Verizon (VZ) Means To Undermine AT&T (T) By Any Means Necessary

Yesterday, there were a number of rumors in the press that Verizon Wireless (VZ) (VOD) was talking with Apple (AAPL) to get a franchise to sell the iPhone after AT&T’s (T) exclusivity runs out next year. The iPhone has been the most critical factor in AT&T’s ability to add new cellular subscribers over the last two years, especially from its competitors.

Now, Verizon is hedging its bets.

According to The Wall Street Journal, Microsoft (MSFT) is working on a handset of its own, probably manufactured by a third party, and would launch it on the Verizon network in the first part of 2010. Microsoft has been furiously fighting to get its Windows mobile operating system onto more handsets, so having its own device should accelerate that process.

Microsoft could fail in its attempt to compete with Apple in more ways than one. Verizon may be using the Microsoft talks as leverage to get Apple to allow it to sell the iPhone instead of competing with it. And, Microsoft has not had much success with hardware. Its Xbox product lost money for years, and its Zune musical player has never done well against the Apple iPod.

Verizon can only win. Either it gets the iPhone or it gets a new Microsoft product that Redmond will back with its marketing muscle.

Douglas A. McIntyre