Big news often comes in small packages and BoomTown was all over the little moves that meant big stories this week. Kara covered a massive redesign of Microsoft’s MSN homepage that follows the old car-racing-mantra-turned-Web-design ethos: Add power and lightness. Everyone breathed a sigh of relief when BoomTown covered the end of the Skype ruckus. All is forgiven, and all it took was a sizable stake in the company and seats on the board. Kara rounded things out by running a quick post about a spankin’ new feature from AllThingsD: Every Friday, the just launched “Almost Famous” will cover interesting start-ups through the eyes of their chief geeks. Kara’s all about geek love.

Digital Daily isn’t usually big into bean-counting, but this week the numbers were where it was happening. The first sales figures came back from Apple’s iPhone launch in China, and the numbers weren’t good. As of pub time for the post, only 5,000 iPhones had been (legitimately) purchased. If the Chinese numbers were a picture of modesty, the App Store’s numbers were parading through Time Square in an orange jumpsuit singing Eddie Grant’s “Electric Avenue.” The two-year-old App store’s epic popularity has pushed its already outsized download numbers past the two-billion mark. Not to be outdone with unprecedented flash, Google (GOOG) violated its own nonrule late in the week and ran a semi-ad on the Google homepage. You say ad, they say synergy, but at the end of the day it was a direct promo for Motorola’s (MOT) new Droid, which runs on Google’s Android platform.

MediaMemo started the week off right with a fresh bite from Apple (AAPL). Peter covered the revamp of Apple TV, which will now be offered for $30 a month. News from News Corp. was no surprise this week, when MediaMemo brought us the story that the media empire (and AllThingsD’s uber-parent company) was doing fine as long as you only pay attention to cable and movies. Broadcast and print? Eh, not so much. Finally, Peter asked a few probing questions of Google CEO Eric Schmidt in regard to his company’s suspicious addition of a “blog” tag attached to some Google News postings. Schmidt speculated, but the ultimate answer wasn’t, as he suggested, because of your mother.

Deep in his Personal Technology bunker, at an undisclosed location somewhere in rural Maryland, Walt got to take a crack at the new Motorola Droid this week, and his response was, well, very positive. He praised the Droid’s exceptional battery life and call clarity, even if the touchscreen wasn’t quite up to the iPhone bar. All in all, he said it was a win for Verizon (VZ) and the Google’s mobile OS.

Mossberg’s Mailbox continues to fill with questions about the speculative Apple tablet. Walt offered some other sage advice about making the Windows 7 switch with 64 bits, and what to do with all that grief over the death of Microsoft’s (MSFT) Outlook Express.

Katie was sweatin’ to the newbies this week, with an energetic review of Fitbit, a wireless fob for tracking calories and exercise stats. The Bluetooth headset-sized clip attaches to your waistband and uploads your activities to the Fitbit Web interface, where you can track how many calories you did or didn’t burn. You can also add water consumed and calories eaten. The Fitbit has been shipping since September, but won’t appear on retail shelves until after the holidays. No word yet on if it will include a “Cheesecake Factory” tab to the interface so as to allow for calorie counts that require exponents.

Like any good gadget lovers, we are all about the small and mighty here at AllthingsD. Stay tuned in with your RSS reader, Twitter feed or the good ol’ homepage. We’ll keep bringing you the little things you need to know.

According to a 10-Q filing with the Securities and Exchange Commission, Sun (JAVA) lost $120 million, or 16 cents a share, on revenue of $2.24 billion in its first quarter. During the same period a year ago, Sun lost $1.68 billion, or $2.24 a share, on $2.99 billion in sales. Analysts had been expecting earnings of 25 cents a share on revenue of $2.31 billion.

Oracle (ORCL) CEO Larry Ellison recently said that Sun is losing about $100 million a month as it waits for European antitrust regulators to approve its acquisition by Oracle. Looks like he’s about right.

Below, excerpts from the 10-Q:

Server Products Revenue
The decrease in Server Products revenue during the first quarter of fiscal 2010, as compared to the corresponding period in fiscal 2009, was primarily due to the economic downturn and consolidation of our customer base, specifically in the financial services sector, as projects were scaled back, delayed or canceled, in addition to the uncertainty associated with the proposed acquisition by Oracle and increased competition.

Storage Products Revenue
The decrease in Storage Products revenue during the first quarter of fiscal 2010, as compared to the corresponding period in fiscal 2009, was primarily attributable to the economic downturn as projects were scaled back, delayed or canceled, in addition to the uncertainty associated with our proposed acquisition by Oracle and increased competition.

North America
The decrease in revenue during the first quarter of fiscal 2010, as compared to the corresponding period in fiscal 2009, was primarily due to decreased sales of our enterprise Server Products, storage disk products and Services. We are still seeing the results of IT budget cuts instituted last year by our largest customers due to the economic downturn, especially in the financial services sector, in addition to the consolidation of our customer base. Across all sectors, non-critical projects are on hold. Revenue was also negatively impacted by the uncertainty associated with our proposed acquisition by Oracle and increased competition.

PREVIOUSLY:

• European Union Mulling Objection to Oracle-Sun Deal
• Q: What’s the Difference Between Neelie Kroes and Larry Ellison?
• Sun to Sack 3,000
• Former MySQL Boss to EC: Approve Oracle-Sun Deal
• Ellison: Oracle Is the New IBM
• Mr. Ellison Asks That His Burgers Be Served With Freedom Fries Until Further Notice

“There will be no banner ads on the Google homepage or web search results pages. There will not be crazy, flashy, graphical doodads flying and popping up all over the Google site. Ever.”

– Google Vice President of Search Product and User Experience Marissa Mayer

“People wouldn’t like [ads on the homepage]. We prioritize the end user over the advertiser.”

– Google CEO Eric Schmidt, August 2009

Well, this is a first, I think: Google is promoting a consumer electronics device on its front page. Surf over to Google.com right now and you’ll find this pitch plugging Droid, Motorola’s (MOT) new Android smart phone: “The Droid is on sale now. Learn more.”

The text is simple and at just 42 characters, it jibes well with Google’s (GOOG) minimalist design ethic. Click on that “learn more” link and you’re taken to a mobile partners page that touts Droid’s Google-enabled search prowess. Only then are you presented with a big “Get the Verizon Droid Now” button that takes you to Verizon Wireless (VZ), where you can purchase the device.

So is it an ad? Google will almost certainly argue that it is not. But clearly, it commercializes the page. Droid is a consumer product sold by another company and Google is branding it on its most prominent page. Wonder how much that spot is worth.

Furthermore, it’s interesting to see Google leveraging search–a product in which it enjoys a de facto monopoly–to promote a second product that isn’t yet dominant (Android). More so, given this remark from CEO Eric Schmidt, made just yesterday:

“Hopefully, we won’t repeat the mistakes that Microsoft made 10 years ago that ultimately led to all these things that happened to them.”

I’ve asked Google for comment and will update this post if and when I receive a reply.

UPDATE Here’s Google’s comment on the Droid promotion via company spokesperson Gabriel Stricker:

We are currently running a homepage promotion for Droid. From time to time we include a link on the Google home page that points users to exciting and important information, whether it be relief opportunities in the wake of a tsunami or hurricane, awareness about an important cause, or information about a new product. The Droid is a hardware collaboration that we’ve been very active and involved with, so it makes sense that Google has an interest in getting the word out.

UPDATE Turns out this is not the first Google has promoted a handset on its homepage. Last October it plugged another Android device there, the T-Mobile G1.

“The cost of smart phones is considerably higher than feature phones for which the early termination fees were created years ago at $175,” said Verizon spokesman Jim Gerace. He added that the new $350 ETF declines by $10 per month through the life of the contract and customers can avoid it by buying their devices off contract and paying full retail price.

An interesting move for Verizon (VZ), which just last year agreed to pay $21 million to settle a class-action lawsuit filed by California consumers over the very early-termination fees it is now increasing. The plaintiffs in the suit alleged that Verizon’s ETFs were illegal under California law and that they were designed to unfairly lock consumers into long-term contracts and prevent them from switching carriers. When Verizon settled the suit, it denied any wrongdoing, insisting that early-termination fees are simply a means of recovering legitimate costs. And to some extent Verizon does have a point.

Full retail price for the Motorola’s (MOT) new Droid is $559.99. With a two-year contract, Verizon sells the handset for $199.99. Theoretically, that’s a $359.99 subsidy (I have no idea at what price Verizon purchases Droid from Motorola). So if Verizon allowed subscribers to break their contract after a month without paying an early-termination fee, the company would stand to lose money. And subscribers who did so could subsequently sell the device online and potentially make a profit, though a small one.

So it’s certainly understandable that Verizon and other carriers want to protect the subsidies they dole out for these new smart phones. And as noted earlier, Verizon’s new ETF drops by $10 each month a subscriber remains under contract. But at this rate, subscribers are still bound to pay a $110 termination fee in the 23rd month of a two-year contract. The contract is nearly over, the subscriber obligation to Verizon almost fulfilled, yet the company can still slap its customers with nearly a third of the full ETF if they break it at that time.

By month 23 of a two-year contract, does Verizon really stand to lose $110 if subscribers decide to switch carriers? Doesn’t seem likely if subscribers can walk away just a month later without consequence, taking their handsets with them.

Since Verizon is pro-rating the ETF, why isn’t it doing so in such a way that it zeroes out by the end of the contract?

And isn’t the fast pace of innovation in the smart-phone sector such that prices–for both component and device–are dropping so quickly that high ETFs aren’t really justified? Remember, you can get Apple’s (AAPL) iPhone for $99 today. When the iPhone debuted in 2007, it commanded a price of $499/$599, depending on model.

I’ve put those same questions to Verizon and will update here when I hear back. In the meantime, here’s what Consumers Union policy analyst Joel Kelsey has to say on the matter: “When people want to switch wireless services, the biggest cost they face is early termination fees. These fees are designed to lock people into long-term contracts and stop them from getting better deals. Early-termination fees make the marketplace less competitive. Verizon’s move is painful proof that it’s time for lawmakers to crack down on these fees.”

UPDATE: Verizon Wireless spokesperson Nancy Stark offers the following answers to the questions I posed above:

Your first question regarding the balance at month 23 or 24 assumes that, at that point, we have recovered all of our subsidy and up-front costs for every device. That simply is not so.

On your second question, while the pace of innovation plays a role in prices coming down somewhat, it also plays a role in driving up costs as more and more complexity that customers want is added to phones–from premium HTML browsers to high-resolution MP cameras with optical zoom; videoplayers; music players; dual processor chipsets; WiFi; very high display resolution, operating systems such as BlackBerry, Windows Mobile, Palm, Android–ALL with the added value (vs a desktop) of mobility, and ALL in one tiny device that ALSO allows you to talk to anyone from anywhere. phew! (by comparison, I recently paid $200 for a camera and all it can do is take pictures, and it has only middle of the road capabilities.)

But getting back to ETFs specifically. The most important point is that Verizon Wireless customers do not have to have an ETF at all if they do not want to. ETFs allow customers to have it either way: They can have no ETF and pay full retail for their device. OR, they can get a greatly discounted device by having an ETF.

The fight for Skype has ended. After weeks of nasty legal sparring, the Internet telephony service’s founders agreed to join the investor group purchasing it from EBay (EBAY) and dropped the lawsuit that had threatened to bollocks the deal.

“Skype will be well positioned to move forward under new owners with ownership and control over its core technology,” said eBay chief executive John Donahoe in a statement. “We look forward to closing the deal and focusing on growing our core e-commerce and payments businesses.”

Under the terms of the agreement, Skype founders Niklas Zennström and Janus Friis will take a 14 percent stake in the company they founded and then sold to eBay, which will include an investment by them.

BoomTown’s Kara Swisher reported yesterday that the total was 13 percent–10 percent for the rights to key Skype technology held by the founders and the option to invest $83 million for three percent more.

In exchange, the pair will give Skype software essential to its operation and drop their various lawsuits against eBay and Skype buyers.

Interestingly, Index Ventures, which helped orchestrate the deal, is leaving the consortium of investors taking a majority stake in the company–as BoomTown reported earlier this week. Index partner Michelangelo Volpi, a former employee of Skype’s founders, had been at the center of one the suits that threatened to ruin the deal. Said Index partner Danny Rimer: “The deal terms changed for Index such that it no longer matches our investment criteria and thus we have decided not to participate in the transaction.”

PREVIOUSLY:

• Volpi and Index Ventures Out of Skype Deal, the Lawsuit-Happy Founder Twins In
• I Love the Smell of Settlement in the Morning: Skype Founders Set to Get 10 Percent, Option to Buy Three Percent More and Two Board Seats
• Volpi and Index Smack Back at Skype Founders With Motion to Dismiss (Plus Filings!)
• When Entrepreneurs Attack! All 10 New Skype Lawsuit Filings!
• Dueling Skype Sides Hire Big Communications Guns
• Skype Actually a “Voice Over IP Litigation” Service

According to News.com, 100 people or so lined up outside Verizon’s midtown Manhattan store last night prior to its midnight opening. And various reports posted to Twitter suggest there were queues at other outlets as well, though quite a bit shorter (see below; click to enlarge).

In any event, the fact that there are lines at all must be a welcome sight for Verizon (VZ), which has been looking for a strong rival to Apple’s (AAPL) iPhone, and for Motorola (MOT), which hopes Droid will revive its much-diminished post-Razr cellphone business. As one Verizon subscriber eager to trade up to Droid told me, “it’s the best smart phone not made by Apple.”

With endorsements like this, Motorola should be working a bit harder on branding the device as its own. Right now, the Droid marketing push from Verizon Wireless is so overwhelming that you’d think CEO Lowell McAdam designed it himself. Why aren’t we hearing from Motorola as well?

“Droid is potentially a game changer for Motorola,” iSuppli analyst Tina Teng said in a recent research note. “Motorola now is no longer just emphasizing slick form factors, such as it did with its RAZR handset. The company now has focused on the hottest segment of the global mobile handset market–providing compelling smartphone products that are usable and expandable through third-party applications.”

That being the case, Motorola might want to do a bit more to get its name out there.

“Hopefully, we won’t repeat the mistakes that Microsoft made 10 years ago that ultimately led to all these things that happened to them.”

– Google CEO Eric Schmidt

Earlier today, Kara Swisher reported in BoomTown that RealNetworks (RNWK) would sack four percent of its workforce–70 employees out of its 1,700-person staff.

Below, the official internal memo from RealNetworks Founder, Chairman and CEO Rob Glaser, breaking the bad news:

Team–

I’m writing to share some important and unpleasant news with all of you. Today we are implementing a reduction in force primarily within our TPS and MSS divisions, as well as in a few of our shared services groups. Approximately 70 employees around the globe are impacted, which represents about 4% of our total workforce. Of these 70 employees, 51% are located within the US and 49% came from our international locations.

These staff reductions are a result of some trends and strategic decisions in our TPS and MSS businesses. I’d bucket the reductions into three categories–efficiency gains associated with eliminating or streamlining duplication of effort, businesses that have been impacted by the recession and/or cyclical downturns where we need to lower our costs and get more efficient, and slower growth businesses in which we have decided to reduce our investments so we can instead invest in areas with better growth prospects.

As a result of these changes being made today, the TPS and MSS divisions are now better positioned to continue to weather the economic storm in the short-term and to thrive and grow in the long-term. On behalf of everyone on the senior management team I would like to extend my thanks and appreciation to everyone being affected by today’s actions for their contributions to our company. We are offering all impacted employees generous severance packages and we are working closely with the affected teams to ensure a smooth and professional transition. Additionally, we are encouraging impacted employees to look for other roles within the company, and HR will assist them in this process.

Thank for your support and understanding.

Rob

“Verizon is displaying maps of the United States that purport to show each carrier’s ‘3G’ coverage. The maps use color to depict the areas of the country in which each carrier has ‘3G’ coverage and blank or white space in the areas of the country where ‘3G’ coverage is not available. Consumers are interpreting the white or blank space on the maps to mean that AT&T customers who are not in an AT&T ‘3G’ coverage area have no wireless coverage whatsoever, and therefore have no ability to use their wireless devices for any purposes in vast areas of the country. This interpretation is not surprising as Verizon, in its own coverage maps, uses white space to inform customers that no coverage of any kind exists. Contrary to the misleading message conveyed by Verizon’s advertisements, AT&T customers can fully use their wireless devices outside of a ‘3G’ coverage area and undisputedly have coverage in areas depicted by the white or blank spaces on the maps used in Verizon’s advertisements.”

– Excerpt from AT&T’s complaint against Verizon

If AT&T’s lawsuit over Verizon’s allegedly misleading “there’s a map for that” wasn’t a public relations mistake to begin with, it will be by the time Verizon gets through with it. Responding to the suit today, Verizon (VZ) rep Jeffrey Nelson used it to stoke public perception that AT&T’s (T) network is inferior to Verizon’s.

“This is a junk lawsuit. It has no merit,” Nelson told Adweek. “It’s surprising that rather than defend the ‘blue’ hot spots on their 3G map, our competitor instead focuses on their white spaces. The maps clearly note that the comparisons are of 3G service, and further note that voice and data services are available in other places.”

Way to draw attention away from Verizon’s claim of a superior network coverage, AT&T.

“We’ve had a great response here in Japan,” Ballmer said. “Certainly we’ve seen initial sales be fantastic. The first ten days were bigger than the first ten days of XP or Vista or any other Windows launch that we have done.”

And indeed that would seem to be the case. According to research outfit NPD, Microsoft (MSFT) sales of Windows 7 in its first few days on the market were more than triple Vista sales for the same length of time.

Welcome news, considering that back in June, SIA was calling for chip sales to fall 21 percent.

“The new forecast is brighter than our earlier projections, reflecting an improving global economy,” SIA President George Scalise said in a statement. “Unit sales of key demand drivers–including PCs and cell phones, which together account for about 60% of semiconductor demand–have been stronger than previously predicted. We remain cautiously optimistic for the longer term. The current forecast is closely tied to projections of continuing improvement in the worldwide economy.”

“I don’t understand how Apple could ruin the record business in one year on Mac.”

– Universal Music CEO Doug Morris

“In an effort to provide you with greater transparency and control over their own data, we’ve built the Google Dashboard,” the company explained in a blog post. “Designed to be simple and useful, the Dashboard summarizes data for each product that you use (when signed in to your account) and provides you direct links to control your personal settings.”

And it does do that, offering a nice single view of all of the data associated with our Google accounts. That said, it’s not quite the extraordinary achievement Google would have us believe.

I suppose it is true that “the scale and level of detail of the Dashboard is unprecedented,” as Google claims. That said, it doesn’t offer much in the way of new information. Noticeably absent from Dashboard is any view of the cookie data Google uses to target ads. Essentially, all Dashboard does is consolidate the admin pages of the services associated with a user’s account in a single place. Convenient, yes. But does it tell us anything we didn’t already know? Or, more importantly, how Google is using that information? No.

Absent one-time charges, the company broke even for the quarter. Analysts had been expecting a two-cent loss on revenue of $609 million.

Good news, but it was tempered with a bit of bad. Because Sirius’s (SIRI) subscriber growth is slowing. The company ended the quarter with 18.5 million total subscribers. That’s up 103,000 from the second quarter, but down 2.1 percent from a year earlier.

“We are very pleased with what we accomplished during the third quarter, especially when considering the macroeconomic issues affecting consumers and the auto industry,” Sirius CEO Mel Karmazin said in a statement.

“We managed to grow revenue, grow ARPU, reduce operating costs, increase adjusted income from operations significantly, and refinance higher cost debt,” Karmazin added. “We look forward to continuing this performance. We grew subscribers and improved churn in the quarter, and we are well positioned to take advantage of an economic rebound. We expect to grow subscribers, revenue, and cash flow next year regardless of the magnitude of any recovery.”