All Things Digital

Google’s (GOOG) Open Handset Alliance is going to have to do a lot better than a few early prototype demos if it truly hopes to unify mobile Linux around its Android specification. Because rival LiMo Foundation is stepping up its game. And fast.

Earlier this year, LiMo uncrated a first wave of handsets running on its Linux-based software platform for mobile devices–18 devices from seven vendors. And now the foundation is adding some big names to its roster of mobile-phone outfits. This morning, LiMo announced eight new members, among them: Mozilla, developer of the Firefox Web browser and Verizon Wireless (VZ).

The companies’ membership is an important endorsement for LiMo–Verizon’s in particular. The mobile-phone player seems quite invested in LiMo and its vision of mobile Linux, which is far more Democratic than the OHA, which is one of those wonderful we’re-Google-and-Google-always-knows-best democracies. So much so that Verizon has declared LiMo’s to be its preferred mobile OS.

“We are wholeheartedly endorsing LiMo’s approach, and we are investing company resources, but we see the opportunity to have both the OHA and LiMo succeed and/or work together,” Kyle Malady, vice president of networks at Verizon Wireless, said during a conference call with reporters this morning. “LiMo is our platform of choice, but if there comes a point where we see there is benefit for our customers we will use OHA as well.”

(Image Credit: ThinkGeek)

Vonage’s slow death is … well, it’s slowing.The financially struggling Internet-phone company reported today a smaller first-quarter loss thanks largely to prudent cost cuts.

Great news for Vonage (VG), which has been tormented by a barrage of costly legal battles and set upon by new and powerful rivals. The company’s net loss shrank to $8.96 million, or 6 cents a share, from a loss of $72.3 million, or 47 cents, in the year-earlier quarter.

Sadly for Vonage, the company’s Q1 loss isn’t the only thing that shrank. Subscriber growth did as well. The company signed up just 30,000 new subscribers in the quarter, a big decline from a year earlier when it added nearly 166,000 subscribers. Worse, turnover rate increased to 3.3% from 3% in the fourth quarter.

Still, Vonage is a bit healthier than it’s been for some time now. So while it may not exactly be on the road to recovery, it’s at least crawling in its general direction. To that end, the company’s inked a deal to resell Covad’s DSL service under the Vonage Broadband name. An interesting idea, in that it will allow Vonage to bundle a broadband offering with its Internet telephony services like most other phone and cable companies on the planet. But DSL? Really? At a time when Verizon (VZ) is expanding its FiOS fiber-optic service and Comcast (CMCSA) is boosting the speed of its high-tier cable broadband?

Microsoft’s chief software architect Ray Ozzie has finally published the sequel to “The Internet Services Disruption,” the 2005 potboiler of a memo that charted Microsoft’s (MSFT) better-late-than-never software-as-a-service strategy. It’s called, intriguingly, “Services Strategy Update April 2008” and it describes in numbing detail Live Mesh, Microsoft’s ambitiously late entry into a rapidly growing cloud-computing market.

Live Mesh, though it takes Ozzie five pages to describe it, is essentially a “software-plus-services” platform that uses the Web to synchronize and share data among devices, applications and people (you’ll find a walk-through here and a good overview here).

“Over the past ten years, the PC era has given way to an era in which the Web is at the center of our experiences–experiences delivered not just through the browser but also through many different devices including PCs, phones, media players, game consoles, set-top boxes and televisions, cars, and more,” Ozzie writes. “It is our mission in this new era to create compelling, seamless experiences that combine the power of the Internet, with the magic of software, across a world of devices. … the Web is the hub of our social mesh and our device mesh.”

“The Web is the hub of our social mesh and our device mesh.”

Wait.

Does Bill Gates know that? Because last year he told CNN’s “American Morning,” “We’re making the PC the place where it all comes together.” Clearly, in the ensuing year, Gates and Microsoft noticed that Google (GOOG) et al. are fast shifting computational relevancy to the Web, away from the desktop and, more importantly, away from Microsoft.

Live Mesh, if it’s successful, will change that. Because, as Joe Wilcox notes over at Microsoft Watch, “Live Mesh is Microsoft’s attempt to turn operating system and proprietary services platforms into hubs that replace the Web. Microsoft is building a services-based operating system that transcends and extends Windows and also the function of Web browsers.” Adds Wilcox, “It’s bold, brilliant and downright scary.”

Sony BMG (SNE) has signed on to Nokia’s (NOK) new “Comes With Music” program and really, who better than the pioneer of the rootkit digital-rights management scheme to endorse Nokia’s DRM-hobbled prebundled music initiative?

This morning, Sony BMG became the second record label to jump on board the Finnish phone giant’s Comes With Music offering, which–when it launches in the second half of 2008, will package mobile phones with a year of unlimited access to music. There are, however, certain caveats to that value proposition, as I pointed out last December:

Though Comes With Music does indeed permit owners of certain Nokia cellphones to download as many songs as humanly possible in one year (with no per-song data charges), transfer them to a PC and keep them at the end of that time, they must pay a per-song usage fee to burn them to CD. What’s more, the songs are wrapped in Microsoft’s (MSFT) ironically named ‘Plays for Sure’ digital-rights management scheme, which prevents them from being played on the iPod, Zune, etc. Finally, another 12 months access to the music catalog requires the purchase of a brand new phone.”

Clearly, Sony, like Universal (VIV.PA) before it, doesn’t see these issues as off-putting to consumers. “When you give consumers the key to the candy store without any limitations, there’s a lot more opportunity for discovering music that you might not have found before,” said Thomas Hesse, president of global digital business and U.S. sales for Sony BMG Music Entertainment. “We think this will energize the discovery of music.”

It might energize Sony BMG’s bottom line a bit as well. When Universal first signed up for Comes with Music, sources close to the company said that Nokia would pay the label up to $35 for every phone that offers access to its library. Nokia subsequently denied it was paying that amount, but it’s definitely paying something–to Universal, Sony and whatever other labels it manages to line up for the service.

EBay (EBAY) may yet find a way to justify the astonishing $2.6 billion it paid for Skype. This morning, the Internet phone service launched an aggressive new international calling plan. For flat fees of up to $9.95-a-month, Skype is offering unlimited calls to computers, landlines and some cellphones in 34 countries.

“For example if you live in London, for just 2.95 euros a month, you can call your grandmother in Poland, whenever you like, talk for up to six hours at a time, and not worry about how much it’s costing you,” explained Stefan Oberg, VP and GM of telecoms at Skype. “Your grandmother doesn’t need to understand the Internet. You just use your Skype subscription to make the call and she just picks up the phone.”

An interesting move, and one that comes just days after incoming eBay CEO John Donahoe said the company will consider selling Skype at the end of the year if it can’t find ways to use it to support its core business. “What we’re testing this year are the synergies,” Donahoe told the Financial Times. “If the synergies are strong, we’ll keep it in our portfolio. If not, we’ll reassess it.”

While consensus has long held that the synergies to which Donahoe refers are anything but strong, that may be changing. Last week eBay reported earnings, noting that Skype added 33 million subscribers in the first quarter of this year, boosting its total membership to 309 million. Revenue also hit $126 million, up 61% from the same quarter last year.

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.”

Motorists who use cellphones while behind the wheel aren’t just dangerous. They also measurably impede the flow of traffic.

That’s the self-evident conclusion of a new study from the University of Utah’s Traffic Lab. Observing the behavior of undergraduate students parked in front of driving simulators and chatting on hands-free mobile phones, researchers found that they spent up to 31% more time tailing other slow drivers instead of passing in a faster-moving lane and drove–on average–2 mph slower than others. They took more time to regain freeway speeds after braking, too.

“At the end of the day, the average person’s commute is longer because of that person who is on the cellphone right in front of them,” said Dave Strayer, a University of Utah psychologist and leader of the research team. “That S.O.B. on the cellphone is slowing you down and making you late.”

Correction: those S.O.B.s. A January 2007 survey of 1,200 motorists by Nationwide Mutual Insurance Co. found that 73% talk on cellphones while driving. Which is lousy news for the 23% who don’t. “It’s a bit like breaking wind in the elevator,” Peter Martin of the University of Utah’s Traffic Lab told Reuters. “Everyone suffers.”

Ribbit is as much “Silicon Valley’s first telephone company” as the region’s first to boast a silly name and grandiose claims.

Still, the Silicon Valley start-up, which officially opened its Web-based telephony platform to third party developers this morning, is generating a lot of buzz for its Flash/Flex-based telephones (see video below), and rightly so. The company has essentially built a software version of an operator-class telephone switch that connects Internet-based voice communication services with mobile and landline phones and other Web-based phone applications.

Using its Ribbit API, developers can write applications that support full telephone capabilities–voice mail, call-logging, text-to-speech transcription services, etc.–and because they’re Flash/Flex-based, they can be embedded into Web sites and integrated into Web-based services.

“What we have done is made voice an object that you embed into your workflow (or software),” said Ribbit CEO Ted Griggs. “We didn’t want to change how people did things, like communicate via Skype, and wanted to integrate the platform to work with any phone.”

Smart, eh? But how’s the company going to make money? Ribbit says it plans to charge for services like calls to traditional landlines, voice-mail transcriptions and billing. A reasonable plan, but as Ovum analyst Brett Azuma notes, an unproven one. “Unless there’s a foolproof way to get the products out there and make them successful,” Azuma told Wired. “I think the consumer applications are a little unclear for now. Being able to use text-to-speech transcription services and archive voice calls are many of the features that consumers have shown interest in over the years. However, whether or not they’re willing to pay for these features is going to be the big question.”

Well, look at that. AT&T’s actually figured out a way to turn the bad press over its cozy relationship with the National Security Agency into a product endorsement: offer a surveillance service to owners of small- and medium-size businesses.

Today the NSA-preferred telecom announced AT&T Remote Monitor, a package of IP video cameras and environmental sensors with which to surveil business locations and the employees who work in them. “It’s a unique and affordable option for a small business that wants to keep in touch with various locations,” Steve Loop, executive director for business development at AT&T, told the New York Times. “It saves them a lot of time in their day from having to physically go to all of their locations.”

Bet that’s exactly how the NSA felt when AT&T provided it with access to millions of email messages, Web-browsing sessions and phone calls. Anyway … AT&T’s touting the service as an easy way to monitor employees, customers and operations, which folks like restaurateur Beaux Roby says is a necessity. “It is Big Brother,” Roby said, “but in this day and age, you need these type of tools.”

And AT&T is, of course, ready and willing to provide them–whether it’s busting time-wasting employees, filtering the Internet for widespread copyright infringement or building that massive database of Americans’ phone calls.

Odd, isn’t it, that Google will award up to $30 million in prize money to anyone able to land a privately funded spacecraft on the moon, but it’s willing to pony up just $10 million to spur interest in development of its new Android platform for mobile devices. Apparently Google’s dominion over space figures higher on the list of company priorities than its dominion over the mobile market.

This morning, Google’s Open Handset Alliance released the Android Software Development Kit in concert with the Android Developer Challenge, a contest that will see Google doling out $10 million in prize money to programmers able to create workable applications for the platform.

“We’ve built some interesting applications for Android but the best applications are not here yet and that’s because they’re going to be written by developers,” Google co-founder Sergey Brin said in a statement. “We’d like to reward these developers and recognize them as much as possible.”

Cash prizes will range from $25,000 to $275,000. Half of the $10 million will be awarded for entries submitted between Jan. 2 and March 3 of next year. The other $5 million will be distributed in a second round that will start after the first Android-based phones arrive at market in the second half of 2008.

Android is built on a Linux 2.6 kernel and supports multitouch interaction, which means we’ll likely be seeing quite a bit of creativity on the platform.

“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?