Verizon Playing Microsoft Against Apple for Phone Deal?

Is it really a surprise that, right after the rumors of AT&T and Verizon pairing off start hitting the news (again), suddenly Microsoft enters the picture? Out of the blue comes news of "Pink" a supposed Microsoft Zune-phone to be sold by Verizon. This doesn't seem like a mere coincidence.

By David Coursey
Wed, April 29, 2009

PC World — Is it really a surprise that, right after the rumors of AT&T and Verizon pairing off start hitting the news (again), suddenly Microsoft enters the picture? Out of the blue comes news of "Pink" a supposed Microsoft Zune-phone to be sold by Verizon. This doesn't seem like a mere coincidence.

While it's certainly possible Verizon will do both--selling iPhones and whatever "Pink" turns out to be, it seems just as likely that Verizon or its partisans may just be playing Apple and Microsoft off one another?

Is Verizon telling Apple that if it can't sell iPhones it will throw its weight behind "Pink?" The danger, of course, is that Apple will simply respond, "Have a nice life." It's more likely that Apple is looking to a day when AT&T will have sold as many iPhones as it is able and will turn to Verizon as the next low-hanging fruit.

As for an actual Microsoft-built Zune-phone, I am not expecting it. Microsoft isn't getting into the cellular hardware business, why should they?

They don't need to manufacture the hardware to create the Zune (or Pink) handset, and it's better if they don't. Indeed, Microsoft's non-denial denial makes be think a new Microsoft-inspired consumer handset is certainly on the way.

"Microsoft's strategy has not changed," an MS spokesperson told PC World. "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."

However, Microsoft's purchase of Danger, creator of the T-Mobile Sidekick phone, also gives Redmond the ability to design innovative hardware, too. The traditional (and small) Windows Mobile enterprise market would be a waste of Danger's talent, so it's easy to imagine a Zune-phone is out there someplace.

In evaluating the recent spate of rumors, it's important to realize that everybody talks to everyone about everything. Well, almost. I'm sure AT&T and Verizon are in near constant contact, at some level. As are Microsoft and Verizon. Microsoft also talks to all the handset manufacturers, trying to persuade them to build Windows Mobile devices.

If Microsoft or Apple calls, everyone is at least willing to answer the phone and most would gladly make some sort of deal, if terms can be arranged. The question, then, isn't whether companies talk to one another, but whether the incentives for making a deal has changed.

I understand why Microsoft wants Verizon, but not so much why Verizon wants Microsoft. Sure, it's relatively easy for Verizon to add another Windows Mobile handset to the product line. Adding a supposed iPhone killer might be another matter entirely, potentially requiring a larger commitment on Verizon's part.

My bet is that Verizon would much rather have the iPhone, but Apple may be driving a pretty tough bargain. Maybe the sudden prospect of Verizon spending a year or two selling a new Microsoft-designed iPhone killer will bring Cupertino's demands more into line and the deal will be struck.

David Coursey would love to see Microsoft have a successful consumer handset of its own. But can we expect it? Follow him on Twitter or send e-mail using www.coursey.com/contact.

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