By Daniel Eran Dilger

Published: 04:35 PM EST (01:35 PM PST)

Years after Verizon Wireless shunned Apple's iPhone because it wanted more control over the device, a company representative has acknowledged that the iPhone App Store was a "watershed" event in the mobile industry.

At the January 2007 introduction of the original iPhone, Verizon executive Jim Gerace told USA Today that his company has passed up the opportunity to parter with Apple because the two companies could not agree on a variety of issues.

At stake in the negotiations were retail distribution issues (Apple initially didn't want to sell the iPhone through WalMart and Best Buy), customer support handling (Apple wanted to support device issues through AppleCare), and the reinstallation of Verizon software and store elements.

Verizon had already been operating its "GetItNow" store as a way to sell its wireless subscribers ringtones and rental apps, most of which were built using Qualcomm's BREW, a proprietary mobile development platform cousin of JavaME. Apple had no interest in supporting BREW or Java on the iPhone.

Apple also wanted to integrate the iPhone with its iTunes Store just as it had with the iPod, and arguably intended from the beginning to launch its own App Store of software as well, although many pundits insist that the company didn't even conceive the concept of third party software until shortly before the launch of iPhone 2.0, as if the entire iOS software platform were simply a reaction to developers' lack of enthusiasm for web apps.

In the three years since the iPhone's launch--and two years after the unveiling of the iPhone App Store--Verizon is now admitting that it misjudged the opportunity it had passed up with Apple. In April, Verizon's chief executive Ivan Seidenberg said he informed Apple that his company would like to carry the iPhone, and alluded to talk that Apple was working on a handset compatible with the carrier's network technology.

Verizon is now admitting that Apple's entry into the mobile phone market has indelibly rewritten the rules of the cellular phone industry in such a way that has even forced carriers who don't sell the iPhone to think differently about how they accommodate independent software stores and how they sell and allocate data services.

Verizon embraces mobile apps

This week, Verizon business development executive director Jennifer Byrne told the audience at the PaidContent Mobile conference that "while we may have had the first app store, GetItNow, we’ve learned a lot, with the watershed being the iPhone. It’s a drastic change from the walled garden stage to the open approach. It’s been a very big shift.”

Byrne said Verizon has "embraced" the idea of a software app store operating independently of the mobile carrier, using "walled garden" language to describe her own company's GetItNow store in contrast to the "open approach" of Apple's App Store. That's an interesting perspective given that Apple's critics often refer to the iPhone App Store as being a "walled garden" because of the curation Apple imposes.

Verizon now supports both RIM's BlackBerry AppWorld and Google's Android Market. "We’ve seen a tremendous response, so it's validated the decision," Byrne said. That shift will no doubt make it easier for Apple and Verizon to come to agreement on future iOS devices, something that has been long been rumored to be imminent but which has not yet officially developed beyond the stage of speculation.

On page 2 of 2: Verizon, Goole look toward toward the web while Apple plans for a native app future.