Apple in talks w/Verizon

Apple is reportedly in negotiations with Verizon to bring two new consumer devices to the US market. Following recent rumors of Verizon's bid to win the flagship iPhone exclusive (when Apple's contract with AT&T expires next year), the new BusinessWeek report says that Apple has been in talks for over six months to bring two "iPhone-like" devices to the market, one of which could surface as early as this summer. Simply called the "iPhone list" by one of the publication sources, the first device is a "smaller, less expensive calling device," while the other is a media pad that "would let users listen to music, view photos, and watch high-definition videos" and allow users to place calls over a Wi-Fi connection.

According to the report, the rumored iPhone-like device is slightly thinner and smaller than the existing iPhone and will be cheaper than existing iPhones. Apple will reportedly reduce costs compared to the current device by using a so-called "system on a chip," which would combine several different chips into a single package, making it less complicated and less expensive. The report claims that the low-cost SoC chip, which could also potentially be used in the media pad, would have a much lower cost that will "blow away the margins on the BlackBerry and the iPhone."

The second media pad device under development is said to be smaller than an Amazon Kindle electronic reader, but has a larger touchscreen than the Kindle's, suggesting that Apple could be focusing on a virtual keyboard rather than a physical one.

Geared toward mobile net computing, the device could be aimed toward quickly growing "netbook" market, which aims to offer low-cost devices with basic PC functions and internet access. Looking to gain ground on AT&T, reports indicate that Verizon is readying subsidized netbooks; however, Nokia recently denied a rumored deal with Verizon to introduce a 4G touchscreen "iPhone-killer" device that would provide 4G Internet access via Verizon's upcoming LTE network. Alternatively, the rumored media pad device may be more like the e-book devices being peddled to carriers such as Verizon and AT&T.

"The media pad category might go to Verizon," the person who has seen the device told the publication. "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."

It was not clear which device would be ready for launch this summer, but the report claimed that Apple has already created prototypes of the devices and that Apple CEO Steve Jobs, currently on leave until June, has been part of the discussion process.

Although the iPhone 3G has had an impact on Verizon's subscriber base and the company has been researching the effect of the device, BusinessWeek says that no deal is imminent: financial details over subsidy payments or revenue sharing as well as device application distribution could be potential deal breakers. Although talks have "heated up" recently, previous reports indicated that Verizon was in talks with Apple over the first iPhone launch, but balked at the subsidy and royalty payments demanded by Apple.

"Another deal breaker could be disagreements over distribution of wireless software applications," the publication wrote. "Apple is the exclusive provider and distributor of apps for the AT&T iPhone. If Apple requests a similar deal on newer devices, Verizon Wireless may balk."

by MacNN Staff