The latest generation of the iPhone — still the smartphone industry’s gold standard after four years — is expected to see the light of day this Tuesday, just in time for the holidays.

Even in a dismal economy, consumers should again line up in droves for a souped-up device that also marks Cook’s first major product launch since taking over from Jobs in August.

The so-called iPhone 5 is widely expected to have a bigger touchscreen and faster processor than the current iPhone 4, which helped the company stay a step ahead of rivals in an increasingly competitive smartphone market.

Its challenge will be to “wow” consumers with yet more game-changing innovations and top itself. The aging iPhone 4 is still an unqualified blockbuster: with more than 20 million sold in the third quarter that ended June 25 alone, it is likely to become the world’s top-selling smartphone.

“Consumers view Apple products as a must-have,” said Channing Smith, co-manager of the Capital Advisors Growth Fund, which owns Apple shares. “Apple phones and products have become almost a necessity. We don’t expect them to falter.”

But the latest version of the gadget that helped define the smartphone category is coming at a time when the world economy is slowing and competition is at its peak. More than 550,000 Google Inc Android-based devices — including tablets — are activated each day globally.

Apple’s ability to generate enthusiasm among consumers and its command of the higher-end market, however, may make it less susceptible to a broader slowdown, investors and analysts say.

Cook is likely to take the stage at Apple central at Cupertino’s 1 Infinite Loop, where Wall Street will get a chance to see first-hand how the acknowledged operations maven fares at a major product launch. Although a highly regarded executive, he is not known for pitching products.

SILICON VALLEY DEBUT

Apple product launches are the most closely watched events on the technology calendar. The new model, which some have dubbed the iPhone 5, will have a bigger touch screen, better antenna and an 8-megapixel camera, one source with knowledge of the matter told Reuters in August.

The event will take place in Silicon Valley rather than downtown San Francisco where Apple made some of its most famous announcements.

“Most interesting is whether new CEO Tim Cook will lead the keynote and whether … Steve Jobs will participate,” Sterne Agee analyst Shaw Wu said.

“Tim is perceived as an operations and supply chain guru and that he certainly is, but we believe it is too early to write him off as not a visionary and showman like Steve Jobs.”

The Apple co-founder, a pancreatic cancer survivor who stepped down in August after his third medical leave, is expected to make an appearance, though a no-show by the Apple co-founder will not be a major disappointment.

“Investors would like to see Steve Jobs to confirm that he is still involved, but we have dealt with the fact that he’s not going to be as involved,” Smith said. “We’d love to see an appearance but it’s not critical.”

Apple’s iPhone has been a huge success since it debuted in 2007, transforming the company from a computer and music-player maker into one of the world’s leading mobile device makers. It accounts for about 40 percent of Apple’s revenue, with margins estimated at roughly 60 percent.

But it faces stiff competition from phones based on Google’s Android operating system, such as Samsung Electronics’ Galaxy line.

The iPhone’s U.S. market share in August was 28 percent, making it No. 2. Android was No. 1 with 43 percent of the U.S. market, Nielsen data show.

Yet longer-term, investors are more focused on Apple’s international push, particularly in Asia.

Cook has said China is a key market. The world’s most valuable technology company has mostly catered to the higher end of a booming market in those countries, but is now trying to release a cheaper phone, sources told Reuters in August.

WHAT’S IN STORE TUESDAY?

Finnish rival Nokia dominates the lower end of the lucrative Asian market. Some investors and analysts expect another version of the iPhone 4 to be launched along with the next-generation model.

“We also expect the announcement of a lower-priced iPhone that will basically be a lower-cost 3GS,” Jefferies & Co analyst Peter Misek said, referring to the event.

The new phone is prompting Wall Street to forecast that Apple will post enormous sales in the October-to-December quarter, with shipments expected to be in the range of 29 million.

The iPhone is currently sold by AT&T Inc and Verizon Wireless, a venture of Verizon Communications Inc and Vodafone Group Plc. Many analysts expect Sprint will become the third U.S. operator to sell the iPhone when the next version is launched.

The new phone is also expected to accelerate the momentum in Apple shares, which are trading at around $381, off a record high of $422.86. The stock remains a far cry from brokerage price targets that range from an average of $490 to a high of $666.

The launch event invite, when it landed last week, set off a typical frenzy of speculation. Various analysts quickly dissected one image in particular on the Apple invitation, which depicts four familiar icons found on iPhones, as a possible signal for the number of new phones to be unveiled.

Speculation about the new iPhone’s features is fevered, with the list of possibilities ranging from faster wireless Internet connectivity to voice-navigation capabilities.

“What we found most intriguing is that the green phone icon on the invite has a number 1 next to it, perhaps signaling that only one new iPhone will be announced,” Wu said.

[Thanks: http://www.reuters.com]

Apple needs to be much more cautious over the specifications of the iPhone 5 as several Android smartphones are threatening the next iteration with breathtaking features. The notable ones include Samsung Galaxy S2 and Motorola Droid Bionic. Both smartphones feature the latest version of Android Gingerbread OS with screen size of at least 4 inches.

In addition, the recent breed of Android phones such as HTC Holiday, HTC Thunderbolt and Motorola Photon found expression in 4.3-inch displays. The trend seems to highlight that the next barrage of Android phones will follow the 4.5-inch form factor.

As a result, if Apple seeks to pose a strong competition against Android it may have to increase its screen size especially when it is prepping for a bigger iPhone market in the second half of this year.

Apple is also rumored to be boosting the screen size of the iPhone 5 to compete with Android rivals, probably going for a 3.7 to 4-inch screen. But if the latest findings from a Wall Street analyst are to be believed, then Apple would not increase the screen-size of iPhone 5.

“iPhone 5 component orders increased for FQ4 (Sept.) and FQ1 (Dec.); timing of orders continues to suggest an October launch. FQ4 orders for iPhone 5 increased ~700k; timing continues to suggest an Oct. launch. iPhone 5 screen size likely to be same as iPhone 4,” Pacific Crest Securities analyst Andy Hargreaves wrote in a note to clients.

iPhone 4 has a 3.5-inch screen featuring the LED backlit liquid crystal display with a 960×640 pixel resolution and is marketed as the “Retina Display.”

[Thanks: http://www.ibtimes.com]

Apple is prepping for a bigger iPhone market in this second half of the year analysts say, ramping up the orders of its current iPhones and also stepping up production of the anticipated iPhone 5.

However, the technology giant is expected to face tough competition from Android smartphones, particularly from HTC that has planned to introduce its biggest smartphone known as the HTC Holiday.

Let’s see how the HTC Holiday would fare with the iPhone 5:

iPhone 5:

The iPhone 5 is expected to run on an upgraded operating system, iOS 5, and is supported by a strong ecosystem including iCloud. iCloud will store photos, apps, calendars and documents without storing them onto the phone’s memory storage.

Apple may fit a near-field communication chip in the iPhone 5 as some high-end Android devices are expected to sport the NFC chip. NFC allows for simplified transactions, data exchange, and connections with a touch. A smartphone or tablet with an NFC chip could make a credit card payment or serve as keycard or ID card.

Apple is rumored to increase the screen size of iPhone 5 to compete with Android smartphones, probably going for a 4-inch screen. The iPhone 4 has a 3.5-inch screen.

Apple is expected to release the iPhone 5 as a “World Phone” - both GSM and CDMA compatible. It is conjectured that the phone will have a SIM-less design with 3-4 antennas. Another rumor suggested that the iPhone 5 will feature a SIM card slot for other countries except the U.S. This will allow users to insert any SIM card in the iPhone when traveling abroad.

Apple has made improvements in the camera department by fitting a 5-megapixel camera with LED flash. Apple’s iPhone 5 is expected to sport an 8-megapixel camera.

There is also near-unanimity in gadget circles that Apple will bring its A5 chip on to the iPhone 5. The A5 processor is the same one that Apple rolled out to power its iPad 2. Apple may boost the speed of its A5 chip in the range of 1.2 or 1.5 GHz as several Android smartphones are coming with 1.2 GHz processor.

HTC Holiday

The Holiday is rumored to boast a 4.5-inch display, supposedly the first of a new wave across the Android landscape with 4.5-inch displays.

The recent breed of Android phones, like Samsung Galaxy S2, HTC Thunderbolt and Motorola Photon, found expression in 4.3-inch displays. The trend seems to highlight that the next barrage of Android phones will follow the 4.5-inch form factor.

HTC Holiday is expected to run on the latest version of Google Inc.’s smartphone operating system, Android 2.3.4 Gingerbread OS.

The Holiday will sport an 8MP dual-LED flash rear-facing camera with 1080p video playback and a 1.3MP front-facing camera for video chat. The device is expected to have a 4.5-inch qHD display with 960×540 screen resolution.

The Holiday will be powered by a 1.2 GHz dual-core Qualcomm Snapdragon processor with 1GB RAM.

The Holiday is expected to have HSDPA (High-Speed Downlink Packet Access) 21 Mbps and HSUPA (High-Speed Uplink Packet Access) 5.76 Mbps support. In addition, the smartphone would have Wi-Fi 802.11 b/g/n, DLNA, Wi-Fi hotspot support along with advanced Bluetooth version 4.0 with A2DP and EDR

There is no word about internal storage details of the HTC Holiday yet, but it is expected to have an external storage via a microSD card slot of up to 32 GB.

On the pricing front, Apple’s iPhone 5 has been rumored to be priced at $600, while iPhone 4 is listed on AT&T at $299 for 32GB version with a 2-year contract. The Holiday is expected to be priced at $199 to $249 at AT&T.

However, Apple certainly knows how to surprise and already has a few things in place like iCloud which can steal the thunder from Android devices. Apple’s iPhone features are extensively varied from HTC Holiday, which means the loyal Apple fan base remains the same. And for Apple, there is no reason to fear a potential loss with respect to buyers.

[Thanks: http://www.ibtimes.com]

Instead, the next iPhone will have a display size between 3.5 and 3.7 inches — the current model has a 3.5-inch display — and may also have a thinner bezel along the sides of the device to make the screen look larger than it actually is. Other than those changes, the next iPhone is not expected to be remarkably different from the iPhone 4, sources inside Apple’s supply chain have reportedly told Taiwan-based DigiTimes.

Shrinking Screens

Suggestions the next iPhone would have a 4-inch screen have been circulating for some time. In February, DigiTimes claimed the iPhone 5 would have a 4-inch screen, and a similar report followed a month later in the China Times. DigiTimes is apparently backing off its original report, and now says the next iPhone’s display will not be much larger than the usual 3.5 inches.

Some Apple watchers have expected the iPhone to enlarge its screen size to offset competition from rival Android handsets that usually have displays measuring 4 inches of more. Some of the most popular and critically acclaimed Android handsets have 4-inch-plus screens including the HTC Thunderbolt, Motorola Droid X, and the forthcoming Galaxy S II.

Several Windows Phone 7 devices also have larger displays than the iPhone, including the HTC HD7 and the Samsung Focus. Smartphones debuting at the IFA Berlin trade show that begins this Friday are also expected to trend toward displays measuring 4 inches or more.

Smartphones sporting screens larger than the iPhone have been available for some time, and Apple has yet to follow suit and enlarge its marquee device. But Apple may yet flirt with enlarging its screen size. Various reports suggest the next iPhone will have an edge-to-edge screen, upping the display measurements by a few tenths of an inch. Those earlier claims fall in line with DigiTimes’ current stance that the iPhone will have a smaller bezel that could make its display size as large as 3.7 inches.

[Thanks: http://www.pcworld.com]

The Holiday is rumored to boast a 4.5-inch display, supposedly the first of a new wave across the Android landscape with 4.5-inch displays.

The recent breed of Android phones, like Samsung Galaxy S2, HTC Thunderbolt and Motorola Photon, found expression in 4.3-inch displays. The trend seems to highlight that the next barrage of Android phones will follow the 4.5-inch form factor.

Apple is rumored to increase the screen size of iPhone 5 to compete with Android smartphones, probably going for a 4-inch screen, compared to the current iPhone 4 screen of 3.5-inch.

Until now, the iPhone 4 was a generation behind Android superphones like the Galaxy S2 and HTC Sensation, but the appearance of Holiday reveal that Apple has a new breed of bigger and faster Android phones to counter.

An earlier report said Taiwan SemiConductor Manufacturing Company (TSMC) had started trial production of the Apple A6 line of processors. It is reported that the TSMC manufactured A6 chipset will incorporate 3D IC technology.

It has also been reported that TSMC is in production with 3D IC technology and is in a race with Intel to manufacture a 3D IC chip. EETimes reported that TSMC could deliver processors with 3-D interconnet by the end of 2011.

If that report is true, Apple could further delay the iPhone 5 launch as it places a faster A6 chipset in the upcoming iPhone. Recently, Computerworld reported that certain Taiwanese suppliers of Apple claim they are starting the production of 25 million iPhone 5 units that would be delivered in the second half of this year, essentially confirming a December release.

And a few analysts predict that the other features of iPhone 5 will most probably remain the same with minor tweaks, also it will most probably come without 4G and LTE support.

Hence, Apple would rather delay an iPhone 5 than release a phone with an A5 processor to tackle the mighty Androids with 1.5GHz dual-core chipsets.

The arrival of such a piece from HTC is a cause of concern for Apple, which is rumored to release iPhone 5 only in 2012. Apple is due to release the next iteration this fall, but analysts are expecting only an iPhone 4S in the fall and iPhone 5 with a materially revamped user interface in 2012.

Here is a look at the speculated features of Apple iPhone 5 and HTC Holiday, which is expected for an early to mid-September release.

Operating system: HTC Holiday is expected to run on the latest version of Google Inc.’s smartphone operating system, Android 2.3.4 Gingerbread OS. On the other hand, Apple’s iPhone 5 will be running on iOS 5, which is the newest of the OS versions. The new iOS 5 is expected come with 200 new features that will include Improved Notifications System, News Stand and iMessage.

Though Gingerbread isn’t quite as refined as iOS yet, it has true multitasking support and is Google’s best bet yet against iOS — at least until it releases Ice Cream Sandwich. It is left to see which platform will outsmart the other in the long run.

Camera: Apple’s iPhone 5 is expected to have an 8MP dual-LED flash camera with 1080p video playback and panoramic photo capture, while iPhone 4 has 5MP camera with 720p video playback. The Holiday, when compared, will sport an 8MP dual-LED flash rear-facing camera with 1080p video playback and a 1.3MP front-facing camera for video chat.

Screen: The new Apple iPhone 5 is expected to have a bigger edge-to-edge 4-inch curved glass screen, compared to iPhone 4’s screen size of 3.5-inch with multi-touch display. HTC Holiday is expected to have a 4.5-inch qHD display with 960×540 screen resolution.

Processor: Holiday will be powered by a 1.2 GHz dual-core Qualcomm Snapdragon processor with 1GB RAM. Apple’s iPhone 4 runs on 1GHz ARM Cortex-A8 processor, and the iPhone 5 is rumored to sport a 1.2-1.5 GHz dual-core A5 processor, which powers the iPad 2, with probably a 1GB RAM.

Storage: There is no word about internal storage details of HTC Holiday yet, but it is expected to have an external storage via a microSD card slot of up to 32 GB. On the other hand, iPhone 4 has fixed 16/32 GB internal storage. Apple iPhone 4 doesn’t have external storage, but that doesn’t matter as 32 GB at the maximum is enough for the users. It is expected the iPhone 5 will have 16/32/64 GB internal storage.

Pricing: Apple’s iPhone 5 has been rumored to be priced at $600, while iPhone 4 is listed on AT&T at $299 for 32GB version with 2-year contract. The Holiday is expected to be priced at $199 to $249 at AT&T.

NFC: HTC Holiday and Apple iPhone 5 are expected to support near field communication (NFC). NFC technology can transform the device into a convenient way for payment and device communication. NFC has potential to do more than just money transaction. The technology could offer features that allow multiple mobile devices to sync for speedier information exchange and gaming.

But Bernstein Research analyst Toni Sacconaghi cited that Apple will not adopt NFC-based mobile payment feature to the upcoming iPhone 5 until Apple is convinced that the technology’s chicken-and-egg-problem is solved as the NFC requires widespread consumer adoption and critical mass with merchants.

3G: Holiday is expected to have HSDPA (High-Speed Downlink Packet Access) 21 Mbps and HSUPA (High-Speed Uplink Packet Access) 5.76 Mbps support. On the other hand, iPhone 4 has HSDPA 7.2 Mbps and HSUPA 5.76 Mbps support, while iPhone 5 is expected to have HSDPA 14 Mbps to 21 Mbps.

WLAN/Bluetooth/USB: HTC Holiday has Wi-Fi 802.11 b/g/n, DLNA, Wi-Fi hotspot support along with advanced Bluetooth version 4.0 with A2DP and EDR. Apple iPhone 4, on the other hand, has Wi-Fi 802.11 b/g/n, Bluetooth version 2.1 with EDR wireless technology. iPhone 5 is expected to have Wi-Fi and an advanced Bluetooth version.

Battery: The battery details of HTC Holiday is yet to be revealed but one can expect a huge battery for the huge smartphone. iPhone 4 has standard Li-ion 1420 mAh battery which gives up to 14 h of talk time on 2G and up to 7 hours on 3G with a standby time of up to 300 hours.

Apple certainly knows how to surprise and already has a few things in place like iCloud which can steal the thunder from Android devices. Apple’s iPhone features are extensively varied from HTC Holiday, which means loyal Apple fan base remains the same. And for Apple, there is no reason to fear a potential loss with respect to buyers.

[Thanks: http://www.ibtimes.com]

Before we take a look at some ideas you may be interested in our article from yesterday where we told how the absence of the US Galaxy S2 and the iPhone 5 would benefit HTC and also Motorola so hit the link if you’d like to see more on that. Although at one time it was thought the main competition for the iPhone 5 was the Galaxy S2 there is a plethora of new and upcoming smartphones that are highly impressive on the way, which could also rival the Galaxy S2. Just some of them include the Motorola Droid Bionic, the HTC EVO 3D, Motorola Droid 3 and we recently detailed leaks of a new handset not due until the fall, the HTC Eternity, which will be a Windows Phone 7 Mango handset. We even told earlier today about a rumor regarding a Galaxy S2 Windows Phone 7 edition instead of Android so there may be yet be more competition although as yet this is still unconfirmed.

Over on Top10.com a useful article by Joe Minihane details 10 pointers for Apple to consider for the iPhone 5, in order to see off the Galaxy S2 competition. Bearing in mind we recently told of smash sales for the Galaxy S2 it’s likely of course that Apple has already decided on what features and specs are needed for the iPhone 5 to stay ahead of the game, but these suggestions for must-haves may interest you. Firstly the screen size needs to be larger to keep in line with the much bigger displays on recent and upcoming smartphones and also a dual-core processor is a must. It won’t be long before people won’t consider buying a smartphone without a dual-core chip. A slimmer, slicker design would also go a long way to helping sales while 1080p video capture and also 1080p onboard editing would give it an edge over the Galaxy S2 which doesn’t yet feature this but does have 1080p video recording.

The release date is crucially important too. If iPhone buyers wait until September or October for release they will have waited far past the summer time frame when it was originally expected to launch. If it doesn’t arrive in the fall to compete for the holiday season Apple will lose out in a big way. We also spoke recently about different pricing levels for the iPhone with a cheaper option and this is seen as important, along with the fact that iOS 5.0 for the next iPhone, when it’s released, must run smoothly without glitches. We told previously about an improved camera for the iPhone 5 which we think is one of the most likely additions. Finally Minihane makes the excellent point that Apple need to resist the urge to slate the Galaxy S2, considering its present legal shenanigans with Samsung. The iPhone 5 should be good enough that this is not necessary and besides, slating other products turns consumers off.

We’d like to tack on a couple more additions wanted for the iPhone 5, one of them being 4G LTE. Although this may not be as likely as other must-haves we know it’s something that many of our readers would like to see, along with a better battery performance. Are you patiently (or not so patiently) waiting for the iPhone 5? Do you agree with these pointers or have you more ideas for must-haves that you’d like? If the iPhone 5 appears with most of the above do you think it will then be excellent competition for the Galaxy S2?

[Thanks: http://www.onlinesocialmedia.net]

Apple Inc. filed a lawsuit against Samsung Electronic Co. yesterday, accusing the Korean company of infringing its patented technologies used in making its iconic smartphone.

In a complaint filed with the Seoul Central District Court, Apple requested that Samsung Electronics be stopped from selling a line of its touch screen smartphones and a tablet PC that hit local and global markets following the U.S. firm’s launch of its smartphone model, the iPhone 3.

Apple also demanded 100 million won ($92,500) in compensation.

Apple argued in the complaint that Samsung Electronics’ Galaxy phones and the Galaxy Tab mini-size PC infringed Apple’s patented technologies used in the iPhone, which enable users to scroll up and down a long electronic document just by flicking the touchscreen.

The Samsung products also unlawfully used Apple’s ideas to enable users to push an on-screen icon for an extended period of time in order to activate it into a different mode in which they can relocate or remove it, it said.

Apple also claimed Galaxy phones copied the design of the iPhone that appears in a round-cornered rectangle shape with one round push button in the center bottom.

Apple wants the court to stop further production and lending of the Galaxy series, the complaint said.

“Samsung’s illegal competition seriously damaged and diluted recognition of Apple’s iPhone, stripping it of distinctive features,” one court official quoted Apple as saying in the complaint.

Apple’s legal action came amid the two companies’ escalating competition for bigger shares in the increasingly popular smartphone market.

Apple had filed similar lawsuits against Samsung in the United States in April.

Samsung Electronics had countered by filing similar lawsuits against Apple in the U.S., Korea, Japan and Germany, arguing that the U.S. firm has copied 10 of its patents to make the iPhone.

[Thanks: http://joongangdaily.joins.com]

Case in point, in today’s mobile/Post-PC universe, we see clearly how major companies like Microsoft, HP, Dell, RIM and Nokia are struggling to remain relevant in the face of developer apathy.

Meanwhile, Apple and Google have left the competition in the dust by virtue of their tremendous success in courting application developers.

But, there is a “pink elephant” in the room that no one is really discussing, and it gets to the nut of what investing time and energy in a software platform is all about. More on that in a minute.

First, some table setting. As an apps developer, I care about three things. First and foremost, is having a great platform to develop on top of.

After all, great software is a by-product of: A) Enabling your target audience to achieve a well-defined set of outcomes; B) Solving the right problem, technically speaking; and C) Delivering an engaging user experience.

Simply put, if you are working on the wrong canvas, or using an inferior palette, accomplishing these tasks is hard to do. The good news here is that whether you’re a devotee of Apple’s iOS, Google’s Android, third-party frameworks like Ansca’s Corona, or open web approaches like HTML5, the getting’s actually pretty good in this realm.

The second requirement is having a readily addressable, targetable base of users. All things being equal, this is preferably a large base of users, but ultimately, the metric of audience size is less integral than factoring the lifecycle value (in dollars) that you can reasonably hope to capture from the base of your users that you actually do monetize. Again, 200 million iOS devices, and 100 million Android devices is a very large footprint for targeting purposes, so no complaints there either.

This brings me to my third requirement. As a developer, while I am of course very passionate about what I build, I am not doing this for the dark joys of being a starving artist.

Rather, I am in it to make money; namely, to build upon my profession, and if all goes well, sing and dance all the way to the bank. Here’s where the circumstances are cloudy at best, and deeply troubling at worst.

Thinking about success: What’s past is prologue

When I close my eyes and think back to the days of old PC, I can recall legions of very large, breakout successes that emanated from the PC model (i.e., $100M+ revenue companies).

The high profile names include companies like Intuit, Lotus, Adobe, Symantec, Borland, CheckPoint, McAfee, Siebel and Sybase. But trust me, the landscape was dotted with successes across a dizzying array of application categories and vertical segments, and serviced by a wide range of solution providers.

Similarly, when I think about the dotcom phase of the web, companies like Amazon, eBay, Yahoo, Google and PayPal come easily to mind.

Even the post-dotcom phase of the web is spotlighted by monster successes like Salesforce.com, Facebook and LinkedIn, with Facebook being doubly noteworthy for having already spawned a true cash-generating machine goliath off of its platform, in Zynga, which is expected to reach $1.8 billion in revenue, and $630 million in profits in 2011.

Now, contrast these companies with their “breakout success” counterparts on iOS and Android, and you are left with the chirping sounds of crickets.

Shockingly, lost in the stunning growth of iPhone, iPad, iPod Touch and Android-derived devices — 300 million devices sold combined and counting, 600,000-plus apps built, and more than 18 billion app downloads — is the disconcerting truth that no one is talking about. Namely, that the closest story of financial success that we have to Facebook, Amazon or Intuit is … Angry Birds!

What the frak? Angry Birds is ridiculously addictive, it’s cute and it’s brilliantly executed, but it is perhaps a $15-25 million business.

Is this the best that we can do in painting a picture of software success in an industry that is projected to grow to 10 billion devices worldwide?

Cry me a river: Why should Apple or Google care?

I trust that Apple CEO Steve Jobs felt tremendous pride when he announced at WWDC that Apple had paid app developers more than $2.5 billion in revenue share from sales of their applications.

He should be proud. Apple has created an amazing platform that seemingly overnight, but actually a decade in the making, has achieved the disruption trifecta: first re-jiggering the music business, then mobile, and now, the PC industry.

But, I’d like to submit an uncomfortable truth that should give the chess players at Apple (and to a lesser extent, Google) some cause for pause.

As Amazon first began to prove out back in the mid-’90s, creating a discovery engine, distribution platform and marketplace optimized for long tail-oriented product offerings can create great financial rewards for the platform creator, and no doubt Apple has innovated upon this model incredibly well vis-á-vis iTunes and the App Store.

However, whereas Amazon’s model did not completely re-write the economics of selling electronics, toys and books, such that what once sold for $25 is now $0.99, the App Store is fundamentally different. Its sole purpose seems designed to create surplus, so as to commoditize software, and since the incremental cost of each piece of software is effectively zero, the race to the bottom is almost assured in this environment.

This is ironic because Apple’s own highly disciplined business strategy is geared toward maximizing profit margins, without leaving pricing overhang for the competition to attack them from the low-end (which is what happened to Apple during the PC era).

Yet strangely, for all of the brilliant creation, orchestration and curation efforts that Apple has made on behalf of developers, little attention seems to have been made to ensuring that app makers can actually build profitable, scalable businesses.

Thus, it’s noteworthy that in Amazon’s nascent Android App Store, the company is exerting a measure of pricing control over app developers, presumably to avoid this race to the bottom.

Why is this? Perhaps, unlike Apple and Google, Amazon is in the business of making the lion’s share of its money selling other people’s stuff. Silly as it sounds, Amazon actually needs its vendors to be fiscally healthy enough so Amazon can sell lots of their products. By contrast, Apple just needs a steady supply of “there’s an app for that” chum to keep the platform fresh and exciting.

Lest one wax poetic about Google saving the day, remember that their real customer is the carrier and device OEM, and the lion’s share of their dollars are derived from search advertising, so they merely need the “optics” of app diversity to remain relevant.

(Sidebar: If you watch Apple’s TV commercials for iPhone/iPad and mobile carriers’ ads for Android phones, this qualitative distinction becomes clear.)

Netting it out, the current state of affairs raises the following questions:

1. How is a large software industry going to grow around this type of model, and what happens if it doesn’t?
2. From an economic viability perspective, what would the ideal platform approach look like for developers?
3. How might another platform, such as Amazon’s, or Facebook’s rumored Project Spartan, outflank Apple and Google by building a better mousetrap for developers to make money?

A final thought: Once upon a time, the notion that people would even pay for software was scoffed at. But Microsoft, acting purely out of enlightened self-interest, helped catalyze a packaged software industry that would grow to more than $200 billion in annual revenues.

The moral of the story? What’s past is prologue in distinguishing between mere survival and breakout success. How do I know this? A little birdy told me.

[Thanks: http://radar.oreilly.com]

Takaki Kawatsu, a 33-year-old real estate agent, says he’ll be among Nintendo Co. customers who will pass on the company’s next Wii game console.

“I bought the original Wii because it was popular, new and seemed like a great item to have at a party,” said Kawatsu, who owned the game console for four years before selling it three months ago. “This time, there is nothing surprising or fresh.”

Kawatsu, who now prefers to play games on his Apple Inc. (AAPL) iPhone, illustrates why analysts say the Wii U will probably fail to replicate the original Wii’s success. Nintendo, facing mounting competition from mobile games such as “Angry Birds” and “Farmville” on Facebook, has tumbled 13 percent to a five- year low in Osaka trading since it unveiled the new console at the Electronic Entertainment Expo in Los Angeles this month.

“They’ve been losing their core customer,” said Michael Pachter, an analyst at Wedbush Morgan Securities in Los Angeles, about Nintendo. “The 45-year-old housewife who bought Wii Fit is playing Farmville, and those in the handheld casual market are playing on the iPad and smartphones.”

The world’s largest maker of video-game players this month said the Wii U will go on sale next year, though it didn’t disclose the price. Sales may peak at about 30 million units, less than half of the original Wii, Pachter said.

A $200 tag would help the Wii U sell “phenomenally well,” while at $500 it wouldn’t do well, Pachter said. The Wii costs $150.

‘You Had to Be There’

President Satoru Iwata demonstrated the Wii U on June 7 at the E3 show in Los Angeles. The presentation focused on the console’s controller, the centerpiece of Nintendo’s device, according to executives at the Kyoto-based company.

“The excitement generated by the console may be difficult to understand for those who weren’t lined up at our booth at the E3 show,” said Yasuhiro Minagawa, a spokesman at Kyoto-based Nintendo. Minagawa declined to comment on the sales outlook for the new player.

The Wii U controller has a front-facing camera, a 6.2-inch touch screen, shoulder firing pads, an expansion slot and game controls on a flat pad. With it, users are able to wirelessly connect to the console and shift content back and forth from a large screen in the living room to the smaller screen.

In February, Nintendo began selling in Japan its 3DS handheld player that beams images in three dimensions without the need for special viewing glasses. Sony Corp. (6758) plans to begin sales of its PlayStation Vita portable player this year.

Pig-Toppling Rival

Nintendo is also facing new rivals who are beginning to redefine the market.

Among them is Cupertino, California-based Apple, which says it’s sold more than 200 million devices capable of downloading and playing games, including 25 million iPads. The App Store, an Apple-run software marketplace, offers a choice of more than 100,000 game and entertainment applications to users of the iPad, iPhone and iPod Touch.

Angry Birds, a popular mobile-phone game where players slingshot birds at pigs hiding behind barricaded wood and stone barricades, is aiming for 100 million downloads in China alone.

Nintendo’s traditional competitors are also catching up. Microsoft Corp. (MSFT) sold more than 10 million motion-sensing Kinect devices within four months of its introduction in November 2010. The $150 machine’s two cameras and infrared projector capture body movements to play games.

Sony, Microsoft Catch Up

Sony, whose PlayStation machine dominated the previous generation of game consoles, shipped 8 million of its motion- sensing Move devices, it said in April. The black controller with a colored ball in front requires a separate camera to detect player movement.

Sony, the world’s second-largest maker of portable game players, this month unveiled the PlayStation Vita and said it will sell for $250, same as Nintendo’s 3DS. The Vita will feature a five-inch display using organic light emitting diode, or OLED, technology, a rear touch pad and play titles including “Uncharted: Golden Abyss” and “LittleBigPlanet.”

Investors are taking note of the competition.

Nintendo fell 2.4 percent to 15,230 yen on June 17, the lowest close since Jan. 19, 2006. The shares have tumbled 36 percent this year compared with Apple’s 0.7 percent drop, a 13 percent decline for Microsoft and a 32 percent slump for Sony.

“It’s beginning to look like Nintendo is falling behind the times,” said Tomoaki Kawasaki, an analyst at Cosmo Securities Co. with a “neutral” rating on Nintendo. “The company is probably overdue for a business model change.”

Lone ‘Sell’

Most analysts aren’t as pessimistic. Half of the 24 brokers tracked by Bloomberg rate Nintendo a “buy.” Eleven rate the stock “hold” and Citigroup Inc. is the lone “sell,” according to data compiled by Bloomberg.

“The new concept covers areas where the Wii was lacking, such as images in high definition, so it should expand the potential user base,” said Yuuta Sakurai, a Tokyo-based analyst at Nomura Securities Co. who’s rated Nintendo “buy” since March 2000. “Wii U has potential” to repeat its predecessor’s success.”

In April, Nintendo forecast net income will rise 42 percent to 110 billion yen ($1.4 billion) in the year to March 2012, missing analysts’ estimates for 143.8 billion yen at the time. The projection doesn’t include sales of the new Wii, the company said then. A gain would be the first in three years.

Still, a revival in earnings won’t help Nintendo lure back Kawatsu, who now uses an iPhone to play Mahjong during train rides. The new Wii isn’t appealing to him.

“It’s like a cross between the iPad and PlayStation Portable,” said Kawatsu. “I won’t buy it.”

[Thanks: http://www.bloomberg.com]

Carrier foreplay: Why is it that the iPad is destroying the entire “Android [jalopy] nation” combined when it comes to tablet sales, yet the same half-baked geek platform known as Android is collectively is outselling the iPhone by a pinch? Simple: the cellular carriers have undue influence over phone sales, and the carriers love Android. Upper management at the carriers loves Android because they get to control it, and the geek salesfolk at the carrier retail stores love Android because geekdom is their religion. Apple can’t change the latter, but it can change the former by giving the carriers more of what they want in the iPhone 5 era. For Sprint and T-Mobile, that means simply giving them the iPhone 5 at all. For Verizon and AT&T, Apple must figure out how to appease these unfortunately powerful behemoths such that the salesgeeks are required to promote the iPhone 5 on at least equal footing with their pet Android phones – in such settings the iPhone 5 will gain the sale in nearly every instance unless the customer is also a geek.

Pricing: In an attempt to keep Android momentum going even as studies show that the vast majority of current Android users say they have no plans for their next smartphone to be another Android, the carriers and manufacturers are now offering Android phones for free (with contract of course) left and right. It’ll be tough for Apple to ask mainstream folks to pony up $200 and up for the iPhone 5 when Brand B is free. The iPhone 3GS at $49 is a nice start, but does Apple have the guts to turn the iPhone 4 into a free product and launch the iPhone 5 starting at $99? Such pricing may be necessary, even if margins are nil.

Lowbrow features: Apple’s biggest marketing pushes for the iPhone 4 were FaceTime and Retina Display. That’s nice, but the vast majority of potential iPhone 4 buyers knew they would never be making mobile video phone calls, and the “better screen” claims can’t be fully appreciated unless you’re in the store looking at the iPhone 4 and its competitors side by side; anything short of that, and it sounds like just another exaggerated marketing claim. With the iPhone 5, Apple must instead focus on pushing lower end features which will appeal to a larger number of users. The iOS 5 preview suggests that Apple has already figured that out. Android’s entire interface is a disaster, but it has a notification center, so now the iPhone 5 will have one – and of course it’ll be ten times better than the sloppy one Android uses. That’s an effective argument for luring Android users over to the iPhone. Similarly, even as most BlackBerry users will admit their platform is growing more irrelevant by the day, they appear to be in love with their BBM BlackBerry Messenger feature. Nevermind that it appears to be a mere fad. Apple must counter that with the iPhone 5, and it has with iMessenger. Doesn’t matter if the entire faux-messaging fad is gone from the face of the earth in six months. What does matter is that plenty of BlackBerry holdouts will switch to the iPhone 5 in the mean time, because for that brief moment, faux-messaging was all that mattered to them.

4G hoedown: 4G is a joke in 2011, with the two largest carriers proudly promoting the 4G LTE networks they haven’t even built yet, and the two smallest carriers boasting of their nationwide 4G networks which aren’t actually 4G. But because most consumers don’t even know what 4G is or does, only that they’re supposed to have it on their phone, Apple must include a 4G antenna in the iPhone 5. Nevermind that having a “4G” phone will do you no good if you live in a place in which a real 4G network doesn’t exist (and that’s nearly all of you reading this, regardless of carrier). Most consumers mistakenly believe that having a “4G phone” means they’re using 4G (“whatever that might be,” they’re thinking). The iPhone 5 must be one of them. Otherwise, carriers everywhere will tell people to steer clear of the iPhone 5 because it “doesn’t have 4G” and consumers will be naive enough to believe it.

[Thanks: http://www.beatweek.com]