At the center of the tug-of-war is the iPhone. (Courtesy Apple)

In case you didn’t hear the scuttlebutt, on Monday BusinessWeek reported that Verizon and Apple had entered talks regarding a potential partnership. The goal of this alliance? To develop two new gadgets for the market. According to the article, one of these devices is a cell phone device that many are now calling the “iPhone lite.” The second device is the rumored tablet people have been buzzing about for the last few weeks.

Well hold the phone (so to speak), because the The Wall Street Journal reports that Verizon is in talks with Microsoft to develop a device that will go up against the iPhone. The project is codenamed “Pink.” The device would run on a Microsoft-designed operating system. So is Verizon trying to make alliances with both Apple and Microsoft? Or is the company attempting to cover all the bases in case one deal falls through?

Both deals make sense. The iPhone succeeded where many other phones have failed — it got American consumers to embrace smartphones . Regions like Japan and Europe have had success with consumer smartphones for several years. But until recently in the United States, smartphones belonged only to corporate executives and early adopters with disposable income. But the Apple iPhone helped change that trend and now serves as the benchmark for consumer smartphones in the United States.

According to MarketWatch’s Jeffry Bartash, the iPhone also helped AT&T financially during the first quarter of 2009. In the United States, AT&T has exclusive carrier rights to the iPhone. Apparently that relationship has paid off. Now AT&T is seeking to extend its exclusive contract through 2011 — a deal that could muscle out Verizon. The plot thickens…

If Verizon lands both deals, the company gets the best of both worlds. It can market one of the most popular pieces of electronics to hit the American consumer market in years while offering up an alternative to those who prefer the Windows Mobile platform. If one deal falls through, Verizon can still try to capitalize on the other relationship working out.

I can’t imagine how these meetings go down. You know that all of these executives have heard the rumors about how the company they’re courting is also looking at a competitor. In my mind, I see the guy from the Verizon Network commercials arriving at a restaurant only to realize he’s double booked: both John “I’m a PC” Hodgman and Justin “I’m a Mac” Long are seated at adjacent tables, each waiting for the date to begin. But maybe I just need more coffee.

Read up on the major players in this drama at HowStuffWorks.com:

How Microsoft Works
How the iPhone Works
How Smartphones Work