Verizon Will Open Online App Store

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NEW YORK (Reuters) – The Verizon Hub, a new kind of home phone with some Web add-ons like weather and traffic reports, will soon come with an applications market, following a trend among cellphone makers such as Apple to open up to third-party apps.

Verizon Communications has been selling the Hub to its wireless customers since February 1 as it looks for new ways to keep growing while U.S. consumers rapidly disconnect their traditional home phones to save money in the weak economy.

Two-and-a-half months after the launch of the product — targeted at families looking to use a phone and access limited Internet services on their kitchen counter — the company is revealing plans aimed at broadening its market.

Besides opening the device to new applications, it is also promising to take away a condition that Hub buyers have to be Verizon Wireless customers.

“We’re in the process of getting rid of that restriction,” said John Gravel, a Verizon product manager on Wednesday. “Why would you limit anyone from using this?”

Gravel sees the applications market attracting new types of customers with an array of software suited to their own interests, such as Internet radio.

Application stores have become a hot topic in telecommunications since Apple launched one for iPhone last summer. Google Inc and BlackBerry maker Research in Motion have followed with their own application stores for cellphones.

Gravel said the launch date for the Hub app market has not been set but it should be ready to go live sometime this year.

TOUGH SELL IN WEAK ECONOMY

The executive also showed a prototype of a smaller, sleeker Hub product that looks like a digital picture frame and comes with a much skinnier cordless phone handset.

Verizon is also working on multi-touch controls for future devices, another trend popularized by Apple’s iPhone. For example, Verizon’s multi-touch could allow users to rotate a photograph on the Hub screen by dragging a finger around.

While analysts see the Hub as an interesting new category, Verizon will have to work very hard to convince consumers, who already feel they don’t need a home phone, to pay $199 for the Hub and $34.99 a month in service fees.

“Its a tough time to be marketing a device and service like this,” said Forrester Research analyst Charles Golvin, adding that it needed to expand beyond Verizon cell customers.

“The first order challenge is to explain to consumers why this is an improvement over a home phone … why its worth paying $35 a month on top of their broadband bill,” he said.

Gravel said demand for the device was “tracking with expectations,” but declined to give specific numbers.

One big drawback for customers of rival wireless services, which include AT&T Inc or Sprint Nextel, could be a restriction that prevents non-Verizon customers from exchanging text messages between the Hub and their cellphones.

Gravel said Verizon is working with industry groups to end the restriction — originally aimed at protecting cell users from being sent spam messages from non-mobile devices.