Verizon & Google Seal Android Pact

Verizon (VZ) reportedly partnered with search engine giant Google Inc. (GOOG) to develop and market mobile devices and applications based on the Android wireless software platform. Android-based mobile handsets developed through this collaboration will be available on Verizon’s high-speed wireless network. Financial terms of the agreement were not disclosed by the companies.

Verizon, the largest wireless carrier in the U.S. , is expected to launch two android smartphones in the coming weeks. Plans are also in place to roll out other Android devices including PDAs and netbooks in future.

Under the multi-year agreement, the companies will pool substaintial resources to jointly develop a family of Android devices that will incorporate innovative mobile applications and feature Google Voice (Internet voice service). The products and services will be marketed leveraging Verizon’s nationwide distribution network and will be available for sale in the carrier’s retail and on-line stores.

Android-based mobile phones have emerged as the biggest challenger to Apple Inc’s (AAPL) iPhone. Android smartphones are currently marketed in the U.S. by Deutsche Telecom’s (DT) subsidiary T-mobile USA and will also be available on Sprint’s (S) network soon. By leveraging Verizon’s vast nationwide 3G network coverage and addessable customer base of 87.7 million, Android phones are expected to make a big impact in the intensely competitive U.S. smartphone market.

Verizon is increasingly challenged by the strong business momentum of iPhones (3G and 3GS), which are exclusively distributed by its archrival AT&T (T) in the U.S. Increased customer switch to iPhone contributed to the sequential decline in Verizon’s net wireless customer additions in the last quarter.

The Android-deal with Google will offer Verizon an opportunity to bolster customer retention by offering a potent alternative to iPhone. Moreover, the strategic alliance will reignite aggressive competition in the domestic smartphone space.

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