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Monday, April 27, 2009, 09:05 pm PT (12:05 am ET)

Apple rumored in talks for Verizon budget phone, media tablet

The heat is stepping up for AT&T with word of negotiations to bring an Apple budget phone and a media tablet to Verizon, one of which may show its face within just a few months.

Already rumored chatting with Apple over an iPhone for 2010, Verizon is now claimed by BusinessWeek to have been in discussions for at least six months to bring the two mystery devices to its network, one of which could be ready as early as the summer while both are reportedly in the prototype stage.

The first is simply characterized as an "iPhone lite" and would be a physically smaller, thinner and feature-reduced version of Apple's distinctive handset. It would achieve the effect by using a system-on-a-chip — a processor that combines its necessary graphics core, controllers and other components on a single chip package — and would let Apple "blow away" the profit margins on the existing iPhone as well as the Verizon-exclusive BlackBerry Storm, according to one of the magazine's sources.

The second device is potentially more revolutionary and appears to be the tablet-like device first leaked by AppleInsider a year and a half ago. It's envisioned as a "media pad" with HD video, music and photos, but it would also allow calls over Wi-Fi. Purportedly, it's smaller than the Amazon Kindle in overall size but has a larger touchscreen, suggesting the absence of a physical keyboard. One of the tipsters also believes it may use the same system-on-a-chip technology as the mini iPhone to keep costs down.

A description such as this matches more than one report of Apple ordering batches of 10-inch touchscreens from Taiwan. Whatever its actual features, the purported eyewitness of a prototype tablet is excited about it and envisions Verizon dominating a relatively undeveloped segment overnight.

"The media pad category might go to Verizon," the viewer says. "We are talking about a device where people will say, 'Damn, why didn't we do this?' Apple is probably going to define the damn category."

While the accuracy of the product descriptions isn't known, Verizon's wireless chief Lowell McAdam has recently confirmed that he has spoken with Apple's Steve Jobs. The iPhone maker's co-founder is rumored to have been directly involved with the negotiations and, supposedly, would have already talked with McAdam about at least the economy "iPhone-like" device.

Either potentially flies in the face of Apple's own public statements on its support for Verizon's network, which until its move to 4G won't be interoperable with AT&T's. On the subject of a CDMA iPhone, Apple COO and acting CEO Tim Cook swatted aside the possibility by claiming there's no long-term life in the format and that it made the prospect of selling one device worldwide difficult. The executive also praised the existing relationship with AT&T.

Still, it's difficult at this stage to determine how much of even Apple's public statements are accurate. The company has been known in the past to use dismissive talk as a feint until a product is ready, such as for the first video-capable iPod and the original iPhone. The magazine also speculates that Apple may use talks with Verizon as a bargaining chip to squeeze more concessions out of AT&T, which itself has been pushing for iPhone exclusivity through 2011.

Appropriately, the report has any possible Apple-Verizon deal relatively distant and maintains that the discussions only got hot in the recent past — complicating any predictions about a likely release date.