Apple 2.0

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Rumor: An iPhone for Verizon in 2009

September 29, 2008: 11:09 AM ET

[UPDATE: This article continues to get hits although it was written in Sept. 2008. For a more up-to-date look at the issue, may I suggest Daniel Eran Dilger's "Why Apple's iPhone is still not coming to Verizon" in Roughly Drafted.]

Chalk this one up to wishful thinking.

A leading Apple blog posted a rumor Sunday that the iPhone -- which is currently available in the United States only through AT&T Wireless -- could be coming to Verizon, perhaps as early as January 2009.

Cleve Nettles, writing in 9 to 5 Mac, says "negotiations between Apple and Verizon are ongoing but they expect to hammer out agreements by the end of the year."

According to a "tipster" whom Nettles says "seems to know way too much about Verizon-Apple politics," an announcement that a deal has been struck could be made at Macworld 2009.

That would be big news for millions of would-be buyers who are either locked into their Verizon accounts or reluctant to switch to AT&T (formerly Cingular), believing that AT&T's wireless network is less mature.

But beyond the word of this unnamed tipster, Nettles' argument rests on some pretty slender evidence.

He cites Apple job postings for engineers with experience in EVDO and CDMA, the wireless standards used by Verizon (and, for that matter, many foreign carriers). But he acknowledges that these skills overlap with those needed to work with AT&T's GSM-based technologies and "could mean absolutely nothing."

He also quotes Apple COO Tim Cook's remarks that Apple "wasn't married to the one carrier/country model." But Cook wasn't necessarily talking about the U.S. market; in fact, Apple has already abandoned that model in several foreign countries.

And Nettles marshals good reasons why Verizon might want to get over its initial resistance to working with Apple, or why Apple might want to reach the 55% of the domestic wireless market currently controlled by Verizon (VZ) and Sprint (S).

But he runs into a wall when it comes to what he correctly cites as the No. 1 reason people think a deal with Verizon is unlikely to happen soon: the reports that Apple and AT&T have signed a long-term exclusivity deal.

He dismisses these as "a couple of falsely reported rumors," citing two USA Today articles, here and here.

Nettles is correct that these articles, both by USA Today reporter Leslie Cauley, are inconsistent. The first, which has been widely cited in subsequent reports, says that Apple (AAPL) gave AT&T (T) exclusive U.S. distribution rights for five years -- i.e. until 2012. The second, based on an interview with AT&T chairman Randall Stephenson, says Apple got a one-year extension, to 2010.

Cauley's reports may be inconsistent, but at least the second one appears to be well sourced, which is more than you can about Nettles' rumor. (Pressed for detail, Nettles says that his tipster claimed to be from Verizon and therefore didn't know much about the Apple-AT&T contract.)

If either date -- 2010 or 2012 -- is correct, a Verizon iPhone in 2009 is, unfortunately, a nonstarter.

[Follow Philip Elmer-DeWitt on Twitter @ philiped]

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Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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