A savvy move for Amex, too. Though Revolution competes against entrenched credit-card companies and PayPal, among others, its alternative payment system, which reduces costs for accepting credit cards by up to 75 percent, is quite attractive to merchants who’ve shouldered those costs for so long.

Says JP Morgan analyst Imran Khan: “While it is hard to know precisely what direction AmEx plans to take the Revolution assets, we think the acquisition suggests the company is trying to be more aggressive in the online payments arena. We think PayPal’s existing account base and international footprint have given it a network advantage in the C2C space that is hard to dislodge. On the other hand, we believe significant room exists for market share gains in Online Payments by companies that offer innovative solutions, and this acquisition gives Revolution Money a stronger backer.”

Google (GOOG) claimed 65.4 percent of the domestic search market in October, up from 64.9 percent in September, according to comScore. Meanwhile, Microsoft’s (MSFT) share rose to 9.9 percent from 9.4 percent in September. A modest bit of growth for the month, but quite impressive year over year. Search volume was up 30.8 percent from October 2008.

And Yahoo (YHOO)? Well, the company’s search market share slipped to 18 percent in October from 18.8 percent in September. Below, a table showing comScore’s (SCOR) search volume and market share data, via JP Morgan analyst Imran Khan (click to enlarge):

“We are very happy that AT&T is now supporting VOIP applications,” said Apple (AAPL) spokeswoman Natalie Kerris. “We will be amending our developer agreements to get VOIP apps on the App Store and in customers’ hands as soon as possible.”

But the new policy hasn’t gone over well with AT&T investors. Shares in the company slipped on the news yesterday and they’re falling still further today. AT&T (T) is trading at $26.21 as I write, down more than two percent from its open. Why? Perhaps due to concerns that the carrier might take a revenue hit when iPhone owners who are using telephony services to make cheap calls switch to low-minute voice plans.

As JP Morgan analyst Mike McCormack notes, voice accounts for $50-$60 of the $95 in monthly revenue generated by the typical iPhone user. If the average user were to drop AT&T’s unlimited voice plan ($99.99/month) in favor of its cheapest ($39.99/month), the carrier could lose upward of 20 percent of voice revenue.

That’s an ugly drop. And while AT&T might offset it by raising its data plan rates, doing so would inevitably outrage customers who are already giving it hell for poor coverage and lousy call quality.

Three months after Intel CEO Paul Otellini announced that the PC market had reached bottom, the company’s latest financials, which handily beat expectations, seem to have proven him right. “The worst is now behind us,” he said. And the tech economy is showing signs of muted recovery.

The question is: Is that recovery sustainable?

The answer, according to Otellini, is yes. “The second quarter was clearly better than we expected,” he told analysts on a conference call. “Customers signaled increased confidence in their ordering patterns.” After months of global recession, Otellini noted that the company’s second-quarter results “reflect improving conditions” in the PC market.

“Intel is seeing a firming up in demand,” he added. “It’s encouraging news for the industry.”

Indeed. Intel is a bellwether for the tech sector; as goes Intel, so goes the industry. So, if Intel says demand is beginning to return to normal seasonal patterns, then the industry may truly be stabilizing. That said, there’s still quite a bit of economic volatility–enough to suggest that it might be wise not to read too much into Intel’s performance.

Said analysts at JP Morgan: “Although the Intel quarter was clearly spectacular on all fronts, we continue to believe the upside was driven by inventory replenishment as we have not seen any evidence of increasing PC demand.”

Shares of Intel (INTC) are trading up 6.77 percent at $17.97 this morning.

“You know the beautiful thing: June 29, 2009, is the two-year anniversary of the first shipment of the iPhone. Not one of those people will still be using an iPhone a month later.”

– Palm investor Roger McNamee

Palm (PALM) seems to have satiated pent-up early demand for its new Pre smartphone, constrained supplies be damned. In a pair of investor notes issued today, analysts at Pali Research and JP Morgan say that sales of the Pre have tapered off to a point where supply and demand are roughly in parity.

“We have concluded our 3rd round of channel checks for the Pre,” writes JP Morgan analyst Paul Coster, who notes that demand for the handset is hovering at about 40,000 per week. “The gap between supply and demand has closed at Sprint and BestBuy stores, waitlists are eliminated or down, and most stores now have Pre devices in stock.”

Pali Research analyst Walter Piecyk also surveyed the Pre landscape and reached a similar conclusion, though he sees the slowing of sales as a bit more pronounced. “We believe that Palm Pre sales have slowed over the past week for Sprint to under 40,000 from 50,000-60,000 last week,” he writes. “…We suspect that if sales continue to moderate, Sprint would increase its marketing budget for the product. The marketing budget behind the product has been somewhat limited to date compared to the marketing push that Apple does.”

Indeed. And let’s not forget that Apple (AAPL) has a new handset on the market that’s been selling quite well. Makes you wonder if this ebb in demand for the Pre is somehow related.

Guess it’s looking like Palm investor Roger McNamee’s hyperbolic predictions about iPhone-to-Pre conversion aren’t going to quite pan out.

J.P. Morgan’s Imran Khan offered an early look at market researcher comScore’s May 2009 core search volume and market share metrics for the U.S. this afternoon (to be publicly released tomorrow) and they show what search metrics always seem to show these days: Google’s share of the domestic market growing at the expense of its rivals (click on tables below to enlarge).

According to comScore (SCOR), Google’s (GOOG) share of the domestic search market rose to 65 percent in May, up from 64.2 percent in April. Its core search volume grew 42.5 percent, far exceeding the 40.6 growth in posted in the month prior. Meanwhile, Yahoo’s (YHOO) domestic core search market share slipped a bit, falling to 20.1 percent in May from 20.4 percent in April. Its core search volume for the month grew by 29.5 percent, down from 39.3 percent.

And what of Microsoft (MSFT)? It, too, suffered a decline. Its share of the domestic core search market fell to eight percent in May from 8.2 percent in April. Core search growth was also down at 24.9 percent from 25.7 percent in April. Clearly, Microsoft is still struggling to gain purchase in the search market. But, while these data don’t yet show it, Microsoft may have found some traction. As I noted last week, Bing has been generating a fair bit of interest, and that bodes well for some improvement in its position in the search market.

Interesting. Certainly puts Palm’s claim that “Sprint tells us they have never seen higher demand for a smartphone” in perspective.

Coster’s suggestion for folks intent on buying a Pre but frustrated by the meager supply at Sprint Stores and Best Buy: Try Radio Shack, which “seems to have been neglected by eager early adopters.”

Interesting thing to say in advance of a product launch on which so much is riding, don’t you think? Unless you’re already trying to foster the perception of excess demand. As Gartner analyst Hugues De La Vergne noted last month, “It’s important to have a success like selling out. The Pre has to live up to the hype or else they’ll lose their momentum to rival products coming out soon after.” And clearly, that’s a very real danger here. Though, to be fair, there are other possible explanations. It could simply be responsible production scheduling. It might also be that Palm’s financial situation has forced the company to temper its launch run-rate in order to retain adequate capital for marketing and customer service. Or it could be that Pre really is the blockbuster device Palm (PALM) and Sprint (S) believe it to be and no amount of supply will be enough to meet the initial and overwhelming demand for it. It could be that the Pre is the next Apple (AAPL) iPhone.

“What the iPhone has shown is that if you really do have a compelling device that is revolutionary then customers will switch to your service,” said Hesse. “We think the Palm Pre stacks up very well against the iPhone.”

We’ll find out come June 6.

Seems that in the end, Palm (PALM) decided it would be folly not to match the $199 price of Apple’s (AAPL) iPhone, though according to CEO Ed Colligan, the Pre is far superior to it. Asked at the Consumer Electronics Show if Palm would try to take market share by undercutting the iPhone on price, Colligan told MediaMemo’s Peter Kafka, “Why would we do that when we have a significantly better product?”

Perhaps, because you must? As J.P. Morgan analyst Paul Coster noted this morning, “The $199 price point was absolutely necessary, in our view, to go head to head with RIM and Apple.”

Interestingly, this means the Pre will indeed ship just days before Apple’s Worldwide Developers Conference, the event at which the company is expected to announce its next-generation iPhone. Which suggests that perhaps, as I theorized yesterday, Palm is hoping the Pre will benefit from the iPhone halo. “By debuting so close to the presumed announcement of the iPhone, Palm would be ensuring that its new device is fresh in the minds of anyone mulling the purchase of Apple’s latest offering–or writing about it,” I wrote. “It would be parasitically riding on the back on the Apple media juggernaut. Question is, can it hang on without getting trampled?”

“We are preparing for a [second-half] letdown in PCs,” Moskowitz wrote in a research note to clients. “While our revised unit growth estimates are edging up, our draconian revenue outlook remains unchanged. We continue to model sub-seasonal sequential trends for the second half of the year.” Demand, he adds, will continue to be slow, and the coming launch of Microsoft’s (MSFT) Windows 7 OS will be no panacea. “So far in the June quarter, our conversations with industry contacts suggest that PC end demand remains soft, and there are increasing concerns of another inventory correction across the food chain if suppliers continue to target normal seasonality in the second half of the year….We have not seen a major PC upgrade cycle related to an operating system launch since 1995, and we do not expect anything different with Windows 7.”

Back in March Gartner predicted that the PC industry would see its sharpest unit decline in history in 2009. Sadly, Moskowitz’s note would seem to bear that out.

The tech-heavy index fell 33 points to 2,619, a two-week low. This despite the release of a report from JPMorgan today that offered a very bullish tech sector outlook for 2008.

While the research outfit predicts revenue growth for the overall Internet sector to decelerate to 21.2% this year from 25.6% last year, it says we can expect the earnings of the Internet companies it covers to grow by 34% in 2008. That’s more than four times faster than the S&P 500.

Among the biggest drivers of that growth: search. JPMorgan says worldwide search revenue will reach $30.5 billion this year, up from $26.2 billion last year. What’s more, it says it will go on to grow at an annual rate of 28% over the next four years, hitting $60 billion by 2011.

Looks like 2008 is going to be quite a year for Google. As will the years that follow.