Verizon-Android: Rotten deal for Apple and its iPhone

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Verizon (VZ) will sell handsets powered by Google's Android very soon -- and that can't be good for iPhone maker Apple (AAPL). The wireless carrier and the search giant announced a tie-up on Tuesday that was short on details. My colleague Sam Gustin interpreted the deal as a frontal assault on Apple by Verizon. I think he's basically right and want to elaborate a bit on the logic.

When Verizon and Google (GOOG) decide to work together, it's hard not to speculate on what this might mean for Apple and its iPhone. After all, Verizon has long been rumored to have a deal in the works with Apple. Reports have bubbled all summer and fall that Apple, disenchanted with AT&T's (T) network performance for mobile Web surfing, will drop the exclusive iPhone distribution deal it has with Ma Bell.
Google, on the other hand, has been a slow starter in the mobile handset software space with scant numbers of smartphones powered by the search engine's Android software hitting the market. But Google appears set to ramp up its presence in smartphones with more than a dozen new Android-powered models slated to hit the market over the next 10 months.

Google insiders have told DailyFInance that they see a big uptick in Android market share coming later this year as the new models land. The upshot for the iPhone? Verizon sure is taking its time and the longer the wait, the worse the deal for Apple.

Why is that? The longer Apple waits to get its deal done with Verizon, the more traction other players will have with the big carrier. Verizon will certainly put serious marketing bucks into pushing Android. And unlike AT&T, which has relied heavily on Apple's marketing mojo to move high-end phones, Verizon has done equally well in the smartphone market pushing a less glamorous constellation of products from Blackberry in volumes that compare quite well to iPhone sales.

On top of that, with more devices coming on line for Android, the Android applications market will become more attractive to developers. They will build more apps, which will mean Android looks better to phone buyers and a feedback loop will develop.

To be sure, the deal was very low on specifics. Verizon did state that it planned to sell Android-powered phones pre-loaded with applications from both parties. Those phones would hit the market in a few weeks, according to the Associated Press. As Tom Kratzil at CNET points out, it's unclear whether this deal will also extend to netbooks. Android is slated to enter that market, as well, and possibly will do so ahead of Apple's much anticipated netbook/media tablet (as seen in this post in a leaked image at our sister blog, Engadger).

But it's clear what is taking place here. Remember that giant battle for the soul of the mobile Web I blogged about two months ago? The battle lines are starting to be clearly drawn. Having seen what happened to AT&T as it became beholden to Apple for new customers, Verizon wants to create a more symbiotic relationship and maintain some control over the "deck." That's the term for the user interface on a phone and Apple has complete deck control on the iPhone. For its part, Google needs Verizon if it wants Android to spread and prosper.

The two giants need each other to drive customers to this novel platform -- and both of them likely want to prevent Apple from further extending its wildly successful iPhone franchise (and the creeping control of the future of the mobile Web that comes with it). So for Mac fans hoping to get Verizon's strong 3G network with an iPhone attached, don't hold your breath.

Alex Salkever is Senior Writer at AOL Daily Finance covering technology and greentech. Follow him on twitter @alexsalkever, read his articles, or email him at alex@dailyfinance.com.
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