If there's one thing I've been trying to pound home about the frequent iPhone-on-Verizon rumor, it's this: it won't happen because the technology underlying Verizon's wireless network, CDMA, is incompatible with the iPhone. There's only been one version of each of the iPhone models made, and that's based on GSM, a rival wireless standard. GSM is used around the world, whereas CDMA is much less widely deployed. In order to sell a Verizon iPhone, Apple would have to build a new handset model, with a CDMA-capable chip, and would have to deal with CDMA-licensing issues to boot -- something the company has shown no inclination to do. The coming 4G networks will be backwards compatible with GSM, not CDMA, and CDMA has been publicly slagged by Apple as a dead end.
I touched on some of these issues this past summer when I discussed Apple's entry into the Chinese mobile phone network. Apple is partnering with China Unicom, not the much larger China Mobile, not least because China Unicom has a 3G network and China Mobile uses -- you guessed it -- CDMA (though it's a CDMA variant that's incompatible with Verizon or any other network). At the time I pegged this as more proof that the iPhone on Verizon is a pipe dream. Apple would go into China with the same phones it was selling everywhere else.
Except that turns out not to be true. The Chinese iPhones are GSM phones, all right -- but they lack Wi-Fi capabilities, which is a huge gap. This is because Apple wouldn't put China's WAPI authentication technology into the phone (WAPI not being a recognized standard, and a possible back door to government surveillance to boot). The AP story on the subject has China Unicom promising a resolution later this year; it will be interesting to see if the phones already have Wi-Fi-capable hardware, in which case once this tiff is resolved Wi-Fi can be activated with a simple software update. But if not -- if there really isn't any Wi-Fi capable hardware in the guts of the phones being sold in China -- then it seems that Apple is willing to make devices specialized for different markets, if the price is right.