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I’m pretty proud of what we’ve been able to accomplish in China. Google has a far superior track record than other Internet or Internet search companies in China.”

–Google co-founder Sergey Brin adjusts the company’s informal corporate motto “Don’t Be Evil” to “Don’t be AS evil” for the Chinese market.

Try as they might, financial analysts attending Apple’s (AAPL) Q2 earnings call yesterday were unable to goad company execs into giving up a launch date for the 3G iPhone. Peter Oppenheimer, Apple’s CFO, and Tim Cook, the company’s COO, refused to confirm rumors that the company plans to announce the device this summer, though they did–as they always do–claim Apple has a number of exciting products in the pipeline.

And that was confirmation enough for analysts. Citigroup’s (C) Richard Gardner promptly issued a research note pitching June 9, the kickoff of the company’s annual Worldwide Developers Conference, as the likely date of the 3G iPhones’ debut. Wrote Gardner, “We expect a steady stream of new products beginning on 9 June with a 3G iPhone and iPhone/iPod touch SDK, continuing with a refresh of the complete laptop line in July/August and concluding with a complete refresh of the iPod line in August/September.”

June 9 seems a plausible, if not bleedingly obvious launch date. Announce the 3G iPhone at WWDC, with an eye toward an official release on June 29, the first anniversary of its predecessor’s debut? That gives Apple plenty of time to reach its goal of shipping 10 million iPhones by the end of 2008. The company has so far sold 1.7 million iPhones worldwide, leaving 8.3 million more to go if it wants to hit the 10 million mark. Uncrating the 3G version of the device in early summer, perhaps in concert with a move into the massive Japanese and Chinese markets, would make reaching 10 million iPhones shipped an easy matter.

We will enter Asia with the iPhone in 2008. … We will one day enter China, we’re not saying when, and we will one day enter India.”

–Apple COO Tim Cook

Here’s another brief but interesting bit of news to emerge from Apple’s annual shareholders’ meeting yesterday. When CEO Steve Jobs pledged the company would sell 10 million iPhones in 2008 did he mean 10 million phones within this calendar year, or 10 million phones between June 29, 2007 and Dec. 31, 2008? Well, according to Piper Jaffray analyst Gene Munster, it’s the former. “We confirmed with Apple that the goal is to sell 10m iPhones ‘in CY08′ alone,” Munster wrote in a note to clients, adding that the company will have no trouble hitting that target–especially once it launches the iPhone in Asia, as COO Tim Cook promised.

“We are currently modeling for 12.9m iPhones in CY08,” Munster said. “Exceeding the goal by 2.9m units or 29%. … Jobs’s reiteration of the 10 million iPhones and the iPhone in Asia by the end of the year eases some investor concerns.”

The only difference between Yahoo CEO Jerry Yang’s letter to shareholders and his all-hands memos to employees is the capital letters. Besides that, it’s really just another restatement of the same “we have a lot to be excited about” arguments Yang’s restated thrice already to employees (see “Yahoo CEO to Employees: Thank You for Not Quitting,” “May the Head Winds Be Always at Your Back, Yahoo” and “Yang to Employees: Nothing to See Here. Please Disperse.“)

In short, Microsoft (MSFT) bid BAD, Yahoo’s continued independence GOOD. Also, Yahoo’s (YHOO) board is “continuously evaluating all of Yahoo!’s strategic options.” Yeah, all two of them–”Yes, we’ll accept your bid” and “No, we’d prefer a nasty proxy fight.”

Anyway, here’s the letter in all its redundant glory …

Dear Stockholders,

On Feb. 1, 2008, Microsoft made an unsolicited proposal to acquire your company. As much has been reported in the press recently, I wanted to reach out to you personally to let you know why your Board of Directors, after a careful review by Yahoo!’s management along with our financial and legal advisers, believes that Microsoft’s proposal substantially undervalues Yahoo! and is not in the best interests of our stockholders.

Most importantly, I want you to know that your Board is continuously evaluating all of Yahoo!’s strategic options in the context of the rapidly evolving industry environment, and we remain committed to pursuing initiatives that maximize value for all our stockholders.

Read more »

Jerry Yang’s rallying the troops over at Yahoo again. In an all-hands memo this morning (see below, corrected for capitalization and punctuation), he explained Yahoo’s decision to reject Microsoft’s hostile bid for the company and thanked employees for all they do to “maintain and enhance Yahoo!’s leadership position in the online world.” Presumably, “leadership” in this context refers to the company’s leadership in underachievement.

Subject: our board’s decision

Yahoos,

As you’ll see from the news release we issued today, our Board of Directors has reviewed Microsoft’s unsolicited proposal with Yahoo’s management, financial and legal advisers. After a careful evaluation, the board has unanimously concluded that the proposal is not in the best interests of Yahoo and our stockholders. Of course, the Board of Directors is continuously evaluating all of its strategic options in the context of the rapidly evolving industry environment and we remain committed to pursuing initiatives that maximize value for stockholders.

We believe Microsoft’s proposal substantially undervalues Yahoo–including our highly recognizable global brand, large worldwide audience, significant recent investments in advertising platforms, future growth prospects, our ability to generate free cash flow and our earnings potential as well as substantial unconsolidated investments (like Alibaba and Yahoo Japan).

You deserve the credit for the tremendously valuable business we have built. All of us in management, as well as the members of the board, deeply appreciate and respect what you have done and continue to do in order to maintain and enhance Yahoo’s leadership position in the online world.

Read more »

The number of iPhones bought with the intention of unlocking was significant in the quarter, but we are unsure how to reliably estimate the number. We are unsure when all the recipients will activate.”

–Apple Chief Operating Officer Timothy Cook, Jan. 22

So those “missing” iPhones? They’re not missing at all. They’re unlocked. That’s the opinion of a number of analysts who this week are looking askance at Bernstein Research analyst Toni Sacconaghi’s claim that about 1.45 million phones were “missing in action” at the end of 2007–built but not subscribed to AT&T.

“Some unknown number of iPhones are being unlocked by purchasers and some, probably a larger number, are being unlocked for resale,” said Ezra Gottheil, an analyst at Technology Business Research Inc. “Some are in inventory. Some will be returned. And some are being used for the nonphone features, as iPhone Touches, until the owners can change their wireless contracts. We don’t know the proportions.”

Piper Jaffray analyst Gene Munster offered a similar theory, noting that his recent check of Apple’s retail stores found a significant percentage of consumers to be purchasing multiple iPhones. “The majority of the people who were buying more than one phone were Asian, and they were bringing small buses of people who all buy more than one phone,” he told the New York Times. “With the value of the dollar, the cost of the phone is much less here.”

And Munster’s contention would seem to be borne out by anecdotal reports from abroad. “In my travels around the world, two out of three iPhones I’ve seen outside of the U.S. have been unlocked,” Richard Doherty, director at consultant Envisioneering Group, told BusinessWeek. “In China, nine out of 10 phones are hacked.”

According to last year’s safely-looking-ahead-to-the-year-to-come lists, 2007 was to be “a year of hyperdisruption for the technology industry”; it was to be “a year of significant developments” and “a year of evolution”; it was to be “a year of invention and innovation,” “a year of experimentation” and “a year of slow, but significant, change”; it was to be “a year of carnage,” but it was also to be “a year of great happiness and multiple blessings.” Above all, 2007 was to be “a busy year for technology.”

Which, as you’ll see below (and in our companion video), is pretty much how it turned out. What follows is Digital Daily’s abridged guide to the year in tech news–a fond reminiscence of what was, and our First Annual Year-End List For Year-End List Haters.

1. Yahoo Shareholders Reject Plan to Tie Executive Compensation to Company’s Crappy Performance
   Well, what do you know: Yahoo’s annual shareholder meeting didn’t conclude with CEO Terry Semel’s head piked on the exclamation point of the Yahoo sign outside company headquarters.

2. I Know It Was You, Fredo. You Broke My Heart. You Broke My Heart!
   Apparently, Fred Anderson is the “Fredo” of the Apple options backdating family.

3. We’ve Asked John Williams to Do a Special Performance of the Theme From “The Poseidon Adventure” for Our Q4 Results
   Who’s programming Microsoft’s on-hold music, Apple’s Phil Schiller? Waiting for the company’s third-quarter earnings call to begin yesterday, those listening in were treated to an instrumental piano version of Celine Dion’s “My Heart Will Go On.” From “Titanic,” the disaster movie.

4. I’m Proud to Say Our New “Soylent Green” iPod Is Made of 100% Biodegradable Greenpeace Activists!
   If you’re going to try to smear Apple for reckless environmental practices, you best have some hard epidemiological and toxicological data on hand, because goofy Photoshop treatments of the company’s marketing materials just can’t stand up to a blow from the Apple PR machine.

5. And Online Display Impressions Soared as More Americans Checked Their AOL Accounts for Old Times’ Sake
   To hear tell from Time Warner executives, the company’s better-than-expected earnings for the first quarter owed quite a bit to gains in online-advertising market share by its AOL Internet division.

6. Web 2.0 Audience in Mirror May Be Smaller Than It Appears
   How ironic is it that Web 2.0–the “participatory Web”–has far fewer participants than its architects would have us believe?

7. And for My Next Trick, I’ll Turn Myself Into a Complete Jackass
   If you’re going to demand that YouTube remove a video to which you object under the Digital Millennium Copyright Act, it’s probably wise to make sure that you actually understand the DMCA.

8. War Is Peace. Freedom Is Slavery. Ignorance Is Strength. DRM Is DCE.
   You can’t put frosting on manure, but HBO’s Chief Technology Officer Bob Zitter isn’t above trying.

9. We’re Naming It the Motorola STNKR, After Our Q1 Earnings …
   Carl Icahn was right. Motorola really is desperate for a new product. How else to explain a patent the company was awarded last month for a “communication device having a scent-release feature and method thereof.”

10. The Frienemy of My Frienemy Is My Enemiend
    If Microsoft is planning an acquisition in the online marketing and advertising space, it better act fast, because if it waits much longer there won’t be anything left to acquire.

11. How Would Monsieur Ellison Like His BEA Served? Mixed in a Bucket With Oracle’s Other Acquisitions?
    Looks like we may be in for another PeopleSoft-esque takeover drama …

12. I’m Just Biding My Time Here Until I Can Quit and Study Whale Feces Full Time
    Given the chance, how would you alter the course of your career? Well, if you worked at Microsoft’s Security Response Center, you might consider taking a job as an Olympic drug tester, a gravity research subject, or a “whale-feces researcher.”

13. Much Like Energy, BS Cannot Be Created or Destroyed, It Can Only Be Changed From One Form to Another
    If Steorn’s perpetual motion effort is anything like its e-commerce venture (and by all accounts things do seem to be going that way), the only thing in its future is insolvency.

14. From Now On, We’ll Be Known as Nlsn/NtRtings
    Looks like vowels won’t be the only accoutrements to be tossed aside in the rise of Web 2.0. The venerable page view is to be abandoned as well.

15. The Defendant Stands Accused of Copyright Infringement, Breach of Contract and Misappropriation of Dumb Luck
    According to popular legend Facebook founder Mark Zuckerberg once kept two versions of his business card in his wallet–one with the title CEO, the other with “I’M CEO . . . BITCH.”

16. Well, Here Come YouTube’s Video ID Tools. Guess That Means Godot Will Be Here Any Minute Now
    Google’s apparently finished “educating users about copyright law” and has moved on to the far more important business of making sure not to run afoul of it.

17. Look at It This Way: Now That Yahoo’s an ‘Ecosystem,’ the EPA Can Finally Declare It a Superfund Site
    “Our financial performance is not what we would like to see long-term.” This, from Blake Jorgensen, Yahoo’s chief financial officer who, just six weeks into the job, is already well versed in the company’s fiscal truisms.

18. Gates to Google: My Lyrical Technique Will Leave Your Body Weak
    Much as Microsoft Chairman Bill Gates fancies himself untroubled by Google’s incursions into his software empire, they clearly do chafe him a bit.

19. Newest Yahoo Mail Feature: BCC Beijing
    Sure, Yahoo signed China’s “Public Pledge on Self-Discipline for the Chinese Internet Industry,” a voluntary agreement to monitor and restrict information deemed “harmful” by Beijing, but did it have to take it quite so seriously?

20. Apple: Wham, Bam, Thank You Fanboi
    “I feel like a $200 whore.” That was one iPhone early adopter’s crass assessment of his feelings of self-worth, after Apple unexpectedly cut the price of the device by a third–just two months after it arrived at market.

21. In the Unlikely Event of a Water Landing, Sergey’s California King May Be Used as a Flotation Device
    With its onboard hammocks, full-size sofas and California King beds, it’s a wonder Google’s “party plane” has room for scientific instrumentation befitting the National Aeronautics and Space Administration, but apparently it does.

22. Act Now and Get a Downgrade to the OS You Really Want, ABSOLUTELY FREE!
    It’s looking more and more like the pent-up demand for Windows Vista we’ve heard so much about this past year is really just pent-up demand for Windows XP.

23. Dude, I Work for Friggin Forbes Magazine. Have You Heard of It?
    The year-long guessing game is over. New York Times reporter Brad Stone has outed Daniel Lyons, a senior editor at Forbes magazine, as the author of the Secret Diary of Steve Jobs, the satirical blog lampooning Apple’s iconic CEO (See? Told you it wasn’t me).

24. If Facebook’s Worth $15 Billion, Then My Stupid Idea’s Got to Be Good for $10 Mil
    Apparently the vainglory from which Facebook CEO Mark Zuckerberg appears to suffer is communicable and spreading rapidly throughout the social network’s developer community.

25. A Billion Here, a Billion There, and Pretty Soon You’re Talking Real Bollocks
    MySpace is worth $65 billion in the same way that Facebook is worth $15 billion–hypothetically.

26. “Apple Has Destroyed the Music Business”–Not That We Didn’t Try Our Best
    Many, many years ago, when the digital-music business consisted of little else besides Napster and the Recording Industry Association of America’s lawsuits against it, Apple proved that there was indeed a decent business to be had in selling music online for $1 per song.

27. It’s Not an Unpaid Endorsement, It’s a “Social Ad”
    Facebook’s Social Ads aren’t endorsements, they’re a “representation” of user activity.

28. Obama Announces “No Tech Policy Left Behind” Plan
    If Google’s mission is to organize the world’s information and make it universally accessible and useful, then Democratic presidential candidate Barack Obama’s is to do the same to its tech-policy issues.

29. Sounds More Like the “Zune of Reading” to Me
    If Jeff Bezos truly hopes to create “the iPod of reading,” observers say he’s going to have to do a hell of a lot better than Amazon’s new Kindle e-book reader.

30. Fiascobook
    What Facebook CEO Mark Zuckerberg lacks in foresight, he certainly makes up for in disingenuous hair-shirt remorse.

Note: John Paczkowski is on vacation and won’t be writing or posting videos until he returns next Monday, Dec. 3.

To keep you abreast of tech news while he’s away, we’re compiling a daily digest of 10 must-read tech stories. Our Tech 10 appears below.

1. Slick Deal for Sony? A Dubai investment firm owned by the emirate’s ruler has acquired a “substantial” stake in Sony. The Wall Street Journal reports that the deal typifies the growing appetite of Middle Eastern oil producers awash in petrodollars for diversifying their investments.
2. Facebook, Political Animal: The social-networking site is jumping on the campaign bandwagon in a partnership with ABC News, the TV network announced today. Facebook members can now digitally track ABC reporters, watch videos and take part in polls, debates and even influence how the news is covered.
3. TGICM (Thank God It’s Cyber Monday): Black Friday may one day take a back seat to Cyber Monday, the Monday after Thanksgiving when online retailers entice bargain-hunters with discounts similar to those offered by offline marketers on the day after Thanksgiving, the New York Times reports.
4. But No Blues for Online Retailers on Black Friday, Either: Online spending on the day after Thanksgiving zoomed 22% compared to last year, according to comScore. That boosts the total of online purchases to more than $9 billion for the season to date, up 17% over the same period in 2006.
5. Zune Is No. 2, in a Good Way: Microsoft’s Zune posted strong Black Friday online sales, playing second fiddle only to sales of Nintendo’s Wii, according to preliminary figures released by Electronista.
6. News Corp. Aims to Serve: Online ads, that is. The media giant’s Internet division will debut an online network to sell ads across Rupert Murdoch’s many holdings (which include this site) as well as other media companies, possibly by the first half of 2008, Reuters reports.
7. Take That, Sacré Downloader! Cracking down on online piracy, the French government is proposing to pull the broadband connections of those who illegally download movies or music online, according to dBTechno News, which notes that President Nicolas Sarkozy has floated a “three strikes” policy to fight Internet pirates.
8. Hollywood Sues ‘Pirates’ Pirate: Maintaining that film piracy in China costs the U.S. movie industry hundreds of millions annually, the Motion Picture Association is suing Chinese Web site Jeboo.com for providing bootlegged copies of such movies as “Pirates of the Caribbean: Dead Man’s Chest” to an Internet cafe in Shanghai. The Times Online says the MPA is seeking about $432 million in damages on behalf of five studios.



9. Look! Up in the Sky! Original Content–From China. Signaling its entry into space exploration, China today released its first picture of the moon from its Chang’e lunar probe. The photo’s “symbolic importance perhaps rivals its scientific value,” Wired reports.
10. Data Deep-Freeze? Microsoft plans to build a data facility in the Siberian city of Irkutsk, according to a report in Data Center Knowledge. The center is expected to host 10,000 servers in a region attractive to Microsoft not for its rough winters but its stable electricity supply.

–posted by Associate Editor John Sullivan

Think Sino-American relations are lousy now, wait until Beijing gets word that a congressional advisory panel has identified Chinese espionage as the “single greatest risk” to the American technology sector.

In its annual report to Congress, the U.S.-China Economic and Security Review Commission accused China of enlisting engineers and scientists to acquire critical U.S. technology “by whatever means possible–including theft.” Said an official familiar with the report, “What the government cannot get through licit means, they are conducting an aggressive program of industrial espionage to acquire.”

To what end? Why, “cyber attacks” on American infrastructure, of course. Said Commission panelist USSTRATCOM Commander General James E. Cartwright, “I think that we should start to consider that [the sense of disruption and chaos] associated with a cyber attack could, in fact, be in the magnitude of a weapon of mass destruction.”

An unsettling hypothesis to say the least, although to be fair, not every panelist bought it. Said James Lewis from the Center for Strategic and International Studies: “The effect [of a cyber attack is] usually to solidify resistance, to encourage people to continue the fight, and if you haven’t actually badly damaged their abilities to continue to fight, all you’ve done is annoy them, and what many of us call cyber attacks [are] not weapons of mass destruction but weapons of mass annoyance.”

Yahoo CEO Jerry Yang’s public shaming before the House Foreign Affairs Committee last week has apparently accomplished what Yahoo’s skewed moral compass could not: prompt the company to provide financial and humanitarian support to the Chinese dissidents it helped imprison.

Less than a week after Yang’s grueling Capitol Hill appareance, during which Committee Chairman Tom Lantos (D., Calif.) upbraided him and another company executive as moral “pygmies,” Yahoo settled a lawsuit brought against it on behalf of two Chinese journalists who were jailed after the company provided Beijing authorities with their email records.

Under the terms of the settlement, Yahoo will provide unspecified financial assistance to the plaintiffs and their families and establish a fund to support other political dissidents. And sources close to the company say it may even offer legal support to the two dissidents and their families.

“After meeting with the families, it was clear to me what we had to do to make this right for them, for Yahoo and for the future,” Yang said in a statement that tried a bit too hard to cast the company’s decision to settle as a humanitarian one. “Yahoo was founded on the idea that the free exchange of information can fundamentally change how people lead their lives, conduct their business and interact with their governments. We are committed to making sure our actions match our values around the world.”

… And putting this long legal and public-relations nightmare to an end.

If you think our witnesses today are uncomfortable sitting in this climate-controlled room and accounting for their company’s spineless and irresponsible actions, imagine how life is for Shi Tao, spending 10 long years in a Chinese dungeon for exchanging information publicly–exactly what Yahoo claims to support in places like China.”

–Statement of Rep. Tom Lantos (D., Calif.), chairman of the House Committee on Foreign Affairs, yesterday

Yahoo CEO Jerry Yang celebrated his 39th birthday yesterday with a public shaming before the House Foreign Affairs Committee. During a hearing to discuss Yahoo’s cooperation with the Chinese authorities, Yang and Yahoo General Counsel Michael Callahan were pilloried for misleading lawmakers last year about the company’s role in the investigation and imprisonment of dissident Chinese journalist Shi Tao.

Seems the committee didn’t quite buy Yahoo’s it-was-the-poorly-translated-document’s-fault story. “While technologically and financially you are giants, morally you are pygmies,” said Committee Chairman Lantos. “Yahoo claims that this is just one big misunderstanding. Let me be clear–this was no misunderstanding. This was inexcusably negligent behavior at best, and deliberately deceptive behavior at worst. … Look into your own soul, and see the damage you have done to an innocent human being and his family. It will make no difference to the committee what you do, but it will make you better human beings, if you recognize your own responsibility for the enormous damage your policies have created.”

Seated in front of Shi’s weeping mother, Yang had little choice but to do just that. “I deeply regret the consequences of what the Chinese government has done,” Yang said. “My heart goes out to the family. … I want to say we are committed to doing what we can to secure their freedom. And I want to personally apologize for what they are going through.”

Yang, however, made no promises to provide financial assistance to Shi’s family for what happened.