All Things Digital

The first handset to be powered by Google’s Android OS debuted this morning at a T-Mobile launch event in New York. Manufactured by HTC, the G1 is largely as anticipated. Peter Chou, CEO of HTC describes it as “iconic,” but that’s being a bit generous, I think (“The G1 won’t win any beauty contests with its Apple rival,” writes Walt Mossberg. “It’s stubby and chunky, nearly 30 percent thicker and almost 20 percent heavier than the iPhone.”)

In design, the device seems to borrow quite a bit from T-Mobile’s Sidekick, and its touchscreen GUI owes a thing or two to Apple’s (AAPL) iPhone. Which makes perfect sense, since that’s the device it’s clearly intended to compete with. The G1 will run on both 3G and Wi-Fi and be tethered to the T-Mobile (DT) network. It will come preloaded with a version of Amazon’s MP3 store and Android Market, an application store similar to Apple’s App Store. And it will support and sync with the broad spectrum of Google (GOOG) apps–Google Talk, Google Calendar, etc. Its browser is something the dev team refers to as Chrome-Lite, a mobile version of Google’s new Webkit-based Chrome browser.

Oddly, the G1 has no built-in video player. Odder still, it has just 1GB of memory. T-Mobile has helpfully outfitted it with a 1GB/month bandwidth cap, though.

The G1 supports PDFs and Microsoft Office documents as well. Email will be handled through Gmail; there is no Exchange support, though presumably, engineers developing for Android Market will fill that void in short order.

Oh, the device offers copy-and-paste functionality. Hear that Apple?

It will arrive at market Oct. 22. Price: a highly-subsidized $179.

QOTD

We’ve reviewed your application, Pull My Finger. We have determined that this application is of limited utility to the broad iPhone and iPod touch user community, and will not be published to the App Store.”

– Apple finds fart jokes and fart apps to be of equally limited utility.

Today is fast turning into an ugly one for Apple (AAPL). In the past 24 hours the company has been beset by bad news. Britain’s Advertising Standards Authority (ASA) has ruled that one of the company’s iPhone ads is misleading. Apple is being accused of censorship after banning the Murderdrome comic from the App Store for violating the terms of its SDK, which prohibits “content or materials that in Apple’s reasonable judgment may be found objectionable by iPhone or iPod touch users.” And now a nasty security bug has surfaced in the company’s iPhone. Seems the passcode lock that allows users to limit access to the device is easily bypassed with just a few finger taps. All an intruder need do to access much of the private information stored in an iPhone’s address book, e-mail or voicemail is simply press the “Emergency Call” key on its passcode entry screen and then double tap its home button. What’s most unfortunate about all this is that Apple fixed a similar vulnerability back in January with iPhone v1.1.3.

Holy cow! Despite some very unfortunate stumbles at launch, Apple sold one million iPhone 3Gs in its first three days on the market, according to a company press release this morning. “iPhone 3G had a stunning opening weekend,” said Steve Jobs, Apple’s CEO. “It took 74 days to sell the first one million original iPhones, so the new iPhone 3G is clearly off to a great start around the world.”

‘Course the original iPhone was available in just one country. Its successor is available in 21. And that broad availability makes peddling 1 million of anything, especially one of the hottest gadgets in recent memory a hell of a lot easier. A more impressive metric is the one Apple (AAPL) offered up for its new App Store today.

iPhone and iPod touch owners have downloaded more than 10 million applications since App Store debuted last week. Quite an achievement considering that App Store is the sole source of official iPhone applications, and one that suggests Apple is well on its way to establishing OS X iPhone as a powerhouse mobile platform.

This morning, Apple raised the curtain on iTunes 7.7 and on App Store, an outlet for third-party iPhone and iPod Touch applications. “The reaction has been so strong,” said Apple (AAPL) CEO Steve Jobs. “So many developers responded. This is the biggest launch of my career.”

And with 522 applications debuting at the store today (135 of them free, 417 of them paid; see chart below), it would seem to be just that. It’s also likely one of the most important, an effort to do to the mobile-software market what iTunes did to the digital music market, to do to the mobile OS what Microsoft did to the desktop OS. An ambitious undertaking, but one for which Apple seems well positioned, initally, anyway. “Everybody wants to build an iPhone app,” Piper Jaffray analyst Gene Munster told The New York Times. “It’s pretty rare you hear things like this. The enthusiasm is surprising.”

You’ll find the store’s “Top Apps” here, its “Top Free Apps” here and the iPhone 2.0 firmware update you need to use them here.

Telekinesis was a great little iPhone remote–while it lasted. But come July 11, its days may be numbered. Hidden away in the latest developer build of iTunes 7.7 is a new Apple-designed remote control application for iPhone and iPod Touch users that navigates tracks on Macs and Windows PCs from any of Apple’s current handhelds.

“Use iTunes 7.7 to sync music, video and more with iPhone 3G, and download applications from the iTunes Store exclusively designed for iPhone and iPod Touch with software version 2.0 or later,” the iTunes installer Read Me document explains. “Also use the new Remote application for iPhone or iPod Touch to control iTunes playback from anywhere in your home–a free download from the App Store.”

Sounds like a slick little application. Even slicker if Apple (AAPL) finally decides to add “multi-zone” support to AirTunes so we can stream different music to different speakers throughout our homes.

[Image Credit: InventorSpot]

Next year is shaping up to be Apple’s (AAPL) best financial year ever–and we’re not even out of 2008 yet.

Last week Piper Jaffray (PJC) analyst Gene Munster said the company’s new App Store could end up generating $1.21 billion in revenue. And now Morgan Stanley (MS) is predicting Apple will sell 27 million iPhones in 2009. “We believe the market generally expects a doubling of iPhone units with the lower price point ($199) and we believe this is realistic, if not conservative,” the investment bank said in a note.

At $200 a phone that would generate roughly $5 billion in revenue. And that’s not accounting for whatever subsidy Apple’s collecting from its carriers.

To hear tell from Steve Jobs, Apple (AAPL) doesn’t think its new App Store will make a material contribution to its bottom line. ” …To be clear, we don’t intend to make money off the App Store,” Jobs said at a town-hall meeting earlier this year announcing the store. “We’re basically giving all the money to the developers, and the 30% that pays for running the store, that’ll be great.”

Course, it will be greater still if it adds a few percentage points to Apple’s operating income. And according to Piper Jaffray (PJC) analyst Gene Munster, it will. Between one and three percentage points, specifically. And if it ends up being on the high end of that projection, the App Store could end up generating $1.21 billion in revenues (see chart below).

Now, to be clear, that particular forecast assumes an installed base of 80.8 million active App Store users (iPhone and iPod Touch combined) spending a minimum of $15. A bit optimistic? Perhaps. Certainly, a market of 61.6 million iPhone users by the end of 2009, as the chart below suggests, does seem a bit aggressive. That said, Apple’s sold 6 million of the device’s first iteration in just under a year. And it was peddling them in just six countries.

By the end of 2009, it will be selling them in 70. And at half their original price. So maybe 61.6 million iPhone users and $1.21 billion in App Store revenues is a stretch. And maybe it isn’t.

Apple’s much lauded iPhone captured 28% of the smart-phone market in the States by the fourth quarter of 2007–just six months into its launch. Today it holds something less than that–about 19.2%. But to look at the headlines, you’d think it controlled the market in its entirety. A quick search on Google returns 19,035 results for “iPhone”– from Jun. 2, 2008 to today. Why? Because in a few hours, Apple CEO Steve Jobs will address the company’s Worldwide Developers Conference in San Francisco, at which he is expected to unveil the next version of the company’s iPhone.

And for Apple’s (AAPL) sake, I hope he does. Because with expectations running this high, I’d hate to see what happens if he doesn’t. Although the new Apple Store housed in a life-size replica of the Golden Gate Bridge pictured in the invite would certainly take some of the heat off …

Anyway, I’ll be live-blogging from inside Moscone West in San Francisco starting at 10 a.m. PDT. Here’s something to read while you wait …

• From Moscone West: This is crazy. They just opened a single door to let cameras in and the media rushed the gate. Its like that 1979 Who concert in Cincinnati.



• The hall in Moscone West is filling quickly to the sounds of Jerry Lee Lewis. From the looks of it media and developers are here in equal numbers.
• Jobs takes the stage. I’m sitting about 20 rows back, but even I can see he’s looking pretty thin from here. He gets right into it, pulls up a slide of a stool and describes Apple as a three-legged company. Macs, music and the iPhone.
• Jobs will spend the morning talking about the iPhone. This afternoon Apple will discuss OS X “Snow Leopard.”

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