Thursday, November 11, 2010

AMD Chief Fights for Credibility in Intel Showdown


For Chief Executive Officer Dirk Meyer, Advanced Micro Devices Inc.’s new lineup of chips is more than an effort to win back customers lost to Intel Corp. It’s a bid for credibility.

After four years of production delays, slumping sales and shrinking market share, Meyer says he wants to convince customers and investors that AMD can consistently deliver quality products and challenge its dominant competitor. The first test comes with its new Fusion chips, built with graphics capabilities that AMD says Intel can’t easily match.

Fusion also provides a chance to redeem AMD’s 2006 acquisition of ATI Technologies Inc., a $5.4 billion purchase that threatened to sink the company with debt. By combining its processors with ATI’s graphics chips, AMD aims to get a payback on the deal. Another part of the comeback plan: AMD spun off its factories in 2008, freeing up cash to focus on innovation.

“You gain credibility out of executing successfully over quarters and years,” Meyer, 48, said in an interview at the company’s Sunnyvale, California, headquarters. “We haven’t been doing it for years yet.”

AMD, which was founded a year after Intel, has spent 40 years in the shadow of its rival, the world’s largest chipmaker. AMD has less than 20 percent of the global personal-computer processor market, compared with Intel’s 80 percent, and its revenue last year of $5.4 billion was a seventh of Intel’s.

Fusion Release

AMD began shipments today of its first Fusion product, which puts processors and graphics chips onto one piece of silicon. Computers based on the product will go on sale in early 2011. That will coincide with a new design from Intel, called Sandy Bridge, which also beefs up graphics features.

AMD’s last big hit was a server processor called Opteron that over three years grabbed 20 percentage points of market share from Intel. Opteron, introduced in 2003, also helped AMD squeeze more profit from each chip. In 2005, AMD’s products began to approach Intel’s famously high gross margins, which run as high as 67 percent.

That’s when AMD’s fortunes reversed. Opteron’s successor, Barcelona, was late to the market and needed to be redesigned. That failure was partly because AMD wasn’t ready for the big time, Meyer said.

Meyer is familiar with both companies. He worked at Intel in the 1980s, then spent almost a decade at Digital Equipment Corp., a computer maker acquired by Compaq Computer Corp., which is now part of Hewlett-Packard Co. When Meyer arrived at AMD in 1995, he led the team that designed its flagship processor.

Focus on Execution

Meyer comes from a technical background. He earned a degree in computer engineering from the University of Illinois and got an MBA from Boston University. After rising through the executive ranks at AMD, he replaced Hector Ruiz as CEO in 2008.

So far, AMD has struggled to follow through on its innovations, said Josh Spencer, a portfolio manager at T. Rowe Price Group Inc. in Baltimore.

“Where they’ve always fallen down in the past has been execution,” said Spencer, whose firm owns AMD shares as part of the more than $400 billion it has under management. With Fusion, “they have a chance to compete with Intel.”

AMD now has more than one engineering team capable of delivering multiple chip designs on time, Meyer said. That’s possible because it no longer has the distraction of running multibillion-dollar chip plants, known as fabs. AMD spun those off into a new venture called Globalfoundries Inc., backed by the government of Abu Dhabi.

‘Deep Hole’

The $8.4 billion transaction in 2008 helped reduce AMD’s debt from $5.5 billion in 2007 to about $2.2 billion now. It also let the company cut capital spending to about 10 percent of what it was three years ago, according to Chief Financial Officer Thomas Seifert.

Profitability will continue to improve. Today, Seifert predicted gross margin, the percentage of sales remaining after deducting production costs, will be between 44 percent and 48 percent in 2011. A year ago, he predicted a 40 percent to 45 percent range for 2010. AMD will be able to achieve a margin of above 50 percent in the long term, he said today during a presentation at the company’s headquarters.

“They were coming out of a deep hole,” T. Rowe’s Spencer said. “I’m impressed by what they’ve done.”

‘Critical Mass’

The moves haven’t reignited investor interest in the stock. The shares have declined 18 percent this year, and they’re trading at a fraction of their $42 price in 2006. Intel shares have climbed 3.7 percent this year.

AMD fell 23 cents to $7.91 at 4 p.m. in New York Stock Exchange composite trading. Intel lost 7 cents to $21.16.

“A company that’s up against some huge odds managed to stay in it,” said Alex Gauna, an analyst at JMP Securities LLC in San Francisco. “The question is: Will they get more interesting? I’m not anticipating they’re going to be a disruptive force.”

Rick Bergman, AMD’s senior vice president of products, disagrees.

“The No. 1 thing we have to do is have a differentiated product,” said Bergman, who joined AMD with Markham, Ontario- based ATI in 2006. In the past, “AMD didn’t have the critical mass, got bogged down in running fabs, and now we’re free from that burden.”

The difference between the new chips, according to Bergman, is that AMD will have state-of-the-art graphics, worthy of the most advanced computer games. Intel’s Sandy Bridge chip is years away from being able to handle that, he said.

“It just can’t do certain things,” Bergman said. “Would you want to buy a notebook and know from day one it has three-or four-year-old graphics technology?”

Single Chip

Intel says its Sandy Bridge chip represents a significant advance in graphics. “The overall performance and graphics capabilities of the Sandy Bridge processor are outstanding and represent a major step forward,” said Tom Beermann, a spokesman for Santa Clara, California-based Intel.

Both Fusion and Sandy Bridge combine two of the key components of a computer onto one chip. That reduces battery drain and speeds up processing by letting computers better share memory. Until now, advanced graphics chips have mainly gone into add-on computer boards. Those products are popular with gamers, who use them to get more realistic visuals.

AMD is counting on more than gamers to help Fusion catch on. New versions of programs for surfing the Web, including Microsoft Corp.’s Internet Explorer, could take advantage of the graphics features as well, the company says.

If AMD is right, computer users will get faster browsing, higher-definition video from programs like Adobe Systems Inc.’s Flash, and home movies that can remove the jerks and swings from handheld cameras.

Before AMD’s vision for Fusion can take hold, the company needs to keep delivering chips on time and find ways to be more nimble than Intel, Meyer said.

“As a small company, we’ve got to always look for ways to answer the question, ‘What’s better, what’s different about AMD?’” he said. “I can’t rely on having home runs.”

Ellison: Oracle has $4 Billion Case against SAP

Associated Press

Oracle Corp. CEO Larry Ellison turned up the pressure in an industrial espionage trial Monday by testifying that archenemy SAP AG should have paid $4 billion for licenses to Oracle software.

SAP and Oracle, two of the world's biggest business-software makers, are fighting over how much SAP should pay to atone for the shady tactics of a now-shuttered software support subsidiary called TomorrowNow.

SAP has already admitted to bad behavior. It acknowledged that TomorrowNow stole customer support documents from Oracle password-protected websites and used them to steal business from Oracle by offering similar services at a cheaper price.

Oracle has said that it is owed billions for the value of the intellectual property that was taken from it. Ellison's $4 billion estimate concerned the amount of money SAP would have paid for the appropriate licenses to Oracle's software, under certain conditions.

SAP claims TomorrowNow wasn't that effective at stealing customers, and it should only have to pay $40 million for Oracle accounts it did manage to lure away.

The trial, in its second week in federal court, offers a rare look at the corners big companies might be tempted to cut in the battle for new business.

It is also as much a public relations bonanza for Oracle as it is an attempt to recover damages, since Oracle gets to pillory two rivals at once: SAP and Hewlett-Packard Co.

The conflict with SAP has grown as Oracle has moved beyond its core business of selling database software and into SAP's stronghold of applications that help companies manage payroll, human resources and other tasks.

The beef with HP stems from Oracle's decision to start selling computer servers, an HP mainstay. Also, Ellison has taken HP to task for hiring Leo Apotheker, SAP's former CEO, as HP's new CEO. Apotheker is replacing Ellison's friend and tennis buddy Mark Hurd, who was ousted as HP's CEO over expense-report lapses. Ellison has since hired Hurd to serve as an Oracle co-president.

Apotheker may not wind up testifying live about his role in the TomorrowNow espionage.

Oracle has tried to force him to appear in court but says HP has refused the subpoena. Apotheker has proven so elusive that Oracle has hired investigators to try and track him down and serve him with the subpoena if he appears within 100 miles of the federal courthouse in Oakland, which includes HP's headquarters in Palo Alto.

If Apotheker stays out of range, Oracle can't force him to testify.

HP accuses Oracle of harassing its new executive and says Oracle had ample time to question Apotheker during an earlier sworn deposition. If Apotheker doesn't appear, Oracle could play the videotaped testimony.

Ellison's testimony injected some celebrity drama into the trial. Although he is known for trash-talking against rivals, his courtroom appearance was devoid of theatrics, and he didn't give any public comments afterward.

Ellison testified that he was deeply worried that his company would bleed customers because of what seemed like SAP's masterstroke of an acquisition of TomorrowNow in 2005. Ellison called the TomorrowNow deal a "brilliant idea" that posed a "grave risk" to Oracle because of its ability to let SAP steal business, even without the theft of Oracle's documents.

The extent of those fears, and how they squared with the amount of business SAP actually poached, consumed most of his hourlong testimony.

Lawyers from Oracle and SAP questioned Ellison on his initial fears that Oracle could lose as much as 30 percent of the customer contracts it got as part of its $10.3 billion acquisition of PeopleSoft in 2005.

That deal sparked SAP's interest in TomorrowNow, since TomorrowNow supported PeopleSoft software.

SAP insists that it owes far less than Oracle is demanding because TomorrowNow stole far fewer customers than Oracle thought it would. SAP's lawyers have repeatedly cited SAP's claim that TomorrowNow stole only 358 Oracle customers, out of the thousands that came to Oracle through the acquisition.

Wednesday, November 10, 2010

Report: Hasbro Device to Bring 3D to iPhone, iPod

PC Mag

As if you needed more of an excuse to waste time on smartphone games, Hasbro is reportedly developing a device that will enable 3D gaming on the iPhone or iPod touch.

The toy company on Tuesday was scheduled to show its investors a handheld device known as the My3D, according to the Associated Press. It apparently looks like a pair of binoculars and lets people attach their iPhone or iPod for 360-degree gaming, as well as travel and entertainment options.

It would retail for $30 and be sold next spring wherever iPhones and iPods are available. The App Store will then add My3D content, some of which will be free. Hasbro is working with Dreamworks, Discovery, Sony, and Imax on content for the My3D, AP said. On the travel front, Hasbro will partner with the LA Visitors Bureau for virtual tours.

Hasbro did not respond to a request for comment.

From the Kansas City Star

Hasbro unveils device that promises 3-D on iPod

Hasbro Inc. is betting that iPod and iPhone users want 3-D viewing on the go.

The nation's second-largest toy maker is set to unveil to investors on Tuesday a handheld device called My3D that attaches to the two Apple Inc. devices. It promises three-dimensional content that offers a 360-degree experience in gaming, virtual travel experiences and entertainment content. It's aimed at both children and adults.

The device, which resembles a pair of binoculars with a slot in which users insert their iPod or iPhone, will be priced at $30. It will be available starting next spring at stores where Apple's iPhones and iPod Touches are available.

Shoppers can then visit Apple's App store, which will allow shoppers to browse for additional My 3D content. Content varies in price; some apps will be free.

Hasbro said it was guided by Apple during development and believes there's nothing available that matches the quality and 3-D experience on the iPhone or iPod Touch.

If it catches on, it has big potential. More than 125 million iPod Touches and iPhones have shipped, according to Shaw Wu, senior research analyst at Kaufman Bros. L.P. He predicts that will hit 200 million by end of 2011.

"The issue with this is whether they are going to get enough content for it," Wu said.

Hasbro is confident it will and says it has teamed up with Dreamworks Animation, whose movie "Megamind" hit theaters last weekend, to develop material.

Separately, Hasbro's My3D will use content from a 3-D television network from Discovery, Sony and Imax scheduled to make its debut next year. Viewers will be able to see trailers and exclusive behind-the-scenes snippets from films for up to 20 minutes. Hasbro says the device will be a key way to market its own brands in a 3-D experience, though details haven't been set.

Meanwhile, Hasbro worked with LA Inc., the Los Angeles Convention and Vistors Bureau, to create virtual travel experiences that include visits to the Wax Museum and the Santa Monica Pier.

Through other apps, users can feel like they're immersed in deep water, exploring coral reefs or playing a shark attacking a tuna, while all along learning facts about sea life. There are also shooter games in a virtual galaxy.

"The idea of being able to be somewhere in Los Angeles, in this 360-degree environment, to be in the shark tank, to be able to swim with the fish and chase after the fish. These are really breakthrough immersive experiences," said Brian Goldner, president and CEO of Hasbro.

Opera Steps Up Browser Battle On Android

Information Week

As promised, Opera Software has made a beta version of its Opera Mobile 10.1 web browser available for Google's Android platform.

Opera announced its intent to offer Opera Mobile 10.1 to Android in October. On Tuesday, it delivered, making the free application available for download from the Android Market. Opera's full-featured Opera Mobile browser is already available for the Symbian and Windows Mobile platforms.

Opera Mini is already available to Android, but Opera Mobile is an entirely new ballgame. The key difference between Opera Mini and Opera Mobile is that Opera Mini uses server-side proxies to compress and deliver web sites to mobile handsets. The data compression helps to reduce mobile data requirements and saves both customers and mobile network operators money.

Opera Mobile, on the other hand, is a full, device-side browser that does all the heavy lifting on the handset and not on remote servers.

Opera Mobile for Android brings two major features to the browser. First is hardware acceleration. With hardware acceleration baked into Opera Mobile, the browser should see a performance boost. Opera Mobile also includes pinch-to-zoom. Pinch-to-zoom has become a must-have feature for smartphones, as it makes interacting with web-based content easier and more manageable. Pinch-to-zoom is offered in the native Android browser, as well as the iOS and BB6 browsers.

Other features included in the new browser include support for tabbed browsing; Opera Turbo powered by the Opera Presto rendering engine; bookmark syncing with desktop browsers; geolocation support; and scalable vector graphics.

I downloaded and tested the new browser this morning. True to its claims, Opera Mobile performs well, and renders full HTML web sites nicely. It loaded the full web site, though the text was so small as to be illegible. I was forced to zoom in to read anything beyond the main headlines. I was disappointed to see that Opera Mobile skipped to the mobile version of, however. The pinch-to-zoom gesture worked flawlessly, and zooming around web sites was not a problem at all. Everything about the browser's performance was smooth and speedy.

One thing of note, Opera Mobile does not support Flash. Several times I was greeted by "Oops, we're sorry" messages on web sites pointing out the browser's inability to playback Flash content. Opera says that Flash will be included in a future version of Opera Mobile.

Opera has a tough road ahead if it is interested in converting Android users. The stock Android browser is already very good, and there are a number of alternatives available, such as Skyfire, Dolphin HD, and Firefox. What's to convince the common Android users to switch? Perhaps tie-ins with Opera's desktop browser, as well as its desktop-phone syncing services.

Tuesday, November 9, 2010

Toshiba rolls out slimmer Form Factor for SSDs

Computer World

Toshiba America Electronic Components on Monday announced a series of solid-state drives featuring a new form factor that's 42% smaller than today's mini-SATA or mSATA SSD modules.

Toshiba's new Blade X-gale SSD series is just 2.2mm thick but comes in models capable of holding 64GB, 128GB or 256GB of worth of data. The mSATA version offers 30GB and 62GB capacities in a form factor that's4.75mm thick. The new SSD is almost one-third of the thickness of a 2.5-in. hard disk drive.

Toshiba also upped the performance of its SSD module from a maximum read/write speed of 180MB/sec. and 70MB/sec. in the mSATA drive to 220MB/sec. and 180MB/sec. in the Blade X-gale. The new SSDs use the SATA 3Gbit/sec. interface.

Toshiba's latest SSD offerings are designed for mobile devices such as tablet PCs, laptops and mini-mobile and netbook PCs.

"Delivering a product that enables superior user experience in a smaller footprint is the ultimate goal," said Scott Nelson, vice president of Toshiba's memory business unit, in a statement.

The Blade X-gale uses multilevel cell (MLC) NAND flash chips, storing two bits per cell.

Toshiba said a new board design that minimizes warping allowed it to increase the capacity of the modules by mounting the flash chips on both sides.

"Until recently, storage designers looking for high-capacity storage had accommodated the size of [hard disk drives] into their designs," Nelson said. "Toshiba's module-based SSDs break with this approach, giving hardware designers greater freedom and flexibility in enabling their product design."

Hanvon to Launch First Ebook Reader with Color E Ink

PC Mag

While there are plenty of ebook readers on the market, almost all of them have black-and-white displays. Chinese company Hanvon wants to change that. The company is expected to unveil the first tablet with a color E Ink screen on Tuesday at the FPD International 2010 trade show in Tokyo, the New York Times has reported.

According to the Times, 90 percent of the ebook readers on the market use monochrome display technology from the company E Ink. Hanvon will be the first company to showcase E Ink's color capabilities. E Ink's color screen is made by fitting the original black-and-white display with a color filter.

Last month, Barnes and Noble announced the Nook color, but the 7-inch screen uses LCD technology, similar to what is used in televisions and computer screens. Like many tablets on the market, Apple's iPad also uses LCD technology.

The benefits of using E Ink as opposed to LCD are that E Ink uses less battery power and can be read in direct sunlight without glare. According to the Times article, the color E Ink that will be featured on Hanvon's e-reader isn't the same quality as LCD technology on, say, an iPad, however. The colors aren't as vivid, and appear to be more muted, and the screen can't support video. This is why Amazon, for example, hasn't yet embraced color E Ink on its Kindle e-reader.

"I'm convinced that a lot of times it takes one company to prove the market," Sriram K. Peruvemba, a vice president for E Ink, told the Times.

The iPad has been available in China since Sept. 17. Hanvon's new ebook reader will go on sale in China in March for around $440. Hanvon president Liu Yingjian said the product, fitted with a 9.68-inch color screen and Wi-Fi and 3G connectivity, might be sold in the U.S. later. Hanvon, the number one ebook reader outfitter in China, sells some products in the U.S., both online and through electronics retailer Fry's.

Monday, November 8, 2010

Microsoft's Kinect Already Hacked?

PC Mag

Has someone already won the $2,000 bounty for delivering open-source drivers that work with Microsoft's recently released Kinect motion-tracking system? Odds are looking good!

Here's the background. Adafruit Industries announced a $2,000 prize last week for anyone who managed to hack into the Kinect in an effort to unlock the device for use with hardware other than the Xbox 360. In short, here's the official challenge: "Upload your code, examples and documentation to GitHub. First person / group to get RGB out with distance values being used wins, you're smart – you know what would be useful for the community out there. All the code needs to be open source and/or public domain."

Well, user AlexP over at the NUI Group Community Forums has posted a video that appears to show a Kinect being controlled via a standard PC interface. That's the only background we have so far, so it remains to be seen whether the potential submission will actually fulfill all the criteria of Adafruit's contest.

Nevertheless, one thing is certain: Microsoft won't be very happy about the results.

"Microsoft does not condone the modification of its products," said a company spokesperson in an interview with CNet. "With Kinect, Microsoft built in numerous hardware and software safeguards designed to reduce the chances of product tampering. Microsoft will continue to make advances in these types of safeguards and work closely with law enforcement and product safety groups to keep Kinect tamper-resistant."

So why the challenge? Adafruit is hoping that the Kinect's "radar camera," as Make magazine senior editor Phillip Torrone puts it, can be unlocked for use with robotics. But as for specific purposes, the sky's the limit—Nintendo's gyroscopic Wii Remote, after all, has been transformed into everything from a VR head-tracking device to the controller of a 15-ton robotic arm.

Android Revolution May Overwhelm BlackBerry

PC World

The Android army may soon claim Research In Motion's BlackBerry as its first victim in the smartphone war. Between July and September, 44 percent of new smartphone users in the United States bought a Google Android phone, according to market research firm NPD Group. During the same period, 23 percent of the users bought an iOS device and 22 percent purchased a BlackBerry. NPD's report is another sign of Android's growing market power, and RIM's dramatic decline. But the battle for smartphone supremacy is far from over, and it's unclear whether Android can continue its impressive growth.

Android by the Numbers

Android outsold RIM by 2-to-1 and nearly did the same to Apple's iOS during the third quarter. Devices based on Google's smartphone OS increased by 11 percentage points in comparison to the second quarter of 2010, while RIM fell by 6 points and Apple rose by 1, according to NPD.

What is most stunning, however, is NPD's assertion that RIM's market share among new smartphone users in the U.S. fell by 53 percent when compared with the third quarter of 2009. NPD failed to mention how much Android rose or fell compared with those numbers, but the research firm said Apple's iOS also fell by 21 percent in that quarter.

Android Isn't the Top Device

Despite Android's growing strength overall, NPD found that Apple's iPhone 4 was the most popular mobile phone purchased by new users. BlackBerry Curve 8500 series devices came in second, followed by the LG Cosmos (an Internet-capable feature phone). The Android-based Motorola Droid X and HTC Evo 4G came in fourth and fifth.

Android's Long and Winding Road

Android has been the top smartphone OS for several quarters, but it isn't growing fast enough to beat out the iPhone and RIM in terms of overall user adoption. The most recent numbers from the Nielsen Company indicate that Android has 19 percent of all smartphone users in the U.S., while the iPhone has 28 percent and BlackBerry leads the pack with 30 percent adoption overall.

But Android's growth may slow in the next few months as new contenders attempt to take a bite out of the smartphone market. Next Monday, nine Windows Phone 7 devices from Microsoft will go on sale, and new smartphones from HP using an updated version of WebOS are expected to hit the market in early 2011.

If the rumors are to be believed, Apple's iPhone may also extend its reach in 2011 by expanding the popular smartphone to other U.S. carriers.

Smartphone Rising

Nielsen reports that during the most recent quarter 41 percent of new mobile phone buyers in the U.S. opted for a smartphone over a feature phone -- up 6 percentage points from the previous quarter. If that trend continues, expect to see a lot more competition among smartphone manufacturers in the coming months. The big question, however, may not be whether Android can rise to the top spot. But whether RIM can turn around its declining user adoption rates to remain a viable top 5 smartphone manufacturer against a slew of innovative devices from Apple, Google's numerous Android partners, HP and Microsoft.

Saturday, November 6, 2010

Does Skyfire App Really Bring Flash to the iPhone? Hands On

PC Mag

The Skyfire Web Browser app, which claims to play Flash videos on the iPhone, made its debut in the Apple App Store Wednesday afternoon. For $2.99, the app will turn Web-based Flash video into HTML5 and play it on your iPhone. But does it really work?

The app is designed as a full-fledged Web browser and includes an address bar, Google search box, and popular trending search terms. In theory, the app transcodes Flash content into HTML5 via the embedded the Safari browser, but in a brief test Wednesday afternoon, Skyfire left a little something to be desired.

After downloading Skyfire, the app issues a warning that it contains age-restricted material, presumably because it can troll the entire Web, including adult content. As such, Skyfire Web Browser has an adult, 17+ label due to "frequent/intense sexual content or nudity," according to the App Store.

After a few instructional screens providing an overview of what the app can do, Skyfire landed on its Web browser. Since an October demo video from Skyfire showed the app in action on the Daily Show's Web site, I too navigated to to test it out. The site loaded normally enough. The main video up top was blacked out with the phrase "Adobe Flash Player" in blue in the middle. At first the app didn't do anything, so I tapped on the video, which took me to the Adobe Web site. A pop-up on the "SkyBar" below then told me I'd have to use the video button to access Flash content.

Returning to, the video button did indeed pop up in a small icon on the bottom bar. Tapping on the video image took me to another page, where it buffered for a moment before failing. "Unable to play video. Would you like to report it to help us improve our system?" a message read. I reported, and navigated back to the site.

I decided to give the "video" section of a chance, and had better luck – sort of. The video button emerged, and the video actually started loading this time, but it eventually displayed a "poor connectivity – video playback in low bandwidth mode" message. The video did load, and I could hear audio, but the video didn't sync up, and eventually stalled, returning to the "Video loading" screen.

Given that my service level is not ideal in my cube, I moved down the hall, where my iPhone 4 kicked from two bars to four. Still, this did not improve connectivity on Skyfire.

I navigated over to and to see if video on those sites would fare any better, but had trouble loading and returned the original "unable to play video" error. Skyfire warns that videos may take between 15-25 seconds to load, but I gave it much longer than that and nothing. It could be first-day growing pains or a lot of eager users clogging the system, but at this point, I wasn't able to actually get it to work.

Those looking to circumvent the Hulu Plus pay wall are out of luck; Hulu is not supported. "They don't allow it," Skyfire said in the app description. The Skyfire Web Browser also does not support Flash games or apps.

UPDATE: Demand for the app has prompted Skyfire to temporarily stop accepting new purchases from the App Store, the company said in a blog post. "The demand far exceeds our initial projections," the company wrote. "Thus we are effectively 'sold out' and will temporarily not accept new purchases from the App Store. We are working really hard to increase capacity and will be accepting new purchases from the App Store as soon as we can support it." The app is no longer showing up in search; it was the top grossing app on the App Store after five hours, Skyfire said.

Friday, November 5, 2010

T-Mobile, Sprint Sow Confusion Over '4G'

The Wall Street Journal

Get ready for a confusing new war of words in the cellphone business.

While many American consumers are still scratching their heads over what exactly to make of current 3G mobile technology, carriers are already aggressively rolling out claims of faster, next-generation service on networks they're spending billions of dollars to upgrade.

The new buzzword is 4G—for fourth generation—and the implication is super fast speeds that make it a snap to watch streaming videos or download big data files on the go.

The catch is the carriers disagree about what counts as 4G. And the one organization that sets anything like an official definition has come up with a surprising conclusion: None of them deliver speeds that qualify.

T-Mobile USA is the latest to jump into the fray, boasting in ads that started running Tuesday that it owns "America's largest 4G network"—the same one it advertised in March as the country's fastest 3G network.

That doesn't sit well with Sprint Nextel Corp., which has been evangelizing the benefits of 4G for the past two years and rolling out an advanced network. Sprint's ads brag the carrier is "bringing you the first wireless 4G network."

"They are putting a mask on 3G and pretending it's 4G," Matt Carter, head of Sprint's 4G business, said of T-Mobile's campaign.

Clearwire Chief Commercial Officer Mike Sievert said the company's ability to deliver more capacity and better value will continue to set it apart. He added customers aren't going to get caught up with the alphabet soup of technology buzzwords.

Sprint's network, which is being built by partner Clearwire Corp., runs on a technology called WiMax, the first wireless broadband standard.

T-Mobile has been upgrading its network to a faster technology called HSPA+.

T-Mobile defends its decision to brand its network as 4G, claiming it is faster—downloading data at five to eight megabits a second versus three to six megabits a second for Sprint and Clearwire.

"If you look at the speed of the WiMax network out there, we're meeting, beating and exceeding them right now," said Reid Walker, a spokesman for T-Mobile USA, which is a unit of Deutsche Telekom AG.

The increased rhetoric underscores the high-stakes game played by the carriers as they jockey for position.

With subscriber growth slowing, carriers are counting on upgrading customers to more powerful phones and more expensive data services in order to drive growth.

Carriers are also trying to lure consumers by advertising new 4G-capable smartphones, such as Sprint's HTC Evo 4G. Consumers in turn are starting to show interest in so-called 4G networks, even if they don't quite know what they are.

The conflicting campaigns probably won't help.

A recent survey by Yankee Group of more than 1,200 consumers found 57% had either never heard of 3G or didn't understand the term. With 4G, the ranks of the confused jump to 68%.

"That is going to get pretty ridiculous really quickly," said Christopher Nicoll, analyst at Yankee Group.

Jamie Monberg, a 38-year-old executive for a Seattle-based design firm, is a gadget enthusiast who covets a 4G phone. But he acknowledges it's tough to sort out all the claims. "To be perfectly honest, even as a technologist, it's incredibly confusing," Mr. Monberg said.

In a sense, T-Mobile and Sprint/Clearwire are both wrong. The International Telecommunications Union, a United Nations agency responsible for setting global standards for communications technology, announced Oct. 21 that only two technologies—LTE-Advanced and WiMax 2—truly qualify as 4G. The ITU determined those could clear its hurdle of speeds of 100 megabits per second for mobile downloads.

While Verizon Wireless is launching an LTE network and Sprint and Clearwire have embraced WiMax, they are using earlier-stage technologies that don't come close to the specifications laid out by the ITU.

"We are comfortable with the way our LTE network will perform," a Verizon Wireless spokesman said.

He declined to comment on whether the carrier would embrace the 4G name. 

The increased noise over 4G only diminishes Sprint and Clearwire's early move into faster technology.

Clearwire, which turned on its WiMax network in the New York area Monday, is available in nearly 60 markets. Verizon Wireless plans to have its LTE network up and running in 38 markets by the end of the year.

AT&T Inc., meanwhile, is rolling out the same HSPA+ technology as T-Mobile.

"Third-party research is clear—AT&T has the nation's fastest mobile broadband network, period," said an AT&T spokesman.

The carrier plans to start moving to LTE next year. It hasn't said whether the network will be called 4G.

Thursday, November 4, 2010

Western Digital Frames Photo Viewer For Android, Apple

Information Week

Free app enables smartphone users to remotely access pictures stored on their home network drives.

External storage provider Western Digital has launched a free app that will give Android and iPhone smartphone users the ability to securely view all photos stored on their home WD network drive anywhere they have an Internet connection.

The Photo Viewer app works with WD's My Book Live, My Book World Edition, or ShareSpace network drive. It's compatible with Apple iPhones and iPads and most Android smartphones, including the Motorola Droid, the HTC Droid Incredible, Nexus One, and the HTC EVO 4G, the Lake Forest, Calif.-based company said. It is available as a free download at the Android Market and Apple App Store.

Once users copy their pictures into the shared pictures folder on their WD network drive, they will have access to their photo library when connected to either their home network or from their compatible mobile devices. The app eliminates the need for uploads to online photo services and having to choose which photos to sync to their smartphone. Users can search for specific photos by name or the date a picture was taken and scroll through thumbnail previews from their Android device.

"Android phones are enjoying a huge success in the market," said Dale Pistilli, VP of marketing for WD's branded products group, in a statement. "By customizing the WD Photos app for Android phones, we provide a greater number of our users a better experience for viewing and sharing the precious photos safely stored at home on their WD home network drives."

Other features of the WD Photo Viewer app include the ability to instantly post pictures on Facebook; create a slideshow with transitions to create digital art; view all photos at once or filter them in a folder or photo album; use search capabilities; email a photo to a friend; assign a photo to a contact; or, on the Apple iOS4, listen to music while viewing photos.

Users must have either a Western Digital My Book Live home network drive (priced at $229.99); a My Book World Edition home network drive (priced at $259.99); My Book World Edition II dual-drive network storage (priced at $519.99); or a WD ShareSpace network storage system (priced at $1,179.99) to use the photo app.

Users must register with WD's MioNet secure remote access service, which is included for free with all WD's network drives, and have an Android device running 2.1 OS or higher, or an iPhone, iPad, or iPod Touch with 3.1 OS or later.

Intel Opens Door to Contract Chip Manufacturing

PC World

Intel on Tuesday said the company would begin contract manufacturing of chips, a change from the company's policy of serving only itself through its factories.

The company earlier this week said it would make a line of FPGA (field-programmable gate array) products for Achronix Semiconductor using its upcoming 22-nanometer manufacturing process. Intel will start manufacturing chips for laptops, desktops and servers using the 22-nm products later next year.

"We are ... open to adding other customers beyond Achronix," said Bill Kircos, an Intel spokesman, via e-mail on Tuesday. He declined to say when the company would start signing up other customers.

Intel advances its manufacturing process every two years, and invests billions to upgrade factories. The company last month said it would invest between US$6 billion to $8 billion over multiple years to build a new plant and improve existing manufacturing plants in the U.S. A part of that investment will be applied to making 22-nm chips, which are faster and more power-efficient than chips made using the current 32-nm process.

The company also announced the opening of a $1 billion chip testing and assembly facility in Vietnam last week.

Making FPGAs for Achronix would make up a tiny amount of overall chip manufacturing capacity, Kircos said. Achronix makes specialized integrated circuits and chips for sectors like networking, communication and high-performance computing.

By accepting a small customer like Achronix, Intel is dipping its toes in the contract manufacturing waters, analysts said. Intel's chip development and manufacturing are tightly linked, and it could be years before Intel is ready to compete with large-scale contract manufacturers such as TSMC (Taiwan Semiconductor Manufacturing Co.), UMC (United Microelectronics Corp.) or GlobalFoundries.

"It's more of a test drive than a real commitment," said Dan Hutcheson, senior analyst at VLSI Research, which focuses on the semiconductor and chip manufacturing industries.

Intel has a good reason to look at FPGAs as they are "an incredibly profitable market," worth $4.7 billion, Hutcheson said.

Intel excels at chip manufacturing and has an advantage over rivals such as TSMC with its manufacturing process, Hutcheson said. Intel may believe it is faster than rivals at advancing process technology, he said.

Higher capital investments are also needed to advance manufacturing processes, said Nathan Brookwood, principal analyst at Insight 64. Intel perhaps realizes that contract manufacturing could fill extra capacity, and offsettin the high fixed cost related to making chips.

"Every generation gets more expensive," Brookwood said. "Looking forward, you could see where you might want to have these third-party customers to help offset some of the fixed expenses."

Brookwood said Intel may also be taking a page from rival Advanced Micro Devices, which last year spun-off its manufacturing operations into a separate entity called GlobalFoundries. AMD explicitly said it spun off Globalfoundries as it couldn't justify enough demand to make investments to scale production, Brookwood said.

"They could see the same sort of phenomenon that Advanced Micro Devices saw half a dozen years ago," Brookwood said.

Intel has mostly been serving itself through its factories, and will have to learn about supporting third parties, Brookwood said. Contract manufacturers have lots of experience supporting third parties, and have basic designs for different Arm, MIPS and PowerPC cores to attract fabless customers.

If Intel is looking at the foundry business model, the company may initially make specialized third-party chips for devices like smartphones and TVs, markets the company is going after aggressively, said Shane Rau, research director at IDC.

These chips could help improve sales of Intel's processors, while using up factory capacity, Rau said.

"The need to fill the fab is ever present," Rau said.

Wednesday, November 3, 2010

FTC Modifies Intel Antitrust Settlement


The FTC has modified the agreement it reached with Intel that settled antitrust complaints against the chip maker. The modification removes an interface requirement from Intel's "Oak Trail" Atom platform.

Intel's legal dispute with the Federal Trade Commission appears to be wrapping up, after the agency announced Nov. 2 that it had modified the initial agreement reached with the giant chip maker in August to settle antitrust allegations.

According to the FTC, the agreement was amended to allow Intel to ship its upcoming "Oak Trail" Atom platform without the required PCI Express interface because Intel began manufacturing it before the two sides reached the settlement Aug. 4. The FTC's modification will allow Intel to ship the Oak Trail chip until June 2013, but all future generations of the chip after that date must come with the PCIe interface.

In December 2009, the FTC filed suit against Intel, alleging that the chip maker abused its market dominance to illegally quash competition from the likes of Advanced Micro Devices, Via Technologies and Nvidia by offering system makers special discounts and rebates in return for limiting their use of products from those other companies, or by threatening retribution.

The FTC also said Intel altered some of its technologies, such as compilers, so that they would hinder the performance of AMD products, and then laid the blame for the poor performance on AMD's technology.

The accusations echoed similar claims made against Intel, not only by rivals like AMD and Nvidia, but also by other regulators, including the European Commission and the N.Y. Attorney General's Office. Intel executives have steadfastly denied that their business practices—while aggressive—violated antitrust laws.

Intel last year settled its long-running legal dispute with AMD, and currently is appealing a $1.45 billion fine levied by the EC. The chip maker reached a settlement with the FTC in August that outlined what Intel could and could not do in regard to its competitive business practices.

One of those provisions was the inclusion of the PCIe interface in the Intel chips for at least six years to ensure that they could not limit the performance of graphics chips, and to let Nvidia, AMD and others more fairly compete against Intel.

The FTC's modification excludes the Oak Trail Atom platform from that requirement. Oak Trail, designed for such form factors as tablet PCs and thin refurbished notebooks, will start appearing in systems in 2011.

The FTC also said that it rejected the arguments from some parties, including Via and chip designer ARM, that the agreement reached with Intel was not punitive enough on the giant chip maker. Via sought some changes in the original agreement, and ARM—which is coming into closer competition with Intel, as Intel is looking to muscle into the mobile handset market that is dominated by ARM-designed processors—asked the FTC to extend the order against Intel beyond the x86 market. The FTC rejected the suggestions from both vendors.

The FTC's suit against Intel refueled debate over the federal government's more aggressive stance in antitrust cases, particularly in the high-tech industry. Regulators not only are looking at Intel, but also other major tech players, including IBM. Some see the government's actions as necessary to level the playing field and to stop actions that they say ultimately are harming consumers. However, others see the regulators at creating an anti-business atmosphere in the United States.

Tuesday, November 2, 2010

Trial Opens Over Damages in Oracle Copyright Case With SAP

NY Times

The dispute between the software giants Oracle and SAP, in one of the most closely watched court cases in Silicon Valley history, is not over whether SAP engaged in a copyright infringement scheme, but over how much damage was done to Oracle.

SAP has already admitted that it infringed on Oracle’s copyrights and has conceded liability. At issue in a jury trial that began on Tuesday in Federal District Court is how much money SAP will pay in damages. Oracle has argued for $2 billion, and SAP has countered that tens of millions of dollars would be enough. It has set aside $160 million to cover the cost.

For most people in the technology industry, though, the trial is a forum for Lawrence J. Ellison, Oracle’s outspoken chief executive, to go after Léo Apotheker, SAP’s former chief executive and now chief executive of Hewlett-Packard. H.P. had been a close partner of Oracle’s, but in recent months the companies have become rivals.

In the weeks before the trial, Mr. Ellison publicly castigated Mr. Apotheker for overseeing the infringement. He also criticized H.P. for hiring Mr. Apotheker, who succeeded Mark V. Hurd. Mr. Hurd was hired by Oracle as co-president after he resigned from H.P. over an ethics question.

The opening arguments in the trial, which is expected to last four weeks, highlighted the cutthroat business tactics of competitors in the business software industry.

Jo-Ellen Pozner, a professor of management and organization at University of California, Berkeley, said that Mr. Ellison was using the trial to sully the image of his rivals. She likened his attacks to a negative campaign advertisement, calling them nasty but memorable in the minds of potential customers.

“He’s killing two birds with one stone,” Ms. Pozner said.

Geoffrey Howard, a Bingham McCutchen lawyer representing Oracle, told Judge Phyllis J. Hamilton, an eight-person jury and a packed courtroom that SAP executives had been well aware of the theft carried out against his client, and that, in fact, they had encouraged it. He painted a picture of a company so fearful of Oracle’s growing power that it chose to purloin its software in an effort to steal its customers.

“The scope is vast,” Mr. Howard said. He also quoted from a 2005 e-mail written by Mr. Apotheker that said, “We need to inflict some pain on Oracle.”

SAP’s lawyer, Robert A. Mittelstaedt of Jones Day, was contrite about the copyright infringement, telling the jury that SAP admits “that it did something wrong.” But he minimized its scope by saying that other than some lost profits and lost customers, Oracle suffered little damage.

“They want a windfall,” Mr. Mittelstaedt said. “They want a bonanza that is all out of proportion to the harm.”

The theft stems from SAP’s acquisition in 2005 of TomorrowNow, a company that provided technical support to some of Oracle’s customers. TomorrowNow routinely downloaded copies of Oracle’s software and maintenance manuals onto its computers and distributed some of those copies to clients — all without paying Oracle.

One of the biggest questions about the trial is whether Mr. Apotheker will testify in person. Oracle’s lawyer was vague on the matter, leaving the door open to his appearing in a video deposition.

Mr. Ellison has suggested that Mr. Apotheker, who started work at H.P. on Monday, is trying to dodge an appearance by staying outside the country. H.P. declined to comment on Mr. Apotheker’s whereabouts.

Ray Lane, H.P.’s chairman, defended Mr. Apotheker’s integrity in a statement last week. He emphasized that Mr. Apotheker had known little about the infringement, and he called Mr. Ellison’s criticism merely an effort to harass Mr. Apotheker and “interfere with his duties.”

At the trial, each side produced e-mails and internal documents that shed an unflattering light on the other.

Oracle’s lawyer showed an e-mail in which an SAP executive had warned Shai Agassi, then SAP’s president, of the potential copyright liability of acquiring TomorrowNow. John Ritchie, a TomorrowNow employee, offered another blow in a video deposition by saying that his superior had ignored his concerns about copyright infringement and went so far as to tell him never to write anything down.

SAP’s lawyer countered with e-mails in which Juan Jones, an Oracle employee, had referred to Toyota, an Oracle customer, with an expletive and boasted of refusing it a lower price on software. The lawyer said the contents had showed that Oracle’s poor service led to some customer defections and that SAP should not be held liable for those.

Indeed, Oracle claimed that SAP had been trying to steal thousands of customers it provided support to, pointing to an internal SAP presentation. But SAP responded that despite its rosy projections, the company lured only 358 of Oracle’s 9,000 or 10,000 support business customers, and that many of them would have left anyway.

Android, iPhone Leave Windows Mobile In Dust

Information Week

Windows Phone 7 can't arrive fast enough for Microsoft, which saw its share of the smartphone OS market fall a stunning 66% in just three months, according to new data released Monday.

Market watcher Canalys reported that Windows Mobile's share of the U.S. smartphone market slipped to just 3% in the three months ended September 30. That's down from about 9% in the second quarter. Microsoft's rivals, meanwhile, are surging.

Apple's iPhone, with a 26% share, was the best selling single platform shipped during the quarter. RIM, developer of the corporate-friendly BlackBerry, held a 24.2% stake. Google's Android OS, which is available on devices from a host of manufacturers, was the most popular mobile OS overall, with a 44% share.

Microsoft is hoping to avoid utter irrelevancy in the increasingly important smartphone market when it launches Windows Phone 7 later this month. AT&T will offer models from HTC, Samsung, and LG, while T-Mobile will stock units from HTC and Dell. Verizon and Sprint plan to begin offering Windows Phone 7 phones next year.

The OEM devices cover a broad range of form factors, from the Dell Venue Pro's slide-out keyboard to the HTC Surround's Dolby speakers, but all conform to a reference design laid out by Microsoft. All Windows Phone 7 devices, for instance, will feature a start screen that's grouped into six "Smart Tiles", from which users can view real-time updates and access calling, social media, messaging, photo, e-mail, and personal applications and services.

Canalys analyst Chris Jones said he believes Windows Phone 7 gives Microsoft a chance to get back into the smartphone race.

"Windows Phone 7 is streets ahead of earlier iterations and provides a vastly improved user experience that will pleasantly surprise many people when they come to use it," said Jones, in a statement. "The integration of Microsoft service assets, such as Xbox Live, Bing, Zune, and Office, greatly strengthens the proposition and we are confident that the initial array of products will perform well," said Jones.

The first Windows Phone 7 devices hit the U.S. market on November 8.

Monday, November 1, 2010

Microsoft, Cisco Alumni Use Tech Savvy to Get Giants to Series


The San Francisco Giants, backed by owners from Microsoft Corp., Cisco Systems Inc., Yahoo! Inc. and Intel Corp., are bringing Silicon Valley knowhow to bear as they take on the Texas Rangers in the World Series.

Under former Microsoft General Counsel Bill Neukom, who took over as managing general partner in 2008, the team is increasingly using technology to hone players’ skills and draw more fans. The Giants also put a bigger emphasis on pitching after years of relying on Barry Bonds’s home runs.

The Giants use motion-sensor suits to help evaluate throwing and hitting mechanics and a specially outfitted pitching machine that shoots different-colored balls at more than 100 miles per hour (160 kph) to help batters overcome blind spots. The team also is the first to use software that sets ticket prices based on supply and demand, similar to airlines or hotels. Such innovations, along with players’ raw talent and a $357 million waterfront ballpark, have helped boost the club’s value almost fivefold since the ownership group took over.

“The point is to be restless about where technology can help us on the baseball side and on the business side,” Neukom, also the Giants chief executive officer, said in an interview in the team’s offices at AT&T Park. The Giants got an early lead in the series last night, beating the Rangers 11-7 in game one.

Franchise’s Value

The ownership group, called San Francisco Baseball Associates LP, bought the Giants for $100 million in 1992, saving them from moving to Florida. The team is now worth $483 million, making them the ninth-most-valuable franchise among the 30 clubs in Major League Baseball, according to Forbes magazine. The Giants also own a third of Comcast Sports Net Bay Area, the cable channel that carries their games.

The Giants’ backers, who get seats between home plate and the dugout along the third-base line, include Arthur Rock, a former Intel chairman and Apple Inc. director; Yahoo board member Arthur Kern and the company’s former president, Jeff Mallett; Cisco executive Dan Scheinman; and venture capitalist Paul Wythes. Hewlett-Packard Co. co-founder William Hewlett was an owner before his 2001 death.

“We’re talking about some of the premier guys in Silicon Valley,” said Larry Baer, the club’s president and chief operating officer. In addition to the technology industry veterans, the 31 owners include investor Charles Johnson, chairman of Franklin Resources Inc., a mutual-fund company in San Mateo, California.

Monetary Boost

Reaching the World Series is worth “several millions of dollars” in additional revenue, Baer said, without elaborating. About 4,000 new season ticket applications have been received by the club since the beginning of September, when the team began its push toward clinching the 21st National League title in its 127-year history. The Giants haven’t won a World Series since moving to San Francisco from New York in 1958.

“The real benefit is 2011, where you can drive season tickets, where you can drive sponsorships, where we can drive pricing,” said Baer, 53.

Playing in the World Series will bolster the Giants’ season-ticket sales, merchandise orders, endorsement deals and TV revenue, said Richard Walden, the head of sports business at JPMorgan Chase & Co.’s Private Bank unit. Still, consistently winning year after year does more for a team’s value than a single championship appearance, he said. JPMorgan helped the Giants finance their ballpark, which opened in 2000.

Long Run

“It will translate over time if they maintain the same discipline with regard to the on-the-field and off-the-field management of the club,” Walden said. “It doesn’t necessarily make a huge difference unless you have a long history of winning.”

The team’s investors aren’t seeking a short-term moneymaker, Neukom said.

“The basic business model is to invite investors who are passionate about baseball to make an investment and to recognize, however, that it is not a near-term strategic investment,” Neukom said. “If you want to have a fund for your grandchildren to go to private schools in case the public schools aren’t what you want them to be, then don’t put that money here.”

Neukom, who became an owner in 1995, orchestrated Microsoft’s legal defense against antitrust allegations by the U.S. government in the 1990s. He first started working with Microsoft after Bill Gates’s father asked Neukom to help the younger Gates build the software company, which had about a dozen employees at the time.

Gates’s Pitch

Neukom, 68, also helped give Gates some pointers on baseball. In the late-1980s, Gates was invited to throw out the first pitch at a Seattle Mariners game. To practice the day before, Neukom, Gates and Mariners catcher Dave Valle went into the woods behind Microsoft’s headquarters for a few warm-up throws.

“He threw about six pitches, went back to work and the next night in the Kingdome he threw a nice pitch,” Neukom said.

Neukom took over as the team’s managing general partner after former Safeway Inc. CEO Peter Magowan stepped down. Magowan and Baer led the effort to purchase the Giants and build the ballpark adjacent to San Francisco Bay.

When the Giants sought investors to help keep the team from moving to Florida in the 1990s, technology executives were an obvious option because of Silicon Valley’s proximity to San Francisco, Baer said. The technology hotbed, home to Apple, Intel and Hewlett-Packard, is about 40 miles from the city.

“We were dialing for dollars,” he said.

Dot-Com Boom

The Giants’ ballpark was the first privately financed major league venue since Los Angeles’s Dodger Stadium in 1962. The effort was aided by the dot-com boom, Baer said. It would have been tougher to get funding to build the ballpark after the bubble burst in 2000, he said.

The stadium was the first to offer Wi-Fi Internet service to fans in 2004. Now the Giants are exploring ways to distribute content on mobile devices and social networks, Neukom said.

When he took over, the team was five years into a six-year playoff drought and rebuilding after Bonds’s departure. Bonds, who set home run records as a Giant, saw his career marred by steroids allegations. He is scheduled for trial in March on charges of obstruction and lying to a federal grand jury in 2003, when he said he never knowingly took the drugs.

Neukom aimed to create a new vision and wrote a manifesto called the “Giants Way,” outlining priorities, including identifying and nurturing talent, teamwork and conditioning.

The Giants’ four starting pitchers in the World Series came up through its minor league system. That includes two-time Cy Young Award winner Tim Lincecum, who pitched 5 2/3 innings in last night’s game. The bearded reliever, Brian Wilson, and rookie catcher Buster Posey also were drafted by the team.

“We’re very proud of that,” said Neukom, who was showered with champagne in the team clubhouse after the Giants defeated the Philadelphia Phillies to win the National League pennant and earn a spot in the World Series. “If we’re playing good baseball, lots of other good things will follow.”

Verizon Profit Beats Estimates as Smartphone Popularity Grows


Verizon Communications Inc., the second-largest U.S. phone company, reported third-quarter profit that beat analysts’ estimates after more customers bought smartphones and signed up for data plans to operate them.

Profit, excluding payments related to its pension fund and charges from sales and acquisitions, was 56 cents a share, the New York-based company said in a statement today. Analysts in a Bloomberg survey had predicted 54 cents per share.

Verizon has added new mobile phones to its network to boost growth as older businesses, such as home phones and wireless- voice service, stagnate or decline. Verizon has increased the number of smartphones under its Droid brand with Android operating systems. Customers paid an average of $18.61 a month for data plans, up 19 percent from a year ago.

“Verizon has been doing exceedingly well with its Android launch,” said Craig Moffett, an analyst at Sanford C. Bernstein & Co. in New York, who rates the shares “underperform” and doesn’t own any. “They’ve had a pretty steady diet of sexy new phones, and they’ve really closed the gap versus the iPhone.”

The company added 584,000 new wireless customers on monthly contracts. That fell short of the 625,000 that analyst Tim Horan at Oppenheimer & Co. had forecast. Simon Flannery, an analyst at Morgan Stanley, estimated 665,000.

Verizon declined 43 cents, or 1.3 percent, to $32.09 in New York Stock Exchange composite trading at 4 p.m. The shares have gained 3.7 percent this year.

Improving Outlook

Revenue for the quarter was $26.5 billion. Analysts had forecast $26.3 billion, according to the Bloomberg survey. Sales a year ago, which included landline operations sold to Frontier Communications Corp., were $27.3 billion. Excluding those operations, revenue from the third quarter of 2009 would have been $25.9 billion.

Net income at Verizon, which co-owns its mobile-phone business with Vodafone Group Plc, fell to $881 million, or 31 cents a share, from $1.18 billion, or 41 cents, a year earlier.

Earnings in the second half of the year will improve by 5 percent to 10 percent over the first half of this year, Verizon said. Earnings excluding some items will be as much as $1.11 a share in the second half of the year, based on earnings per share on that basis of $1.01 through the second quarter.

Sales at the fixed-line business dropped 3.6 percent to $10.3 billion in the third quarter from a year earlier. Verizon is losing home-phone subscribers and broadband customers.

That side of the business, which contributed 42 percent of Verizon’s revenue last year, has gotten a boost from the FiOS fiber-optic network. FiOS, which sells high-speed Internet access and high-definition television service over the fiber lines, added 226,000 Web and 204,000 video subscribers.

LTE, IPhone

Verizon will start selling service on a new wireless network this quarter that will improve data speeds, making applications like streaming, high-definition video and low-delay online games possible. The fourth-generation technology, called long-term evolution, will be introduced in 38 markets by the end of the year, including Boston, New York, Washington and Miami.

LTE will give customers data speeds that are 10 times faster than Verizon’s existing 3G service, Chief Operating Officer Lowell McAdam has said.

Verizon will also start selling Apple Inc.’s iPhone early next year, two people familiar with the companies’ plans said in June. Rival AT&T Inc. has had sole domain over the popular, touch-screen smartphone in the U.S. since its introduction in 2007. AT&T activated 5.2 million of the phones last quarter, the company said yesterday.

Sony Ericsson sees Smartphone Sales Soar

The Inquirer

Accountants at IT industry analyst Isuppli have praised Sony Ericsson for its shift to smartphones.

Tina Teng, senior analyst for wireless communications at Isuppli said that Sony Ericsson's smartphone shipments have been soaring even as its overall cellphone sales ranking declined.

She said that this reflected the company's strategic shift away from lower-margin, higher-volume products and toward more profitable devices.

The company's overall mobile phone shipment ranking fell to sixth place in the second quarter, down from fourth in the first quarter.

This marked the first time in at least three years that Sony Ericsson didn't rank among the Top five global mobile phone brands.

While shipments rose 4.8 per cent compared to the first quarter, close rivals Research in Motion and ZTE surpassed Sony Ericsson because their growth rates were higher.

But Isuppli preferred to see the glass as half full. The outfit had a 15.4 per cent increase in smartphone shipments during the second quarter. This made Sony Ericsson the fourth fastest growing smartphone brand of the quarter.

Teng said that with its shift in focus from volume to value-add, Sony Ericsson is positioning itself to cash in on the fastest growing and most profitable segment of the global wireless market.

She said that average pricing for mobile phones has declined to extremely low levels and will continue to decrease in the coming years. In contrast, smartphones continue to offer fast growth and strong profit margins.

Global shipments of all kinds of mobile phones are set to rise by 6.9 per cent from 2009 to 2014, down from the 13.9 per cent for the period from 2003 to 2008. However smartphone shipments will rise by 22.7 per cent from 2009 to 2014, she added.

Teng said that by shifting to the higher-end phone market, Sony Ericsson is mirroring the successful strategy of Motorola, which has been withdrawing from the market for mainstream cellphones in order to focus on its high-end Droid smartphone line.

In 2010 Sony Ericsson entered the Android smartphone marketplace, and it has offered handsets like the Xperia line that uses Android.

Smartphones represented 13.6 per cent of Sony Ericsson's total mobile handset shipments in the second quarter of 2010, more than double the 5.8 per cent seen during the second quarter of 2009.