False move: Verizon iPhone prospects muddied by 4G LTE Rhapsody deal

All the Verizon iPhone pieces are falling into place, except one. The most popular smartphone in history, the iPhone, is set to join forces with the most popular U.S. carrier which doesn’t already offer it, in a year in which said carrier is about to roll out its nationwide next gen 4G network which should give the next gen iPhone room to run. Apple will no longer have to answer questions about a Verizon iPhone from consumers who have thus far refused to join the party. Verizon will no longer have to worry about the fact that the iPhone 4 is outselling Verizon’s own Droid by a 2.5 to 1 margin, as now Verizon will be selling both. Except wait a minute, here comes Verizon introducing its new 4G LTE home-based internet service. And instead of partnering with Apple’s iTunes, by far the most popular digital music service in the world, Verizon is instead partnering with bitter (and dying) iTunes rival Rhapsody. Huh?

To be clear, Verizon’s 4G LTE pilot program has nothing to do with cellphones. It’s a home internet experiment (think cable or DSL alternative), designed for use on your desktop or laptop computer, at your house. Verizon’s partnership with Rhapsody for its home 4G pilot program in no way gets in the way of Verizon’s ability to turn around and sell an Apple iPhone, which of course is fundamentally part of the iTunes ecosystem. But it’s just bizarre. And Apple can’t be happy about it.

Rhapsody, essentially a rebranding of RealNetworks, has been a grand failure. It’s about as much of a threat to iTunes dominance as a mosquito is to King Kong. But Rob Glazer, the head of Real / Rhapsody / whatever it’s called now has long been a very public aggravating thorn in Apple’s side. And now Verizon is getting into bed with Real / Rhapsody at the same time it’s getting into bed with Apple? That’s just odd.

For Verizon to partner with dying Rhapsody would appear to be a poor business decision on its own merits. But doing so at a time when Verizon is courting Apple’s favor is doubly bizarre. In years past, a younger and more iconoclastic Steve Jobs might have pulled the plug on the entire Verizon iPhone over such an absurdly rude move by a potential partner. Will the Steve Jobs of 2011 see fit to look past this minor transgression on Verizon’s part and allow the Verizon iPhone to continue full steam ahead? We’re betting yes, but we’ll see. Here’s more on the Verizon iPhone.