All Things Digital

The high-speed pursuit by Electronic Arts of Take-Two Interactive Software and the bounties of its Grand Theft Auto franchise has ended in a set of flat tires. On Sunday EA (ERTS) dropped $2 billion tender offer for the rival video game maker.

The company didn’t say exactly what prompted it to end talks with its smaller rival, though presumably it had something to do with Take-Two’s bashing of EA’s $25.74-per-share bid as too low and the company’s acquisition strategy as “mystifying.”

“This was never a must-have proposition, but we respect their people and products,” Owen Mahoney, senior vice president of corporate development at EA told The Wall Street Journal. “We don’t need Take-Two to make EA successful.”

Hence, EA’s repeated extensions and revisions of its offer. …

Anyway, this may not be the last we’ve heard of a deal. There’s still a chance that EA might return to the table. “If Take-Two’s stock price settles back into the teens, we could see them come back again in a few months,” said Michael Pachter, an analyst with Wedbush Morgan Securities. “They walked away, but that doesn’t mean they won’t look at it again.”

Take-Two shares plunged 22 percent in pre-market trading on the news.

With its original tender offer for Take-Two Interactive set to expire today in a cloud of investor disdain, video-game publisher Electronic Arts did what any company whose acquisition target is in market ascension would do: It extended its offer by a month, to May 16.

And then it lowered its bid to $25.74 a share, from $26.

EA (ERTS) did this because last night, Take-Two (TTWO) shareholders approved the issuance of 1.5 million new shares to the company’s management firm, ZelnickMedia–shares that EA claims dilute the value of its buyout offer. A reasonable argument to be sure. But lowering the price of an offer that Take-Two already claims undervalues it clearly isn’t going to advance EA’s cause.

And at this point, that cause needs all the help it can get. As of this writing, EA has gathered a little more than 8% of Take-Two’s shares. It needs 50% for its offer to succeed. And with Take-Two gearing up for the April 29 release of its eagerly anticipated “Grand Theft Auto IV”, it’s not likely to get much more at $25.74. Said Take-Two chairman Strauss Zelnick, “I’m mystified by EA’s strategy.“

We’re telling IT executives to not support it because Apple has no intentions of supporting (iPhone use in) the enterprise. This is basically a cellular iPod with some other capabilities and it’s important that it be recognized as such.”

–Gartner analyst Ken Dulaney, July 2, 2007

Today’s an important one for Apple (AAPL). The company is hosting a “town hall” meeting to discuss an iPhone software roadmap. Presumably, this event will see the release of more details about the eagerly anticipated iPhone SDK, but perhaps not the debut of the SDK itself. Certainly, that’s the impression given by the invitation to the event–”Please join us to learn about the iPhone software roadmap, including the iPhone SDK and some exciting new enterprise features.” Enterprise features? Ready to eat your words, Dulaney?

But whether the SDK is released to developers today or not, this event promises to be a watershed one. Because it heralds a vast new addressable software market for developers. After all, the iPhone and iPod touch run OS X, and presumably most future iPod models will as well. Which likely means that applications written for Mac in Xcode–Apple’s development toolset–will be deployable on any OS X device. They’ll be “write once, run anywhere”–anywhere there’s OS X, that is. And word on the street has it that we may see a few of them as early as today.

The event begins at 10 a.m. PT (1 p.m. ET). Updates to follow …

UPDATES:

• The event’s begun. You’ll find streaming video of the event here.
• The next iPhone software update will include support for Push Email, Push Calendar, Push Contacts, Global Address List, Cisco VPM, Certificates and WPA2/802.1x, Security Policies, Device Config, and Remote Wipe. Wow.
• Responding to customer demand for Microsoft Exchange on the iPhone, Apple has gone ahead and licensed ActiveSync for the device.
• Exchange will be native to the iPhone. Jobs must be muttering multiple “BOOMS” from backstage.
• Nike and Disney have been testing Exchange for iPhone and are pretty happy with it.
• Scott Forstall is now taking the stage to talk about the iPhone SDK. Apple giving developers the same tools and APIs it uses to develop iPhone apps.
• Apple took Cocoa and created Cocoa Touch, a new framework for building apps.
• The OS X kernel is the same for desktop and iPhone.
• Xcode has been expanded to support iPhone. It will code complete APIs for the iPhone SDK. (See? What’d I tell you: write once, run anywhere there’s OS X.)
• SDK includes Interface Builder and iPhone Simulator that allow developers to run their apps on their desktops. “It runs on a Mac and simulates the entire API stack on your computer,” Forstall says.
• Forstall builds a quick “Hello World” app, drops it on the iPhone and runs it. Quick and easy.
• “This is an app I just built in two minutes. But we wanted to see what we could build in two days. So we built Touch FX,” Forstall says. It’s an image editor that allows you to warp photos by pinching them.
• Forstall then demos Touch Fighter, a point-and-shoot game.
• Did I mention the SDK is available today? Good luck downloading it …
• Whoa. Travis Boatman from Electronic Arts takes the stage and demos an iPhone version of Spore. They’ve already ported 18 levels. (Hope SDK includes tool for building spare batteries.)
  

• Apple really pulling out all the stops on this one. Chuck Dietrich from Salesforce.com onstage now.
• Salesforce ported one of its automation tools to the iPhone, one that graphically displays how salespeople are performing against their goals.
• Next up: AOL. AIM for iPhone. Took five days to build.
• Larry Ellison takes the stage to announce Oracle Database 11g for iPhone.
• Kidding.
• Epocrates demo. Clinical reference app for doctors.
• Ethan Einhorn from Sega up next.
• Ha! Super MonkeyBall for iPhone. “This is not a cellphone game. This is a full console game. … We had to fly in a developer to upscale the art for the iPhone,” Einhorn says.
• Jobs back onstage. Announces the iTunes App Store. “You’re a developer who just spent two weeks or a bit longer writing an application. What’s your dream?” Jobs asks. “To get it in front of every iPhone user.”
• Apps can be downloaded wirelessly or sideloaded via iTunes. “This is the exclusive way to distribute iPhone applications,” Jobs says, adding: “We are controlling distribution.” (We will control the horizontal. We will control the vertical. You are about to participate in a great adventure. You are about to experience the awe and mystery which reaches from the inner mind to… The iTunes App Store.)
• Developers price their own apps and they get 70% of the revenues they generate. Apple takes 30% for running the App Store. ” … To be clear, we don’t intend to make money off the App Store. We’re basically giving all the money to the developers, and the 30% that pays for running the store, that’ll be great.”
• Apple plans to release an iPhone 2.0 software update in June that will include enterprise capabilities, App Store, etc.
• One more thing …
• Oh, look: It’s KPCB’s John Doerr. Must be here to demo i’MRich for iPhone.
• Doerr announces the iFund for iPhone developers.
• $100 million to start. Boom.BOOM. BOOM! “That should be enough to start about a dozen Amazons, or even four Googles! … If you want to invent the future, the iFund wants to help you build it,” Doerr says.
• END

(Spore photo courtesy Gizmodo)

Note: John Paczkowski live-blogged the following on his iPhone from Moscone Center West in San Francisco:

9:55 a.m.: Break out the Cupertino Kool-Aid: the show’s about to start.

Uh-oh. We’re being told turn off all electronic devices. Guess that means the laptop’s out. We’ll have to do this one on the iPhone. Not as bad an option as you’d think, since the device seems to autocorrect for all Apple-related misspellings.

10 a.m.: Well, this is a break from tradition: Apple CEO Steve Jobs saunters onstage decked out in full Sgt. Pepper regalia. Kidding, he’s wearing the jeans and black mock turtle ensemble for which he presumably holds the patent.

Jobs begins: “Today were going to talk about music. Six hundred million copies of iTunes. Billions of songs sold. Top store in 21 countries. No. 3 music retailer in U.S.” He continues: iTunes has “550 TV shows [with] 95 million TV shows sold to date.”
Of all music releases in 2006, he notes, 32% was digital only.

10:05: New on iTunes: Ring tones: Custom ring-tones maker built into iTunes. Typical ring-tone price is $2.49. Apple will charge 99 cents, plus cost of song. How it works: New column in iTunes. Bell logo indicates ring tone’s availability. Click and up pops a slick little editing tool. Jobs demonstrates editing process. Chooses Aretha Franklin’s “Respect.” “I’ll assign this to calls from my wife,” he says. Wonder if he’s made a rim-shot ring-tone yet.

10:08 a.m.: iMovie-like audio editing tool. Nice. Jobs playing “Gonna Make You Sweat.” Phil Schiller dancing in cage suspended from auditorium ceiling. Kidding. It’s Tim Cook. … Now, he’s playing “Give Peace a Chance.” “That’s for when NBC calls.” Ooh, snap. There will be 500,000 participating songs. Apple will turn ring tones tool on next week.

10:10 a.m.: Moving on to iPod: iPod sales “rather strong,” Jobs says. Apple replacing or refreshing every iPod model for holiday 2007, he adds. There’s more: Shuffle gets a basic refresh. New colors, 1 gigabyte. Same price.

10:13 a.m.: Nano most popular music player in history, Jobs reports. Customers want video on Nano. Nano gets video, brighter screen, cover flow, games. Then Jobs whips out chubby Nano. Holy crap. It’s incredibly thin. Five colors. Two-inch screen. Exact same screen as iPod video.

10:17 a.m.: New interface on this Nano. More intuitive. Quality looks great. Three games bundled with Nano. Apple has also partnered with Electronic Arts to bring games for sale on iTunes.

10:19 a.m.: EA game looks impressive.

10:20 a.m: Jobs demoing video: “I love Jon Stewart. Best place to get your news.” He calls up “Daily Show” episode where Stewart convinces John Hodgman to say “I’m a PC” on camera.

10:22 a.m.: There have been 25 million video podcasts on iTunes, Jobs says. Now, he’s demoing photo slide show on Nano. Again, pretty slick: 24 hours audio playback, five hours of video.

10:24 a.m.: Prices: 4 gigabytes, $149; 8 gigabytes, $199. Nano will start shipping today. In stores this weekend. “A little video for everyone,” Jobs declares.

10:25 a.m.: “We took redesigning this device very seriously,” Jobs says, “and we think we nailed it.”

10:27 a.m.: Moving on to iPod. “It’s time to give the iPod a name,” Jobs says, declaring it the “iPod Classic.” It has a full metal design. Much thinner. Eighty gigabytes of storage. What’s more, Jobs notes, iPod Classic will feature “all the user-interface tweaks you’ll find on Nano.”

10:28 a.m.: Whoa. Second model features 160 gigabytes–that’s storage for 40,000 songs in your pocket, Jobs says.

10:30 a.m.: The iPod Classic will be available this weekend as well, Jobs announces.

Then: “Not done yet.” He continues: “iPhone is best iPod ever.” Apple is bringing iPhone touch tech to new iPod, he says. It’s called iPod Touch. Same 8mm thin size. Same screen as iPhone. “We think it’s the eighth wonder of the world,” Jobs notes.

10:33 a.m.: Jobs keeps on listing: Multi-touch widescreen display. Photo support.

10:35 a.m.: “A revelation in how to enjoy music for the people who haven’t yet experienced the iPhone,” Jobs says of this new iPod.

10:37 a.m.: More features: Antenna in the back of device. Wi-Fi support. “We’ve succeeded in adding Wi-Fi where others have failed,” Jobs notes.

10:40 a.m.: Apple adding Safari browser to iPod Touch so users can use it to log in to those annoying Wi-Fi portal pages, Jobs continues. Full Google and Yahoo search capabilities. Plus: iPod Touch also features YouTube. Streamed over Wi-Fi.

On to the iPod Touch demo: Slide to unlock. User interface looks just like iPhone. Full onscreen controls cover flow in landscape mode. Jobs unhides Safari, YouTube icons on iPod screen. Still lots of empty screen space.

10:43 a.m.: Jobs makes 86th Bob Dylan reference of morning, browses Dylan’s Web site. Never realized this before, but Dylan looks quite a bit like Howard Stern on the cover of “Blood On The Tracks.” Now he’s surfing over to Facebook for iPhone. Status Update: “Steve is … about to announce an iPhone price cut.”

10:44 a.m.: Now he’s demoing YouTube. Oh, look. Haha funny hijinks. God, I love that Star Wars kid …

10:45 a.m.: “We’ve put Wi-Fi in and made it usable,” Jobs says. “It’s a worldwide product. Shipping to a number of countries beyond the states.”

10:47 a.m.: Screen is missing at least 10 buttons. Two models: 8 gigabytes, $299; 16 gigabytes, $399. Both models available later this month.

10:48 a.m.: Showing rough cut of new ad for iPod Touch. Then: “One more thing.”

10:50 a.m.: What could that empty spot in the iPod Touch dock be for? Answer: iTunes Wi-Fi music store. Four buttons, top 10s, top albums. According to Jobs, this means you can preview songs on iPod Touch, buy them, download to device and then sync to Mac. Search entire catalog.

10:51 a.m.: Hey … wait a minute … doesn’t Microsoft sell a Wi-Fi enabled music player? What’s it called again … the Microsoft zwned?

10:52 a.m.: iTunes Wi-Fi music store demo: Four buttons: Featured, Top 10, Search and Downloads. Jobs buys John Lennon’s “Imagine” to demonstrate. Fast download: Album art and everything.

10:56 a.m.: Wi-Fi music store will be available in 21 countries, Jobs notes, adding that it will be added to the iPhone via software update later this month.

10:57 a.m.: What? Partnership with Starbucks? (Someone needs to teach Jobs about good coffee.) You’ve got to be friggin’ kidding: Starbucks button will pop up on iTunes whenever you’re near a Starbucks, enabling you to listen to and buy whatever song the cafe is playing. Repeat: Starbucks button in iTunes. iTunes GUI design team silently sobbing in back of room.

11 a.m.: Howard Schultz, founder and chairman of Starbucks, is welcomed onstage. Starbucks is ubiquitous. Also fire hot: seven new stores every day “and we’re still in the embryonic stage.” Embyronic stage? How is that possible? Perhaps they’re planning to stack Starbucks retail stores 3 high in major metropolitan areas.

11:01 a.m.: Demo: Downloads are nice and fast. Occur in seconds, really.

11:03 a.m.: Schultz now talking about Starbucks as an entertainment brand: “With Apple, we will transform the marketplace.” (Wonder if Starbucks will burn CDs the same way it burns its coffee beans?)

11:04 a.m.: New Starbucks slogan: “Drip. Mix. Burn (our coffee).” Kidding. Actually tomorrow’s Digital Daily headline.

11:05 a.m.: More on the partnership: Free access to iTunes Wi-Fi while at Starbucks. Walk into a Starbucks, iPod will immediately recognize what store you’re in and what songs it’s playing.

11:07 a.m.: Very aggressive rollout beginning Oct. 2: New York City and Seattle in October. San Francisco in November. Los Angeles in February. Chicago in March. All Wi-Fi stores completed by 2009.

11:09 a.m.: Jobs: “Lots of people will be happy with this new combination: iPods and coffee.” Note to self: anonymously send Steve a pound of Kenya AA from Stumptown Coffee Roasters.

11:10 a.m.: Now let’s review … New iPod lineup: Shuffle, Nano, iPod Classic, iPod Touch,
iPhone. They range in price from $79 to $599.

Uh-oh. New iPhone? No, but Jobs says that iPhone owners are more satisfied with product than any other device Apple has made.

11:13 a.m.: Jobs announces that the 8 gigabyte iPhone drops in price to $399. (No word on whether Apple will offer rebates to nudniks like me who paid $599 after waiting in line for 4 hours.) “We want to put a lot of iPhones in stockings this Christmas,” he adds.

11:15 a.m.: Guess Paul McCartney must have been too busy to perform “Hey Jude.” Jobs welcomes KT Tunstall to the stage. Jobs walks off to a darkened corner, rocking out with his restrained CEO head-bob. Tunstall ends the event by noting: “Steve Jobs is actually making it more fun to pay for music than steal it.” Sounds like an ad lib, but then again these Apple events are very tightly scripted.