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Verizon passed on exclusive iPhone deal

Verizon Wireless rejected Apple’s offer to be the exclusive distributor of the iPhone almost two years ago due to Apple’s demands. According to Jim Gerace, a Verizon Wireless vice president, Apple wanted a percentage of the monthly service fees, say over where the iPhone could be sold, and control of iPhone customers. “We said no. We have nothing bad to say about the Apple iPhone,” Gerace said. “We just couldn’t reach a deal that was mutually beneficial.”

The Verizon executive said only Apple Stores and Verizon stores would have sold the iPhone, much like the current deal with AT&T/Cingular. But Gerace said that would have put Verizon’s distribution partners, such as Wal-Mart and Best Buy, at a disadvantage. Gerace also said that Apple wanted sole discretion over whether to replace or repair a malfunctioning iPhone. “They would have been stepping in between us and our customers to the point where we would have almost had to take a back seat… on hardware and service support,” Gerace said.

Apple battle over iPhone name moves to Canada

Apple has been met with another fight for the iPhone brand name by a small company in Canada. “Comwave Telecom Inc. has used the iPhone brand since 2004 to sell Internet phone service to its customers, and filed documents opposing Apple’s motion to take the name,” reports Bloomberg News. “The dispute expands Apple’s legal woes over the brand, which Cisco Systems claims to have trademarked in the U.S. The spat also may lead to delays in getting the phone to Canadian consumers.” Comwave president Yuval Barzakay said, “It’s a crucial brand for us… Our legal folks believe we’re certainly in the driver’s seat.” As previously reported, Apple is currently battling Cisco Systems over the iPhone trademark in the U.S.

iPhone demand will challenge suppliers

The expected popularity of the iPhone could create challenges for some of the device’s parts suppliers. According to analysts, Asian handset-component makers may see shortages of key components if the iPhone takes off quickly. “While niche firms from chip maker Toshiba in Japan to Germany’s Balda, a touch-panel supplier, stand to gain from the phone’s debut, analysts say parts makers need to be prepared to quickly ramp up output or risk shortages if the product is a quick success,” reports Reuters. “Companies at the greatest risk are makers of the NAND-style flash memory that will power the phones, as well as makers of product-specific components like the special touch panels that will set the iPhone apart from other more traditional cell phones.” Apple the iPhone in the U.S. in June, with a target of 10 million units in 2008.

Rogers Wireless to offer iPhone in Canada

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Rogers Wireless has confirmed that it will be the exclusive carrier for Apple’s iPhone in Canada. “Rogers is actively working with Apple to launch the iPhone in Canada as soon as possible and will be the exclusive provider of the iPhone in Canada,” the company said this week in a customer service email. Rogers Wireless is the largest Canadian wireless communications service provider. An exact date and service pricing were not mentioned. Apple is set to release the iPhone in the U.S. in June.

Cingular to give away 18 months of iPhone service?

AT&T/Cingular plan to aggressively push Apple’s iPhone to new customers, offering them 18 months of free service, according to Jim Cramer, director and co-founder of investment site TheStreet.com. “The company made it very clear that it’s going to use Apple’s iPhone to get customers from Verizon Wireless by giving away its service for a year and a half to those customers who buy the phone,” Cramer said after speaking with executives from AT&T/Cingular.

“Management sounded like kids when talking about the iPhone and how it was going to remake AT&T and that it was the greatest invention they’ve ever seen,” Cramer said in a related article. “Now, AT&T’s all about market share, and if you read between the lines, I think you see a strategy coming where the device’s $500 price point is preserved but the service contract is greatly reduced. I think that AT&T—and not Apple—is the key to this next leg, and CEO Stan Sigman can make it happen.”

Update: According to a Cingular representative, the company will not be offering a free period of service with the iPhone. “The report is nonsense,” the spokesperson said. “We’ve always said the only way you can get the iPhone is with a Cingular rate plan.”

iPhone web searches now greater than iPod searches

According to internet metrics firm Hitwise, online searches for the iPhone have passed searches for the iPod since the all-in-one device was announced at Macworld Expo earlier this month. “For the week ending 1/13/07, the share of searches for ‘iphone’ was greater than the weekly share of searches for ‘ipod’ at any time during 2006,” reports Hitwise. “The week ending 1/20/07 still showed a greater volume of searches for ‘iphone’ versus ‘ipod.’ This early surge in interest should indicate a rosy future for the iPhone when it becomes available in later in the year. Interestingly, the volume of searches for ‘ipod’ peaked during the last week of the year, rather than before Christmas as one would expect.”

iSuppli: iPhone to generate nearly 50% margin

Apple and Cingular will see a nearly 50 percent gross margin on each iPhone sold, giving the companies “a hefty profit, as well as plenty of room for future price cuts,” according to a preliminary Bill of Materials (BoM) estimate by iSuppli.

“iSuppli estimates the 4GB version of the Apple iPhone will carry a $229.85 hardware BoM and manufacturing cost and a $245.83 total expense, yielding a 49.3 percent margin on each unit sold at the $499 retail price,” said Andrew Rassweiler, teardown services manager and senior analyst for iSuppli. “Meanwhile, the 8GB Apple iPhone will sport a $264.85 hardware cost and a $280.83 total expense, amounting to a 46.9 percent margin at the $599 retail price.”

LG considers lawsuit over iPhone design

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LG Electronics is considering whether it will file a lawsuit against Apple, claiming that the iPhone design is a clone of the unreleased LG KE850 “Prada” mobile phone. The LG phone shares some similarities with the iPhone, including a rounded, black design, touch-sensitive controls and a full-screen interface. “At first glance, we recognized the iPhone shares many form factors with the Prada phone. We are flattered that other makers follow our design policy,” LG spokesman Lee Hyoung-kun said. “We can’t say at the moment whether or not we will file a lawsuit against Apple regarding this. It’s too early to make remarks on the issues.”

Macworld 2007 keynote now available as podcast

Delivered by Apple CEO Steve Jobs, this year’s keynote address from Macworld Expo is now available as a free downloadable podcast from the iTunes Store. Despite the fact that it clocks in at a feature film-length 1 hour and 45 minutes, Jobs’ keynote is unquestionably the most engaging public speech iLounge’s editors have ever seen, introducing the company’s new iPhone with a level of oratorical mastery that deserves academic study. The download is 1.21GB, and well worth the transfer time.

Cisco lost rights to iPhone trademark last year?

According to trademark law experts, Cisco may not be the owner of the iPhone name as it claims in the lawsuit filed this week against Apple. The iPhone trademark, owned by Cisco since 2000, was apparently abandoned in late 2005/early 2006 because the company was not actively selling a product under the iPhone name.

Cisco filed a Declaration of Use with the US Patent and Trademark office days before the trademark’s expiration in May 2006, following a six month grace period, but only provided a photo of one of its previously existing products—the Linksys CIT200 Cordless Internet Telephony Kit—with an “iPhone” sticker affixed over the product’s name.

“If Cisco didn’t launch a product using the iPhone name, their trademark registration would be canceled and they would have no bargaining chips with Apple,” says attorney Jay Behmke. “So in order to keep the trademark active, they had to file the Declaration of Use, and start selling a product under that trademark.”

“It is possible that the Declaration of Use is defective, as there was no continuous use, and the sample that Cisco submitted was for a product not released until 7 months later,” Behmke says. “The fact that the Declaration of Use was submitted only days before the deadline expires gives me the impression that they were scrambling to get a product to market, and had to file the Declaration before the product was ready.”

Analysts see iPhone suit settled fast; Apple changing phone’s name?

Some financial analysts and legal experts believe Cisco’s lawsuit over the iPhone trademark won’t stop Apple from using the name, noting that the case will likely be settled long before the June ship date. At least one analyst, however, believes Apple will change the device’s name to “Apple Phone.”

“We expect an amicable resolution,” Prudential Securities analyst Inder Singh said. “The most likely outcome, in our opinion, is for Cisco to be a net recipient of financial payment from Apple for use of the name.” Apple “has until May to sort this out and then ramp up marketing, so there is time,” said Gene Munster, an analyst with Piper Jaffray.

Citing sources close to the iPhone situation, Trip Chowdhry of Global Equities Research said he expects Apple to change the name of the iPhone to “Apple Phone” in time for the product’s release in June. Of note, Apple this week renamed its previously codenamed iTV living room device the “Apple TV.”

Cingular to rebrand as AT&T next week

AT&T will rebrand its Cingular service with the AT&T name starting Monday. AT&T took full control of Cingular, the exclusive carrier of Apple’s iPhone, with its $85.8 billion purchase of BellSouth last month.

“The new name is a step back in time for Cingular, which bought the old AT&T Wireless in 2004 and eventually dropped the AT&T name altogether,” reports the Wall Street Journal. “AT&T executives hope a sole brand will signal to consumers that the company is a one-stop shop for myriad services including wireless, TV and land-line phone. But the coming months may be confusing for some Cingular customers who not long ago were absorbed from the old AT&T Wireless.”

Ads, customer bills and other items will have both Cingular and AT&T logos at the beginning of the transition, with the AT&T name to takeover solely months from now.

Apple’s Jobs: ‘You don’t want your phone to be like a PC’

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Apple CEO Steve Jobs says consumers can expect more mobile applications for the iPhone by the time the device ships in June—but that Apple will control what applications make it onto the iPhone, much like it has done with every iPod.

“We define everything that is on the phone,” Jobs told the New York Times. “You don’t want your phone to be like a PC. The last thing you want is to have loaded three apps on your phone and then you go to make a call and it doesn’t work anymore. These are more like iPods than they are like computers.” Jobs told Newsweek something similar. “You don’t want your phone to be an open platform,” he said. “You need it to work when you need it to work. Cingular doesn’t want to see their West Coast network go down because some application messed up.”

“These are devices that need to work, and you can’t do that if you load any software on them,” Jobs continued. “That doesn’t mean there’s not going to be software to buy that you can load on them coming from us. It doesn’t mean we have to write it all, but it means it has to be more of a controlled environment.”

During the unveiling of the iPhone, which runs a scaled down version of Mac OS X, Jobs showed off applications for email, web browsing, photos, SMS text messaging, and Google Maps, as well as widgets for weather and stocks. Other icons on the iPhone prototype include Calendar, Camera, Calculator, Notes, Clock, and Settings.

iPhone requires Cingular contract; No other carriers anytime soon

The iPhone will require a two-year Cingular service plan, according to reports. “We spoke with Cingular and confirmed that Apple’s new iPhone will require a two-year cell phone plan and will not be sold without it,” reports the San Francisco Chronicle’s Ellen Lee. At a CES press conference in Las Vegas following the iPhone’s introduction, Cingular confirmed that customers must agree to a two-year contract in order to buy the iPhone, even if that requires customers to renew their current service plan with the company. Cingular also said that the company’s exclusive rights to sell the iPhone is a “multi-year agreement in the U.S.,” meaning the device won’t be offered by other carriers anytime soon.

Cisco sues Apple over iPhone name

Cisco Systems filed suit against Apple today, claiming that the company is using the iPhone name without permission. The suit comes after an apparent licensing deal fell through this week following years of negotiations over the iPhone trademark, which Cisco has owned since 2000.

“Cisco entered into negotiations with Apple in good faith after Apple repeatedly asked permission to use Cisco’s iPhone name,” Mark Chandler, Cisco’s senior vice president and general counsel, said in a statement. “There is no doubt that Apple’s new phone is very exciting, but they should not be using our trademark without permission.”

As of yesterday, Cisco said it was confident Apple would agree to its latest terms, noting that it was expecting to receive a signed agreement from Apple. Cisco said the paperwork never arrived, and today filed a lawsuit, asking a U.S. district judge for Northern California to order Apple not to use the iPhone name during this week’s Macworld Expo.

Natalie Kerris, an Apple spokeswoman, dismissed Cisco’s suit. “We think Cisco’s trademark lawsuit is silly,” she said. Several companies already use the name “iPhone” for Voice-over-Internet products, Kerris said. “Apple is the first company to ever use the ‘iPhone’ name for a cell phone. We believe that Cisco’s trademark registration is tenuous at best. If Cisco wants to challenge us on it, we are very confident we would prevail.”

iPhone reaction: Press, analysts, competitors and bloggers

“Apple’s new iPhone could do to the cell phone market what the iPod did to the portable music player market: crush it pitilessly beneath the weight of its own superiority. This is unfortunate for anybody else who makes cell phones, but it’s good news for those of us who use them.”—Lev Grossman, Time

“At first blush, it’s the gadget-lover’s ‘genie in a bottle’ fantasy: get three wishes fulfilled in only one wish. But like a mischievous genie, Apple has left us wanting more: a wicked video iPod with trifling storage capacity, a super smartphone that will need to be shipped back for battery replacement, and an highly visual web device that may choke on data when used on Cingular’s current cell phone network. And then there are the prices, known and unknown. Perhaps by design, it will cause envy, yet immediately require successors.”—Jeremy Horwitz, iLounge

“At $499 and $599, it’s a pretty expensive deal. Steve is more focused on not cannibalizing iPod sales than on driving volume of phones. Those are not high-volume prices.”—Rob Glaser, CEO of Real Networks

“I don’t know a single person that likes the phone they have. Everyone feels like a victim of both their phone plan and their phone hardware. Cellphones seem to be one of those things that barely works given all the drawbacks. The iPhone isn’t just a new gadget. It looks like something that will transform the way we think about cellphones.”—Matt Haughey, A Whole Lotta Nothing

“From what Jobs showed Tuesday, the iPhone really does look to be five years ahead of what anyone else has got. Maybe longer. It’s taken rivals five years to catch up with the iPod, which now looks hopelessly outdated and crippled compared to the iPhone.”—Leander Kahney, Wired News

“There’s an interesting tradeoff presented by the iPhone. While the phone can do more, and it’s interface is fluid, in some ways it widens the gulf between human and computer. When you touch it it doesn’t touch you back.”—Jason Fried, 37signals

“This goes beyond smart phones and should be given its own category called ‘brilliant’ phones. Cell phones are on track to become the largest platform for digital music playback, and Apple needed to make this move to help defend their iPod franchise as well as extend it beyond a dedicated music environment.”—Tim Bajarin, Creative Strategies

“It’s not just candy. These are entirely useful, new ways to use your phone.”—Mike McGuire, Gartner

“This thing will go through the roof, exactly according to Apple’s master plan. Prepare for a replay of the iPod lifecycle: other cellphone companies will rush out phones that match the iPhone’s feature list, but will fail to appreciate the importance of elegant, effortless, magical-feeling software.”—David Pogue, New York Times

“We are focused on the ‘pro-sumer’ and business customer, where e-mail, Microsoft Outlook and easy text entry for messaging and Web navigation is required. A full QWERTY keyboard is essential, so you can compose and edit documents fast and round-trip them back to the office rather than trying to navigate a cursor up and down and sideways.”—Marlene Somsak, Palm spokeswoman

“What you cannot appreciate looking at iPhone photographs on your computer display is how amazing its screen is. 166 DPI is an amazing resolution—tiny, tiny text is amazingly legible. And the device itself is very thin. The battery policy, though, is exactly like that of other iPods: it’s sealed inside the case, and is not swappable.”—John Gruber, Daring Fireball

“Prospects for the new device are positive, but it is not a given that Apple can win against a slew of wireless providers, phone manufacturers, and Microsoft, all of whom are similarly motivated to raise their flag on the same territory.”—James L. McQuivey, Boston University professor

“At the risk of playing into the hype of the iPhone, seeing is believing with this device.”—Gene Munster, Piper Jaffray

“Apple’s bothersome tradition of non-user-servicable batteries continues. There’s no reason to do this, frankly, aside from the kind of implied ‘we’re aesthetic obsessives’ claim that Apple still gets away with.”—Rob Beschizza, Wired

“This product could not have been done two years ago and come to market the way that it has. Yes, I know other devices can do a lot of what the iPhone can do but that’s like saying there’s a lot of other music players out there as well.”—Michael Gartenberg, Jupiter Research

“It just confirms our message, and it’s good to have others preaching the same message. The best company will win in the end, so I think it’s good news for us. It’s not a threat, although of course it’s hard competition, but that usually makes you perform better yourself.”—Pekka Pohjakallio, VP of Nokia Nseries Computers

“OS X. On your phone. Damn.”—Merlin Mann, 43 Folders

“While its $499 and $599 price points appear high, they are highly functional devices and best-in-class. We would not be surprised to see simpler cell phones in the future at much more aggressive price points… Apple will likely follow its iPod strategy, which is to start out at the high-end and then trickle down to mid-range and low-end.”—Shaw Wu, American Technology Research

“I’ve already ordered two. I don’t know what the cost is and I don’t care. The higher it is the more I like it as a shareholder.”—Nick Kaiser, Saturna Capital

“Wireless is hard. Success in this industry has confounded other companies like Microsoft and even Motorola at times.”—Mike Abramsky, RBC Capital Markets

“The iPhone is a lot of things: A widescreen iPod, a smart phone and a mobile web browser. It also might be the death knell of the current iPod.”—Pete Mortensen, Wired News

Apple still working to license iPhone trademark

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Even though Apple has already announced that its new mobile phone will be called the iPhone, the company has yet to sign an agreement with Cisco, the holder of the iPhone trademark. According to Cisco—which launched a line of VoIP phones last month under the iPhone brand—the company has recently been in extensive discussions with Apple about licensing the trademark. Cisco said that “it is our belief that Apple intends to agree to the final document. We expect to receive a signed agreement today.” Phil Schiller, Apple’s senior vice president for worldwide marketing, would not confirm to the Associated Press whether the company had agreed with Cisco on terms of use of the name. “There are a number of companies that have used ‘iPhone,’ but this is the first use in a cellular phone,” he said. “We feel fine using it as a cell phone name.”

Apple unveils revolutionary iPhone

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Following literally years of speculation and rumors, Apple CEO Steve Jobs today introduced the iPhone, a sleek all-in-one device combining a mobile phone, widescreen iPod, and internet communicator. The iPhone boasts a 3.5-inch widescreen display and runs a version of Apple’s Mac OS X operating system with an innovative new user interface for using just a finger to control the device on-screen.

It comes in two capacities—4GB and 8GB—and includes support for quad-band GSM, EDGE, 802.11b/g Wi-Fi and Bluetooth 2.0 EDR wireless technologies. The iPhone also sports a built-in 2 megapixel camera and will work with Macs or PCs. Apple’s Jobs confirmed that the exclusive carrier for the iPhone will be Cingular.

Jobs said the phone is 11.6mm thin—thinner than any smartphone available, including the Motorola Q and Samsung BlackJack. The iPhone has built-in sensors—an accelerometer, a proximity sensor and an ambient light sensor—that serve to automatically rotate the display from portrait to landscape, and to turn off the display to save power and prevent inadvertent touches. Battery life is said to be 5 hours for talk time, video or browsing, and 16 hours of audio playback.

The iPhone will be available in June. The 4GB iPhone model will sell for $499, while the 8GB model will sell for $599, each with 2-year contracts. Apple said Cingular will announce service plans for the iPhone before it begins shipping in June. The iPhone will be available in Europe in late 2007, and Asia in 2008. Jobs said he was announcing it today and shipping nearly six months from now because Apple needs FCC approval. The iPhone will sell in Apple Stores and Cingular stores.

Users are able to make calls in several different ways, including simply pointing at a name or number with their finger. The iPhone syncs contacts from a PC, Mac or Internet service, and allows users to easily create conference calls. Another new feature called Visual Voicemail lets users look at a list of their voicemails, choose which messages to listen to, then go directly to those messages without having to sit through prior messages. The iPhone also includes an SMS application with a full QWERTY screen-based touch keyboard to easily send and receive SMS messages in multiple sessions.

In addition to a mobile phone, the iPhone includes a major new iPod portion. The device features touch controls for play-pause, chapter forward-backward and volume. To go along with the iPhone’s widescreen display, there’s now a Cover Flow view for browsing your music library by album cover artwork. (The iPhone is switched automatically to Cover Flow view by simply rotating the device into its landscape position.) Movies and TV shows are obviously also now viewable in a full widescreen view.

The iPhone runs a slimmed-down version of Mac OS X, including email, web browsing, searching and maps. A rich HTML email client fetches email in the background from most POP3 or IMAP mail services and displays photos along with the text. The iPhone comes with a mobile version of Apple’s Safari web browser, allowing users to view web pages as they appear on a PC, and then zoom in to expand any section by simply tapping on iPhone’s multi- touch display with their finger. The iPhone also includes Google Maps for viewing maps, satellite images, traffic information and directions. The iPhone also includes a calendar application and a photo management application, which can be automatically synced with your PC or Mac.

Several iPhone accessories will also be available in June, including a new Bluetooth wireless headset and new pair of iPod-like earbuds with integrated microphone.

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