Rumors of an iPhone on the Verizon Wireless network have been stirred before, and last week received a fresh turn. The Wall Street Journal, interviewing Verizon’s chief executive Ivan Seidenberg, said Verizon was likely to get access to the iPhone in the coming years, as it converts its 3G network over to 4G, or LTE.

Microsoft is a major player in software for cellphones, but it is working hard to develop a new device that will rival Apple’s.

Verizon, meanwhile, is pushing on several fronts to extend its smart-phone offerings and compete with AT&T Inc., which is the iPhone’s exclusive U.S. carrier.

In a recent interview, Verizon CEO Ivan Seidenberg declined to comment on whether Verizon and Microsoft were planning an iPhone-like device.

Microsoft’s project, which is code-named “Pink,” aims to produce a phone that will extend the tech giant’s Windows Mobile operating system, adding new software capabilities. It would also likely include Microsoft’s new Windows Marketplace for Mobile, a store for cellphone downloads along the lines of Apple’s App Store, these people said.

The device, according to published reports, will be a kind of miniature tablet computer. Like the iPhone, it would be able to access the Internet over cell phone data networks, allowing users to surf the Web just about anywhere. And analysts expect that, like the iconic smart-phone, the retail price would be subsidized by wireless carriers.

Those rumors have heated up amid the growth of the netbook market. Recent reports suggest that Apple will announce at least two new devices, including an updated iPhone, at its June developer conference in San Francisco. It’s unclear whether Apple will also unveil the new, larger touch-screen device.

Netbooks are small, low-cost laptops that are the fastest-growing category of PCs. They’ve become popular replacements for standard notebooks for travelers and families looking for a second or third computer in the house.

Netbooks sell for about $500 retail, but wireless providers offer them for as little as $100 upfront. They market them like cell phones, selling them below cost and making up for it with a monthly subscription fee from consumers.

Although McAdam would not say what the two companies discussed, two people familiar with the subject said talks covered the new smaller iPhone-like device under development. Representatives of Verizon Wireless and Apple declined to comment. AT&T spokesman Mark Siegel says: “We are delighted with the iPhone and our partnership with Apple.” The company declined to make an executive available.

AT&T by the way, has been the only carrier of Apple’s iPhone in the U.S., adding more than 7 million subscribers as a result of the arrangement; the company is reportedly in talks with Apple to extend the partnership, due to end as soon as next year. An agreement to distribute Apple communication devices via Verizon Wireless may cost AT&T some of the business it has gained as the sole Apple carrier. Even if Verizon Wireless and Apple fail to strike a deal, talks between them increase pressure on AT&T to accept partnership terms favorable to Apple.

Now it’s not surprising for Apple to launch a smaller and cheaper version of it’s popular products, The ipod with it’s ipod shuffle, the Mac with Mac mini, Why not iPhone? as competitors trying to get a slice of the market with similar products. launching a cheaper version of it’s product would surely make it harder for the competitors.