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Full transcript of 2009 MWSF Keynote Address

Continue reading a full play-by-play transcript of the keynote address from the 2009 Macworld Conference and Expo, presented by Phil Schiller, Senior Vice President of Worldwide Product Marketing for Apple, Inc. Note that events are presented in reverse chronological order. Most of the announcements found in this transcript are explained in further detail in separate news articles; photos from the event can be found here.

10:33 AM: This most likely signals the end of the presentation. Sorry, iPod + iPhone fans - we were hoping for more today, too. But there has been a little good news, especially for iPhone users. Lots of applause for Bennett. He’s doing another song. Left my Heart in San Francisco. A melancholy way to close this all out. The 3G iTunes music downloading is working _RIGHT NOW_, Jesse Hollington confirms. Standing O for Tony Bennett. We’ll be updating iLounge with all the news from the show, stay tuned, guys! Thanks for tuning in.

10:29 AM: iTunes. iPhone 3G downloading of music starts today. Since they’re ending on music, they have a musical performer… Grammy winner… 15 Grammies, 2 Emmys, Tony Bennett. Song that is “very appropriate to this last Macworld,” Schiller says. Bennett slides out on a platform with a band. The Best is Yet to Come is the song.

10:27 AM: iTunes. DRM-free, 256k encoding in AAC, one-click upgrades from iTunes. All the majors, starting today, 8 million songs are DRM-free. By the end of this quarter, 2 million more - all 10m songs will be DRM-free. In AAC format. It’s easy to upgrade library to DRM free for a fee. Third new thing: iPhone/iTunes. Wi-Fi Music Store. You’ll be able to buy music over 3G network. So it’s no longer Wi-Fi Music Store. Same price. Same selection. Same quality. Anytime, anywhere, you can get music on your iPhone.

10:24 AM: iTunes. iTunes Music Store started 6 years ago. What’s happened: 6 billion songs. 10,000,000 songs available. 75,000,000 accounts with credit cards. iTunes #1 channel for music in USA. What’s new? Three things. Price. One pricing model for all songs in the past. The music companies will have more flexibility - three pricing tiers. $0.99, $0.69, and $1.29. Based on how the companies offer music, that’ll be the pricing. More music will be sold at 69 than 1.29. iTunes Plus is DRM-free music.

10:23 AM: MBP 17”. Completes lineup of the MacBook family. One last thing… iTunes.

10:20 AM: MBP 17”. So the bottom of the MBP 17” is just a plain sheet of aluminum, no latches, no segments. 7 hours of life on the 9600GT or 8 hours on the 9400M. It can be BTO - same price of $2799 to start, 2.66GHz, 4GB memory, 320GB drive + SuperDrive. Ships at end of January. 34% smaller packaging, too, they note. Showing TV ad.

10:15 AM: MBP 17”. Video of engineers talking about the battery tech. Bob Mansfield talking about how they give you 8 hours on single charge, 1,000 recharges. Dan Riccio, VP of Product Design. Removable battery is gone. They are justifying on video the non-removable battery. They say that by making specially shaped batteries they can fill the space better. Ugh. Lithium Polymer battery video. Adaptive charging lets the batteries get charged intelligently by talking to the individual cells inside the battery. It will have 3X the number of recharges and lifespan of “industry standard,” Riccio says on video. Environmentally friendly… a lot less batteries will wind up in landfills.

10:10 AM: 17” MBP is the third thing today. Unibody enclosure… all of Apple’s buddies praising it, being shown on screen. Doesn’t this ever get old? MacBook #1 on best-seller lists. The 17” version looks like the others. 0.98” inches thin, world’s thinnest 17”, 6.6 pounds is lightest. LED backlit display, 1920x1200. Wide viewing angle, 700:1 contrast ratio and 60% greater color gamut. Best display they’ve done, he says. Some high-end customers don’t want clossy. $50 Anti-Glare option. Loses the black glass and goes with silver metal instead. Superdrive and lock on right. Standard IO on the other side like 15” - 3 USB ports, FW800. No FW400. Up to 2.93GHz Core 2 Duo, 8GB memory 1GHz DDR3, GeForce 9400M + 9600MGT built in. Standard 320GB, 256GB SSD offered. All the same stuff as in other MacBooks. Greatest feature, he says, is the battery.

10:09 AM: iWork ‘09. This is a lot easier than trying to send stuff through e-mail… and lets you get access to documents anywhere. Launches today. You can get to it via the new iWork ‘09.

10:04 AM: iWork ‘09: demo.

Lets you just select any iWork document and share it over the site, with invites to people who want to see it. (Just go right ahead and share your business documents over the web. ...) You get an e-mail invite to view the document on Mac or PC under any popular browser. Being shown in an educational context where it makes more sense. For now it’s free, eventually it’ll be paid.

10:01 AM: iWork ‘09. That’s it for iWork ‘09. $79 or $99 for Family Pack. If you purchase it with a new Mac, you can get it for $49. Ships today. Leopard is required for new iLife; if you want to buy all three - Mac Box Set of all three at $169, Leopard, iLife + iWork. Ships late January. So looks like no Snow Leopard in there, until later. is a new service, going into Beta. A new service that will let you share iWork documents with other people. View documents online. Add comments and notes, which you can see. You can also download a copy from rather than using e-mails - even for large files.

9:58 AM: iWork ‘09, Numbers ‘09. This year it has added features requested by customers. Table categories. It can now do auto-grouping of information in a table based on similar words. Easy formula writing has been added; 250 functions now that are easy to find and understand. Dennis is falling asleep. New chart options, inclduing mixed chart types, multi-axis, trend lines, and error bars. Linked charts between Pages and Numbers, and new templates.

9:55 AM: iWork ‘09, Pages. Full-screen view. Lets you see multiple pages on screen at once rather than cluttering with toolbars. Dynamic outlines so that you can create an outline and then build pages off of the outline, allowing for reorganization of the outline dynamically. Mail merge with Numbers, now added. MathType and EndNote support. Complicated bibliographies etc. supported. Plus 40 new templates for documents.

9:49 AM: Item number 2 today: iWork ‘09. Keynote, Pages, Numbers all updated. Keynote gets new animation tools for better presentations. Magic Move is a new feature that does transition between slides. If slide one is a collection of cards and 2 is only one card, it auto-transitions between them - you just choose how you want the start and end slides to look and it does the rest. Powerful transition effects that look really nice. Text transitions have also been added, including “swing” where the text swings from one word to another. Shimmer effect has sparkles. Anagram is a reorg of letters. Great new metallic chart look and animations, also stone textures, wood, etc, all animated. New themes. Very simple. Keynote Remote feature - an iPhone app to let you control keynote. Works on iPod touch or iPhone. Talk wirelessly using wi-fi to yor Mac, giving you slides and speaker notes you’ve added. Flick to advance slides. Lots of applause on this. $0.99 application from Apple. First time Apple is charging for an iPhone app other than a game.

9:48 AM: Other updates to iWeb and iDVD. Free with all new Macs. Upgrade is $79. $99 Family Pack for 5 machines. Will ship late January.

9:45 AM: Colbie Callat, Patrick Stump/Fall Out Boy, Sting, and more. Sarah McLachlan, Ryan Tedder/OneRepublic, Norah Jones. Every one presented in video form so you can learn how to play their songs. There’s a lesson store and a new section of Garageband for iPhone Ringtones, too. The artists help you learn the stories behind songs, view lyrics and notation, practice with tracks, create your own mix, slow down any part. John Fogerty talking about the making of his song - very self-deprecating humor and amusing anecdotes on Proud Mary. This is awesome.

9:40 AM: The last of the apps he’s highlighting is Garageband ‘09. New guitar effects, etc. Only one feature he’ll talk about: create software that can help someone learn to play a musical instrument. It’s called Learn to Play. New UI that teaches guitar or keyboard, with an HD video instructor who helps you learn. “Tim,” a recorded Applesque guy, shows you how to use the piano or guitar on screen, plus notation. 9 basic guitar lessons and 9 basic piano for free, you can download what you want. Artist Lessons help you learn to play songs with artists! John Fogerty.

9:37 AM: iMovie ‘09: pro-quality animated maps showing in either 2-D or 3-D where you’ve traveled from and to. New transitions, titles, and themes added. The five themes bring in some nice effects—very professional-quality effects for consumers, easy to create.

9:34 AM: iMovie ‘09: Audio tracks can be edited separately so that two videos spliced together don’t overlay audio on top of each other. Very streamlined, visual process for editing videos. Video stabilization - iMovie analyzes every frame to figure out motions. Bouncing Jeep video he’s showing makes the video look totally stable - shot from a moving car, yet the video looks completely professional in stability. You also have the ability to transform videos into slow-mo mode very easily. Aged film and cartoon and X-ray effects can be added to videos in realtime.

9:30 AM: iMovie ‘09 Demo. Randy Ubillos, who came up with the new app last year, is up for the video demo. Chief Architect of Video Applications for Apple. You can add picture-in-picture to your videos, cutaways to shots, everything else real easily. You can also place the audio only from a video clip into the background of an existing video sequence, with just drag + drop. Precision editor gives you a large view of both clips you are trying to combine to figure out where you want to splice, and what can go into the final edit.

9:28 AM: iMovie ‘09. Last year they wiped out the old version, getting rid of some old features. This year, they’ve brought back the depth and power. Precision editor. You can edit audio and video up close now. Advanced drag and drop feature that lets you choose how to deal with clips added to the timeline. New themes, with titles, transitions and effects created for you. Animated travel maps in 2-D or 3-D show where you traveled during your video. There is now also AUTOMATIC VIDEO STABILIZATION. Videos you couldn’t use before are auto-fixed.

9:26 AM: One cool feature: it sorts all of the photos taken in different locations, so if you want to find everything taken in one spot, you just click on the location’s name and it locates everything for you.

9:24 AM: Demo continues to move through Faces, Places… Notably, Phil Schiller’s delivery during the speech thus far has been pretty strong. While he doesn’t have the air of danger that surrounds Steve Jobs during a keynote - Phil comes across as a friendly guy - he’s doing a good job. Showing how when you move through a collection of photos taken along a street, how the pins placed automatically on a Places map let you see where photos were taken, highlighting the current location with a pin on the map.

9:20 AM: Product demo. Basically what we’ve already heard, being shown in the software.

9:19 AM: Photo printing and books. Travel books and new themes, better printing have been added. Inside, you can add maps for travel books, inclusive of info on where you were based on geotagging. All handled automatically. You can print on the sleeve and hardcover as well.

9:18 AM: Some effects literally rip the photos to shreds and reassemble them. Pro-quality looks. You can sync the slideshows to iTunes and iPhone/iPod touch! Finallllllly.

9:15 AM: Also: Facebook and Flickr support. Just click a button with tagged info on the people in the photo, syncs IDs of people that you’ve added, as well as re-synching info from Facebook back to your library. Flickr sync and geotag support is there. New Slideshow Themes let you select a number of effects, music, with cool animated themes somewhat like iDVD and iPhoto Books, combined. It uses face detection to properly position photos in the middle of a realtime slideshow. Smart.

9:11 AM: iPhoto ‘09: Places. Will it use GPS? A map appears with pins where your photos were taken. It uses GPS Geotagging, which is starting to make its way into cameras - iPhone 3G and recent Nikon camera - have geotags. iPhoto figures out where things are on a map, IDing them by name rather than just the longitude/latitude details. If you have a photo that hasn’t been geotagged (because it’s old), you can categorize entire events by location. There’s a DB with thousands of locations to help you find where the event took place. The maps come from Google Maps. Satellite images and overhead maps are both available.

9:08 AM: iPhoto ‘09. Faces is a new way to organize photos. (Facial recognition technology?) You get a corkboard with snapshots of people. How does it work? Face detection. You can name a person in a photo, and then it figures out who the person is. It uses Face Recognition across multiple photos. (Hope this works for babies.) You give the program a little help IDing faces, but this is the best technology they’ve found to do it.

9:07 AM: An entire new version of iLife, iLife ‘09. There’s nothing as good as iLife on a personal computer.

9:06 AM: 100 Macworlds each and every week in the Stores. People come to get hands on iPhone, iPod touch, and Mac. Mac has had huge resurgence with customers. Today, is all about the Mac. 9.7m Macs sold. Twice as fast as rest of industry growth. Best product line ever for the Mac. Three new things to tell you about.

9:03 AM: Lights are dim. Event starting. Schiller takes stage in blue button-down shirt and jeans. Audience applauds. “So much going on across all our businesses…” Excitement highest in Apple’s stores. Picture of Beijing location. Then Munich, Germany. Sydney, Australia. What other company’s logo, he asks, could ever be in front of such beautiful stores? 3.4 million customers per week visit Apple Stores around the world.

9:02 AM: There’s a simple computer setup on stage, still no Phil Schiller. It looks from a distance to be an old 20” Cinema Display.

9:00 AM: The sheer number of iPhones in use here is insane. Obviously, it’s an Apple event, but… (Coldplay is playing.)

9:00 AM: Pretty much all the seats except for the VIP section are occupied here.

8:59 AM: “Welcome to Macworld 2009… silence your cell phones and paging devices as a courtesy…”

8:56 AM: It’s obvious that Apple likes Beck. Ever since he was involved in the very first limited edition iPods—the ones with artists’ signatures on the back, years ago—he has occasionally shown up in iPod-related materials, and his music is currently playing (Gamma Ray). (Note: Tony Hawk, Madonna, and No Doubt were other limited-edition iPod participants, before the release of the U2 iPod.)

8:55 AM: For iPod and iPhone users, the announcements expected today are relatively low-key. We’ve heard whispers of a new iPod shuffle, capacity bumps, iPhone-to-Mac tethering, and iTunes announcements. We’ll see what actually gets announced, but this will be a bigger day for Mac-related news than iPod and iPhone news—sales statistics aside.
8:51 AM: They’ve updated their playlist of pre-keynote music. Similar artists, new songs.

8:50 AM: Apart from the suggestion that Steve Jobs won’t be opening the keynote, this seems in all regards like a typical Apple keynote event.

8:50 AM: Welcome, iLounge readers, to our coverage of the 2009 Macworld Expo keynote.

Apple CEO Steve Jobs pens open letter on health

Following ongoing rumors regarding the health of Apple CEO Steve Jobs, the company co-founder has published an open letter on the matter. Jobs writes, “For the first time in a decade, I’m getting to spend the holiday season with my family, rather than intensely preparing for a Macworld keynote. Unfortunately, my decision to have Phil deliver the Macworld keynote set off another flurry of rumors about my health, with some even publishing stories of me on my deathbed.
I’ve decided to share something very personal with the Apple community so that we can all relax and enjoy the show tomorrow.”

“As many of you know, I have been losing weight throughout 2008. The reason has been a mystery to me and my doctors. A few weeks ago, I decided that getting to the root cause of this and reversing it needed to become my #1 priority. Fortunately, after further testing, my doctors think they have found the cause—a hormone imbalance that has been ‘robbing’ me of the proteins my body needs to be healthy. Sophisticated blood tests have confirmed this diagnosis. The remedy for this nutritional problem is relatively simple and straightforward, and I’ve already begun treatment. But, just like I didn’t lose this much weight and body mass in a week or a month, my doctors expect it will take me until late this Spring to regain it. I will continue as Apple’s CEO during my recovery.”

He continues, “I have given more than my all to Apple for the past 11 years now. I will be the first one to step up and tell our Board of Directors if I can no longer continue to fulfill my duties as Apple’s CEO. I hope the Apple community will support me in my recovery and know that I will always put what is best for Apple first. So now I’ve said more than I wanted to say, and all that I am going to say, about this.”

iLounge’s Live Macworld ‘09 Coverage: 9am PT, Tuesday, 1/6/09 [Updated]

As always, iLounge’s editors are in the process of arriving in San Francisco, California to cover tomorrow morning’s keynote address from Apple, as well as all of the other major news from Macworld Expo. Please bookmark this page and plan to tune in to our live play-by-play coverage of the keynote slightly before 9AM Pacific Time.

iLounge’s live coverage provides a high-speed text feed to bring you the very first word on major keynote announcements, with some accompanying photography. Past live feeds have been up to minutes ahead of coverage found elsewhere, and we have a team of five editors in place this year to cover the many announcements expected from both Apple and third-party developers in the early hours of the show. Expect some interesting but small surprises tomorrow. We look forward to sharing them with you.


iLounge editors are now on site outside of the hall where Phil Schiller will give this morning’s keynote address. Crowds outside the Moscone Center are said to appear lighter than in previous years, with a decidedly less excited vibe indoors, as well.

Reed Exhibitions cancels Apple Expo Paris

Reed Exhibitions has announced that it will not hold Apple Expo Paris in 2009. Apple previously pulled out of the 2008 show, and the future of the show has been in question for several years due to Apple’s diminished presence. The company has not held a keynote presentation at the event since Apple Senior Vice President of Worldwide Product Marketing Phil Schiller introduced the iMac G5 during his 2004 address. This news follows yesterday’s announcement that the 2009 Macworld Expo would be the company’s last, and serves to further highlight the diminished role of trade shows in Apple’s efforts to inform the public of its product offerings.

Apple announces its final year at Macworld Expo

Apple today unexpectedly announced that this year’s Macworld Conference & Expo, scheduled for January 5-9, 2009, in San Francisco, will be the company’s last. For the first time since 1997, Apple CEO Steve Jobs will not be giving a keynote presentation to open the show; instead, Phil Schiller, Apple senior vice president of Worldwide Product Marketing, will deliver the opening address. In the release announcing the change, the company states: “Apple is reaching more people in more ways than ever before, so like many companies, trade shows have become a very minor part of how Apple reaches its customers. The increasing popularity of Apple’s Retail Stores, which more than 3.5 million people visit every week, and the website enable Apple to directly reach more than a hundred million customers around the world in innovative new ways. Apple has been steadily scaling back on trade shows in recent years, including NAB, Macworld New York, Macworld Tokyo and Apple Expo in Paris.”

Apple patent points to iPhone, iPod status indicators

A recently published Apple patent application suggests the company is developing a new system of status indicators for its iPod and iPhone devices. The patent describes a system in which the main backlight of the device sports a semi-transparent area, allowing a low-power, secondary backlight to show through, displaying simple icons to show whether the iPod is playing music, indicate new email or voicemail, missed calls, and so on. 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.

Judge: Papermaster must stop work for Apple immediately

A U.S. District Judge has ordered newly hired Apple executive Mark Papermaster to stop work immediately because he might be violating a non-compete agreement he signed with IBM. Federal District Judge Kenneth Karas ordered that Papermaster “immediately cease his employment with Apple Inc until further order of this court.” On Tuesday Apple announced Papermaster’s arrival as senior vice president of Devices Hardware Engineering, but has since said Papermaster would discontinue work for now. “We will comply with the court’s order but are confident that Mark Papermaster will be able to ultimately join Apple when the dust settles,” an Apple spokesman told Reuters. Papermaster replaces outgoing Apple executive Tony Fadell, who will remain with the company for a time in a limited advisory role.

Apple iPod, iPhone Senior VP Fadell out, replaced by IBM’s Papermaster

Tony Fadell, senior vice president of Apple’s iPod division, “father of the iPod,” and an executive involved in the development of the iPhone, is leaving the company for personal reasons, Apple has announced. According to the announcement, Fadell will remain at Apple as an advisor to the CEO; his wife Danielle Lambert, vice president of Human Resources, will also be leaving the company. In Fadell’s place, Mark Papermaster, a former IBM executive, will be joining Apple as senior vice president of Devices Hardware Engineering, and will lead Apple’s iPod and iPhone hardware engineering teams. IBM filed a suit against Papermaster last month citing a non-compete clause in an attempt to prevent the well-respected chip designer from joining Apple.

“Mark is a seasoned leader and is going to be an excellent addition to our senior management team,” said Steve Jobs, Apple’s CEO. “Tony and Dani have each made important contributions to Apple over the past eight years. We’re sorry to see Dani go, and are looking forward to working with Tony in his new capacity.”

Apple patent points to short-range communications bridge

Apple is working on a way to provide wide-area wireless communications to devices offering only short-range communications, according to a new patent application. The application describes a system in which wireless modules, offering both long-range and short-range wireless communication, are embedded in common objects such as cars, purses, t-shirts, tennis shoes, and more, and facilitate connectivity for devices—such as iPods—which offer only short-range communications. 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 Unwired View]

Additional notes from Apple’s Q4 2008 conference call

In its fourth-quarter 2008 Quarterly Results Conference Call, Apple Inc. executives CEO Steve Jobs, CFO Peter Oppenheimer and COO Tim Cook made several comments concerning the iPod, iPhone, and Apple TV. At the start of the call, Oppenheimer stated that because deferred iPhone revenue has grown so much — to $5.8 billion at the end of the September quarter, or more than 39% of Apple’s total revenue had it not been deferred — the company will begin providing quarterly non-GAAP info to show how iPhone/Apple TV numbers are used internally, including adjusted sales, the adjusted cost of sale, and adjusted net income.

Apple CFO Tim Cook made several statements regarding the iPod and iPhone, revealing that the latter was shipping to carriers in 51 countries by end of the quarter, with 30,000 points of distribution. He also revealed the company had roughly 2 million iPhones across all of the 51 countries in inventory, and said Apple thinks that’s about right for 4-6 weeks of inventory. Cook declined to give hard numbers on how many of the iPhones went to new users or first-gen owners, saying that information was confidential to Apple’s carrier partners, but added that since the company expanded from six to 51 countries, there were a large amount of iPhones being sold to first-time buyers.

On iPods, Cook said that sales were up eight percent for the quarter, but noted that the final weeks of quarter we were running flat year-over-year, adding that it’s difficult to predict whether the usual holiday seasonal lift will follow the pattern that it has before. Cook also hinted at possible iPhone price cuts while outlining Apple’s price drop on the iPod touch, from $299 to $229 on the 8GB model, with $100 off the others, and doubling the memory on the iPod nano while maintaining current price points.

Apple CEO Steve Jobs also made several sweeping statements, regarding the iPhone as both a netbook competitor and in comparison to other cellular handset makers, and the Apple TV. Discussing the pricing of the company’s Mac line relative to the economy, Jobs explained that Apple considers the iPhone as one of the company’s entries into the netbook category, while simultaneously stating that there weren’t many netbooks being sold. When asked about Apple’s decision to produce only one model of phone, Jobs explained that while most companies in the past have chosen to make a great number of different models, as software becomes a differentiating technology in the category, these different models will be unattractive to developers. He said that Apple approaches the market as a software platform company, suggesting that Apple will make very few models in order to make same software available across all phones. Finally, discussing the Apple TV, Jobs again stated that the category was a “hobby,” repeating his prior statement that he doesn’t think anyone has yet succeeded in it, while adding that he thinks it will continue to be a hobby in 2009.

iPods sales top 174 million, 13 million iPhones sold

According to sales numbers provided by Apple in its quarterly results releases, the company has now sold more than 174 million iPods, and more than 13 million iPhones. “iPhone had a breakout quarter. Nearly 6.9 million sold, exceeding the 6.1 million shipped during entire lifetime of first-gen iPhone,” said Apple CFO Peter Oppenheimer, speaking during the company’s quarterly results conference call. Oppenheimer added that Apple has already surpassed its goal of 10 million iPhones sold in 2008. The iPhone accounted for $806 million in recognized revenue in the fourth quarter, while Apple increased the number of countries in which the iPhone is sold from 6 to 51. It expects to be in over 70 countries by end of December quarter, with over 30,000 points of distribution around the world.

Discussing its music products and services, Apple noted that the iPod’s marketshare is over 70% in month of September, while it continues to gain share year-over-year in most international markets, including the UK, France, Germany, Japan, and Australia. Customers are “loving” the new fastest way to purchase an iPhone - starting with web at home, it takes only 1 minute more than buying an iPod when you get to the store. The iTunes Store now has 65 million customer accounts, and offers more than 8.5 million titles.

Apple sells 11.05 million iPods, 6.89 million iPhones in Q4

Reporting its fourth-quarter financial results today, Apple said it sold 11.05 million iPods during the quarter — more than an eight percent increase compared to the same quarter last year, and slightly more than the 11.011 million sold in Q3. It also sold 6.89 million iPhones in the quarter, up from 1.119 million in the year-ago quarter and an artificially-low 717,000 in Q3 2008. The company posted revenue of $7.9 billion and net quarterly profit of $1.14 billion, or $1.26 per diluted share, compared with revenue of $6.22 billion and net quarterly profit of $904 million, or $1.01 per diluted share in Q4 2007. Sales of Other Music Related Products + Services were $832 milllion in Q4, up from $601 million in the year-ago quarter and $819 million in Q3. That category includes iTunes Store sales, iPod services, and revenues from Apple and third-party iPod accessories.

“Apple just reported one of the best quarters in its history, with a spectacular performance by the iPhone—we sold more phones than RIM,” said Steve Jobs, Apple’s CEO. “We don’t yet know how this economic downturn will affect Apple. But we’re armed with the strongest product line in our history, the most talented employees and the best customers in our industry. And $25 billion of cash safely in the bank with zero debt.”

“We’re very pleased to have grown revenue 35 percent and to have generated $9.1 billion in cash in fiscal 2008,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead, visibility is low and forecasting is challenging, and as a result we are going to be prudent in predicting the December quarter. We are providing a wide range for our guidance, targeting revenue of $9.0 to $10.0 billion and earnings per diluted share between $1.06 and $1.35.”

Highlights from Apple’s ‘Let’s Rock’ special event [updated]

Aside from major product upgrades, Apple today also revealed an update to the iPod classic, announced iPhone Software 2.1, and made several remarks regarding the performance of the iTunes Store and iPod sales.

iPod classic: Apple today updated its iPod classic line, removing both the 80GB and 160GB models and replacing them with a single, thin-bodied 120GB model, which will sell for $249. The new iPod classic offers on-device Genius playlist creation, and compatibility with the newly-announced Apple headphones.

iPod shuffle: Not mentioned during the event, Apple today quietly updated the iPod shuffle, replacing the current colors with more vibrant hues of blue, green, pink, and red (pictured). The silver model remains unchanged, as does the pricing: $49 for 1GB models and $69 for 2GB models. We had previously heard that there were electronic changes being made to the iPod shuffle for this revision; it is currently unclear whether this will result in a different sound profile for the shuffle, or what other changes might have been made.

iPhone: Apple will release iPhone Software 2.1, which debuts on the second-generation iPod touch, as a free update to all iPhone users this Friday. According to Apple, the update fixes lots of bugs, reduces call drops, significantly improves battery life, fixes problems caused by installing lots of apps on the phone, and provides faster backups in iTunes.

iPod: According to Apple, the latest data shows the iPod at 73.4% marketshare in United States. #2 is “other” at 15.4%, followed by Sandisk, and then Microsoft, which holds 2.6% of the market. Over 5,000 iPod accessories are now available, and 90% of all cars in the U.S. offer iPod integration. Cumulative iPod sales are now over 160 million units.

iTunes: The iTunes Store now offers 8.5 million songs, 125,000 podcasts, and 30,000 episodes of TV shows, and boasts 65,000,000 unique accounts.

Apple preps site of ‘Let’s Rock’ event

Apple has begun on-site preparations for tomorrow’s “Let’s Rock” special event. The event, scheduled to begin at 10:00 a.m. Pacific Time, is being held at the Yerba Buena Center for the Arts in San Francisco. According to Cult of Mac, the building has already been covered on one side by a large silhouette iPod poster matching the image seen on the event invitation, and Apple security guards have been spotted watching over each of the center’s doors. iLounge will be providing live coverage of the event.

Report: iPod, iPhone failures due to common part issues

Published today, a report by EETimes traces numerous iPod and iPhone hardware problems to a lack of “attention to the basics” of product design, including “component placement, sealing, USB protection and connector quality, along with batteries and LCDs.” The report spotlights the findings of Rapid Repair, a company specializing in media device repairs, as it has worked through problems with both iPod and iPhone models over the past five years. Amongst the highlights:

* The use of polymer batteries rather than lithium ion and lithium polymer batteries would lead to fewer leakages, while laminated glass is a superior option to both crackable glass and scratchable plastic for covering displays. Fifty percent of the failures Rapid Repair encounters are LCD- or battery-related, with after-market batteries causing more problems than the ones installed initially in the devices.

* Connectors, including headphone jacks and internal sockets for screens and other parts, fail or disconnect over time; internal disconnections can lead to expensive repairs just to reconnect cables. Apple’s contract manufacturers, including Foxconn, may be responsible for choosing the less impressive parts that cause problems.

* According to the company, “many USB power modules fail” in iPods, and units also stop working due to “poorly designed after-market car chargers, liquid intrusion, and hard-drive failures” caused by dropping.

The report recommends the use of superior connectors, recessed displays, and better protection for both the display and storage media, noting that hard drives will continue to remain viable for five years due to improvements in capacity and physical size.

Apple sends out invites for Sept. 9 special event

Apple has begun sending out notices to various members of the media inviting them to a special event on September 9, one week from today. The invitation, entitled “Let’s Rock,” looks like an iPod Now Playing screen, with the album art replaced by one of Apple’s common silhouette iPod dancers, and the track information replaced by the event details. The “Let’s Rock” event will be held at the Yerba Buena Center for the Performing Arts in San Francisco, and is scheduled to begin at 10:00 a.m. Pacific Time. iLounge will be on hand at the event to provide coverage.

Apple adds 60 days to MobileMe extension

Apple has sent out an email to MobileMe members announcing a 60-day extension to their subscriptions, which will be added to previously announced 30-day extensions. The email reads: “We have already made many improvements to MobileMe, but we still have many more to make. To recognize our users’ patience, we are giving every MobileMe subscriber as of today a free 60 day extension. This is in addition to the one month extension most subscribers have already received. We are working very hard to make MobileMe a great service we can all be proud of. We know that MobileMe’s launch has not been our finest hour, and we truly appreciate your patience as we turn this around.” The extension applies to all MobileMe subscribers whose account was active as of midnight Pacific Time, August 19.

Columnist: Apple’s silence on flaws is tarnishing image

Apple is widely known for its refusal to talk about future products, notes a recent Washington Post article, but its recent silence in the wake of widespread service problems with existing products such as MobileMe and iPhone may be hurting its relationship with its customers. Technology columnist Rob Pegoraro writes, “Poor communication can sink any gadget, but it’s worse on a Web service such as MobileMe. When these things malfunction, they often do so for reasons beyond our control or even comprehension…. So the companies running these services need to speak up, promptly and with sufficient detail to give users cause for optimism. ‘Trust me’ and ‘We’ll do better’ won’t do—not when users paying $99 a year can see the providers of competing, free services offering far more information to their users.” Pegoraro notes that while Apple’s secrecy on future products is a sound business strategy — one preferable to pre-announcing “vaporware” products that either arrive with significant delay or not at all — the company’s “don’t-look-behind-the-curtain tactics don’t work when customers just want to know that their purchase will work as advertised, or when would-be customers want reassurance that they’re not buying into a failed experiment.”

Works With iPhone doesn’t Work With iPhone 3G?

A recent statement from a third-party iPod and iPhone accessory manufacturer has raised questions regarding the scope and nature of Apple’s Works With iPhone certification, which was until now understood to guarantee that an accessory would be compatible with current and upcoming iPhone hardware. In a press release issued today, however, Altec Lansing announced that its T612 Digital Speaker System for iPhone and iPod has “passed ‘Works with iPhone’ iPhone 3G test requirements for use with Apple’s latest generation iPhone,” noting that the system received certification for the original iPhone in January 2008.

According to Apple, Works With iPhone certification is supposed to be issued only after special radio interference and electrical testing have been conducted by an independent lab, and the company requires developers to purchase and integrate a special Apple authentication chip into their devices. However, readers and iLounge editors have confirmed that the iPhone 3G triggers Apple’s “This accessory is not made to work with iPhone” nag screen when used with at least two previously WWi-certified products, a screen that should not appear when connecting to any WWi accessory. One of these products, the iHome iP99 Alarm Clock Radio, displays the nag screen but otherwise continues to operate as noted in our earlier review, the other, XtremeMac’s InCharge Auto, also displays the screen yet continues to charge the iPhone 3G. Additional WWi accessories we have tested from JBL, Altec Lansing, and Belkin continue to work as they did with the original iPhone.

There have also been a number of products released with the Works With iPhone badge despite deviations from the radio or electrical standards originally understood to be required for certification. It remains unclear what, if any, changes Apple has made to the certification program for the iPhone 3G, or how many previously released WWi products may be incompatible with the iPhone 3G.

Notes from Apple’s Q3 2008 Conference Call

In its third-quarter 2008 Quarterly Results Conference Call, Apple Inc. executives CFO Peter Oppenheimer and COO Tim Cook made several comments concerning its music-related products, which accounted for 33% of the company’s total revenue growth in the third fiscal quarter. iPod sales grew 10 percent in the U.S. during the quarter, and 15 percent internationally. The iTunes Movie Rental service now offers over 2200 films — 450 in HD — and the App Store is up to 25 million downloads and 900 applications, with 20 percent free to download, and 90 percent priced at less than $10.

Both Cook and Oppenheimer repeatedly made reference to a future product transition, expected to take place in the September quarter, which will bring down the company’s average margin to 31.5 percent; the pair also said Apple would be “delivering state-of-the-art new products at prices our competitors can’t match.” It was not revealed whether the product transition in question will be iPod or Mac related. Speaking on iPhone production capability and recent sellouts, Cook said that the company was shipping units as fast as it can, adding that “[w]e are confident enough about the production ramp that we will be launching in about 20 additional countries on August 22,” bringing the total number of countries where the iPhone is available to over 40, a number which Apple has stated will grow to at least 70 by the end of the year.

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