Unbeatable iPhone is desperately sought by Verizon

In a world where smartphones will soon rule, Verizon seems ready to pull out all the stops to get an iPhone

If one thing is clear from a flurry of recent new reports on Verizon Wireless, it is that the wireless carrier really wants its own iPhone -- or an iPhone-like device -- so it can compete with AT&T Inc., which currently has an exclusive hold on the highly successful smartphone.

At least three stories in recent days, all citing unnamed sources, gave three different scenarios of what Verizon might be up to. One story, from USA Today, said that Verizon and Apple Inc. are discussing the possibility of creating an iPhone that would work over Verizon's CDMA wireless network, as opposed to AT&T's GSM network. Analysts have said Verizon might want to build a dual-mode iPhone to work with a future variant of CDMA called WCDMA and Verizon's forthcoming, faster, LTE network.

A second story, from BusinessWeek, said Verizon is working with Apple on two iPhone-like devices: an "iPhone lite" calling device and a media pad with access to music, video and phone calls via Wi-Fi. One of the two might appear this summer from Verizon, the story said.

Meanwhile, a third story, from today's Wall Street Journal, said Verizon is working with Microsoft Corp. on a Windows Mobile touch-screen wireless device that has multimedia capabilities to compete against the iPhone.

Verizon won't comment on any of these reports, with a spokeswoman saying flatly after the third story appeared, "we don't comment on speculation and rumor."

Apple would not respond at all.

A Microsoft spokeswoman issued a diplomatic response, which neither confirmed nor denied that the software maker is working with Verizon: "Microsoft's strategy has not changed. It is and has always been to provide a software platform for the industry. We work closely with many mobile operators and device makers around the world, because customers want different experiences on a variety of phones," she said.

Some with a cynical view have suggested that all that's afoot is that Apple is talking to Verizon to pressure AT&T in its talks to get another year as the sole carrier of the iPhone; AT&T's exclusive deal with Apple concludes in 2010. In other words, AT&T would have to put more flesh on the table than it has already, these observers said.

But that view wouldn't explain Microsoft's interest in working with Verizon. In fact, there aren't many touch-screen smartphones that can compete against the iPhone, in theory, at least.

But several analysts who have heard these recent stories all believe it's obvious that Verizon wants the iPhone or something really close to it and is working hard to get such a device. Unnamed sources or not, it makes sense that Verizon is working vigilantly to get a handset with iPhone-like capability.

It's not that Verizon isn't doing well financially without the iPhone. Rather, another way to look at it is that Verizon is AT&T's staunch competitor and it can't let AT&T grab a foothold in the march toward a world where the smartphone is king. Various projections and surveys, including one cited by the CTIA, a trade group for U.S. mobile operators, show that by 2020, a majority of people accessing the Internet around the world will be doing so with mobile devices. Analyst Jack Gold of J.Gold Associates LLC says that the tipping point will arrive sooner.

But why the iPhone, over all the other cool alternatives on the market? There are BlackBerry devices from Research in Motion Ltd. and an array of Windows Mobile devices. And soon there will be a Palm Pre running a new Palm WebOS, not to mention a range of Google Inc.-supported Android devices, in addition to the G1.

Verizon sells dozens of wireless phones, including several smartphones, and some of them come strikingly close to the iPhone. The BlackBerry Storm is one example, but even the Storm hasn't caught on like the iPhone has, analysts said.

One market observer, who asked to remain anonymous, said Verizon has discovered what AT&T already knows. "The iPhone is unbeatable," he said.

However, even Apple knows it needs to keep adding and fine-tuning the iPhone -- as it will with the upcoming iPhone 3.0 update -- in order to make sure that the device remains not only unbeatable for competitors like Verizon but also compelling for millions of customers.

The iPhone is unbeatable for now, might be a better way of stating things.

Copyright © 2009 IDG Communications, Inc.

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