A Microsoft spokeswoman issued a diplomatic response, which neither confirmed nor denied that the software maker is working with Verizon: "Microsoft's strategy has not changed. It is and has always been to provide a software platform for the industry. We work closely with many mobile operators and device makers around the world because customers want different experiences on a variety phones."

Some with a cynical view have suggested that all that's afoot is that Apple is talking to Verizon to pressure AT&T in its talks to get another year as the sole carrier of the iPhone, which concludes in 2010. In other words, AT&T would have than it has already, these observers said.

But that view wouldn't explain Microsoft's interest in working with Verizon. In fact, there aren't many touch-screen smartphones that can compete against the iPhone, in theory, at least.

But several analysts who have heard these recent stories all believe it's obvious that Verizon wants the iPhone or something really close to it and is working hard to get it. Unnamed sources or not, it makes sense that Verizon is working vigilantly to get this iPhone-like capability.

It's not that Verizon isn't doing well financially without the iPhone. Rather, another way to look at it is that Verizon is AT&T's staunch competitor and can't let AT&T grab a foothold in the march toward a world where the smartphone is king. Various projections and surveys, including one cited by the CTIA, the trade group for U.S. mobile operators, show that mobile devices will be used by the majority of people in the world for accessing the Internet in 2020. Analyst Jack Gold, of J. Gold Associates, says that tipping point will arrive sooner.