The $199 and $299 iPhones will also have an impact on retailers' sales of the iPod Touch, which uses the same touchscreen interface as the current iPhone and costs close to $300, said Bonny Joy, device strategies analyst for Strategy Analytics.

To compete with the 3G iPhone, retailers will have to polish up their salespeople's qualification skills so they can point out the growing number of iPhone alternatives that offer touchscreens, high-speed data, multimedia playback and email, retailers and analysts said. Competing carriers will likely sharpen their smartphone prices and begin promoting their array of alternatives, they added.

Already, Verizon Wireless announced plans to launch three new LG multimedia phones, including an all-touchscreen LG Dare due sometime in June. The others are the LG Decoy, due June 16 with detachable Bluetooth headset, and the LG Chocolate 3, a flip version of the Chocolate slider. It's due in July with embedded 1GB memory, memory card slot and FM transmitter to broadcast music to a nearby radio.

"Anytime there is a big swing in price for a better product, it causes some short-term agita," said Kevin Sinclair, president/CEO of Wireless Zone, a 286-store franchise company that exclusively sells Verizon Wireless service. "Other carriers will do what is common: step up based on pricing and work with other manufacturers to launch new products with the same features to compete," he said.

For its part, Wireless Zone "will make sure store owners and salespeople understand the options," Sinclair said.

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