All Things Digital

As the anniversary of the iPhone’s market debut approaches, the Mac faithful are quickly succumbing to Apple (AAPL) Rumor Seasonal Affective Disorder, an ailment most often associated with the lead-up to Macworld.

Fueling that trend today is a memo, purportedly leaked from inside AT&T (T), instructing employees not to schedule any vacation between June 15 and July 12 to ensure sufficient staffing for “an exciting Summer Promotional Launch.” This, of course, is being taken as proof positive that the 3G iPhone will arrive at market sometime during that timeframe. And for good reason, AT&T issued a similar mandate last year prior to the iPhone’s official debut.

Meanwhile, Vodafone (VOD) and Telecom Italia (TI-A) said today that they’d both won contracts to bring the iPhone to Italy this year, the first time Apple has allowed two mobile carriers to distribute the device in a single country.

An interesting bit of news and one that lends some validity to recent reports that Apple is stepping back from the exclusive iPhone distribution arrangements it’s been inking to spur iPhone growth abroad. “Apple’s either turned a corner that they’ve had to turn, or that they’ve chosen to,” Technology Business Research’s Ezra Gottheil said of the Vodafone and Telecom Italia deals. “I don’t know if they prefer the exclusivity, and the revenue sharing that goes along with it, or just prefer to sell iPhones and grow their share of the [handset] market.”

Motorola added another dancer to its conga line of disappointing quarters today, posting an ugly first-quarter loss. The ongoing collapse of its post-Razr phone business continued to weigh heavily on the company, which lost $194 million in the quarter ended March 31. That’s significantly worse than its year-ago loss of $181 million. Sales fell about 21% to $7.45 billion, from $9.43 billion a year ago. Mobile-devices losses were $418 million on sales of $3.3 billion, down 39% from the year-earlier quarter.

Suffice to say, the gruesome performance fell short of Wall Street expectations. Motorola (MOT) shares slipped into the mud following the news. They’re trading around $9 right now, down some 4%.

Not to worry, though, says CEO Greg Brown. Motorola, which plans to shed its money-losing handset division in 2009, is well positioned for recovery. “Motorola is still a huge business and an iconic company,” he told USA Today. “I see a vibrant, very successful mobile-device business with a fresh portfolio that is aggressive and competing effectively [in the global market]. These elements, I think, will allow it to compete ferociously in the future.”

Remarkable. Downtrodden handset maker Palm (PALM) has somehow managed to poach another Apple (AAPL) veteran: Lynn Fox, the company’s now former director of Mac PR.

First Jon Rubinstein, former head of hardware engineering at Apple. Then Mike Bell the company’s VP of CPU software, in the Macintosh hardware division. And now Fox.

What does Palm have up its sleeve that could possibly inspire Rubinstein, Bell and Fox to leave Apple at a time like this?

Motorola has finally taken a RAZR to its handset business. In the face of growing pressure to bolster its ailing stock price, Motorola (MOT) yesterday announced plans to divide itself into two publicly listed companies–one focusing on mobile phones and the other on broadband and mobility services.

“Our decision to separate our Mobile Devices and Broadband & Mobility Solutions businesses follows a review process undertaken by our management team and Board of Directors, together with independent advisers,” CEO Greg Brown said in a release. “Creating two industry-leading companies will provide improved flexibility, more tailored capital structures and increased management focus–as well as more targeted investment opportunities for our shareholders.”

On a conference call with Wall Street analysts, Brown said the decision to carve out its handset business was the result of an evaluation process announced in late January, not a move engineered to appease billionaire investor-provocateur Carl Icahn who sued the company in a Delaware court Monday demanding access to minutes of board discussions about the division’s potential spin-off.

Palm shareholders gave the company a kick in the Grape Nuts this morning in answer to news that it will shutter all but one of its retail stores by the end of the first quarter. The closure affects some 33 Palm locations nationwide, including airport kiosks. The only store Palm plans to keep open is the one in its Silicon Valley headquarters (which to the company’s credit is one more than Gateway kept open when it pioneered this particular brick-and-mortar exit strategy).

For Palm, which could likely use all the cash it can scrape together, the move seems wise. “It makes sense,” Global Crown Capital analyst Pablo Perez-Fernandez told the San Jose Mercury News. “They need to take every resource they have and focus them on their core product that will take them on a growth path.”

Assuming there’s a growth path to be found. And for Palm, which recently sacked a reported 10% of its workforce and just settled a class-action suit over defects in some of its Treo handhelds, that’s not exactly a certainty at this time. “They’re toast,” said Shareholder Value Management analyst Jeff Embersits.

Unlike Verizon, AT&T doesn’t need to open up its wireless network to other wireless devices. Why? According to Ralph de la Vega, CEO of AT&T’s wireless business, the company’s network has always been open. “We are the most open wireless company in the industry. You can use any handset on our network you want,” de la Vega told USA Today. “We don’t prohibit it, or even police it.”

So non-AT&T phones work on AT&T’s network. AT&T just didn’t bother to tell anyone–until all this talk of open-access wireless and Google’s open mobile-software platform, Android, made it a PR talking point. Your turn, T-Mobile.

When Microsoft CEO Steve Ballmer told a departing Microsoft employee that he would “f*****g kill Google,” he forgot to mention that he planned to take his sweet time doing it.

Because here we are three years later, a few days after Google announced Android–an open mobile platform that could mean trouble for Windows Mobile, Google’s trading around $700, Microsoft’s trading around $35, and Ballmer–well, Ballmer’s doing what he’s done for years now: disputing the notion that Google has made any gains against Microsoft.

In Tokyo to preside over the launch of Microsoft’s new Windows Live services, Ballmer said he still doesn’t see Google as much of a threat to Microsoft’s loss-making online services business. “Google is not ahead of us,” he told reporters, adding “in the area of search specifically, Google would lead.”

And what of the mobile-platform market and Google’s designs on it? Surely, the impressive membership of the search giant’s Open Handset Alliance is cause for some concern. Not at all. The mobile-platform market is “Microsoft’s world” and Google’s Android platform is vaporware. “…We have great momentum, we’ve brought our Windows Mobile 6 software to market, we’re driving forward on our future releases and we’ll have to see what Google does,” said Ballmer. “Right now they have a press release, we have many, many millions of customers, great software, many hardware devices and they’re welcome in our world.”

Apparently, Ballmer hasn’t seen Android’s rumored first app., yet.

“This is the Gphone. OK, this is not the Gphone.” The words of Iliyan Malchev, a Google engineer, in a video describing the company’s new mobile phone effort, really couldn’t have been more apt. Because what Google’s gone and built isn’t a hold-in-your-hand phone, but a robust open-development platform upon which to build one.

Android, as Google’s calling it, is a complete “stack” of software for mobile phones, backed by a consortium of companies called the Open Handset Alliance. (Interestingly, Verizon, which was rumored to be interested in Google’s wireless efforts, isn’t yet a member.)

“Android is the first truly open and comprehensive platform for mobile devices,” Andy Rubin, Google’s director of mobile platforms, explained in a blog post this morning. “It includes an operating system, user interface and applications–all of the software to run a mobile phone, but without the proprietary obstacles that have hindered mobile innovation. … Through deep partnerships with carriers, device manufacturers, developers and others, we hope to enable an open ecosystem for the mobile world by creating a standard, open mobile software platform. We think the result will ultimately be a better and faster pace for innovation that will give mobile customers unforeseen applications and capabilities.”

The first phones based on Android are expected in the second half of 2008. And no, Google isn’t building one of them, as CEO Eric Schmidt pointed out over and over again during a conference call to discuss Android this morning.

Q: So if this is not the Gphone, when will we see the Gphone, and what will it be?

Eric Schmidt: We’re not announcing anything, but this is the platform for building a Gphone. It starts a whole wave of innovation …

Q: Does that mean there will be NO Google phone you can buy?

ES: Imagine not just one Gphone, but a thousand Gphones as a result of the partnerships … the many other people who will be joining the open initiative. We forgot to tell you that it’s available next week, and the terms are the broadest in the industry.

Q: ………..Gphone?

ES: We are not announcing a Google phone.

Q: Eric, I want to go back to the Gphone–what’s the deal?

ES: The deal is we don’t pre-announce products… if there were to be a Gphone, it would run Android..

Previously:

• Report: Google May or May Not Reveal Phone Project Monday!
• The Mobile Apps Are Great, but the ‘I’m Feeling Lucky’ Dial Function Really Makes It
• First Gphone Line Forms in New York Times Newsroom
• We Believe in One Godphone, the Handset Almighty …
• ‘We’re Not Doing a Mobile Phone’ Added to Norton Anthology of False Denials
• The Gphone: Exclusively From Sprint Nextel and Google?

In a press conference following Google Analyst Day, company Chairman and CEO Eric Schmidt and co-founder Sergey Brin confirmed Google’s plans to bid in the FCC’s upcoming 700 MHz spectrum auction, but declined to discuss the mobile-phone strategy that might make use of it–apparently leaving that task to The Wall Street Journal.

According to a report in the publication today, Google will officially disclose its long-anticipated plans for Google-powered phones within the next two weeks. The devices will reportedly feature Google’s standard mobile applications (Maps, etc.) and more interestingly, a customized open-source operating system, which would allow third-party developers to build applications beyond those offered by Google. From the Journal:

The Google-powered phones are expected to wrap together several Google applications–among them, its search engine, Google Maps, YouTube and Gmail email–that have already made their way onto some mobile devices. The most radical element of the plan, though, is Google’s push to make the phones’ software ‘open’ right down to the operating system, the layer that controls applications and interacts with the hardware. That means independent software developers would get access to the tools they need to build additional phone features.

“Developers could, for instance, more easily create services that take advantage of users’ Global Positioning System location, contact lists and Web-browsing habits. They also would be able to interact with Google Maps and other Google applications. The idea is that a range of new social networking, mapping and other services would emerge, just as they have on the open, mostly unfettered Web. Google, meanwhile, could gather user data to show targeted ads to cellphone users.”

And don’t forget the mobile commerce element. Google-powered phones might even offer customers a way to pay for goods from vending machines and retailers via text message.

Anyway … The company has approached a number of handset makers and wireless operators about partnering in the effort, which it hopes to bring to market by the middle of 2008.

Previously:

• First Gphone Line Forms in New York Times Newsroom
• We Believe in One Godphone, the Handset Almighty …
• ‘We’re Not Doing a Mobile Phone’ Added to Norton Anthology of False Denials
• The Gphone: Exclusively From Sprint Nextel and Google?

Apparently Google’s cellphone offering isn’t a cellphone at all. And the much discussed prototypes the company has been spotted toting around are really just for show-and-tell.

Because Google isn’t developing a cellphone, it’s developing a cellphone operating system. With it, the company hopes to replicate its online success in the mobile world and give Microsoft’s Windows Mobile OS a run for its money as part of the deal. “The essential point is that Google’s strategy is to lead the creation of an open-source competitor to Windows Mobile,” one industry executive told the New York Times. “They will put it in the open-source world and take the economics out of the Windows Mobile business.”

And that makes quite a bit more sense than the idea of Google suddenly leaping into the hardware business with a full-blown Google handset. Better to extend your services and advertising to the roughly two billion consumers world-wide who use mobile devices than try and sell them an entirely new mobile device, right?