But an understandable one. It might be hard to remember now, but almost every predicted form of the iPhone was that of a phone with a clickwheel.
Like in this old MacRumor article. Plus...
* Verizon never got to see an iPhone.
* Apple's previous phone-iPod combo collaboration, the ROKR, was a failure at the time.
* Apple wanted to control distribution and warranties, which Verizon felt would compromise their sales partners and compromise customer satisfaction. (Later, Apple opened up to other stores once sales dropped off, anyway.)
* Apple and Verizon probably couldn't come to terms on app, ringtone, music sales.
These are all good reasons to turn down something sight unseen.
According to the original WSJ history, this is a myth.
Apple approached Cingular (ATT) first, and then reached out to Verizon at the same time. It seems likely that Apple wanted to be on both networks.
After a year of negotiation, Apple gave up and agreed to an ATT exclusive. (An exclusive is not something a maker would want on their own. )