iPhone on Verizon? Not So Fast Says Analyst

Apple's (NASDAQ: AAPL) iPhone on the Verizon (NYSE: VZ) network may look like the perfect match, giving the largest wireless carrier the most popular mobile device in U.S. history. However the dream match might not be in the best interest of either company according to analysts at Kaufman Bros.

The analysts believe that the future success of the iPhone does not hinge on the potential partnership with Verizon after its exclusive agreement with AT&T (NYSE: T) runs out next year. Due to conflicting interest the deal may never get done, lending credence to rumors swirling yesterday that Apple may look to the nation's fourth largest wireless carrier, T-Mobile as a future partner.

Conflicting interest between Apple and Verizon could ultimately squash any hopes of a deal getting done.

Apple runs its own app store, which is one of the key features that make the mobile device as popular as it is across various demographics. Verizon has aspirations to run its own app store in the future and may not be willing to concede this plan to lure the iPhone.

The iPhone also offers a vast media experience through its iTunes service, while Verizon uses its service, V CAST, for media function on its smart phones.

In its current agreement with AT&T, Apple gets favorable economics with an ASP of $611. The most popular smart phone developer current on the Verizon network is Research in Motion (NASDAQ: RIMM), which gets an ASP currently of $340 from Verizon.

If both companies are not willing to give ground in negotiations, a deal between Verizon and Apple may not be able to join in 2010. Kaufman sees T-Mobile and/or Sprint (NYSE: S) as a better fit at this time, with both companies in need of a boost from the iPhone sales potential to gain market share.

Kaufman sees T-Mobile as a solid fit for Apple as the wireless network has a similar 3G network, whether that's a good thing or not, to what the iPhone currently runs on.

A pairing of the Verizon and Apple may be inevitable in the future, possibly in 2012 when Verizon rolls out its 4G network. If a deal can be struck in 2010 it would surely deal a blow to Verizon's wireless competitors. After all Luke Wilson would have nothing to boast about with AT&T's precious exclusive iPhone deal.

Shares for Apple fell just before the close on Tuesday before rebounding to a current $198.74 before the market opens. Verizon shares are at $32.34, AT&T shares are at $27.18, while Sprint is at $3.78 in pre-market hours.

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