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When Steve Jobs wrapped up his announcement of the new iPhone 4, another big Apple Inc. event had come and gone with no mention of Verizon Wireless.
That was a disappointment for some smartphone customers. Verizon Wireless executives, too, are eager to get their hands on the phone and speak regularly with their counterparts at Apple.
But the country's largest wireless carrier by subscribers is also working hard on Plan B. By loosening its grip over operations and deepening its relationships with allies such as software giant Google Inc. and handset makers HTC Corp. and Motorola Inc., Verizon Wireless is finally making progress in the smartphone race.
Since announcing a deal last October to develop phones with Google, the carrier has introduced two hit Google-based devices—the Motorola Droid and the Droid Incredible by HTC—and its share of the U.S. smartphone market has risen about a percentage point, to 24.1% at the end of March, while AT&T's fell nearly four points to 41.9%, according to comScore, which measured users over 13 years old.
While AT&T Inc. remains the exclusive iPhone carrier in the U.S., Verizon Wireless is working with Google to develop a tablet computer, and other Android smartphones are slated for release this year. Verizon Chief Financial Officer John Killian told a group of investors on May 18 that, "We are going to do as well as if we had the iPhone."
Backing up that statement will take more work. When Verizon Wireless passed on the chance to carry the iPhone four years ago, it fell far behind AT&T in sales of smartphones and data services—the mobile Web browsing, messaging and wireless application downloads that are fast replacing phone calls as the driver of wireless revenue.
More Verizon Wireless customers are buying smartphones, but just 16% of its customers over 13 currently carry them, compared with 33% of AT&T's, according to comScore. AT&T also collected 18% more a month in data revenue per customer than Verizon last quarter.
Adding to the pressure, AT&T Monday changed its data pricing, instituting usage limits for new customers but lowering the minimum smartphone service plan to $55 a month, compared with Verizon's $70 a month.
Verizon Wireless Chief Executive Lowell McAdam said in a recent interview that senior executives at his company talk at least once a quarter with their counterparts at Apple.
Apple appears to be developing a version of the iPhone that could work on Verizon Wireless's network, people briefed on the matter said this spring, and analysts think the carrier could get the phone next year.
"There are a lot of interesting things we can do together," Mr. McAdam said of Apple, "and I am confident that eventually we will."
Until then, the relationship with Google and some key manufacturers gives Verizon Wireless a hedge against the iPhone. And it serves the company's goal of not being too dependent on one device.
More than any other carrier, Verizon Wireless has helped fuel the adoption of Android, using its marketing muscle, customer service expertise, and 2,300 retail stores to propel Google's wireless software. This year, Verizon has become the largest U.S. seller of Android-based smart phones, according to analysts at Credit Suisse.
The pairing of Verizon Wireless and Google, the main competitors to AT&T and Apple, respectively, seems obvious today, but it began with a degree of suspicion.
After missing out on the iPhone, Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC, realized it had to go further in opening up its tightly managed system to devices and applications developed by others in order to compete.
"We had been incredibly controlling of the network," said John Stratton, the carrier's chief marketing officer. "We knew that it would slow down innovation."
Meanwhile Google, which until recently was pushing a new model for selling phones directly over the Web rather than through carriers, shared Silicon Valley's skepticism about big phone companies.
In early 2008, when Mr. McAdam visited Google's Mountain, View, Calif., headquarters and told CEO Eric Schmidt that he was ready to let rival companies develop handsets and software on his network, Mr. Schmidt replied, "Yeah, right."
After Verizon Wireless hosted a big conference to help develop those devices, Mr. McAdam recalled, "[Eric] called me up and said, 'You guys were telling the truth; let's sit down and talk.'"
The companies bonded in 2009 while putting together the Motorola Droid, the first Android phone to sell one million units. Since the middle of last year, Verizon Wireless executives have visited the Google campus every three months for high-level planning sessions.
Mr. McAdam, along with Chief Marketing Officer Mr. Stratton and Senior Vice President John Harrobin often meet with Google Chief Executive Eric Schmidt, Android chief Andy Rubin, and other Google executives such as vice president of engineering Vic Gundotra.
The two teams review the latest Android operating systems and match software up with handsets. "We talk about the experience we want," said Mr. McAdam. "We literally call it the GX, or the Google experience."
This spring, after a group meeting where the team discussed multiple devices, Verizon Senior Vide President John Harrobin sent Google engineers a case of highly caffeinated Red Bull as a bit of liquid encouragement. "I wanted them to have a little extra energy for work," Mr. Harrobin said.
Google seems to have come around to the benefits of the carrier system. In April, Verizon Wireless decided to not offer Google's Nexus One phone on its network. The following month, Google pulled the plug on its experiment with retailing phones over the Web amid poor sales and complaints about shoddy customer service.
"The carrier model is an established model," Google Android chief Andy Rubin said in an interview. "Consumers can walk in off the street and put their hands on a device and feel it. When you're choosing among three devices, it's best to use them side by side, and that's something you can't do on the Web."
—Niraj Sheth and Sara Silver contributed to this article.