AT&T Gets Shrewd With Smartphones

AT&T is making all the right moves in its long-running tussle with Verizon.
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There's a lot to like about


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smartphone strategy.

Even in an unforgiving economy, AT&T is still well positioned in its wireless battle against


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, particularly after unveiling a slew of cutting-edge phones earlier this week.

AT&T is tackling its


head-on with phones aimed at the "quick messaging" market, and it also unleashed an eagerly anticipated smartphone.

The telecom firm took the wraps off its


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E71 phone

, upping the ante in its struggle with Verizon.

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With an attractive price point of $99.99, the super-thin E71 is expected to hit the shelves during the next few weeks. The Nokia phone made it into

top smartphone list

in 2008, and was described as an "absolute gem of a phone."

"We are encouraged by the price point and expect the E71 to be a solid number three at AT&T behind the iPhone and Blackberry smartphone franchises," wrote Avi Cohen, managing partner at analyst firm Avian Securities, in a note released Monday,

Despite seeing its wireline operation

take a pounding

recently, AT&T continues to see strength in next-generation phones.

Buoyed by the growth of its wireless business and the popularity of Apple's iPhone, AT&T is even


low single-digit revenue growth during 2009, despite an increasingly tough economy.

Like its rival Verizon, AT&T has been gaining share at the expense of


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, according to Avian Securities' Cohen, something the analyst expects to continue.

"AT&T has always been with the cutting edge smartphones; Sprint has kind of gotten lost in all this," he told


AT&T, of course, also has


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iPhone in its corner, while Verizon is


the less popular Blackberry Storm. The Dallas, Texas-based firm is even rumored to be offering iPhones

without mandatory two-year service contracts

. The telecom giant is also waiving activation fees, according to company communications obtained by



Despite taking a fourth-quarter profit hit as a result to its iPhone subsidy program, the iconic smartphone represents a potent weapon in the company's armory.

As far as infrastructure is concerned, AT&T has said it will invest between $17 billion and $18 billion to drive growth by

enhancing its

wireless and broadband networks to provide more coverage.

With its wireline operation taking a pounding, AT&T has little choice but to throw resources at its wireless business, which grew 13% during the fourth quarter. Look to the company's smartphone strategy to drive revenue growth during 2009.