At the January 2007 introduction of the original iPhone, Verizon executive Jim Gerace told USA Today that his company has passed up the opportunity to parter with Apple because the two companies could not agree on a variety of issues.
At stake in the negotiations were retail distribution issues (Apple initially didn't want to sell the iPhone through WalMart and Best Buy), customer support handling (Apple wanted to support device issues through AppleCare), and the reinstallation of Verizon software and store elements.
Verizon had already been operating its "GetItNow" store as a way to sell its wireless subscribers ringtones and rental apps, most of which were built using Qualcomm's BREW, a proprietary mobile development platform cousin of JavaME. Apple had no interest in supporting BREW or Java on the iPhone.
Apple also wanted to integrate the iPhone with its iTunes Store just as it had with the iPod, and arguably intended from the beginning to launch its own App Store of software as well, although many pundits insist that the company didn't even conceive the concept of third party software until shortly before the launch of iPhone 2.0, as if the entire iOS software platform were simply a reaction to developers' lack of enthusiasm for web apps.
In the three years since the iPhone's launch--and two years after the unveiling of the iPhone App Store--Verizon is now admitting that it misjudged the opportunity it had passed up with Apple. In April, Verizon's chief executive Ivan Seidenberg said he informed Apple that his company would like to carry the iPhone, and alluded to talk that Apple was working on a handset compatible with the carrier's network technology.
Verizon is now admitting that Apple's entry into the mobile phone market has indelibly rewritten the rules of the cellular phone industry in such a way that has even forced carriers who don't sell the iPhone to think differently about how they accommodate independent software stores and how they sell and allocate data services.
Verizon embraces mobile apps
This week, Verizon business development executive director Jennifer Byrne told the audience at the PaidContent Mobile conference that "while we may have had the first app store, GetItNow, weve learned a lot, with the watershed being the iPhone. Its a drastic change from the walled garden stage to the open approach. Its been a very big shift.
Byrne said Verizon has "embraced" the idea of a software app store operating independently of the mobile carrier, using "walled garden" language to describe her own company's GetItNow store in contrast to the "open approach" of Apple's App Store. That's an interesting perspective given that Apple's critics often refer to the iPhone App Store as being a "walled garden" because of the curation Apple imposes.
Verizon now supports both RIM's BlackBerry AppWorld and Google's Android Market. "Weve seen a tremendous response, so it's validated the decision," Byrne said. That shift will no doubt make it easier for Apple and Verizon to come to agreement on future iOS devices, something that has been long been rumored to be imminent but which has not yet officially developed beyond the stage of speculation.
On page 2 of 2: Verizon, Goole look toward toward the web while Apple plans for a native app future.
Verizon, Google look toward the web while Apple plans for a native app future
At the same time, Verizon also agrees with Google's outlook that native apps will eventually give way to web apps. Google employees have noted that the company sees its Android apps as a temporary platform that will eventually make way for web apps as soon as browser technology improves enough.
Byrne echoed the same sentiment on web apps, adding, "the real tipping point for [mobile web apps running in] the browser will be 4G because it will literally be your computer in your pocket  quasi-instantaneous. Thatll be the point we see even more activity on the browser side.
In contrast, Apple's pioneering lead in Cocoa Touch native apps for iOS devices is being pursued as a long term platform, and shows no intention of being a temporary effort designed to last just until HTML5 web browsers become more widely established. Apple already supports a leading implementation of HTML5 in its iOS Safari browser, and has rolled out tools and specifications designed to help developer create native-looking mobile apps for the iPhone, iPad and Mac.
However, Apple's own flagship web app suite in MobileMe isn't even accessible from its iOS devices. Instead, the company has bundled native iOS apps that handle MobileMe mail, contacts, and calendars, as well creating new native apps for MobileMe's iDisk, Gallery, and Find My iPhone location and remote management features. Apple's position on web apps has been one of providing additional mobility and convenience rather than replacing desktop apps with web alternatives.
Apple's iLife and iWork desktop apps for the Mac are supported in part by web services within MobileMe and iWork.com. In contrast, Google's Docs, Maps, and other apps are almost entirely web-based. Even where Apple accesses Google's web services, it has done so using native iOS apps, including Maps, YouTube, and integrated Safari search.
Verizon now feeling the heat of smartphone data users
Verizon is also discovering the far greater demand that sophisticated smartphones with functional web browsers and video streaming services will exact on the network. Byrne told the audience "On [the new Android-based Motorola] Droid X, were seeing something like 5x the data usage of any other device."
As Verizon begins to accumulate more sophisticated smartphone users that do more than just text message (as its RIM BlackBerry and Windows Mobile users have been largely limited to doing by their poor browsers and limited media features), the carrier will likely pursue the same limited data service tiers that AT&T began and that most international carriers enact. Additionally, Verizon may have to scale back some of its more valuable and attractive services such as tethering and WiFi hotspot features.
Apple pioneered heavy mobile data use on the iPhone, pushing AT&T to offer unlimited data services to users and making WiFi standard at a time when most carriers forbid phone makers from including non-mobile data access. Prior to the iPhone's launch, few Verizon phones were allowed to offer WiFi features. Apple also pushed free Internet standards, such as email with rich attachments, ahead of mobile industry SMS and MMS messaging services on the iPhone.
When Apple finally did add MMS services to iOS 3.0, AT&T initially balked to support the new service for months, complaining that it didn't think it could accommodate the vast demand it anticipated from iPhone users.