Turbulence! Apple’s speeding profit rocket slams into air pocket

Apple's multi-year profit-building streak hits air pocket as holiday earnings go flat -

Apple's blockbuster revenue growth is slowing drastically, as iPhone sales plateau and the company finds itself lacking revolutionary new products.

The company's warning, issued Wednesday as part of its financial results for the holiday quarter, sent Apple Inc.'s stock plunging by more than 10 percent, wiping out a year's worth of gains.

Analysts said the warning suggested Apple can no longer sustain its growth without some completely new products. Its last revolutionary creation, the iPad, was launched in 2010. Co-founder Steve Jobs, who was the engine behind the creation of the iPod, iPhone and iPad, died in 2011.

"It has been an overriding concern with Apple that they would not be able to generate revenue growth just rolling out new versions of old products," said Jeff Sica, president and chief investment officer of SICA Wealth Management. "Now they've proven it in their numbers."

On a conference call with analysts, Apple CEO Tim Cook rebutted that idea, but as usual, gave no details.

"We're working on some incredible stuff. The pipeline is chock full," he said.

Before he died in 2011, Apple co-founder Steve Jobs told biographer Walter Isaacson that he had figured out how to create a groundbreaking, easy-to-use TV set. Since then, company watchers have been waiting for the company to bring out something in that vein to re-energize sales. Cook said the company was still working on it.

"I tend to believe that there's a lot we can contribute in the space, and so we continue to pull the string and see where it leads us," he said.

Apple said it expects sales of between $41 billion and $43 billion in the current quarter, which ends in March. That would usually be little cause for concern, even though analysts were expecting $45.6 billion, because Apple usually lowballs its forecasts. But Chief Financial Officer Peter Oppenheimer said the company is changing its practices and providing a reasonable range rather than a single, easily achievable number.

That means Apple is looking at sales growth of about 7 percent from last year's January to March quarter, a striking number for a company that's posted double-digit increases in every quarter except one since 2008.

Apple's stock fell $55.58 to $458.43 in extended trading, after the release of the results. The shares are down 35 percent from their all-time high, hit Sept. 21, when the iPhone 5 launched.

Fueled by earlier versions of the iPhone, Apple's market capitalization decisively overtook that of Exxon Mobil in early 2012, making it the world's most valuable company. With Wednesday's drop, Apple is worth just 5 percent more than Exxon.

Apple's enviable profit growth also hit a wall in the October to December quarter. It said net income in the fiscal first quarter was $13.1 billion, or $13.81 per share, flat with a year ago. That still beat expectations, as analysts polled by FactSet had forecast earnings of $13.48 per share.

Revenue was $54.5 billion, up 18 percent from a year ago. Analysts were expecting $55 billion. Sales were held back by the fact that the latest quarter had 13 weeks, one less than the corresponding 2011 quarter.

Apple shipped 47.8 million iPhones in the quarter, about 1 million less than analysts were expecting, and 22.9 million iPads, also about 1 million short.

Most surprisingly, Mac sales were also 1 million short, at 4.1 million. That's a 22 percent drop from shipments a year ago. Oppenheimer said this was because Apple couldn't get the new iMac desktops out before December.

Cook said iPhone supplies were short too, and the company could have sold more of both the iPhone 5 and older iPhone 4 if it had been able to make more.

Most technology companies would be ecstatic if they posted 18 percent sales growth and $13 billion in profit for a single quarter, but Apple is held to a high standard, set by the shocking, iPhone-propelled success of the last few years.

"Apple has been growing tremendously and that level of growth can't be sustained by any company," said Sarah Rotman Epps, senior analyst at Forrester Research.

Investors have already been concerned that Apple's strategy of keeping the price of the iPhone high means it's losing out on sales, particularly overseas. Consumers are instead opting to buy cheaper smartphones running Google Inc.'s Android software, which has propelled South Korea's Samsung Electronics to the world's largest maker of smartphones. The average wholesale price of the iPhone is $640, hundreds of dollars more than smartphones with comparable hardware.

There's speculation among company watchers that the company will produce a cheaper iPhone, but that would cut into its profit margin and could tarnish the company's image as a purveyor of premium products.

Apple had warned that the holiday quarter's profits would be lower than Wall Street was initially expecting, because it had so many new products coming out, including the iPhone 5 and iPad Mini. New production lines are more expensive to run and yield more defective products that need to be redone or thrown out rather than sold.

Problem with iPhone Battery

Story first appeared in USA TODAY.

Apple concedes there's a problem with the new iPhone 4S battery life after all — a snag that apparently extends to other devices running the new iOS 5 mobile operating system software.

A small number of customers have reported lower-than-expected battery life on iOS 5 devices. Apple has found a few bugs that are affecting battery life, and they will release a software update to address those in a few weeks.

Apple didn't reveal the nature of the bugs or go into any other specifics.

Apple's statement follows a rash of complaints in various online Apple forums from customers upset about battery woes on the new iPhone 4S. As previously reported in USA TODAY, users said they've lost as much as 15% of the battery power per hour, even when the phone is not in active use. Last Friday, TheGuardian reported that Apple engineers contacted iPhone 4S owners seeking an answer to the battery issue.

Some speculation has centered around a location setting involving a "time zone" function that is useful for customers who travel a lot but that may potentially sap the battery. Also, iOS 5 brings a systemwide Notification Center that keeps users constantly informed of missed calls, messages, appointments, reminders and more.

Apple touted great battery life for the iPhone 4S — up to eight hours of 3G talk time — when it introduced the phone last month.

Creative Strategies President Tim Bajarin believes the fact that the issue can be resolved through a software fix makes a big difference and that sales won't be hurt. Apple tends to wait until they're certain of a problem and then works very fast to try and correct it.

The fact that Apple said the bugs lie within iOS 5 suggests other products may be affected, including the iPad, iPod Touch and iPhone 4 and 3GS.

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 DailyShow.com 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 DailyShow.com, 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 DailyShow.com 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 CNN.com and CBS.com to see if video on those sites would fare any better, but CNN.com had trouble loading and CBS.com 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.

Apple, Blackberry spar over Smartphone

Sydney Morning Herald

 

Canada's Research In Motion (RIM) fired back at Apple's Steve Jobs on Tuesday over his claims that the iPhone is outselling the Blackberry and that 18cm tablet computers have no future.

"We think many customers are getting tired of being told what to think by Apple," RIM co-chief executive Jim Balsillie said in a blog post responding to the comments made on Monday by Jobs.

"For those of us who live outside of Apple's distortion field, we know that seven-inch tablets will actually be a big portion of the market," Balsillie said after Jobs dismissed seven-inch (18cm) tablets as too small.
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Blackberry is developing a touchscreen tablet computer called the PlayBook which features a seven-inch (18cm) screen in a bid to challenge Apple's iPad, which features a nearly 10-inch (25cm) screen.

Jobs, speaking to financial analysts during a conference call on Monday, dismissed seven-inch (18cm) tablets as "tweeners" saying they were "too big to compete with a smartphone and too small to compete with an iPad".

He suggested makers of seven-inch screens "include sandpaper so users can sand down their fingers" to be able to tap onscreen keys.

Balsillie struck back with criticism of Apple's refusal to allow Adobe's Flash video to play on the iPad.

"We know that Adobe Flash support actually matters to customers who want a real Web experience," he said.

"We also know that while Apple's attempt to control the ecosystem and maintain a closed platform may be good for Apple, developers want more options and customers want to fully access the overwhelming majority of websites that use Flash."

During his earnings call, Jobs also said that the iPhone "handily" outsold BlackBerry during the quarter and he didn't see the RIM handsets catching up any time soon.

Apple sold 14.1 million iPhones during the quarter, up 91 per cent from a year ago.

"RIM has achieved record shipments for five consecutive quarters and recently shared guidance of 13.8 to 14.4 million BlackBerry smartphones for the current quarter," Balsillie said.

"Apple's preference to compare its September-ending quarter with RIM's August-ending quarter doesn't tell the whole story because it doesn't take into account that industry demand in September is typically stronger," he said.

"As usual, whether the subject is antennas, Flash or shipments, there is more to the story and sooner or later, even people inside the distortion field will begin to resent being told half a story," the RIM co-CEO said.

RIM Short Interest Doubles as BlackBerry Loses Ground to IPhone

Bloomberg

 

Bets against shares of Research In Motion Ltd. have doubled since April as investors wager the BlackBerry maker’s stock will continue to decline in the face of competition from Apple Inc. and Google Inc.

Short interest in RIM climbed to 31.1 million shares as of Aug. 31, more than double the level on Apr. 15 and the most since June 2007, according to data compiled by Bloomberg. Investors taking short positions borrow and sell a stock, aiming to profit by repaying the borrowed shares at a lower price.

“Everybody is so negative, the short positions continue to grow,” said Buzzy Geduld, chief executive officer of New York hedge fund Cougar Trading. He said he may short or buy the stock after the company’s earnings report today and doesn’t own shares at the moment.

Best known for handsets equipped with a full keyboard, RIM has struggled to create touch-screen devices that can compete with Apple’s iPhone and phones like Motorola Inc.’s Droid that use Google’s Android software. The BlackBerry Torch, a touch- screen model that went on sale last month, has received mixed reviews and generated what analysts say are lukewarm sales.

At the same time, the Waterloo, Ontario-based company faces challenges as it expands in overseas markets and the potential loss of business in its traditional corporate base. Countries such as India and the United Arab Emirates have threatened to ban BlackBerry services over security concerns.

Revenue, Profit Growing

Of 200 companies polled in the U.S. and U.K., 74 percent now let employees use devices other than BlackBerrys, according to an August survey by Sanford C. Bernstein & Co. JPMorgan Chase & Co., the second-largest U.S. bank by assets, may soon let employees use iPhones or Android phones for corporate e-mail, in place of the BlackBerry, for the first time, two people familiar with the situation said last week.

The stock has dropped 31 percent this year on the Nasdaq Stock Market as Apple has climbed by that percentage. RIM rose 97 cents to $46.49 at 4 p.m. New York time.

Marisa Conway, a spokeswoman for RIM, didn’t respond to messages seeking comment.

RIM is still boosting revenue and profit as mobile-phone buyers increasingly shift to smartphones that can surf the Web and play videos and music. When the company reports results for the latest quarter today after the close of regular trading, revenue is likely to jump 27 percent to $4.49 billion while net income surges 58 percent to $753 million, according to average estimates from analysts surveyed by Bloomberg.

‘Losing Mind Share’

Growth in the U.S. is slowing and the company is losing market share globally. RIM’s portion of the worldwide smartphone market slid to 18.2 percent in the second quarter from 19 percent a year earlier as customers opted for devices with larger screens and more applications, according to researcher IDC. Apple’s share rose to 14.2 percent from 13 percent, while Android surged to 17.2 percent from 1.8 percent.

“It feels like RIM is not in touch with what demanding, tech-savvy customers want,” said Nirav Parikh, senior vice president at Los Angeles-based TCW Inc., which manages $110 billion and sold all of its remaining 866,749 RIM shares as of June 30, according to a securities filing.

“They are losing mind share,” he said. “Their international growth is great, however those markets in the next couple of years may follow trends in the U.S., which don’t bode as well for RIM,” said Parikh.

Analyst Downgrades

While 31 of 54 RIM analysts recommend buying the shares, five analysts have downgraded the stock over the past quarter and nine now recommend selling. Among the RIM bears is Goldman Sachs Group Inc.’s Simona Jankowski, who cut her rating on the stock to “sell” in April and says the Torch didn’t do enough to change her mind.

“They really needed a very high-profile, very successful launch that was a really big hit,” Jankowski said. “That’s how high the bar was and they just didn’t clear it.”

Cougar Trading’s Geduld said he’s waiting to hear the company’s earnings news before deciding how to invest.

“I don’t think it’s quite a short and I don’t think it’s yet a long,” he said. “The real question is what are they going to say about the future.”

iPhone Maker Rallies Workers after China Suicides

Associated Press

 

Young workers who normally spend their days assembling iPhones and other high-tech gadgets packed a stadium at their massive campus Wednesday, waving pompoms and shouting slogans at a rally to raise morale following a string of suicides at the company's heavily regimented factories.

The outreach to workers shows how the normally secretive Foxconn Technology Group has been shaken by the suicides and the bad press they have attracted.

"For a long period of time I think we were kind of blinded by our success," said Louis Woo, special assistant to Terry Gou, the founder of Foxconn's parent company. "We were kind of caught by surprise."

The company has already raised wages, hired counselors and installed safety nets on buildings to catch would-be jumpers. Other changes include job rotation so workers can try different tasks and grouping dorm assignments by home province so workers don't feel so isolated.

However, Woo acknowledged there will be challenges in preventing such tragedies in a work force of 920,000 spread across 16 factories in China, all of which are to have morale boosting rallies. Woo said he expected the company will grow to 1.3 million workers sometime next year.

"No matter how hard we try, such things will continue to happen," he said.

The rally Wednesday took place at Foxconn's mammoth industrial park in Shenzhen, which employs 300,000 and where most of the suicides have taken place. The latest suicide - the 12th this year - occurred Aug. 4 when a 22-year-old woman jumped from her factory dormitory in eastern Jiangsu province.

Twenty thousand workers dressed in costumes ranging from cheerleader outfits to Victorian dresses filled the stadium at the factory complex, which was decorated with colorful flags bearing messages such as "Treasure your life, love your family." The workers chanted similar slogans and speakers described their career development at Foxconn.

As they filed toward the stadium for the rally, a flood of workers headed in the other direction to begin the night shift.

"In the past, from the time we started work until when we finished, we would not really have a break. But now we've been given time to rest," said 18-year-old worker Huang Jun. "If I can get off work early enough and have a little time for fun, then I feel a bit better and less stressed out."

Other workers said they wanted Foxconn to organize more recreational activities such as sports or karaoke.

Woo said it was common for workers to have 80 hours a month of overtime, but Foxconn was aiming to reduce the workload and become the first company in the industry to keep overtime to a maximum of 36 hours a month - as required by Chinese law.

Foxconn, part of Taiwan's Hon Hai Precision Industry Co., has built itself into the world's largest contract maker of electronics by delivering quality products on thin profit margins for customers including Apple Inc., Sony Corp., Dell Inc., Nokia Corp. and Hewlett-Packard Co.

Labor activists, however, say that success has come in part from driving workers hard by enforcing a rigid management style, operating a too-fast assembly line and requiring excessive overtime. The company denies that it treats employees inhumanely.

The troubles at Foxconn came to light amid broader labor unrest in China and highlighted Chinese workers' growing dissatisfaction with the low wages and pressure-cooker working conditions that helped turn the country into an international manufacturing powerhouse.

One activist said the rally Wednesday was unlikely to boost morale and does not replace the need for more thoroughgoing reforms.

"I don't think today's event is going to achieve anything except provide a bit of theater," said Geoffrey Crothall, spokesman for the China Labor Bulletin, a labor rights group based in Hong Kong. "Basically what Foxconn needs to do is treat its workers like decent human beings and pay them a decent wage. It's not rocket science."

Android Beats iPhone in Smartphone Sales

WIRED

 

Android is now the fastest-growing smartphone OS in both overall share and sales of new devices — and for the first time, people in the U.S. bought more Android phones than iPhones.

According to a Nielsen study released Monday, 27% of all purchasers of smartphones in the past 6 months bought an Android phone, up from 17% in a poll from the year’s first quarter. The Android OS jumped to 14% of overall smartphone share, just behind Windows Mobile at 15%. Apple dropped from 27% to 23% of new smartphone sales, but kept its 28% second-place position in the total smartphone user base.

The report is probably most troubling for Blackberry, which while still first overall in total smartphone users and new sales, has seen a steady decline in its share of new purchasers, from 45% a year ago to 33% in the recent quarter. Only 42% of Blackberry owners say that they want to purchase a Blackberry next, with a full 50% leaning towards either an iPhone or Android.

Nielsen’s data is not broken down by carrier, but it’s no coincidence that Verizon has heavily promoted the Motorola Droid and other Android phones over both Blackberry and Windows smartphones, while Motorola has in turn pushed against the iPhone, which is exclusive to AT&T. (See Motorola’s new ad campaign for the Droid, “No Jacket Required.”)

John Gruber, whose popular blog Daring Fireball is mostly about Apple news and products, commented: “How much of Android’s U.S. success is attributable to Verizon’s strength as the number one U.S. carrier? I.e., how different would these numbers look in an alternate universe where Verizon, not AT&T, is the iPhone’s exclusive U.S. carrier?”

Gruber also noted that by only counting smartphones, Nielsen’s statistics exclude the iPad and iPod touch, which run Apple’s iOS; including these non-phone mobile devices would give a better picture of the total market for developers targeting each of these platforms. But it’s unclear whether Apple benefits more by having devices like the iPad counted with smartphones or laptops: another new report by IDC shows that if iPads are added to the company’s notebook sales, Apple jumps to third place in the global mobile computing market.

Apple CEO on Antenna Problem: We're not Perfect

Associated Press

 

A perfect iPhone? There's no app for that.

Apple Inc. will give free protective cases to buyers of its latest iPhone to prevent reception problems that occur when people cover a certain spot on the phone with a bare hand.

CEO Steve Jobs apologized Friday to people who are less than satisfied with the iPhone 4, even as he denied it has an antenna problem that needs fixing.

"We're not perfect," Jobs said at a news conference. "Phones aren't perfect."

The more than 3 million people who have already bought an iPhone 4 can go to Apple's website starting late next week and sign up for a free case, he said. Apple can't make enough of its $29 "Bumper" cases for everyone, so the company will let people chose from several case styles.

New buyers through Sept. 30 will also be eligible. Apple will send refunds to people who already bought a Bumper.

Jobs, expressing irritation with the critical coverage of the phone's reception problems, echoed an earlier statement from Apple that no cell phone gets perfect reception. He played a video showing competing phones, including a BlackBerry from Research in Motion Ltd., losing signal strength when held in certain ways. He talked for 45 minutes and took 45 minutes of questions with Apple's chief operating officer, Tim Cook, and Bob Mansfield, a senior Apple executive in charge of hardware engineering.

Phones usually have an antenna inside the body. In designing the iPhone 4, Apple took a gamble on a new design, using parts of the phone's outer casing as the antenna. That saved space inside the tightly packed body of the phone, but meant that covering a spot on the lower left edge blocked the wireless signal.

Consumer Reports magazine said covering the spot with a case or even a piece of duct tape alleviates the problem. It refused to give the iPhone 4 its "recommended" stamp of approval for that reason, and on Monday it urged Apple to compensate buyers and fix the problem. The company had been criticized about spotty iPhone service in the U.S. on AT&T Inc.'s network even before the newest model came out.

On Friday, in the company's first remarks following the magazine's report, Jobs said Apple was "stunned and upset and embarrassed."

Jobs said the iPhone 4's antenna issue isn't widespread, with just over five out of every 1,000 complaining to Apple's warranty service and less than 2 percent returning the device. Jobs also said that while the iPhone 4 is dropping calls slightly more frequently than its predecessor, the iPhone 3GS, it's "less than one additional dropped call per 100."

"We're not feeling right now that we have a giant problem we need to fix," Jobs said. "This has been blown so out of proportion that it's incredible."

Analysts have criticized Apple's responses to reports of reception problems as dismissive, and cautioned that the company shouldn't come across as arrogant. A curt note attributed to Jobs told one early iPhone buyer to either hold the phone a different way or buy a case.

Apple has also said the main problem is actually with software, not antenna design. Apple said it recently discovered that iPhones display more cell phone signal "bars" than they should, leaving people who believed they had a strong signal frustrated by dropped calls. Apple issued a software update Thursday that it said would make the number of bars shown on the phone's face more accurate.

But Consumer Reports painted the problem as much broader. On Friday, the magazine said the free cases were "a good first step toward Apple identifying and finding a solution for the signal-loss problem of the iPhone 4."

No phone owner wants a gadget that doesn't work. But many people who have bought an iPhone 4 or are considering one seem willing to forgive the antenna problem because they like its other features so much.

"It's not really my concern because I hardly make calls," said Ross Beck, a 22-year-old student in Seattle. "Honestly, it doesn't faze me. I know Apple and I know they fix their mistakes."

Helen Ferszt walked out of Apple's flagship store in New York City on Thursday after ordering the iPhone 4, her third model, despite having heard of the reception problems.

"I love the iPhone," said the 78-year-old psychotherapist from New York. But she added that Apple needs to do better than giving away a free case.

"No, I want it to be fixed," she said. "They can't just hang us out to dry."

Jobs apologized Friday to buyers who had less-than-perfect experiences with the new device.

"We're going to do whatever it takes to make them happy and if we can't make them happy we're going to give them a full refund and say we're really sorry we inconvenienced you, and we're going to do better next time," he said.

The refund applies even for those who have long-term contracts with AT&T Inc., the iPhone's exclusive U.S. wireless carrier.

Possible Lawsuit over iPhone Problems

Examiner

Northern California law firm calls for customers in class action lawsuit

The Northern California based law firm of Kershaw, Cutter and Ratinoff call for customers to contact them for a class action law suit in response to the continuing problems of Apple’s iPhone 4.

Seeking a suit against Apple, Inc. and AT&T the law firm is looking for consumers experiencing dropped calls, bad reception and weak signals.

Unhappy with Apple’s ridiculous response and placing blame on user error for inaccurate holding of the iPhone, purchasers are replying in record numbers to the proposal of a legal remedy.

For iPhone users that want to pursue information on legal recourse read the statement on the investigation by Kershaw, Cutter & Ratinoff.

Steve Jobs Made Phone Call Seeking Lost iPhone

Associated Press

Brian Hogan's world closed in fast almost as soon as he sold the next-generation iPhone he found in a Silicon Valley bar to a popular technology website for a stack of $100 bills, according to court documents released Friday.

By April 19, Hogan's roommate had tipped off investigators that he was at the center of the drama, Apple's top lawyers were meeting with police to press for criminal charges and Steve Jobs himself was personally demanding the iPhone's return.

The ordeal has set off ethic debates in journalism and law enforcement circles while Hogan and a website editor are now at the center of a criminal investigation that has been rife with speculation but devoid of many facts - until now.

On Friday, San Mateo Superior Court Judge Clifford Cretan ordered unsealed a 10-page sworn statement with details written by San Mateo Sheriff's Detective Matthew Broad to obtain a warrant to search the car and home of Jason Chen, a Gizmodo.com editor. Broad's statement was used to obtain a search warrant for Chen's home and car.

According to the statement, the saga began March 25, when Apple engineer Robert "Gray" Powell left the iPhone prototype in the bar area of Redwood City's Gourmet Haus Staud restaurant.

It said Gizmodo paid Hogan $5,000 for the device, cracked it open and posted images of it on April 20 despite a phone call from Jobs the day before demanding website editors return the gadget. Gizmodo promised Hogan an additional $3,500 bonus if Apple formally unveiled the device by July, according to Broad.

Now, Chen is under investigation for theft, receiving stolen property and damaging property, according to the affidavit. The affidavit also suggests Hogan and a third roommate, Thomas Warner, also may face criminal charges, and alleges the two panicked and attempted to hide evidence when they caught wind of the criminal investigation.

Nobody, including Chen, has been charged with any crime,

"The events have taken on a life of their own," said Jeff Bornstein, Hogan's attorney. "He thought it was dumb luck that he stumbled on to something valuable and he regrets not doing more to return it."

Bornstein said Hogan always intended to return the phone and didn't believe he was breaking the law in dealing with Gizmodo.

Bornstein also denied the affidavit's suggestion that Hogan was trying to get rid of evidence on April 21. That's when, shortly before midnight, Hogan's roommate Katherine Martinson called investigators and told them that Hogan and Warner were removing evidence from their apartment, the document said.

Investigators found Hogan at his father's Redwood City house and he directed them to nearby Sequoia Christian Church, where they recovered Hogan's computer and monitor.

Bornstein said that Hogan was in the process of moving out of the apartment and that Warner ended up with Hogan's computer, panicked and dropped them off at the church.

The investigation has prompted debate over whether he should be shielded from prosecution by California's so-called shield law, which protects journalists from having to turn over to police unpublished notes and the names of anonymous sources. But the shield law doesn't immunize journalists from breaking the law.

The investigators themselves have come under fire as well for apparently launching the investigation at Apple's behest. Detective Broad belongs to a special high technology task force called the Rapid Enforcement Allied Computer Team, which is comprised of investigators from several jurisdictions and investigates crimes against technology companies.

According to Broad, task force investigators met with two high-ranking Apple executives and outside lawyer George Riley on April 20, the day Gizmodo published the images. Riley told the task force that Gizmodo's action were "immensely damaging to Apple," because consumers would hold off buying iPhones until the new version was released. Riley didn't estimate a dollar figure, but said losses were "huge," according to the affidavit.

Apple is a member of the technology crime task force's board, but the company said it didn't use its influence to pressure law enforcement to investigate.

"We reported what we believe was a crime, and the D.A. of San Mateo county is taking it from there," said Apple spokeswoman Katie Cotton.

San Mateo County prosecutors had argued to keep the affidavit under seal to protect the identities of witnesses and the ongoing investigation. But The Associated Press and several other media companies convinced a San Mateo County superior court judge to make the document public, arguing disclosure was necessary to ensure that the raid of a journalist's home was proper.

Nokia Goes ‘Back to the Future’ in Attempt to Topple iPhone

Bloomberg / Business Week

Nokia Oyj has chosen Anssi Vanjoki, an outspoken executive who produced its last hit smartphone three years ago, to bring back the buzz.

Vanjoki, a 20-year company veteran named yesterday to take over a new smartphone unit, launched the N95 model in March 2007. That was eclipsed three months later by Apple Inc.’s iPhone. Espoo, Finland-based Nokia, the world’s largest handset maker, still hasn’t developed a phone with the same cachet.

The N95, Nokia’s first handset with GPS, sold more than 10 million units and helped boost the operating margin in devices to more than 21 percent. Since then, Apple and Research in Motion Ltd. have eaten away at Nokia’s customers and profits, driving down the margin to 12.1 percent in the first quarter.

“It’s a bit back to the future,” said Carolina Milanesi, a research director at Gartner Inc. in Egham, England. “The biggest challenge is that he doesn’t have much time, as Nokia needs to deliver.”

Shares in Nokia have lost 22 percent in the three weeks since the company reported first-quarter earnings that missed analyst estimates. Nokia slashed prices for smartphones in the period to compete with the iPhone and RIM’s BlackBerry.

Vanjoki’s first answer to the iPhone was a line of music phones in August 2007. At the announcement, he said, “If there is something good in the world, we copy with pride.” Apple has since cited that comment in an ongoing U.S. legal battle between the companies over patents used in their smartphones, with each side accusing the other of stealing their technologies.

Latest Salvo

Nokia last week filed a patent-infringement lawsuit against Apple in its latest salvo over the iPhone and iPad. The suit, the fifth patent complaint between the two companies in the past year over smartphone technology, broadens the fight to include Apple’s iPad touch-screen computer tablet.

One of two remaining members of former chief executive officer Jorma Ollila’s so-called “Dream Team” from the 1990s along with current CEO Olli-Pekka Kallasvuo, 53-year-old Vanjoki will have to defend Nokia’s position from increasing competition on all fronts, analysts said.

The company has not only lost momentum in touchscreen phones to Apple and in Qwerty-keyboard business phones to RIM, it’s also being challenged by Samsung Electronics Co., HTC Corp. and LG Electronics Inc., which have revamped their lines with Google Inc.’s Android operating system.

“The stakes couldn’t be higher,” said Tero Kuittinen, an analyst at Greenwich, Connecticut-based MKM Partners. “The iPhone is a luxury juggernaut that can no longer be defeated, but Nokia still has a shot at snuffing out the challenge of its Asian midrange rivals.”

Marketing Strategy

Nokia hired Vanjoki in 1991 from St. Paul, Minnesota-based 3M Co. to develop a mobile-phone marketing strategy and the global brand. He started running the multimedia unit in 2004, and shipped the N95 three years later in March 2007.

Vanjoki shifted back to marketing a few months later, after the phone units were merged into one devices division and Kai Oistamo was put in charge. Vanjoki will now once again head a separate smartphone business, while Mary McDowell will run the low-end phones. Oistamo will take McDowell’s position as head of corporate development.

Vanjoki is known for speaking his mind in a company that tends to take a more low-key approach. In February, he criticized the N97, a combination touchscreen and keyboard phone that was supposed to help Nokia take back high-end smartphones, in a video interview with the All About Symbian blog.

“The N97 has been a tremendous success for us when it comes to how many did we ship and how much money did we collect,” he said. “But it has been a tremendous disappointment in terms of the experience quality for the consumers, something we did not anticipate.”

Speeding Harley

A graduate of Finland’s biggest business school, Vanjoki is also chairman of Amer Sports Oyj, the Finnish sports equipment company that owns the Salomon and Wilson brands. He made the Finnish press in 2002 after police tried to fine him more than $100,000 for speeding through town on his Harley-Davidson.

Vanjoki’s first test in the new job will be later this year when Nokia rolls out the N8, a slim touchscreen with a revamp of its Symbian software system to make it more finger-friendly. The phone will come with free access to television content, maps and navigation.

“Anssi’s going to have the ultimate responsibility to be the poster child for these new products,” said Ben Wood, a London-based analyst at CCS Insight. “It’s a big bet and the first step of a long journey back. If these people don’t succeed, they will be doing something different in three years.”

With assistance from Susan Decker in Washington, D.C.

Adobe Reacts to New iPhone App Policy

Wired

 

The introduction of multitasking in iPhone OS 4 was great news for app developers and consumers, but Apple left unmentioned one policy tweak that could significantly change the App Store game.

As Wired.com reported Thursday, Apple previewed its next-generation iPhone operating system and released a beta to developers, which included a new developer’s agreement stipulating that iPhone apps must be originally programmed using Apple-approved languages (such as Objective-C).

The official iPhone OS 4 won’t be available until summer, so the exact implications of the policy change have yet to be seen. However, the consensus among several developers and tech observers is that the biggest and most obvious loser is Adobe, who has been touting a new tool called Packager for iPhone, which would enable Flash developers to easily port their apps into iPhone-native. This solution, which is set for an April 12 release as part of Adobe CS5, would partly address the lack of native Flash support for the iPhone and the iPad.

Adobe’s reaction to the news on Thursday wasn’t substantive (”We are aware of the new SDK language and are looking into it”), but Lee Brimelow, Adobe’s Flash evangelist, had some more colorful words today.

“Adobe and Apple has had a long relationship and each has helped the other get where they are today,” Brimelow wrote in his blog. “The fact that Apple would make such a hostile and despicable move like this clearly shows the difference between our two companies. All we want is to provide creative professionals an avenue to deploy their work to as many devices as possible. We are not looking to kill anything or anyone.”

Brimelow ended his post with, “Go screw yourself Apple.”

Meanwhile, Adobe has issued a filing with the Securities and Exchange Commission stating that “our business could be harmed” as “new releases of operating systems or other third-party products, platforms or devices, such as the Apple iPhone or iPad, make it more difficult for our products to perform, and our customers are persuaded to use alternative technologies,” as Bloomberg first reported.

The clause from the iPhone developer’s agreement in question is 3.3.1, which reads:

    3.3.1 — Applications may only use Documented APIs in the manner prescribed by Apple and must not use or call any private APIs. Applications must be originally written in Objective-C, C, C++, or JavaScript as executed by the iPhone OS WebKit engine, and only code written in C, C++, and Objective-C may compile and directly link against the Documented APIs (e.g., Applications that link to Documented APIs through an intermediary translation or compatibility layer or tool are prohibited).

Apple did not return a phone call requesting comment on the new developer agreement.

Update: Kevin Lynch, Adobe’s chief technology officer, has posted his level-headed response to the revised iPhone developer agreement:

“It is up to Apple whether they choose to allow or disallow applications as their rules shift over time,” Lynch wrote. “Secondly, multiscreen is growing beyond Apple’s devices. This year we will see a wide range of excellent smartphones, tablets, smartbooks, televisions and more coming to market and we are continuing to work with partners across this whole range to enable your content and applications to be viewed, interacted with and purchased.”

Apple Details iPad's Battery Replacement Plan

PC Mag

When one thinks of Apple, a single word often comes to mind: battery.

It's no secret that the Cupertino-based developer has inched the totality of its product lines toward non-replaceable batteries. So what happens, then, when your iPhone or Macbook Pro laptop battery loses its ability to hold much of a charge? What about the iPad? Will you have to run back to your local Apple store to pick up a replacement?

Apple just announced the terms of the deal for the iPad and, all jokes aside, it's just like the iPhone's battery replacement service... but bigger!

Apple's warranties provide for varying measures of support depending on the product lines--iPhone owners get a free battery replacement if their devices' capacities drop below 50 percent within the first year of ownership--the company offers its own battery replacement service for affected products.

Provided your iPad hasn't gone through some catastrophic amount of damage--"as result of an accident, liquid contact, disassembly, unauthorized service or unauthorized modifications," suggests Apple--then you'll be eligible to take advantage of the company's battery replacement service.

But what does that entail? First, you'll have to shell out $99 (plus $6.95 for shipping and whatever your local tax happens to be) for the opportunity for a brand-new device. And I phrase that as I do for a very specific reason.

When you send your iPad off to Apple, you aren't just getting your same ol' iPad back in the mail after one week or thereabouts. Opting for the company's battery replacement service will basically put you on the list for a refurbished iPad--although the exterior case of the device will be brand-new, the underlying product will be one that's gone through Apple's fix-it procedures in some capacity. Naturally, any data you've kept on your old iPad device will go the way of the dinosaur: You'll want to back up all your settings and information prior to asking Apple for a new battery.

This is the exact same treatment that iPhone users receive, minus $20 to the overall cost of the replacement. It's interesting to note that the replacement fee isn't tiered at all, meaning that even the lowest of devices--the $499, 16GB iPad--will cost the same amount to replace with a refurbished product as the $829 64GB device. That can be a confusing issue for consumers, but you have to keep Apple's battery replacement service in perspective.

When Apple receives a device for replacement batteries, it essentially sticks the product in a "to be fixed" bin. In order to guarantee a rapid turnaround time for the iPad you've sent in, it's easier to grab an identical item that's been previously fixed off the shelf and send it your way. Once your device is fixed, it'll go in the waiting line for someone else suffering from a near-dead battery. You're not paying Apple for a refurbished unit per se; you're paying for the entire process.

That's not quite the case with battery replacement services for the replacement-unfriendly MacBook Pro. Given that the laptop system could be a person's entire--and only--computing setup, Apple suggests that the data on the device could be preserved during the course of a normal battery service appointment. As well, one can take a MacBook Pro to any Apple retail store for same-day repair--not so with Apple's portable devices.

GPS Shootout: Droid Vs iPhone

Washington Post

Getting lost ain't what it used to be. With most smartphones now sporting built-in GPS, we're running out of excuses for showing up late. And we wanted to find out which smartphone navigation application will get you to your destination fastest.

For this contest, we grabbed two of the most capable smartphones on the market: Apple's iPhone 3GS (AT&T) and the Motorola Droid (Verizon). Both feature large, touch-sensitive displays and robust processors that can handle serious computing tasks. More important for this test, both have GPS receivers that work with full-featured GPS navigation apps.

This is where the differences start: While the Droid comes with built-in Google Maps navigation for Android 2.0, the iPhone's top GPS tool is the TomTom for iPhone, a $100 download from the App Store. The features of these two products are so eerily similar that it's a no-brainer to make a head-to-head comparison.

For our test, we took the Droid and the iPhone 3GS on a wild, Bullitt-style ride through the streets of San Francisco. With the same destination entered on each device, we took wrong turns, changed directions, and made a generally erratic spectacle of ourselves that bordered on public menace.

As we drove, we kept a close eye on each unit, noting which updated routes faster, which provided the most effective directions, and which offered the most helpful turn-by-turn instructions.

TomTom for iPhone

TomTom's fully-loaded GPS app costs an eyebrow-raising $100, but it does give the iPhone enough navigation features to rival most stand-alone GPS devices.

The program supports the iPhone 3G and 3GS, and it can also be used on the iPod Touch in conjunction with the optional TomTom Car Kit ($120). The app takes up 1.3GB of the phone's built-in memory, which forced the owner of our 16GB test unit to delete a bunch of music files from the device before installing it.

TomTom for iPhone uses the iPhone's 480-by-320 touchscreen to full advantage, offering turn-by-turn, voice-guided navigation with both 2D and 3D maps. The home screen lets you choose between a few options: You can enter a destination address, select a recently-used destination, search for a point of interest, select a point on the map, or pull an address out of your contact list.

We particularly liked the intersection interface for entering addresses. The app narrows down the list of available cross streets to include only those that intersect with the primary street you've entered. In a big city, this greatly simplifies entering your destination; you don't have to scroll through a seemingly endless list of streets.

Out on the road, TomTom's 3D maps offer a clear view of your immediate route that make it easy to spot your next turn without taking your eyes off the road for very long.

Meanwhile, the voice guidance includes helpful information about the distance to the next turn, so you know whether you need to get over immediately to make that left turn in 300 yards, or whether you've got a half-mile to go. TomTom's voice guidance helpfully gives you the next two turns in advance, as in "Turn right on Fifth Street, then left turn."

We did encounter several GPS signal failures during our drive with the iPhone 3GS. These occurred mostly in narrow alleyways that obstructed our line-of-sight to the sky.

The Droid, however, made no corresponding complaints about loss of signal at such points, and kept on navigating without interruption throughout our test.

We don't know whether this difference in GPS continuity was due to hardware differences between the devices or to tolerances for signal loss in the apps. But for practical purposes, TomTom for iPhone was slightly less effective than the Droid's app at maintaining a seamless guidance experience through the city.

We should note that we tested both phones without any optional hardware, such as a mounting device or car kit. However, users who opt for the TomTom Car Kit should experience a better GPS experience with their iPhones, since the car kit comes equipped with its own GPS module, one that's superior to the iPhone's: It's similar to the receiver that TomTom integrates into its larger stand-alone GPS devices, and it features a more robust antenna design.

Google Maps Navigation for Android

While the TomTom iPhone app is a freestanding navigation program, Google's Android navigation software lives inside the phone's Google Maps app. Originally available only on the Android 2.0-based Motorola Droid, Google Maps navigation has now made its way to Android 1.6 devices as well. Android 1.6 users can download the app from the Android Market. We took it for a spin on a Verizon-connected Droid.

Rather than begin by picking a method of entering your destination, you're given a bird's-eye view of your current location from the start. To begin navigation, you hit the menu button in the Google Maps app and tap Directions. From there, you're presented with a field to enter your destination, and you select options to navigate by car, by public transit, or on foot.

The differences between pedestrian navigation and automotive navigation can be significant, particularly since pedestrians aren't restricted by one-way streets or footpaths that would be inaccessible by car. Having the option to toggle between these modes is a massive point in Google Maps' favor. Add to that the ability to automatically compile a list of bus, ferry, and train routes complete with schedule information, and you've already got the best navigation experience I've seen on any phone.

The navigation itself is great, too. As I've already mentioned, the Droid managed to maintain a GPS signal throughout our test, even at times when the iPhone lost communication with the satellites. What's more, the Droid established its connection more quickly than the iPhone at the time the app launched, and it refreshed its directions more quickly than the iPhone whenever we took a wrong turn or otherwise deviated from its instructions.

On a couple of occasions, the directions from the two devices varied. Though judging the efficiency of the directions is unavoidably subjective, my copilot and I both agreed that the Droid's choice of routes was a bit better than the iPhone's. Google Maps also includes real-time traffic information as a data layer, which adds value by letting you see which parts of your journey are likely to result in delays.

While both devices offer voice-guided turn-by-turn directions, we preferred the clarity of the Droid's voice directions to the iPhone's, but felt the iPhone gave us distance information more effectively. In our tests, the Droid did a much better job at pronouncing street names than did the iPhone.

When we arrived at our destination, Google Maps capped off its superior run on the course by presenting us with a Google Street View image of the address we were looking for.

We Have a Winner

Both TomTom for iPhone and Google Maps for Android are excellent GPS tools that should get their owners to their destinations with ample efficiency. However, it wasn't hard to choose a winner in this showdown.

The Droid's free, built-in software is so well integrated with its Maps app that it offers a seamless navigation experience the iPhone just can't rival at this time. Though we liked the simplicity of TomTom's 3D map images better than the slightly more complex images afforded by the Droid's higher-res display, the Droid beat the iPhone in quickly refreshing directions to compensate for wrong turns. In the end, the Android navigation tool was simply superior on most counts--including, obviously, the price.

Of course, these two apps are available only on totally separate platforms, and almost nobody is likely to switch handsets over the quality of the phone's GPS experience. If you haven't noticed, iPhone users have built a reputation for loyalty to that device.

However--assuming you're on the fence about your next smartphone purchase and are not locked in to a particular carrier--which phone will do a better job of getting you where you want to go? The answer to that question today is the Droid.

Florida Hospital Deploys iPhones, VoIP To Nurses

Information Week

Sarasota Memorial Healthcare System, a hospital in Florida, plans to deploy iPhones to its nurses, to replace audible alarms and alerts, bringing peace and quiet-- and improved performance--to the healthcare provider.

"One of the biggest problems in any complex environment, particularly healthcare, is communication," CIO Denis Baker said. "It's a nightmare to get a hold of someone, even people on the same floor, as they go about their tasks."

So Baker's ears perked up when he was approached by Voalte about piloting a project. Voalte is a startup developing point-of-care communications using mobile technology. Its application uses iPods to send pages and alerts.

For the 60-day pilot, Sarasota Memorial handed out 25 iPod Touches to nurses on a single floor in June. The decision was made to use the iPod Touch because it's less expensive than the iPhone, does not require a cell-phone service contract, and basically has all the capabilities of the iPhone exclusive of phone functionality.

Also, the hospital wanted to move from text messaging to VoIP telephony, and it anticipated that the Touch would become VoIP-ready in its next version.

A major objective of the project was to reduce the amount of noise and inefficiency involved in calling nurses where they're needed, Baker said.

He explained, "If a patient is in bed and needs assistance with something -- they might be in pain -- they now push a button on the bedside, that goes to the nursing desk, and someone has to hunt down a nurse and make an overhead page. That's inefficient, because it doesn't go to the right person, and it also makes for too many overhead pages." At any given point in the hospital, you can hear an overhead page every three minutes. Noise is a huge complaint in any hospital -- equipment moving, staff conversations, and especially overhead pages. The noise prevents patients from getting the rest they need to heal.

On the floor where the iPods were deployed, the hospital reduced overhead pages from 172 in eight hours to 38. The 25 deployed iPods were receiving 4,000 messages per day. "Nurses were getting comment form patients on how quiet it was," Baker said.

After a successful conclusion to the pilot, hospital senior management early this month approved the deployment of 100 additional devices to a second nursing floor and the critical care environment. The hospital is also looking into giving devices to anesthesiologists for communications between the hospital's 26 emergency rooms.

For this phase of deployment, the hospital is using iPhones rather than iPods. They'd used iPods initially because they anticipated that the iPod would soon support VoIP, but that did not materialize, so the hospital is switching devices, Baker said.

Sarasota Memorial had prior experience with VoIP phones, and found dedicated VoIP handsets unsatisfactory. Dedicated VoIP phones lacked device management, so nurses could not check out a device at the beginning of a shift and check it back in again afterwards. The VoIP handsets are about the same price as iPhones, $500-$700, and they do less.

The Apple devices permit a greater level of physical security. When the hospital tried deploying VoIP handsets, they had no way of getting nurses to sign the devices in or out.

When the devices broke down or wore out due to normal wear and tear, nurses would simply abandon the devices. "People thought they'd have to pay for them. So they would use them, and if a device stopped working, they'd put it in a drawer and walk away, rather than give us an opportunity to have it repaired," Baker said. And the devices did wear out--battery clips broke, and they had to be taped together. "I can't say the device was designed for the long haul," He said. He declined to identify the brand of device that was used.

The iPods and iPhones, when not in use, live on a 12-bay charging station, under lock and key. A single individual is charged with making sure each nurse signs each device in and out again.

Another reason for choosing the iPhone is third-party application support. Sarasota Memorial eventually wants to roll out electronic medical records (EMR) apps and other enterprise e-health apps on the iPhone, Baker said.

Nurses are happy with the iPods, Baker said. The IT department asked nurses to judge the effectiveness of their current communications. Before deployment, they rated effectiveness at 2.5 out of a possible four. After using the iPods, the nurses rated communications at 3.4.

"Another key component was difficulty in figuring out who was taking care of patients on a busy nursing floor," he said. Nurses gauged their ability to find peers at 2.2 out of 4 before the iPod deployment, 3.4 afterward.

Some 84% of nurses said they would recommend the iPod app for wider adoption.

Upgrading from the iPod Touch to the iPhone was a little tricky, as the hospital plans to use VoIP over its internal Wi-Fi network, and isn't interested in a phone company service plan. Sarasota Memorial hadn't planned at first to switch to the iPhone. When they deployed the iPod Touch in the spring, they anticipated that the new model Touches released later this year would support VoIP. When the new iPods came out in early September without business VoIP services, it left ther hospital scrambling, and it turned to Voalte, the vendor that supplied the application, for help.

"Voalte asked us to go to AT&T, buy the phones, and cancel the cell phone plans. We said no to that, you need to come up with some easy way to supply the devices. Somehow they worked that out -- I have no idea how. Frankly, I don't care," Baker said.

Voalte declined to comment on how it managed to find de-activated iPhones for Sarasota Memorial.

Sarasota Memorial expects to get the new iPhones later this month, and to deploy them by December.

The project cost Sarasota Memorial about $300,000. While it has improved patient care and operating efficiency, the hospital is still working out metrics for financial savings resulting from the application, Baker said.

Voalte, the vendor, is a startup specializing in developing medical apps for the iPhone. The vision is to develop a single application for all types of alarms in hospitals and other healthcare providers, whether they're pages, or automatically generated by devices, with doctors and other caregivers able to check in to the application at the beginning of the shift and check it out at the end, said Trey Lauderdale, vice president of innovation and co-founder of the company.

Voalte plans to support the app on Google Android, the BlackBerry, Palm Pre and Windows Mobile.

Right now, a multitude of EMR and other health technology vendors are building iPhone apps, without coordinating all the different alarms and messages that they send. "You're going to end up with a toolbelt problem, a nurse carrying four or five pagers, a virtual toolbelt on the iPhone," Lauderdale said. Also, without coordination, more important alerts, where a patient's life is in danger, might get superseded by less important ones, because of the way iPhone handles notifications.

"We see ourselves providing VoIP, integration with the back-end PBX, and capability to enable caregivers to log in and log out of the device. We'll provide the infrastructure to work with other applications and vendors to make sure their communications with devices are orchestrated," Lauderdale said.

One limitation of the iPhone is that it doesn't support multitasking for third-party apps. Third-party apps shut down when you switch away from them, you can't leave them running in background. Voalte solves that problem by locating the application intelligence on the server, which sends out alerts using the iPhone's built-in push notification service. When the recipient clicks the button to view the notification, it calls up the local app.

Another limitation on the iPhone is its short battery life. Voalte now uses external battery packs, the Mophie Juice Pack.

In the next generation, Voalte is working with several vendors to develop an external battery pack made of anti-microbial resistance.

Doctors and nurses wipe down the devices with antibacterial wipes between shifts. The iPhone is great for infection protection because it has very few buttons and crevices for bacteria to hide in, Lauderdale said.

Since the notifications are just text-based, why not just use old-fashioned pagers? Lauderdale said they're unacceptable for several reasons. First, Voalte is looking to deploy VoIP call management on the devices for voice calls.

Still, most of the communications with nurses doesn't require voice, it's just small snippets of information that need to get passed to one operson or a team of people--"Please come to the nursing station," "need witness for meds in 305." "These lend themselves perfectly to text messaging," he said. Even there, the iPhone is better than pagers because the iPhone permits two-way communications.

Also, the iPhone apps permit using different ringtones for different-priority messages. "Nurses are constantly doing something," Lauderdale said. If they hear the tone for a low-priority message, they can get to it when they're ready; but if a nurse hears a tone for a critical message, the nurse can jump on it right away (if they're not already doing something else that's also critical). And nurses use notifications as a task list. When they finish something, they delete it from the list, and then look down the list of accumulated messages to see what needs to be done next.

The CEO of Voalte is Rob Campbell, who founded PowerPoint and sold it to Microsoft, and Filemaker, which is now owned by Apple.

Developers Frustrated With iPhone App Store

Business Week

Software programmers are designing apps for the Google-backed Android operating system, fired by frustration with Apple's rejections and delays

Programmers at Ubermind are diversifying their app store loyalties. Once the company's mobile-phone software developers trained all their attention on making applications for the Apple (AAPL) iPhone. No longer.

The 34-person team at Ubermind, maker of the popular iLightr app that creates a virtual flame on the iPhone screen, recently began building apps for a rival mobile-phone operating system. They're now releasing two apps a month for devices based on Android, the software backed by Google (GOOG), in addition to the five monthly apps they release for the iPhone. "We have no plans to abandon" the iPhone, says Ubermind CEO Shehryar Khan, who says his company's sales have doubled in the past year thanks to iPhone apps. "But we are not going to put all our eggs in one basket."

Of the more than 125,000 programmers registered to create apps for the iPhone, a growing number are branching out to build apps for Android and other operating systems. The Apple App Store is still growing, with an inventory that recently surpassed 100,000 games, e-books, calendars, and other apps. It remains the largest downloadable mobile app store by a wide margin. But the larger the App Store gets, the harder it is for developers to make money from it. That, combined with sometimes long approval times and dismay over Apple's gatekeeping decisions, has led some developers to branch out or switch allegiances altogether.

When the App Store made its debut in July 2008, it was the first. Now developers can choose among plenty of operating systems. Apart from Android, there's BlackBerry App World for Research In Motion (RIMM) devices. Carriers are opening their own stores, too. The App Store's share of mobile app downloads may slip to 20% in 2014, from 70% this year, according to consultant Ovum.

"We Are in This to Make Money"

Android is garnering much developer attention. In October, the number of apps in development for Android jumped 94%, from September, while iPhone app volume rose by a mere 4%, according to mobile analytics firm Flurry. The number of devices running Android is surging, too. By 2012, Android is expected to become the second-most popular smartphone operating system after Symbian, leapfrogging BlackBerry, Microsoft (MSFT) Windows Mobile, and the iPhone, according to Gartner (IT).

With Android Market, developers can publish apps in a matter of minutes, without going through a review. And developers say it's a lot easier for users to find an app among 12,000 on Android Market than by rooting through more than 100,000 on the App Store. "We love the iPhone, but we are in this to make money," says Craig Hockenberry, principal at Iconfactory, creator of the hit iPhone Twitter application Twitterific. "It's hard to make money [in the App Store]." Hockenberry recently began investigating making apps for Android, though he hasn't turned his back on the App Store.

At the outset, developers stuck with Apple in part because it's a hassle learning to write code for a new system. But technologies such as Ideaworks Labs' Airplay software make it easier for developers to create apps for multiple systems at the same time. That kind of software "will definitely change the game," says Will Stofega, program manager at consultant IDC.

Ideaworks recently did away with fees for independent iPhone app developers. "We want to send a message to iPhone developers: There's lots of other hardware worth looking at" besides the iPhone, says Ideaworks CEO Alex Caccia.

As other operating systems gain traction, Apple could lose part of its competitive advantage, says Charlie Wolf, senior analyst at Needham & Co. "Their whole advertising pitch is the apps," Wolf says. "The real issue is: Are developers making enough to stay loyal to the platform?"

Apple App Store: Rejection and Delay

For many, the answer is no. To start with, application prices are falling. Iconfactory's Twitterific app now costs $4.99, compared with $9.99 a year ago. Large game makers such as Electronic Arts (ERTS) can spend more on marketing than can smaller design shops. Moreover, developers are making fewer sales, with products lost among the more than 100,000 apps. Larva Labs makes iPhone apps such as PhotoTwist, which lets people warp and twist photographs, but the company can no longer break even on new apps. "Every other app we wrote after [PhotoTwist] got less interest than the previous one," says Matt Hall, co-owner of Larva. "We've spent more time on unique features for these apps." Larva Labs now focuses on Android, he says.

Frustrations over the App Store's lengthy and often arbitrary approval process are also turning developers off. In March, Ubermind received three app rejections in one week alone. Developer SMobile Systems waited a year to win approval for its iPhone app, designed to make iPhone content more secure. Recently hundreds of consumers signed a petition asking Apple to publish two DJ apps that have been held up in the review process. "We are really starting to rethink our options," says Russell Haglof, whose Pajamahouse Studios created a DJ app that's been in review for more than two months. "If you are starting to make a business with a partner that can take two months with no response, it's not a healthy relationship," he says. Unsure of when their apps would hit the store, developers can't market them in advance of release, or even advertise release dates.

Developers say Apple is trying to improve its review process and make it easier for consumers to discover new apps. The company now maintains an online system that lets developers track the status of software making its way through the review process. (No mobile app store is without problems: Developers on Android Market try to game the system by updating their apps daily, thereby boosting their rankings on the site, for example.)

As the leader, Apple has cause to keep as many developers as possible on board. If the App Store loses its allure, so does the iPhone. "It's Apple's game to lose," Wolf says.

Jailbroken iPhones Vulnerable To 'Duh' Worm

Information Week

For the third time this month, jailbroken iPhones and iPods are at risk of attack.

"Jailbreaking" allows iPhones and iPods to run software that Apple has not sanctioned and is, according to cybersecurity firm Intego, "extremely dangerous...because of the vulnerabilities that this process creates."

Users of jailbroken devices -- an estimated 6% to 8% of iPhone users -- who have the ssh networking software installed, and have failed to change the default password, may be vulnerable to the newly reported worm.

The worm is called iBotNet.A by Intego. It is called the Duh virus by Sophos, another cybersecurity company.

"Duh is a good name for this virus," said Sophos security researcher Paul Ducklin in a blog post. "It will only infect those who escaped Ikee infection (since those phones would no longer have SSH active for the new virus to break in) but still didn't bother to change their root password away from Apple's feeble default root password of 'alpine'."

The Ikee worm, believed to be the first iPhone worm, was reported in early November. It affected jailbroken devices in Australia by replacing the wallpaper image with a picture of Rick Astley. Shortly thereafter, a tool for hacking jailbroken iPhones was spotted.

Duh will search its local network and several IP address ranges linked to ISPs in Europe for vulnerable iPhones and iPods. When it finds them, it will change the root password and then download malicious files from a server in Lithuania.

According to Intego, those files will turn the infected device into a zombie or bot in a larger network of compromised devices, known as a botnet.

The worm also records information gathered from compromised iPhones, for possible future misuse, and alters a host file, if present, for Dutch online bank ING. The alteration sends would-be ING visitors to a look-alike site that will presumably steal login credentials.

Apple Developing Radio App for iPhone, iPod

From eWeek

Apple is reportedly prepping an in-house radio application for the popular iPhone and iPod touch, according to the Apple blog 9to5Mac. Citing unnamed sources, the blog’s publisher and editor Seth Weintraub said Apple is developing a radio.app to serve as an FM radio similar to that found in current iPod Nanos, with likely Live Pause functionaliy. “The source mentioned that this application could also be incorporated into the iPod.app before release,” Weintraub wrote. “The holdup on this app is that Apple is trying to integrate the Mobile iTunes Store purchases into the functionality of the program.”

According to the blog, Apple is also working on tagging capability that allows users to view and download specific music tracks from the iTunes Website. Currently on Apple’s App Store users can select a series of radio-based applications such as ESPN Radio ($2.99) and Pocket Tunes Radio ($6.99), which offers thousands of free stations and uses GPS technology to find stations in range.

Satellite radio conglomerate Siruis XM announced in August the impending release of the SkyDock, which allows users to connect to satellite radio via the iPhone or iPod touch. The SkyDock acts as a dock by plugging into the base of the device, providing power as well as linking it to Sirius XM’s satellite radio signal.

The SkyDock expands the company’s relationship with Apple, as Sirius XM announced in June the release of an iPhone application that serves as a mobile extension of a user’s paid satellite radio service. The application, which allows users to access more than 120 channels, comes with a seven-day free trial, at which point a prospective user must subscribe to keep listening. However, the mobile application does not feature Howard Stern as part of the accessible lineup, though Sirius XM made the Howard Stern Show available to iPhone and iPod Touch users as a free download from the iTunes store.

AT&T Gets a Fuzzy Signal on Apple's iPhone

By The Wall Street Journal

Did AT&T get a sour apple when it snagged the iPhone?

Maybe. AT&T's exclusive right to offer Apple's smart phone over the past two years has attracted new customers, and at least initially enhanced the phone company's image. But it is difficult to know whether those benefits are worth what have been some considerable costs, both short and long term.

For investors, and for federal regulators investigating such exclusivity deals, it is worth considering some factors. While AT&T has disclosed at least 10 million activations of iPhones since it became available in mid-2007, only about 40% of those were new customers. That number dropped to 35% in the most recent quarter when the 3GS phone became available.

That means only four million new customers signed up, about 5% of AT&T's total, or 6% of "postpaid" customers on costly monthly contracts. Complicating the math is that some activations represent upgrades from earlier iPhone versions. AT&T said last month that it had about nine million iPhone customers.

More important, perhaps, is that the iPhone likely has kept some AT&T customers from defecting. AT&T's churn, the percentage of customers who leave, has dropped to 1.49% from 1.7% since the third quarter of 2007. Over the same period, Verizon Wireless's churn has risen to 1.37% from 1.27%.

Then there is the extra revenue. AT&T has consistently said iPhone customers generate much higher revenue per user than the average, close to $100 a month. AT&T's "postpaid" average revenue per user has risen 4.7%, to $60.21, since the third quarter of 2007.

But partly offsetting that revenue is the reported $400-a-phone subsidy that AT&T has paid Apple since June of last year. That implies an iPhone customer brings in nearly $2,000 of revenue over the life of a two-year subscription, after recouping the subsidy cost.

Even so, J.P. Morgan Chase analyst Mike McCormack, who is skeptical of the return generated for AT&T from the iPhone, notes that AT&T has said other smart phones -- carrying a much lower subsidy -- tend to generate similar average-revenue-per-user levels as Apple's device. The iPhone subsidy has depressed AT&T profit margins. The metric AT&T emphasizes for its wireless division, operating income before depreciation and amortization, as a percentage of service revenue, has dropped from 41.2% in the second quarter of 2008, before the subsidy began, and has bounced in a range of 33.5% and 40.9% since. AT&T has said repeatedly it expects the margin to rise to the mid-40s long term.

And that margin doesn't reflect the impact of capital expenditures required to upgrade AT&T's network capacity so it can handle the average iPhone users' heavy Internet habits.

It is no secret that iPhone users download games, video and other Web data at two to four times the rate of other smart-phone users. Yet AT&T charges the same $30-a-month fee for unlimited data use it levies on its other smart-phone customers.

The heavy iPhone Web habits have strained AT&T's network, now the subject of numerous complaints. Sanford C. Bernstein analyst Craig Moffett noted AT&T's name was "jeered at every mention" by application developers at an Apple conference in June.

AT&T is taking steps to improve its 3G performance, but the damage to public perception of its network may be difficult to repair.

It is possible Verizon's network would have reacted similarly if that company had offered the iPhone. No matter: It seems likely that if Verizon eventually gets the right to offer the iPhone, some of those four million customers who signed up for AT&T may defect. Indeed, some of the older AT&T customers also may go. So whatever value AT&T got from the device, it seems clear that Apple was the real beneficiary.