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Google: Apple is a ‘very close and valuable partner’

In spite of increasing competition between the two companies, a Google executive has made positive public comments about its relationship with Apple. Reuters reports that Vic Gundotra, head of mobile engineering for Google, said, “Apple is a very close and valuable partner and we’re very excited about the relationship we have with them today. We have no reason to believe that’s going to change.” Speaking at an industry roundtable discussion at the Mobile World Congress in Barcelona, Gundotra was also pressed on the issue of Google’s presence on the iPhone, and responded, We don’t want to comment on those rumors. We think that relationship is stable.” A report from January stated that Apple was in talks with Microsoft to see the latter’s Bing service replace Google as the default search engine on the iPhone; a more recent analyst note said there was a “high” likelihood of the deal becoming a reality. Apple CEO Steve Jobs also took a couple of shots at Google during a recent company meeting, reportedly saying that some “teams at Google want to kill us,” and added that Google’s “Don’t be evil” mantra is “a load of crap.”

NPD: Apple now fifth-largest electronics retailer in U.S.

  • February 12, 2010
  • Apple

According to the latest data from The NPD Group, Apple is now the fifth-largest electronics retailer in the United States. In the brick and mortar retailer category, Apple placed fifth in overall 2009 sales, following leader Best Buy, Walmart, Staples, and Target. Apple was also fifth in the online retailer category, following Dell, Amazon, Best Buy, and HP. Overall consumer spending was down, with the middle class—consumers with incomes between $30,000 and $100,000—cutting back nearly eight percent from 2008. Lower-income consumers decreased spending by three percent, while consumers with incomes over $100,000 decreased spending by slightly more than one percent. NPD’s Consumer Technology sales include IT, imaging, audio, video, and consumables, and exclude video game hardware and software, PC software, and mobile phones. [via MacDailyNews]

Apple launches ‘Countdown to 10 Billion Songs’ promo

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Apple has launched its new “Countdown to 10 Billion Songs” promotion in celebration of the lead-up to the 10 billionth song sold on iTunes. In the contest, Apple is offering a $10,000 iTunes Gift Card to the person who downloads the 10 billionth song. No incremental prizes are being awarded, and there is a limit of 25 entries per person per day. As it has in past “countdown” promotions, the company is using a counter graphic on both its countdown webpage and iTunes store graphics, although these have normally been approximations, and not real-time download numbers. The contest begins today and will end once the 10 billionth download is reached; official rules are available here.

Report: Google pays Apple $100M/year for iPhone search

Google pays Apple more than $100 million annually for its position as the default Internet search engine on the iPhone, according to a new report. Citing a source familiar with Apple’s operations, Silicon Alley Insider reports that Apple receives more than $100 million a year from Google as part of a revenue sharing deal, but that recent deals between the two companies have become increasingly contentious. According to the source, the original deal between the two companies for Google Maps on the iPhone was reached in just two weeks, while a similar deal for the iPhone 3G, negotiated just a year later, was a six-month negotiation “full of acrimony” as Google wanted access to data generated by Maps users, which Apple did not want to give up. A report from last month indicated that Apple was in talks with Microsoft over the possibility of the latter’s Bing service replacing Google as the default search engine on the iPhone.

Apple CEO Jobs meets with NYT, WSJ, Time for iPad demos

Apple CEO Steve Jobs reportedly visited New York City in recent days, stopping by both the New York Times newsroom and the Wall Street Journal for personal demonstrations of the new iPad tablet. Gawker reports that Jobs’ NYT visit was strictly off-the-record, but a person who was present indicated that Jobs is preparing to sign up magazines and newspapers for distribution on the iPad, after focusing on books prior to the device’s unveiling. Little is known about Jobs’ visit with the Wall Street Journal, beyond the fact that he was reportedly confined to the office’s third floor, and did not meet with several interested staff members.

New York Magazine claims Jobs held another meeting with New York Times Company executives in the basement of Southern Asian restaurant Pranna, to which Jobs wore a “funny” hat. The report states that Jobs was seated next to NYT publisher Arthur Sulzberger during the “intimate” event, and demonstrated the iPad and its functions while speaking about how it could shape the future of media. Finally, Fortune reports that Jobs also visited the Time & Life Building while in town to demonstrate the tablet to Time Inc. CEO Ann Moore and several select magazine editors.

Apple forces removal of Android mention from App Store

Apple has demanded the removal of promotional text mentioning Google’s Android platform from an application’s App Store description. Mobile development house Flash of Genius has reprinted part of Apple’s email discussing the description text for the company’s Flash of Genius: SAT Vocab app, in which it requests removal of the text. The e-mail reads, “During our review of your application, we found that your application contains inappropriate or irrelevant platform information in the Application Description and/or Release Notes sections. Providing future platform compatibility plans or other general platform references are not relevant in the context of the iPhone App Store.  While your application has not been rejected, it would be appropriate to remove ‘Finalist in Google’s Android Developer’s Challenge!’  from the Application Description.” In addition, the e-mail recommends the developer make the changes to the description “to avoid an interruption” in the app’s availability. For its part, Flash of Genius believes the text is relevant and helps to boost sales, and is considering e-mailing Apple to try and find an acceptable way to reincorporate the text.

Apple warns against use of location services for ads

Apple has posted an App Store Tip on its iPhone Dev Center warning app developers not to use location based services primarily for serving location-targeted ads. The tip states, “if you build your application with features based on a user’s location, make sure these features provide beneficial information. If your app uses location-based information primarily to enable mobile advertisers to deliver targeted ads based on a user’s location, your app will be returned to you by the App Store Review Team for modification before it can be posted to the App Store.” While it is possible that Apple is issuing the warning in an effort to reduce unnecessary battery drain potentially caused by activating GPS and other location-based features, others, including Iconfactory developer Craig Hockenberry, have suggested that Apple is instead trying to prohibit other location-based advertising in favor of an Apple/Quattro Wireless-provided solution. Apple purchased Quattro Wireless for $275 million earlier this year, and former Quattro head Andy Miller is now employed by Apple as Vice President, Mobile Advertising.

Apple makes two mobile advertising hires in Europe

Apple has hired two well-known figures in the mobile advertising world for European positions with its recently-acquired Quattro Wireless mobile advertising firm. Theo Theodorou, former mobile advertising sales manager for Microsoft in the Europe, the Middle East and Africa (EMEA) market, has been hired as head of EMEA sales at Quattro Wireless. New Media Age reports that Theodorou is coming from publisher Hachette Filipacchi, where he was appointed commercial director of digital sales in October 2009. Apple has also hired Todd Tran, formerly managing director of Group M-owned mobile marketing agency Joule, as general manager of the Apple mobile ad network in Europe. Apple purchased Quattro Wireless for $275 million earlier this year, with former Quattro head Andy Miller joining Apple as Vice President, Mobile Advertising; when asked about the acquisition during its First Quarter 2010 Financial Results Conference Call, Apple executives said that the company wanted to acquire Quattro to offer developers a way to easily monetize apps, especially free offerings, adding, “we’re going to work hard to provide developers a great opportunity and we’ll see where it takes us.”

Apple receives patent for touch-sensitive bezel

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A newly-published Apple patent suggests the company is working on touch-sensitive bezel, which would allow it to expand its touch-based interfaces beyond the perimeter of the screen. The patent describes a number of different implementations, including a force-sensitive touch surface, a multi-touch input surface, and other input methods, and each is described as applicable to the iPod, computers, and other portable devices. According to the patent, the bezel would be used to manipulate or control what is being displayed on the screen, based on which part of the bezel was being touched; in addition, these menu-like selections could be made to rotate around the bezel as the device’s orientation is changed. As with all Apple patents, this filing does not necessarily represent any future product release from Apple, but offers evidence of the company’s research in this area. [via Patently Apple]

U.S. Senator probes Apple, others about practices in China

Dick Durbin, a United States Senator from the state of Illinois and Assistant Senate Majority Leader, has asked a group of 30 U.S. companies, including Apple, for more information on their business practices in China. Reuters reports that the request was spurred by Google’s decision to cease cooperation with Chinese Internet censorship programs. “Google sets a strong example in standing up to the Chinese government’s continued failure to respect the fundamental human rights of free expression and privacy. I look forward to learning more about whether other American companies are willing to follow Google’s lead,” Durbin said in a statement. Apple’s 2009 Supplier Responsibility Progress Report (PDF Link) notes that while the company’s products and components are manufactured by a wide variety of suppliers around the world, the final assembly of most products occurs in China. The report states that of the 83 facilities audited, 97% of the core issues assed were in compliance with Apple’s Supplier Code of Conduct. More information on Apple and its relationship with suppliers and manufacturing partners can be found on the company’s Supplier Responsibility page.

Jobs speaks out on Android, Adobe at Town Hall event

Apple CEO Steve Jobs held a Town Hall meeting for Apple employees last week following the announcement of the iPad tablet, offering his views on a number of topics, including the company’s increasing competition from Google, according to several reports. Although all details from the event are second-hand reports, and are therefore open to some interpretation, Jobs reportedly said that Google attacked Apple by entering the phone business, instead of Apple going after the search market. John Gruber of Daring Fireball quotes a source claiming that Jobs said “teams at Google want to kill us,” but that Apple won’t let them, and added that the company’s “Don’t be evil” mantra is “a load of crap.”

Wired reports that Jobs also called out Adobe for being lazy, as he said they have the potential to do interesting things but simply refuse. Jobs also said that Apple doesn’t support Flash on its iPhone OS devices because it’s buggy, and that no one will be using Flash going forward as the online community focuses on HTML5 development. Finally, Mac Rumors received an anonymous submission that included some extra details, including statements from Jobs that Apple plans to deliver agressive updates to the iPhone that Android/Google won’t be able to keep up with, that Jobs considers the iPad to be on a similar level of importance as the iPhone and Mac, and that the next iPhone will be an “A+” update.

Nokia disputes Apple’s ‘largest mobile device company’ claim

In a posting on Nokia’s official Conversations blog, Mark Squires, head of social media communications for the Finnish company, has disputed Apple CEO Steve Jobs’ claim that Apple is, by revenue, now “the largest mobile devices company in the world.” The article refers to a story from Finnish paper Helsingin Sanomat, quoting Nokia CEO Olli-Pekka Kallasvuo saying that Nokia is the world’s biggest mobile device manufacturer, when using a “generally accepted and stable definition of mobile devices,” which excludes laptops. Squires then references Sanomat’s revenue comparison between the two company’s October-December financial results, which stated that Nokia saw revenue of €8.18 billion from its devices and services business during the period, while Apple—even using its own definition of mobile devices—saw revenue of only €7.25 billion.

An analysis of Apple’s reported earnings (PDF Link) does not bear this out, however, as Apple’s revenue from iPod, iPhone, and laptop sales was $11.73 billion, or €8.45 billion, during the December quarter. Removing revenue from laptop sales does leave Apple behind Nokia, resulting in revenues of $8.97 billion, or €6.46 billion, during the period; it is unclear how Helsingin Sanomat arrived at the €7.25 billion number, but it appears to be incorrect. Squires goes on to point out that Nokia remains far ahead of Apple in terms of total devices sold. Nokia and Apple have recently been engaged in an ongoing legal battle, each company accusing the other of patent infringement, with the U.S. International Trade Commission launching an official probe into possible infringement on Apple’s part earlier this week.

Complete transcript of Apple’s iPad special event

Below is a complete transcript of iLounge’s live coverage from Apple’s iPad media event, held on January 27, 2010. Updates are presented in reverse chronological order; photos from the event can be seen on iLounge’s Flickr account.

12:09 PM: A brief update for those still watching this feed - we just went hands on with new Accessories. There’s a new VGA to Dock Connector Adapter ($29) for attaching the iPad to a projector or monitor. A Camera Accessory Kit ($29) that comes with a USB adapter and a SD card reader in one package, two separate pieces, to let the iPad import photos from a camera or card. The Keyboard Dock ($69) with a normal keyboard grafted on to the front of a plastic dock. A standard Dock ($29) with audio and dock connector ports on the back. And an Apple case ($39) made from plastic and microfiber, with a front flap that folds backwards to serve as a stand. Finally, there’s a new 10W power adapter that is included with the iPad or sold separately for $29; it uses a Dock Connector but obviously supplies more power than a typical USB port. There’s nothing amazing about any of these items, but they’re all coming.

WSJ: Apple seeking $10-$15 e-book pricing

In its negotiations with book publishers, Apple has been pushing for e-book pricing in the range of $10-$15, according to a new report. Citing publishers that have met directly with Apple, the Wall Street Journal reports that Apple is asking publishers to set two price points—$12.99 and $14.99—for hardcover best sellers, with fewer titles offered for $9.99. Under this scheme, publishers would set their own book prices, with Apple taking a 30% cut, the same it takes for regular paid apps published and sold on the App Store. The report also states that Apple was in “11th-hour” negotiations with publishers, some of which are hesitant to sign up with Apple due to the fact that they would receive lower per-book revenue than they do from Amazon, which is taking a loss on many of its $9.99 offerings. Apple is expected to announce details of its tablet device at its special media event later today.

Purported tablet images appear ahead of event

A handful of new photos purportedly showing Apple’s upcoming tablet have been published online. Engadget reports that it received the images from an anonymous source; the images show a tablet-sized device bolted inside some sort of testing frame, with a home button at the bottom of the tablet when held vertically, what appears to be a dock connector port directly below that more holes to its right, another set of holes on the left-hand side of the device, which would be the bottom when turned for horizontal use, and, in a couple of the images, a large-screen version of maps running on the screen. A fourth image shows an iPhone resting on top of the screen to provide scale. We have included one of the images below for those readers who’d like to stay clear of any spoilers prior to Apple’s announcement; click through to Engadget for the rest.

Update: Another image, supposedly showing the tablet’s back casing, has appeared online, originating from weiphone.com. We’ve added it to the images below.

McGraw-Hill CEO confirms iPhone-OS based tablet

In an interview with CNBC last evening, Terry McGraw, CEO of major publishing firm McGraw-Hill, confirmed not only that the company would offer its books for Apple’s upcoming tablet, but that the device runs iPhone OS. When asked about rumors that the company had been working on getting their textbooks ready for the tablet, McGraw responded, “Yeah, Very exciting. Yes, they’ll make their announcement tomorrow on this one. We have worked with Apple for quite a while. And the Tablet is going to be based on the iPhone operating system and so it will be transferable. So what you are going to be able to do now—we have a consortium of e-books. And we have 95% of all our materials that are in e-book format on that one. So now with the tablet you’re going to open up the higher education market, the professional market. The tablet is going to be just really terrific.” A video of the interview appears in embedded form below; McGraw’s comment about the tablet begins around the 2 minute 50 second mark. [via Mac Rumors]

ITC begins probing Apple on patents

The U.S. International Trade Commission has launched an official investigation into whether Apple infringes on Nokia’s patents as the Finnish company has claimed. “We are pleased that the ITC has moved quickly to begin [its] investigation,” said a Nokia spokeswoman. Nokia first sued Apple in October 2009 claiming patent infringement, and was soon after countersued, with Apple claiming Nokia infringes on 13 of its patents. In December, Nokia filed a complaint with the ITC alleging that Apple infringes on the company’s patents “in virtually all of its mobile phones, portable music players, and computers;” less than three weeks later Apple filed its own complaint with the ITC, asking it to block Nokia imports to the U.S. The ITC has yet to decide whether it will launch a similar probe of Nokia based on Apple’s request.

Apple patent points to proximity-based tablet interface

A newly awarded Apple patent suggests the company has been working on a way to display different user interface modules based on proximity instead of touch. Originally filed in September 2005 and awarded earlier today, the patent entitled “Proximity detector in handheld device” describes a system that employs one of a number of different methods for detecting when a finger, stylus, or some other object is place above, but not directly on, an area of the screen. Once the presence is detected, an appropriate user interface element is displayed, and the user can interact with the element via proximity gestures or some other form of input, such as touch. Notably, the images included with the patent appear to depict a tablet device, as opposed to a smaller handheld like the iPhone or iPod touch. As with all Apple patents, this filing does not necessarily represent any future product release from Apple, but offers evidence of the company’s research in this area; continue reading for images from the patent. [via Patently Apple]

Notes from Q1 2010 Apple Conference Call

During Apple’s First Quarter 2010 Financial Results Conference Call, Apple CFO Peter Oppenheimer and Apple COO Tim Cook made several comments concerning its media-related products, including the iPod, iPhone, and Apple TV, as well as U.S. cellular partner AT&T. In his opening statements, Oppenheimer said that while traditional iPod sales declined, sales of the iPod touch were up 55% year-over-year, boosting the iPod’s Average Selling Price (ASP) by nine percent.

The iPhone saw “very strong” growth in several international territories, and has been a “runaway hit” in Japan, with sales up over 400% year-over-year. iPhone sales were also up over 500% from the year-ago quarter in the Asia/Pacific market, because of Korea and other newly added countries, including China. Specifically, Cook revealed that the iPhone passed the 200,000 activation mark in China earlier this month, and that the company is very focused on quality at the point of sale and quality of customer experience, in order to build the brand for the long term in that market. In the corporate market, 70% of the Fortune 100 are now actively deploying or piloting iPhone. When asked about iPhone inventory levels that sat at roughly 2.7 million units in the channel at the end of the quarter, including demos and in-transit inventories invoiced to carriers, Cook said that Apple is completely comfortable with the number, adding that Apple could have sold a lot more units but elected not to because the company is managing inventories very tightly. The implication, we felt, was that a transition from 8GB iPhone 3G models to 8GB iPhone 3GS could have achieved this.

In regards to the company’s accounting changes, Oppenheimer explained that the company has settled on estimates of $25 for iPhone and $10 for Apple TV software updates which will be taken from the selling price and deferred over time, but did not provide any specifics on how the company arrived at either number. Both executives also praised Apple’s financial team for rapidly facilitating the switch to the new accounting principles. When asked about Apple’s recent acquisition of mobile advertising firm Quattro, the executives said that the company wanted to acquire Quattro to offer developers a way to easily monetize apps, especially free offerings, adding, “we’re going to work hard to provide developers a great opportunity and we’ll see where it takes us.”

Finally, when asked about the potential effect recent criticism of AT&T might have on Apple’s and the iPhone’s brand, the men hailed AT&T as a great partner, noting that the two companies have a working relationship that pre-dates the initial launch of the iPhone, and that AT&T has more mobile broadband usage than any carrier in the world. They also pointed out that iPhone customers have a great experience in the vast majority of locations, that AT&T has very detailed plans to address its network problems in cities, and that Apple has reviewed the plans and believes AT&T will make significant progress towards fixing them.

Apple Q1 2010: 21 million iPods, 8.7 million iPhones sold

Reporting its first quarter financial results today, Apple said it sold 21 million iPods during the holiday quarter — an eight percent decrease compared to the same quarter last year. Despite the drop in unit sales, revenue from iPod sales actually increased one percent year-over-year, to $3.391 billion. Apple also sold 8.7 million iPhones in the quarter, a 100 percent increase year-over-year, and up from 7.4 million units in the prior quarter. The company posted revenue of $15.68 billion and net quarterly profit of $3.38 billion, or $3.67 per diluted share, representing all-time revenue and profit highs, compared with revenue of $11.88 billion and net quarterly profit of $2.26 billion, or $2.50 per diluted share in Q1 2009. Sales of Other Music Related Products + Services were up 15% over the year-ago quarter, and up 14% from Q4 2009, to $1.16 billion total. That category includes iTunes Store sales, iPod services, and revenues from Apple and third-party iPod accessories. International sales accounted for 58 percent of the quarter’s revenue.

Notably, Apple has applied new accounting principles to its iPhone and Apple TV numbers, and is accounting for the sale of both products as two deliverables. As explained in the company’s 10-Q filing with the SEC, “The first deliverable is the hardware and software essential to the functionality of the hardware device delivered at the time of sale, and the second deliverable is the right included with the purchase of iPhone and Apple TV to receive on a when-and-if-available basis future unspecified software upgrades and features relating to the product’s essential software.” The rules also result in the recognition of “substantially all of the revenue and product costs from the sales of iPhone and Apple TV at the time of sale.” The change in accounting rules explains the discrepancy between the Q1 2009 financial numbers mentioned above and those originally reported.

“If you annualize our quarterly revenue, it’s surprising that Apple is now a $50+ billion company,” said Steve Jobs, Apple’s CEO. “The new products we are planning to release this year are very strong, starting this week with a major new product that we’re really excited about.”

“We are very pleased to have generated $5.8 billion in cash during the quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the second fiscal quarter of 2010, we expect revenue in the range of about $11.0 billion to $11.4 billion and we expect diluted earnings per share in the range of about $2.06 to $2.18.”

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