Monday, July 27, 2009, 01:15 pm

As Verizon profit falls, president praises iPhone innovation

By Neil Hughes

Verizon Communications announced lower quarterly profits Monday, while the company's successful cell phone business was noticeably impacted by the launch of the iPhone 3GS in June.

But Denny Strigl, Verizon's president, said that the mere presence of the iPhone in the market has had a ripple effect on competing devices, which, in turn, has been a benefit for Verizon Wireless.

Verizon has many smartphones that compete with the iPhone. The company intends to launch another iPhone competitor in the Palm Pre, after Palm's exclusive agreement ends with Sprint next year. The largest cell phone carrier in the U.S. also has a new BlackBerry Storm and Google Android phones on the way.

But all of those products are driven by the innovation brought by Apple and the iPhone, Strigl said.

"When you think about what Apple has done in bringing the iPhone into the marketplace," he said during the Q2 2009 conference call, "it truly has accelerated innovation. And as we talk to all of our manufacturers, everybody has come out with their own iconic device, and I think that this has been very good overall for our customers."

Verizon also expects to launch its own application store this year, to compete with Apple's App Store. Company officials have said they will require their store to be installed on new smartphones sold through the company.

Most of Verizon's second-quarter troubles came from its sagging landline business. Total profit was $3.16 billion, down from $3.4 billion a year ago.

Verizon recently bowed to the U.S. government and agreed that it would unlock some exclusive phones for use on smaller wireless carriers. This as members of the U.S. Congress are looking into exclusive cell phone arrangements such as the one between AT&T and Apple for the iPhone.

Last week, Verizon said it added 1.1 million wireless subscribers during the quarter. That lagged behind competitor AT&T, which netted 1.4 million new subscribers -- most of them choosing the iPhone.

Rumors have surfaced that Verizon is secretly prepping its high-speed Long Term Evolution 4G data network for launch in early 2010. This as AT&T chief executive Randall Stephenson is reportedly working behind the scenes to extend his company's exclusive iPhone contract with Apple.