The Narrative Fallacy writes "According to BusinessWeek, Verizon Wireless is in talks with Apple to distribute two new iPhone-like devices that are not iPhones. (Apple has created prototypes.) AT&T's contract with Apple, which has not been made public, is believed to cover all models of the iPhone, but only the iPhone. So if Apple builds something that isn't an iPhone — and perhaps doesn't even make cellular calls — they won't be violating their exclusivity contract with AT&T, which runs through at least 2010. One device is a smaller, less expensive calling device described by a person who has seen it as an 'iPhone lite.' The other is a media pad, said to be smaller than a Kindle but with a bigger screen, that would let users listen to music, view photos, watch high-definition videos, and make calls over a Wi-Fi connection. (And read books?) Apple could use the prospect of an iPhone-esque device as leverage to prevent Verizon Wireless from introducing the Palm Pre, or at least to delay its introduction on Verizon's network. 'The media pad category might go to Verizon,' said one person who has seen the device. '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.'" Reader stevegee58 writes with word that Verizon may be playing both ends against the middle. Marketwatch reports that Microsoft and Verizon are in talks to develop a touch-screen mobile phone that would run on Windows Mobile.