Verizon Plots iPhone Killer

Verizon (VZ) is preparing a secret weapon for the escalating handset wars.

Just a month before Apple's (AAPL) iPhone is due to juice AT&T's (T) growth, industry watchers say New York-based Verizon has some hand candy of its own to sweeten sales.

"They are working on an answer to the iPhone that is supposed to be pretty good," says one telecom expert who is familiar with Verizon's effort.

Verizon's anti-iPhone is LG's Prada. The Prada, or KE 850, was recently introduced in England and is very similar in appearance to the iPhone.

The Prada is less than a half-inch thick and is dominated by a three-inch touch-screen. The phone has a camera on the back and is designed to be a video and music player.

As the phone's high fashion name would suggest, the Prada was designed with the help of the Italian fashion house and it comes with a suitably high price, selling for more than $600 in the U.K. The iPhone, due to be rolled out next month, is expected to fetch $500.

AT&T's five-year exclusive arrangement with Apple to sell the iPod-inspired iPhone is seen as a potentially big threat to the continued growth at Verizon Wireless.

Verizon and AT&T have ridden solid gains in wireless users to 52-week highs this month. But if the iPhone is a hit, AT&T stands to win many new customers when the phone hits the market, stealing momentum and lucrative users from Verizon.

Verizon can stem some of the defections if it has its own supersleek iPhone imitation.

In reaction to all the iPhone attention AT&T is getting, Verizon COO Denny Strigl told USAToday Tuesday: "We do have a very good response in the mill. You'll see that from us in the late summer."

A Verizon representative played down the notion that the company was banking on the Prada as its answer to the iPhone.

"We have several music devices coming" including the LG Prada, "but there are others," the representative said.

Verizon investors will be hoping one of those phones can beat the iPhone.

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