NEW YORK - Best Buy Co. will start selling the iPhone on Sept. 7, becoming first U.S. chain to do so outside of Apple Inc.'s and AT&T Inc.'s own stores.

The announcement by Best Buy expands the availability of Apple's vaunted phone to 970 full-size stores and 16 smaller Best Buy Mobile stores. It's also a coup for the Minneapolis-based chain, which has been upgrading its cell-phone departments.

"We had a lot of work to do, obviously, to get in a position where Apple and AT&T would feel good about Best Buy Mobile carrying it, and that's what we've done in the last 18 months," said Shawn Score, president of Best Buy Mobile.

Best Buy also resells Apple's Mac computers and iPod media players. Apple spokeswoman Natalie Kerris said the long-standing relationship between the companies was the reason Best Buy would now be able to sell the iPhone.

Last week, Best Buy announced it had completed a two-year conversion of its stores to include upgraded cell-phone departments under the Best Buy Mobile brand. It has upgraded its computer systems to handle cell-phone activation and spent 250,000 hours training its employees.

Score said Best Buy Mobile, which resells phone service under the carriers' brands, now has a 3.6 percent share of the cell-phone market, up from 2 percent last year. It is a joint venture with CarPhone Warehouse Group PLC, which sells the iPhone in Britain and is Europe's largest cell-phone retailer.

In Europe, independent chains like CarPhone have a much stronger presence, while the U.S. market is dominated by the carriers' own stores. AT&T, the exclusive U.S. carrier for the iPhone, sells it in more than 2,000 stores. Apple has 189 U.S. stores.

Another major electronics chain, RadioShack Corp., sells AT&T phones, but not the iPhone. AT&T spokesman Michael Coe said he could not speculate on whether the iPhone would be sold at other third-party retailers.

"Smart" phones like the iPhone, which does e-mail, Web surfing, and accept third-party software, are a big focus for Best Buy Mobile. Sales are up tenfold in two years, Score said. It is the only authorized third-party reseller of Sprint Nextel Corp.'s iPhone-like Samsung Instinct.

"The smart phones are what people are heading for," Score said.

Apple launched the second generation of the iPhone on July 11. The two models cost $199 and $299 with two-year contracts.

Story Source: Associated Press/AP Online