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Tuesday, May 11, 2010, 03:15 pm PT (06:15 pm ET)

Verizon marketing exec rumored to be working on iPhone campaign

A Verizon Wireless marketing executive has reportedly been assigned to work full time on a three month, top secret project rumored to be a marketing campaign for a forthcoming iPhone launch.

The new rumor coincides with a report published by CrunchGear earlier today, which claimed Verizon's branding partner, Landor Associates, was busy working on an advertising campaign related to a summer product launch of a Verizon iPhone.

The source of the latest rumor, communicating confidentially with AppleInsider, specifically cited Verizon's "senior vice president of West Coast marketing" as being involved in the secret effort, although Verizon does not have a senior vice president of marketing devoted to the West Coast region. The company's regional marketing is assigned on a director level. Additionally, the executive is described as being a man, while Verizon's current director of West Coast marketing appears to be Kim Cochran, according to public records.

Rumors that won't die

Rumors related to a Verizon iPhone have persisted since before the iPhone was even announced, dating back at least to comments made by Jim Cramer of The Street, who described how a hedge fund manager could seed media sources with false reports to foment the market and then take advantage of wildly fluctuating stock prices that resulted.

"It is very important to spread the rumor that both Verizon and AT&T have decided they don’t like the phone," Cramer said in 2006, just before Apple officially announced the iPhone. "It’s a very easy one to do. You also want to spread the rumor that it’s not going to be ready for Macworld [Expo]. And this is very easy, because the people who write about Apple want that story. And you can claim that it is credible because you spoke to someone at Apple, because Apple isn’t in [a position to comment on unannounced products]. It is an ideal short."

Subsequent reports that Apple's iPhone either was or was not heading to Verizon have resulted in similar dramatic price swings in Apple's stock, distorting the real results of the work that went into actually delivering the phone in the US and globally.

Availability of the iPhone on Verizon's network would likely have a relatively minor affect on Apple's overall sales; the company sold 8.8 million iPhones in the first quarter of 2010, but AT&T only activated 2.7 million phones in the US within that same period. The vast majority of Apple's iPhones are being sold outside the US, which is also where the greatest potential for future growth in the smartphone market is.

While many American users are unhappy with AT&T's level of service in specific markets, particularly in overloaded regions such as San Francisco and New York City, the arrival of a Verizon-compatible iPhone would likely result primarily in a shift of users from AT&T to Verizon, rather than sparking a large number of new iPhone sales. Verizon has a smaller concentration of smartphone users than AT&T does.

Few clues from Apple

Apple has remained silent on the potential for a CDMA-only, 4G LTE, or hybrid version of the iPhone which could be sold on both AT&T and CDMA providers such as Verizon or Sprint, with company executives only ever praising AT&T as a valued partner in the US. In other global markets, Apple has readily opened up its exclusive service contracts to make the iPhone available from multiple, competitive mobile providers, but those markets are not split by the UMTS/CDMA technical divide that suppresses mobile phone competition in the US.

Verizon and Sprint deployed a large number of BlackBerry and Android-based CDMA smartphones in the US, often using aggressive "buy one get one free" programs which helped Android as a platform to surpass Apple's first calendar quarter of iPhone sales in the US, according to data from NPD. However, Apple continued to outsell all Android vendors globally and remains a stronger, less fractionalized installed base for app developers in the US. Apple has also maintained stronger average selling prices than its competitors, including smartphone leader Nokia.

If Apple chose to deliver a version of the iPhone capable of working on Verizon's network, it is possible it could eat up a significant chunk of the sales of competing smartphone platforms, which currently are isolated from direct competition with the iPhone due to the network technology barrier that currently prevents the iPhone from working on Verizon and Sprint. However, Apple would likely also lose significant leverage in driving concessions from AT&T, such as the low iPad 3G pricing deals for unlimited data that the company has not been able to establish in many other markets outside the US, as well as hardware pricing leverage.