An Apple iPhone Lite of sorts could be coming as soon as this Summer. Or perhaps an Apple Media Tablet. Verizon and Apple have been in close talks about the possibility, which includes prototypes and Steve Jobs negotiations, two elements that suggest the talks are much further along than initial stages.

Someone who has actually SEEN the devices, according to BusinessWeek, had this to say about them:

“The media pad category might go to Verizon,” said the person who has seen the device. “We are talking about a device where people will say, ‘Damn, why didn’t we do this?’ Apple is probably going to define the damn category.”

The new iPhone-like device is slightly thinner and smaller than the existing iPhone, people say. The reason the device is much cheaper than existing iPhones is that it relies on a so-called system on a chip, which incorporates many types of chips and drives down the cost of silicon in such devices, says one source familiar with the design. This new chip could also potentially be used in the media pad. “It will have a much lower cost that will blow away the margins on the BlackBerry and the iPhone,” the person says.

Notice the “iPhone-like” connotation – by making key adjustments to the hardware and perhaps name, Verizon and Apple might be able to bypass any exclusivity terms that AT&T and Apple have made in regards to the iPhone.

Exciting times for Verizon customers! I just hope that Apple isn’t playing this one like a hustler and using talks with Verizon to boost their position with AT&T in iPhone negotations.