Steve Jobs, Verizon, the iPhone and the iPad

April 28, 2009, 1:43 PM UTC

Someone at Verizon (VZ) has been busy winding up the rumor mill this week, leaking stories to at least three news outlets about a pair of prototype wireless devices that Apple (AAPL) is reported to be shopping around.

In the past two days, news items in the New York Times, USA Today and


have all cited unnamed persons briefed on a new round of negotiations between Apple and Verizon — two companies whose failure to reach an agreement in 2005 famously resulted in the original iPhone going to AT&T (T).

BusinessWeek provides the most detailed account of the two prototypes:

  • A smaller, less expensive “calling device” described by a BusinessWeek source who has seen it as an “iPhone lite”;
  • A “media pad” that would let users listen to music, view photos, watch high-definition videos and place calls over a Wi-Fi connection.

This “media pad” sounds a lot like the tablet Apple has been rumored to be working on for at least 18 months — and for which Apple is reported to have snapped up large quantities of 9- to 10-inch touch-sensitive screens. BusinessWeek reports that it is smaller than Amazon’s (AMZN) Kindle e-book reader, but with a larger touchscreen.

According to the BusinessWeek source who has seen it:

“We are talking about a device where people will say, ‘Damn, why didn’t we do this?’ Apple is probably going to define the damn category.”

Silicon Alley Insider‘s Henry Blodget suggests that Apple call it the iPad.

The nature of the “calling device” is a matter of some dispute. USA Today suggested that it would run on Verizon’s CDMA network — a possibility dismissed Monday by Piper Jaffray’s Gene Munster as “unlikely” given the hurdles involved in building and supporting a cellular technology that seems to be on its last legs. As Apple COO Tim Cook put it last week: “CDMA doesn’t really have a life to it after a certain point in time.”

The timing of all this is also fuzzy. BusinessWeek‘s sources tell it that one of the devices could come out this summer — but they don’t say which one. We’d put our money on the iPad, given that any Verizon iPhone — lite or not — would probably have to wait until after 2010, when the carrier’s next-generation LTE (Long Term Evolution) cellular network comes on line and Apple’s contract with AT&T expires.

Complicating matters are multiple reports that AT&T is trying to get Apple to extend its deal as the iPhone’s exclusive U.S. carrier beyond 2010.

The whole thing sounds like a typical high-wire Cupertino negotiating session, in which Apple seduces potential partners with impossibly sexy gadgetry, pits one against the other, and ends up extracting the most favorable terms for itself.

It’s no accident that one of BusinessWeek‘s sources — Verizon Wireless CEO Lowell McAdam — says that before Steve Jobs went on medical leave, McAdam was talking directly with the master dealmaker himself.

The Wall Street Journal
Tuesday reported that Verizon is in discussions with Microsoft (MSFT) to carry a touchscreen device code-named “Pink” that would compete with Apple’s iPhone by early next year. In a note posted after the report, Morgan Keegan’s Tavis McCourt pointed out that Verizon already sells 14 different touch screen phones, six of them running Windows Mobile. “There appears to be nothing new here from a product perspective,” he writes.  “If we assume Microsoft was the source of the leak, this speaks volumes as to how threatened it is by iPhone.”

See also: Rumor: An iPhone for Verizon in 2009