Verizon iPhone hits store shelves, end AT&T's lock

* Apple fans brave frigid weather

* AT&T loses iPhone exclusivity after three years

By Sinead Carew and Gabriel Madway

NEW YORK/SAN FRANCISCO, Feb 10 (Reuters) - Verizon Wireless began selling Apple's (AAPL.O) iPhone at long last, ending AT&T Inc's (T.N) more than three-year stranglehold on the device in the United States.

Small crowds of iPhone fans braved a frigid New York dawn to line up outside Verizon stores on the first day of sales on Thursday.

"I have the AT&T iPhone 4 but I've really had it with the service," said Jim Liu, 25, who was sixth in line an hour before doors opened at 7 a.m. at the Verizon Wireless store in Bryant Park, New York. Liu joined eight others on a line that started at 3 a.m.

Verizon, the No. 1 U.S. carrier, has seen strong interest in Apple's smartphone ahead of the launch, after years of pent-up demand from its customers.

Analysts say Verizon could sell 12 million iPhones or more this year.

Verizon began accepting orders for the device a week ago, but cut off sales on the first day after inventory it had set aside for existing customers ran out. The phone company beat its previous launch-day phone sales record in a mere two hours. [ID:nN04174578]

Verizon Wireless, a venture of Verizon Communications Inc (VZ.N) and Vodafone Group Plc (VOD.L), will charge $199.99 for the 16-gigabyte iPhone, with a two-year wireless plan.

The iPhone, launched in 2007, set the standard in the smartphone market, transforming Apple into one of the largest mobile phone makers on the planet.

Apple sold 16.2 million iPhones in its most recent quarter, generating more than $10 billion in sales. The smartphone is available in 90 countries on 185 carriers.

The iPhone had until Thursday been exclusively available in the United States on the network of AT&T, the No. 2 phone company. But many customers complained about the quality of its network, citing dropped calls and slow download speeds.

Analysts expect some AT&T customers, like Liu, to leave for Verizon due to AT&T's patchy reputation, particularly in cities like New York and San Francisco. [ID:nN03280589]

Liu's phone gets poor reception at the office and he said he would have to pay to break his contract with AT&T. "I'd rather pay to get out of a contract to be with a provider with better service."

Early reviews of the Verizon iPhone found the larger company's voice service worked better than AT&T iPhone service. (Reporting by Sinead Carew in New York and Gabriel Madway in San Francisco; Editing by Derek Caney)