Verizon Wireless Bringing $150 Smartphone to U.S. Market

Verizon Wireless said on Monday it will start to sell a new LG Electronics Inc. smartphone, the latest handset with computer-like functions to join an increasingly crowded U.S. market.

Dubbed the enV, the gadget is the ninth smartphone being offered by Verizon Wireless.

This year's holiday shopping season is the first during which Verizon Wireless and its rivals are banking on high-end handsets at lower prices to attract consumers to data services like e-mail, video and music.

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U.S. mobile operators are spending billions of dollars to upgrade their networks to deliver these data services, but smartphones have not been a big hit so far with consumers.

Verizon Wireless, the No. 2 U.S. mobile service, hopes a bigger variety of cheaper smartphones will attract mass demand, though some analysts questioned whether there were too many models in the market already.

The unit of Verizon Communications (VZ) and Vodafone (VOD) said the enV will sell for $149 to customers who commit to a two-year contract. That is half the $300 that smartphones typically fetched until this year, with businesses accounting for the bulk of buyers.

Verizon also sells Motorola Inc's (MOT) Q for $100. T-Mobile USA sells Research In Motion Ltd's (RIMM) BlackBerry Pearl for $199 and Cingular offers Samsung Electronics Co.'s BlackJack for a similar price.

"Many smartphone launches in the last four to five months have come at affordable prices for a change. This automatically translates into higher volumes," said M:Metrics analyst John Jackson, who believes mass market demand may be a bigger step.

"What is unknown is whether the masses will now adopt smartphones," he said. "The overwhelming majority of phones are still purchased on the basis of cost and sex appeal. Non-voice services simply don't sell phones to the masses."

The enV will compete with about 10 smartphones offered by Verizon's bigger rival Cingular Wireless, owned by AT&T (T) and BellSouth (BLS), and at smaller rival T-Mobile USA, owned by Deutsche Telekom (DT).

The enV has a 2 megapixel camera, a fold-out keyboard for e-mail, and allows consumers to download Verizon's video and music services.

T-Mobile has roughly tripled its smartphone line-up and Cingular has roughly doubled its advanced cell phone range since last year's holiday shopping season, which kicks off at the end of November each year.

"I don't know whether there's a sufficient market to support 10 different models at a single operator," said Oppenheimer & Co. analyst Lawrence Harris.