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AT&T warns Apple of video patent infringement

  • February 10, 2006
  • Apple

AT&T claims that Apple and others are infringing on its MPEG-4 video compression patents. Looking for global licensing agreements, AT&T has targeted Apple, CyberLink, DivX, InterVideo, and Sonic Solutions as companies whose products use the MPEG-4 technology. AT&T has also reportedly contacted national retailers that sell products from the companies, informing them that they may be held liable for infringement.

“With the recent explosion of products that use the MPEG-4 standard, including Apple’s video iPod and Creative’s Zen Vision:M, AT&T could stand to gather a financial windfall from its patented technology,” reports PC Magazine. “An increasing trend in mobile phone multimedia also signals potential future profits to be made through the global licensing program.”

Analysts see iPod speakers, iPhone in Apple’s future

Following a meeting with Apple executives at company headquarters in Cupertino, California, analysts from UBS Investment Research believe Apple could introduce several new products in the coming year, including iPod speakers and an Apple-branded cell phone.

“We also believe that Apple may choose to enter new consumer markets for iPod speakers and Apple branded cell-phones over the next year where the company would be able to leverage its market leading innovations and creative designs that have made the iPod such a tremendous hit with customers,” the firm said. “In addition, we anticipate that Apple will continue to announce new partnerships with content providers and build on the media it currently has available for download.”

iPod, iTunes highlights from Apple’s Q1 conference call

Following Apple’s announcement of record earnings and revenue yesterday, the company held its quarterly conference call with press and analysts. Below are the highlights pertaining to Apple’s music business, which accounted for 59% of the quarter’s total revenue.

- The iTunes Music Store had an 83% share of the US market of legally downloaded music during the month of December.

- There are now over 2,000 different iPod accessories.

- Apple said it did “very well” in sales of both Apple-branded and third-party accessories. The company sees the accessories as a “recurring revenue stream.”

- The iPod gross margins in the December quarter were above 20%.

- The iPod is now sold at more than 35,000 outlets, although not every retailer sells all iPod models.

- Stock of the 4GB iPod nano is still “lean” in certain areas, following tremendous holiday demand.

- The iTunes Music Store operated “above break even” during the quarter for a slight profit.

- There is more downloadable content on the way for video iPods.

- iPod Radio Remote sales are doing “well.” Apple said it is “currently not meeting demand” for the device, but it is “working really hard” to try to do so.

Apple reports record earnings, revenues [updated]

As expected, Apple today announced record financial results for its fiscal 2006 first quarter ended December 31, 2005. Apple’s net profit for the holiday quarter was $565 million, or 65 cents per share, on $5.75 billion in revenue—the highest quarterly earnings and revenue in the company’s history. These results compare to revenue of $3.49 billion and a net profit of $295 million, or 35 cents per share, in the year-ago quarter.

During his keynote speech at Macworld Expo last week, Apple CEO Steve Jobs announced that more than 14 million iPods were sold during the quarter, which represents a 207 percent growth in iPods compared to last year. The total number of iPods sold now stands at over 42 million.

“We are thrilled to report the best quarter in Apple’s history,” said Jobs. “Two highlights of an incredible quarter were selling 14 million iPods and getting ready to launch our new Macs with Intel processors five to six months ahead of expectations. We are working on more wonderful products for 2006, and I can’t wait to see what our customers think of them.”

Update: In an SEC filing, Apple said all iPod models accounted for more than $2.9 billion in revenue during the quarter, an increase of 177 percent compared to last year. Apple’s “Other Music Products” category—which includes the iTunes Music Store, iPod related services and accessories—accounted for $491 million of the quarter’s revenue, a 177 percent increase year-over-year.

Apple’s Jobs suggests Dell should eat his words

After the close of the stock market Friday, Apple CEO Steve Jobs took advantage of his company’s recent good fortunes to have a laugh at the expense of Dell’s boss.

Shortly after Jobs returned to Apple in 1997, Dell’s founder and chairman, Michael Dell, was asked at a technology conference what he might do to fix Apple. “What would I do?” Dell said. “I’d shut it down and give the money back to the shareholders.”

Apple’s stock price saw a 12 percent surge last week, which pushed the company’s market capitalization to $72.13 billion, passing Dell’s value of $71.97 billion.

On Friday, Jobs sent an email to Apple employees, which read: “Team, it turned out that Michael Dell wasn’t perfect at predicting the future. Based on today’s stock market close, Apple is worth more than Dell. Stocks go up and down, and things may be different tomorrow, but I thought it was worth a moment of reflection today. Steve.”

Apple posts Macworld Expo keynote stream

Apple has now posted the QuickTime video stream of Steve Jobs’ Macworld Expo keynote address. During the speech, Jobs introduced the new iPod Radio Remote and other iPod accessories, as well as Intel-based Macs and updates to its iLife and iWork suites.

Apple reports highest quarterly revenue ever

In a rare move ahead of next week’s expected earnings report, Apple CEO Steve Jobs revealed the company’s holiday financial numbers during his speech at Macworld Expo. Jobs reported that Apple had its highest revenues ever—$5.7 billion. “One for the records,” said Jobs. In addition, the Apple boss noted that Apple retail stores had their first $1 billion revenue quarter.

Apple in legal dispute with Burst over digital media patents

Burst.com, which develops video and audio delivery software, said it was sued by Apple on Wednesday for declaratory relief, alleging patent invalidity or non-infringement. The suit, filed in U.S. District Court in San Francisco, follows “a breakdown in protracted negotiations for issuance of a license of Burst’s patents to cover Apple’s iPod and iTunes products,” according to the company.

“Burst anticipates responding to the complaint and filing a counterclaim for patent infringement shortly,” the company said in a statement late Thursday. “Burst remains committed to the enforcement of its intellectual property and looks forward to successfully resolving this litigation through a license covering Apple’s Quicktime, iPod and iTunes products, including Apple’s iTunes Music Store.”

In March of last year Burst settled a major patent and antitrust suit against Microsoft. The software giant paid Burst $60 million to license its patents. “Since the Microsoft settlement, the company has been in patent licensing discussions with several companies engaged in the distribution of audio and video content on computer networks,” Burst said.

Apple requests iPod Camera Connector compatibility updates

Apple Computer is interested in updating the list of cameras that are compatible with the Apple iPod Camera Connector to reflect as many compatible models as possible. Developers and vendors of cameras can self-certify their cameras by downloading the PDF document iPod Camera Connector Compatibility, and follow the instructions to have products added to Apple’s list of compatible cameras.

Apple details iPod sales in annual report

In its annual report (SEC form 10-K) filed Thursday with the Securities and Exchange Commission, Apple summarized several iPod and iTunes related details.

Apple said that net sales of iPods rose $3.2 billion, or 248 percent, during 2005 compared to 2004. The company said it sold 22.5 million iPods in fiscal 2005, an increase of 409 percent from the 4.4 million iPod sold in 2004. Apple has now shipped more than 30 million iPods since the device’s introduction four years ago.

“Strong sales of iPods during 2005 continued to be experienced in all of the company’s operating segments and was driven by strong demand for the iPod shuffle introduced in January 2005, the release of an updated version of the iPod mini in February 2005, the release of the iPod nano in September 2005, and expansion of the iPod’s distribution network,” Apple said in the filing.

Apple said that net sales of other music related products and services, which consists of sales associated with the iTunes Music Store and iPod accessories, increased $621 million, or 223 percent, compared to last year.

“The company has experienced strong growth in sales of iPod services and accessories consistent with the increase in overall iPod unit sales for 2005,” Apple said. “The increased sales from the iTunes Music Store is primarily due to substantial growth of net sales in the U.S. and expansion in Europe, Canada, and Japan.”

Steve Jobs to kick off Macworld Expo with keynote

IDG World Expo today announced that Apple CEO Steve Jobs will once again deliver the opening keynote address at next month’s Macworld Conference & Expo in San Francisco. The event is being held at the Moscone Convention Center January 9-13, 2006. The keynote will begin at 9:00 a.m. PT on Tuesday, January 10, 2006.

Apple plans after-Thanksgiving sale

  • November 21, 2005
  • Apple

Apple will once again this year host an after-Thanksgiving sale at its online and brick-and-mortar stores. The one-day event, which Apple is calling “The feast after the feast,” will take place on Friday, November 25. “Come back to the Apple Store on the day after Thanksgiving for a special one-day-only holiday shopping event,” reads a note on Apple’s website. “You’ll find dozens of great gift ideas for everyone on your list, and you’ll get free shipping on all items.” Last year’s sale saw $20 price reductions on iPods, as well as discounts on iPod accessories, iMacs, digital cameras and more.

Lugz sends Apple cease and desist notice over TV ad

imageLugz Footwear said late Friday that it has sent a cease and desist letter to both Apple and its adverstising agency, TBWA/Chiat/Day, over the similarities between a Lugz TV commercial from 2002 and Apple’s new iPod + iTunes spot featuring rapper Eminem.

As previously reported, Apple’s new ad is strikingly similar to the three year old Lugz commercial, with both featuring an urban background in red, orange and yellow hues with a hip-hop soundtrack and black silhouette dancers.

“If you look at these spots, common sense would tell you that there’s a problem here,”  Larry Schwartz, executive vice president and a principal of Lugz parent company JSSI, said in a statement. “The Apple commercial uses the most powerful elements of our campaign, making the ads disturbingly similar. We are prepared to vigorously pursue all legal remedies in order to protect our rights.”

Creative blames Apple for flash shortage

Makers of MP3 players are facing a shortage of 1GB flash memory chips, and at least one blames Apple and Samsung for the less than ample supply that the rest of the industry is fighting for.

“One of the key challenges we face in our MP3 business is an industry-wide shortage of 1GB flash memory,” said Creative president Craig McHugh. “Industry demand for high-capacity flash memory currently outstrips supply and this will impact availability of our 1GB flash MP3 players for the holiday quarter. The shortage of flash memory, according to industry analyst speculation, is primarily a result of a special deal that Apple has secured from a key supplier for the holiday season.”

It has been reported that Samsung is selling the majority of its flash memory supply to Apple at below market cost for use in the iPod nano and iPod shuffle.

Creative CEO Sim Wong Hoo said the deal is putting pressure on many smaller companies. “The MP3 market is now consolidating, but there is a shortage [of flash memory] because of the special deal we talked about,” said Sim. “The low-end [manufacturers] went out of business in the last few months because it’s very hard to face this pressure. If Creative is losing money then it’s very difficult for other companies to really fight in this battle.”

Sim said he doesn’t expect the deal to last long. “I don’t think the vendor [Samsung] is benefiting on it, so it’s really a one-sided deal,” he said. “I don’t think anybody else out there can get [similar terms]. That’s not the way the industry practices.”

Eminem iPod + iTunes commercial returns

imageAfter briefly appearing online last week following Apple’s special event, the new iPod + iTunes commercial featuring rap music superstar Eminem is now back on the company’s website for viewing. There have also been reader reports that the 30-second spot began airing on TV over the weekend.

The ad, which was first shown by Apple CEO Steve Jobs during the event in San Jose, is a new 3D version of Apple’s well-known silhouette ads featuring the rapper singing his hit single “Lose Yourself” along with dancers and the new fifth-generation iPod.

The commercial came as somewhat of a surprise given the history between Apple and Eminem. The rapper’s music publisher, Eight Mile Style, filed a lawsuit against Apple in early 2004, claiming the iPod maker used “Lose Yourself” in a commercial for the iTunes Music Store without permission. The dispute was settled in May of this year, with Apple agreeing to pay Eminem and Eight Mile Style an undisclosed sum.

The disappearance of the commercial from Apple’s website without explanation sparked a bit of controversy online. Bloggers have speculated that Apple had pulled the ad because of its similarity to a three year old Lugz shoe commercial [video, screenshot comparison]. Others assumed that the ad was pulled because of a last minute demand from Eminem’s camp. Currently, no explanation has been given.

Apple drops Samsung investment plan

Talks between Samsung and Apple on a possible joint investment to produce NAND flash memory chips have been dropped. “We had had some talks with Apple earlier this year but it did not work out due to differences over terms,” a Samsung spokesman told Reuters on Monday, adding they had dropped the joint investment talks “at a very early stage.” Apple is reportedly in talks currently with another company for joint flash chip output.

The Korea Economic Daily reported over the weekend that Apple had pulled out of the joint $3.8 billion investment plan due to “deepening anti-Samsung sentiment among some South Korean politicians and civic groups.” The Korean Fair Trade Commission Chairman recently stated that Samsung could be investigated for reports of the company selling flash memory to Apple at below-market prices. Last week, Samsung was found guilty in the U.S. of price-fixing.

Apple’s design process highlighted in Time cover story

imageThe October 24th edition of Time magazine features a cover story on Apple and how the company is different from others when it comes to designing new products. While Apple CEO Steve Jobs is featured on the cover holding the new fifth-generation iPod, most of the article is devoted to analyzing the design process at Apple. The cover story contains some choice quotes from a number of Apple executives, including Jobs, Jonathan Ive and Tony Fadell. A paid subscription is required to read the full article.

Time’s Lev Grossman says that there are two things going on inside Apple—collaboration and control. When it comes to a new product, it’s a joint effort—the company does not pass a product down the line, from team to team. “There aren’t discrete, sequential development stages,” explains Grossman. “Instead, it’s simultaneous and organic. Products get worked on in parallel by all departments at once—design, hardware, software—in endless rounds of interdisciplinary design reviews.”

Jobs compares Apple’s design process to other companies. “You know how you see a show car,” Jobs says, “and it’s really cool, and then four years later you see the production car, and it sucks? And you go, What happened? They had it! They had it in the palm of their hands! They grabbed defeat from the jaws of victory! What happened was, the designers came up with this really great idea. Then they take it to the engineers, and the engineers go, ‘Nah, we can’t do that. That’s impossible.’ And so it gets a lot worse. Then they take it to the manufacturing people, and they go, ‘We can’t build that!’ And it gets a lot worse.”

Time’s Grossman describes the “control” of Jobs: “Sure, Jobs is perfectly pleasant to be around. And he pays attention to what you’re saying, but if he disagrees with it… he’ll come storming back and hammer at you until you change your mind or at least shut up… In other words, Jobs is into control. In itself, that is of no real importance, except that in a lot of ways, Apple is an expression of Jobs’ personal ethos.”

Finally, Jobs talks of the new iPod’s potential. “There is no market today for portable video,” he says. “We’re going to sell millions of these to people who want to play their music, and video is going to come along for the ride. Anyone who wants to put out video content will put it out for this. And we’ll find out what happens.”

Apple reports best earnings ever, ships 6.4 million iPods

Reporting record fourth quarter and year-end financial results on Tuesday, Apple announced that it shipped more than 6.4 million iPods during the quarter, the 10th consecutive quarter of record iPod sales.

Apple’s net profit for the quarter was $430 million, or 50 cents per share, on $3.68 billion in revenue—the highest quarterly earnings and revenue in the company’s history. These results compare to a profit of $106 million and revenue of $2.35 billion last year. For fiscal 2005, Apple had a net profit of $1.335 billion on revenue of $13.93 billion, representing the highest annual net profit and revenue in the company’s history.

With today’s report of Apple shipping 6,451,000 iPods during the quarter—about 300,000 more than last quarter and approximately 4.4 million more than a year ago—the total number of iPods sold now stands at over 26 million.

In an SEC filing, Apple said all iPod models accounted for more than $1.212 billion in revenue during the quarter, an increase of 126 percent compared to last year. Apple’s “Other Music Products? category—which includes the iTunes Music Store, iPod related services and accessories—accounted for $265 million of the quarter’s revenue, a 170 percent increase year-over-year.

Apple, Samsung may be probed by Korean FTC

Following complaints from Korean digital music player makers, Samsung and Apple could be facing an antitrust probe over NAND flash memory chip pricing. Samsung is said to have sold its flash chips to Apple for the iPod nano at below-market prices, crippling makers of iPod competitors who cannot now build comparable devices at the same price points.

“Speaking at a local radio talk show, FTC Chairman Kang Chul-kyu said questions about Samsung and Apple engaging in unfair trading could be investigated by the antitrust body,” reports Asia’s Yonhap News. “The issue of whether Samsung provided cheap flash memory chips for use in Apple’s latest MP3 music player was raised earlier this week during a parliamentary audit on the FTC. Rep. Kim Hyun-mi claimed that Samsung sold its NAND chips for US$54, or roughly 50 per cent of market prices.”

Motorola CEO: Apple building smart phone

  • September 29, 2005
  • Apple

Motorola CEO Ed Zander added to the ongoing speculation of Apple’s intent to create its own mobile phone with comments today to CNET News.com. “We know that they are going to build a smart phone—it’s only a matter of time,” he said after his presentation today at Technology Review’s Emerging Technologies Conference at the Massachusetts Institute of Technology.

Also, as a Motorola representative did earlier this week, Zander downplayed his comments about the iPod nano, claiming they were “taken completely out of context. We have a great relationship with Apple. I’ve known Steve Jobs for 15 years. Sure, there is some tension there. We have the Rokr, and they have the Nano. They are a competitor as well as a partner.”

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