen when conducting FaceTime chats as well as an issue “that prevented some international users from connecting to 3G networks” on the iPad.

Apple said last week it was investigating an issue that had caused 3G connection problems for some Verizon iPad 2 owners.

The update also aims to close several security holes. Apple also issued security updates on Tuesday for the Mac OS and for the Verizon iPhone, which has yet to reach iOS 4.3.

That said, new numbers from Millennial Media offer up an interesting take–just how are the smartphone leaders doing in terms of making money for others. The report looks at both how many ads are being viewed on various devices as well as how much app revenue is being generated via the various smartphone operating systems.

In terms of advertising impressions, Android is the clear leader, with devices running that operating system accounting for nearly half of all ad impressions shown last month. Measured on that basis, 14 of the top 20 devices run Android, though the iPhone still tops the list and the BlackBerry Curve is the second most common phone model.

However, in terms of app revenue by platform, the numbers are largely reversed, with iOS apps generating 47 percent of revenue, as compared to 36 percent of revenue generated by Android apps. BlackBerry apps accounted for 7 percent of sales, while WebOS, Windows Phone, Symbian and other operating systems combined for just 10 percent of app revenue.

The report is chock full of other interesting stats as well.

For example, non-phone devices such as the iPad, iPod Touch and Galaxy Tab are seeing strong ad growth. The number of ads seen on such devices grew 21 percent month-over-month and such devices now make up 17 percent of the total mobile ad market, as compared to 64 percent for smartphones and 19 percent for feature phones.

The iPhone, meanwhile, saw its number of ad impressions grow 17 percent from a month earlier, amid adoption of the Verizon iPhone, which now accounts for 8.2 percent of ads shown to iPhones.

The report also breaks out ad impressions based on the type of phone. On that basis, 59 percent of ads were viewed on touch-screen only devices, 17 percent on models with both a keyboard and touchscreen, 13 percent on phones with a keyboard but no touchscreen and 11 percent on those sad little phones that have only a traditional phone keypad.

The financial wire says that a white iPhone 4 will be arriving for both AT&T and Verizon Wireless in the coming weeks. Apple has repeatedly delayed the white iPhone, most recently saying it would arrive this spring, a position reiterated in a tweet last month from Apple exec Phil Schiller.

Bloomberg said that the delays stemmed from issues with, among other things, peeling paint.

An Apple representative was not immediately available for comment on the report.

The arrival of a new iPhone 4 model in the coming weeks could add further substantiation to reports that an update to the iPhone is not coming in time for Apple’s developer conference in June. At the same time, a new color might tempt some that have been holding out for a new model.

PREVIOUSLY

• Apple: No White iPhones ‘Til Spring
• Steve Specifically Asked for Snowfall White and They Came Back Navajo White
• What Happened to the White iPhone 4?

Those with a Verizon iPhone reported having less than two percent of their calls dropped over the past 90 days. That compared to a 4.8 percent call-drop rate reported by AT&T iPhone owners.

However, it should be noted that the survey, a poll of 4,000 consumers by ChangeWave Research, was completed at the end of March, so none of the Verizon users had actually owned their phones for a full 90 days. Also, the survey asked customers to recall how many of their calls were dropped, rather than offering some scientific measurement.

Of those surveyed who planned to buy another iPhone, 46 percent said they would buy one on Verizon’s network, compared with 27 percent who planned to buy an AT&T model. Another 27 percent said they didn’t know which network they would go with.

In one bit of positive news for AT&T, reports of dropped calls across all phone models have dropped in the past few months, from a high of six percent in September to 4.6 percent as of March. However, that’s still higher than any of the other majors; Verizon has the lowest reported dropped call rate in the survey, with 1.4 percent as of March.

Both Verizon and AT&T customers were happy with their iPhones, with 80 percent of AT&T customers and 82 percent of Verizon iPhone owners saying they were “very satisfied.” Nearly all the rest said they were “somewhat satisfied.”

According to comScore, the Verizon iPhone was the best-selling cell phone in the U.S. for the month of February.

“The results of this survey demonstrate that AT&T’s iPhone subscribers are extremely satisfied with their service but of course we always strive to make their experience even better,” an AT&T representative said, reiterating the company’s iPhone advantages, such as broadband speed, the ability to talk and surf at the same time and compatibility in more international markets.

But while Apple’s share of the total U.S. mobile phone market–smartphones, feature phones, etc.–increased to 7.5 percent, the smartphone market growth leader continues to be Android, which now accounts for a third of smartphones in the U.S., compared to roughly a quarter of the smartphone market each for Apple and the BlackBerry.

Also of note, Microsoft’s various phone operating systems dipped from November to February despite the introduction of Windows Phone 7. Microsoft-based phones accounted for 7.7 percent of smartphone subscribers as of the end of February, compared with 9 percent at the end of November.

Overall, more people are using their phone’s browser and downloading applications, reflecting the growth in the smartphone market. As of February, the phone’s browser was being used by 38.4 percent of subscribers, up more than three percentage points, while more than 36 percent of phone owners ran downloaded applications, also up more than three percentage points from November.

“We will probably do that in the mid-summer time frame,” Shammo said during a Morgan Stanley investor conference, according to Reuters.

A Verizon Wireless representative was not immediately available for comment. However, Verizon has always said the $30-per-month unlimited option was a limited-time offer as the carrier moves toward tiered-data pricing.

AT&T initially offered unlimited data for the iPhone, but dropped the plan in favor of tiered pricing. Those with the unlimited plan were allowed to keep it, however. It is not clear whether Verizon will extend the same option to its customers.

Shammo also hinted that a second Verizon iPhone could come this year in answering a question on how the Apple phone affects profit margins.

“There could be some (margin) lumpiness when you launch the phone,” the CFO said, again according to Reuters. “If there happens to be a new one that comes out, that quarter might not look so good (either).”

But evidently that’s not the case.

Pre-orders were huge, of course, cutting down the need for people to go out to a store, so early reports from around the country revealed a far more sedate response to a long-awaited event that ironically seems pretty uneventful. Fifteen minutes before the the Verizon iPhone went on sale, there were just eight people in line at Apple’s flagship store in New York, according to CNNMoney. At a lower-Manhattan Verizon store, 21 people queued up to buy the iPhone.

The scene was largely the same around the country, according to other reports: 20 folks at a Gainesville Verizon Store, 10 at another in Plainview, a dozen in Milwaukee, a “few dozen” in Lincoln, Neb.,. And before you the blame cold temperatures for the modest turnout, consider this: The line in front of Apple’s Stockton Street flagship store in San Francisco this morning was just two people long. Said News.com’s Marguerite Reardon, “Upon arriving here about five minutes (before the 7 a.m. opening of the store), there were literally more Apple Store employees, police officers and reporters–each–than people in line to buy iPhones.”

So, a pretty staid turnout for a device that’s generated such monomaniacal interest for so long. That said, it’s important to remember that Verizon isn’t launching the iPhone into a market with a vast untapped demand for it. In reality, most folks who absolutely had to have an iPhone bought one from AT&T. And those who refused to leave Verizon to do so likely pre-ordered one last week. In the end, the lines (or lack thereof) we’re seeing today have very little to do with how big a seller the iPhone will be for Verizon (and for proof of that, one need only look to foreign markets with multiple iPhone carriers). Sales estimates vary pretty widely, but many suggest Apple will sell between 9 million and 13 million iPhones through Verizon this year–a big boost no matter how you look at it. The big lines will return with the debut of iPhone 5.

PREVIOUSLY: Verizon’s iPhone Sales So Amazing They Can’t Even Put a Number On It

[Image Credit: Christine Bartolucci ]

An iFixit teardown of the CDMA iPhone 4 headed for Verizon reveals a world mode chip in the device’s innards: Qualcomm’s MDM6600, which supports CDMA and EVDO network standards as well as GSM and HSPA+. It’s the same chip used in the Droid Pro, Motorola’s “global ready” Android phone.

In other words, Verizon’s CDMA iPhone isn’t a world phone–but it could have been, given a SIM card and some additional engineering. Which makes it likely that the next iteration of the iPhone will be. And if iPhone 5 proves to be global ready, iPad 2 likely will be as well, as Wedge analyst Brian Blair, who first floated the idea of the World iPad, notes.

“This is the proof of my thesis, I think,” he said of iFixit’s findings. “This is a dual–band GSM/CDMA chip that I believe will not only be in a “World iPad” in April as I mentioned last Fall but I also expect it will be in the new iPhone 5 in June. It makes sense for many reasons: but the main one is that Apple engineers will only have to design a product one time, same guts and parts for GSM as for CDMA.”

[Image credit: iFixit]

“Our proprietary checks in Apple’s supply chain suggest slight increases to our production forecasts for CY1Q11,” Fidacaro said in a note to clients today. “Our read on CDMA iPhone production shows a ramp up from prior forecasts and positive revisions for the GSM iPhone as well. Early indications from the Verizon presale of the CDMA iPhone were [also] strong. Thus, we are raising our iPhone shipment estimates substantially.”

Fidacaro had been looking for Apple to ship 17.7 million iPhones in the March quarter and 70.5 million in fiscal 2011. Now he’s forecasting 19.8 million and 76.7 million–a 92 percent increase year-over-year.

That, along with a significant upward revision to his iPad shipment estimates, driven by the presumed debut of iPad 2–32.1 million in fiscal 2011, up from 27.3 million (a 330 percent increase year-over-year)–prompted Fidacaro to raise his price target on Apple to $465 from $445.

Spare change for Apple shares?

No, not the tech industry. The ad industry.

Verizon is attacking AT&T, AT&T is attacking Verizon, and T-Mobile is attacking both of them. Only Sprint is staying out of the fray, taking its mother’s advice that if it doesn’t have anything nice to say, it should perhaps just say nothing at all.

Among the more recent attack ads was one from Verizon touting the sound quality of its iPhone. Now, AT&T is firing back at Verizon with an ad touting the benefits of talking and surfing the Web at the same time, which is apparently very important for procrastinators. (That said, Mobilized is a huge procrastinator and rarely ever talks and surfs at the same time.)

The ad comes on the heels of Verizon’s announcement earlier Friday that it had sold out of the iPhones it had available for pre-order on Thursday. The iPhone goes on sale for all customers, including would-be switchers, next Thursday.

In any case, here’s the ad:

The policy is effective immediately and is intended to ensure that average data users aren’t negatively affected by the inordinate data consumption of just a few users. Says Verizon, “If you use an extraordinary amount of data and fall within the top 5 percent of Verizon Wireless data users we may reduce your data throughput speeds periodically for the remainder of your then current and immediately following billing cycle to ensure high quality network performance for other users at locations and times of peak demand.”

What constitutes an “extraordinary amount of data”? Verizon doesn’t say, but I’m sure its subscribers will know it when they hit it, because their speeds will drop for almost two billing cycles.

And to think that just a few weeks ago, Verizon was talking up its plan to offer iPhone buyers a $30 unlimited data plan. Evidently it applies to the amount of data only, not the rate at which it’s downloaded.

Verizon says the shift in policy has nothing to do with the looming debut of the iPhone (“There’s nothing magic about the timing.”), which is widely known to tax carrier networks. But the timing here makes it hard to believe. This is Verizon bracing itself for the iPhone data deluge.

“We’ve been working on this for a very long time. We expect unprecedented demand, bigger than anything we’ve ever seen before. We feel good about being able to handle it.”

– John Stratton, Verizon Wireless COO.

AT&T must be snickering into its cornflakes this morning (okay, perhaps it’s more of a hollow chuckle). Verizon began taking pre-orders for the forthcoming CDMA iPhone this morning and is suffering some of the same issues for which AT&T has been taken to task in the past (though AT&T’s problems were substantially more severe).

I received multiple reports from eager buyers whose purchase attempts were thwarted by infuriatingly slow page loads and/or error messages. Twitter is full of similar notes. This despite Verizon’s claim that the iPhone’s launch on its network would go flawlessly. “We are not going to have any flaws on the execution of the iPhone launch,” Fran Shammo, president and CEO of Verizon’s telecom and business unit, said ealier this year. “We’ve been preparing the network for the last year anticipating the launch of the iPhone.”

Well, perhaps a few flaws, as Verizon Wireless conceded this morning. Still, nowhere near as bad as the ones that troubled AT&T, which had to issue a formal apology.

“We have been processing orders all morning and most customers are not experiencing problems,” spokesperson Brenda Raney told me. “On balance this has been a smooth availability launch. In instances where customers get an error message, they tend to be specific to that individual versus a system wide issue. For example, if customers on a Family SharePlan log in and use a mobile number other than the one belonging to the primary account holder, they will get an error message. We are working to address that now.”

Of course, “on balance” doesn’t help if you are the one who has waited for years for the Verizon iPhone and find yourself unable to order one.

PREVIOUSLY:

• AT&T Now Dropping iPhone Calls and iPhone 4 Pre-Orders
• Apple: Sorry We Sold So Many iPhone 4s Yesterday
• Time to Cut AT&T Some Slack, iPhone Users?

[Error Image Credit: Business Insider]

Although it has been preparing to lose its iPhone exclusive for months, the carrier has made a few eleventh-hour moves aimed at stemming as many defections as possible.

Just yesterday, the carrier announced a more generous rate plan that benefits customers who tether their iPhone to a computer, offering those customers twice as much data as before for the same price. AT&T also announced plans to offer a wireless hotspot feature on smartphones with the same data rates it charges for tethering. Although the feature is initially being offered for Android, AT&T intends to expand that to other phones–including those sold by a phone maker that rhymes with Snapple.

AT&T has also been sounding off about the benefits of its iPhone in statements to the media, postings to its Web sites and even in emails to existing AT&T customers who have an iPhone or other smartphone. Among the features it is touting are the ability to talk on the phone and browse the Web at the same time, more international usability and potentially faster data rates.

All this comes as Verizon is gearing up for what appears to be a crush of pent-up demand. The carrier has already sent a note to its own workers asking that they hold off with personal purchases so that more non-employees can get devices. And Verizon has some selling points of its own. As expected, early reviews (including the one from our own Walt Mossberg) show that call quality is improved on the Verizon iPhone. In addition, it has built-in wireless hotspot capabilities and the option–for a limited time, anyway–for a $30 unlimited data plan.

As for the other carriers, they may not have an iPhone to sell, but that hasn’t stopped them from lobbying to win a few switchers as well. T-Mobile has been particularly aggressive, casting stones at both Verizon and AT&T over network speed and costs.

A Verizon Wireless spokeswoman confirmed the move, saying “We always put customers first.”

Pre-orders through Apple and Verizon begin tomorrow.

That is a slower start than either Android or Palm’s webOS had in their debut, NPD said. Windows Phone 7′s sales put it not only behind Android, Apple and RIM, but also behind its own, older Windows Mobile operating system. Windows Phone 7′s two percent share was roughly equal to what HP’s Palm share was for the fourth quarter.

“With its mid-quarter launch, Windows Phone 7 entered the epicenter of competition between iOS and Android at AT&T,” NPD analyst Ross Rubin said in a statement. “Both competitors offer mature feature sets and large app libraries. Microsoft has made the case for Windows Phone 7′s differentiation and improved integration. Now, the company must close the feature gap, offer more exclusive capabilities, work with partners to deliver hardware with better differentiation, and leverage its extensive experience in driving developer communities to increase its app offerings.”

Microsoft has said some two million phones running Windows Phone 7 were sold to carriers worldwide, but has offered no data on the rate at which the devices were actually leaving store shelves.

AT&T, which sells the broadest array of Windows Phone 7 models, also hasn’t given specific sales figures but said that the numbers have been growing steadily since launch. LG, one of the phone makers that built Windows 7 models, indicated its sales were less than it had hoped.

Microsoft downplayed the meaningfulness of early sales figures.

“Sales are an important measure of success, but for a new platform customer satisfaction and active developer investment can be even more important leading indicators of long-term success,” a representative said in a statement, reiterating comments that the company made last week noting high customer satisfaction numbers and a growing base of applications. “These early signs of satisfaction from customers and developers are reason to be bullish about the foundation for long-term success for Windows Phone 7.”

Overall, NPD said that Android grew its share nine points during the quarter, grabbing 53 percent of the consumer market, while Apple iPhones accounted for 19 percent of the market, down four percentage points. RIM also had a 19 percent share, a drop of two percentage points.

The five top-selling handsets included three Android models and two versions of the iPhone–the iPhone 4 and iPhone 3GS. The iPhone 4 was the top-selling device, followed by the Motorola Droid X and HTC Evo 4G. The iPhone 3GS was the fourth-best-selling model, followed by the Motorola Droid 2. Motorola has already said it expects to take a hit this quarter, as its top-selling devices are on Verizon, which is now getting an iPhone of its own.

That’s according to Susquehanna analyst Jeffrey Fidacaro (and AT&T, which confirmed that percentage to me), who doesn’t see the launch of the iPhone on Verizon as a catastrophic event for AT&T at all. He thinks the carrier stands to lose two million iPhone users at most to Verizon–hardly a mass exodus.

AT&T’s decision last year to accelerate upgrade eligibility for iPhone customers, making it easier for them to get the iPhone 4 when Apple released it, is proving a wise move indeed. What better deterrent to switching networks than the carrier’s $325 early termination fee?

In all likelihood, iPhone subscriber churn will be no worse at AT&T than it has been at other carriers that have lost iPhone exclusivity. As Matthew Key, CEO of Telefónica Europe, said during a February 2010 earnings call, “Ever since Vodafone has started selling the iPhone in January, we see absolutely no evidence of people leaving us, churning on the iPhone going back to Orange or Vodafone, so [we are] very comfortable with our iPhone volumes. We continue to out-trade the market and no sign of churn whatsoever.”

It’s indisputable that Verizon is going to sell a lot of iPhones when the device finally arrives on its network. The question is how many? And the answer is as varied as the research houses trying to pinpoint the number. On the low end, analysts have been calling for nine million, and at the highest end, 12 million.

Until today, when R.W. Baird & Co. analyst William Power reset those parameters with a bullish new potentiality: 23.8 million iPhones sold to Verizon subscribers in the first year.

That’s about double the top end of the range I mentioned (it’s also more than a quarter of Verizon’s current subscriber base). But according to Power–who cautions that this is a “directional number” and not a forecast (there are constraints around how many devices Apple can actually ship)–a recent Baird survey of 1,000 smartphone users supports it. From the survey:

• 29 percent of current Verizon feature phone owners said they will “probably” or “definitely” upgrade to the Verizon iPhone in the next three months. The carrier has roughly 64 million postpaid feature phone users, so that’s 19 million potential iPhone upgrades, assuming eligibility.
• 25 percent of Verizon’s current smartphone users said they will “probably” or “definitely” switch to the iPhone. That’s 4.8 million additional potential iPhone sales, again assuming eligibility.

Grand total: 23.8 million potential Verizon iPhone sales–from the carrier’s installed base alone. Add to that the 5.6 percent of current AT&T iPhone users who told Baird they planned to switch to Verizon and that number rises to nearly 25 million.

Which sounds fantastical, seemingly even to Power, who is standing by his current forecast of 10 million iPhone activations at Verizon. But it does suggest, strongly, that demand could be far greater than anyone has anticipated.

That’s great for Verizon (though perhaps less so for its network) and even better for Apple. Not too bad for AT&T, either. Doesn’t bode well for Android handset makers like Motorola Mobility, though. As CEO Sanjay Jha said during an earnings call yesterday, the company has already seen a slowing of device shipments around news of the Verizon iPhone. “Since the announcement of the iPhone, we have seen some slowdown in our sell through of devices at Verizon,” Jha said. “There was anticipation of devices coming to Verizon even prior the announcement of the iPhone.”

Below, a carrier-by-carrier breakdown of interest in the Verizon iPhone. Each pie chart represents the base of subscribers at each carrier who plan to purchase a smartphone in the next three months. Note: the 25 percent / 29percent numbers above refer to the percentage of the total base of Verizon respondents (i.e. Verizon respondents who plan to purchase a smartphone in the next three months plus those who don’t).

We now know, though, that the company will offer a $30 unlimited data plan for the iPhone, similar to that offered for other 3G smartphones, although it still plans to move away from unlimited plans, so there is no telling how long the plan will last. Verizon also said it will charge the same price for the hotspot feature ($20 for 2GB) that it charges for most other smartphones that can act as a wireless hotspot. The hotspot feature is the main distinguishing characteristic of the Verizon iPhone, which in most other respects resembles its AT&T sibling. Even more details on service plan pricing were briefly available on Apple’s site, for those that want to check out voice plans and text messaging rates.

Verizon has also outlined its policies, including who is eligible for an upgrade and what its exchange policy will be for recently purchased devices.

There are still a few unknowns, such as the voice quality of the phone and how Verizon’s well-regarded network will hold up amid the crush of new iPhones hitting the network. And it likely will be a crush. Some analysts have predicted the company could sell 11 million iPhones out of the gate, something that the company on Tuesday’s earnings conference call said was a reasonable forecast.

The numbers themselves were lackluster, with Verizon Communications reporting per-share earnings, excluding pension and other items, of 54 cents on revenue of $26.4 billion. The earnings were a penny short of expectations, Bloomberg said, with revenue about in line with what analysts predicted. After initially dipping, Verizon shares were trading recently at $36.35, up about 3 percent.

Once again, though, much attention focused on the Verizon iPhone, which goes on sale next month.

Ahead of the company’s earnings conference call, Verizon Chief Operating Officer Lowell McAdam told The Wall Street Journal that the company would offer a $30 unlimited data plan, similar to what it offers for other phones.

“I’m not going to shoot myself in the foot,” he told the Journal. AT&T used to offer a similar plan, but switched to usage-based pricing for new customers last year; plenty of the subscribers that Verizon is courting, however, have been able to keep their unlimited plan with AT&T.

Verizon has announced it will sell the iPhone at prices similar to what AT&T charges for the iPhone, so its service pricing has been one of the big remaining unknowns. Verizon is also likely to charge an extra fee for customers who want to take advantage of the device’s ability to act as a wireless hotspot. AT&T’s iPhone doesn’t have such a feature.

The iPhone also impacted Verizon in other ways last quarter, McAdam said, noting that it appeared to hold back subscriber growth, although the company did add some 870,000 new customers.

“It wasn’t what I hoped it would be,” he told the Journal.

Verizon’s earnings report suggests an opportunity to sell some iPhones to its existing customer base; only about a quarter of its contract subscribers have smartphones.

The company said it expects that, with the addition of the iPhone and devices running on its new LTE network it expects that number to roughly double this year, with smartphone penetration accounting for more than half of customers by year-end.

PREVIOUSLY:

• Verizon to iPhone Users: You Will Buy The $30-Per-Month, Unlimited Data Plan and You Will Like It
• Verizon iPhone to Debut With Unlimited Data Plan