If you find this metric as astonishing as I do, consider this: The increase in Bay Area data traffic is actually below the national average–significantly below. According to AT&T (T) CTO John Donovan, 3G data traffic on the company’s wireless network has risen nearly 5,000 percent in the past 12 quarters nationally (see chart below; click to enlarge).

“Today, we’re seeing unprecedented growth in mobile broadband traffic,” Donovan said during his keynote at the Open Mobile Conference on Nov. 5. “This growth has required extensive rethinking of wireless networks as we know them, as well as significant advances in the supporting IP backbone and other infrastructure.”

A 5,000 percent increase in 3G data traffic: That’s an astonishing figure. Seems to me it’s entirely likely that any carrier that had been first with the iPhone–including catcalling rival Verizon (VZ)–would have suffered network troubles similar to those that plague AT&T today.

No other U.S. carrier offers a super-smartphone that has sold as well as the iPhone and that people use much like a laptop. Sure, Android and Palm (PALM) webOS devices are used in this way as well, but there are far fewer of them and they have significantly fewer data-hungry apps.

Research in Motion (RIMM) offers some BlackBerries that are used this way, but only some, and there are only 3,000 or so apps available for them. iPhone owners have 100,000 apps from which to choose. And while it’s obvious that there are more BlackBerries in use than iPhones, some of these rely on AT&T’s network, which only compounds the carrier’s problems.

So, really, any carrier that had been first to market with the iPhone would have seen its network overtaxed, especially after Apple (AAPL) launched the iPhone 3G and the iTunes App Store. Those events effectively upended traditional planning models for network capacity in a way that no one was prepared for.

Perhaps other carriers would have fared a bit better. Verizon’s 3G network, even back in 2007, was much deeper and broader than AT&T’s. But could it really have supported a 5,000 percent increase in data traffic without incident? I’m not so sure.

Which is not to say that AT&T is blameless. Its network has lagged and continues to do so, and the iPhone and the massive surge in data traffic it brought with it are not entirely responsible for that.

But they are obviously a big factor. It will be interesting, then, to see how Verizon’s network holds up in comparison if and when the carrier gets the iPhone.

[Image Credit: Morgan Stanley Managing Director Mary Meeker]

Make no mistake, that surge has been massive. Says AT&T (T): “Since 2008 AT&T’s network in the San Francisco area has experienced a 3G data traffic increase of 2,000 percent.”

Wow. No wonder my calls kept dropping at that last Apple (AAPL) event in San Francisco (yes, an iPhone 3G repeatedly dropping calls at Apple’s Sept. invitation-only music gathering). In any event, the upgrade, which includes the bolstering of backbone infrastructure, should result in better coverage, 3G performance and in-building penetration.

“More than ever before, customers look to wireless communications to stay in touch with family, friends and business colleagues,” said Terry Stenzel, AT&T vice president and general manager for Northern California/Reno. “The additional spectrum helps to enhance the 3G network so that our customers have the best experience when they make a call, check an e-mail, download a video or song, access applications or surf the Internet on their AT&T device.”

How nonexclusive is Microsoft’s deal with Twitter?

So nonexclusive that just hours after Microsoft (MSFT) announced it, rival Google (GOOG) lurched forward to say that it has entered into a similar partnership with the San Francisco-based microblogging service.

The search giant may be second to this party, but it’s not going to be late. But make no mistake–this is very clearly a rush job.

Some proof? Microsoft has code running. Google does not.

Twitter and Google announced the deal in posts to their respective company blogs.

“Our friends down in Mountain View want to organize the world’s information and make it universally accessible and useful,” Twitter co-founder Evan Williams wrote. “A fast growing amount of information is coursing through Twitter very quickly, and we want there to be many ways to access that information. As part of that effort, we’ve partnered with Google to index the entire world of public tweets as fast as possible and present them to their users in an organized and relevant fashion.”

Marissa Mayer, Google’s vice president of search, was similarly enthusiastic about the deal.

“We believe that our search results and user experience will greatly benefit from the inclusion of this up-to-the-minute data, and we look forward to having a product that showcases how tweets can make search better in the coming months,” Mayer wrote. “That way, the next time you search for something that can be aided by a real-time observation, say, snow conditions at your favorite ski resort, you’ll find tweets from other users who are there and sharing the latest and greatest information.”

Once Google gets around to indexing Twitter’s real-time data.

For one thing, Palm (PALM) is waiving its $99 app submission fee for open-source webOS apps. For another, it’s giving developers the option of selling their apps through the App Catalog or via a Web-based storefront.

The first option entails a $50-per-app fee and requires review and approval by Palm. This includes the chance to bid on priority placement in the App Catalog if developers wish. The second option requires neither fee nor review and allows developers to distribute their apps over the Web with Palm handling transactions and fulfillment–assuming the apps conform to Palm’s content and user interface criteria.

“By opening up a web distribution channel free from our review, we are placing a great deal of trust in you–the developer–and the community,” Palm said on its blog. “We want you to embrace these principles, establish a high bar of quality and user experience, and help enforce these rules.”

An interesting strategy–assuming developers do establish the high bar of quality to which the company refers. Certainly, it’s very different from Apple’s (AAPL) approach, which includes an application-approval process criticized as obtuse and byzantine. By offering developers the chance to pay to promote their software in its Apps Catalog or to distribute it via the Web without having to suffer through an approval process, Palm is positioning its program as the polar opposite of Apple’s. Question is, are these enticements enough to win their attention?

That’s what ngmoco co-founder and Electronic Arts (ERTS) alum Neil Young said of Apple’s iconic handset at the Game Developers Conference in San Francisco earlier this year, and it’s worth reflecting on a bit in light of a new report from Bernstein Research analyst Toni Sacconaghi that claims the iPhone OS will soon create pricing and customer migration pressure for traditional gaming platforms.

Noting that some 665-760 million games may have been downloaded from the Apple (AAPL) App Store during the last 12 months, Sacconaghi estimates that the installed base for the iPhone and iPod touch platform could amount to about one third of the total handheld gaming installed base by 2012.

“We believe that gaming embodies the power of Apple’s App store: it has dramatically lowered the entry barriers for both developers and gamers alike, resulting in an unparalleled number of available games at affordable prices, which is creating lock-in and enhanced interest in Apple’s high-margin iPhone (and iPod Touch) platforms,” Sacconaghi writes.

Continuing, the analyst adds: “By most measures, gaming has been the killer App Store category, accounting for an estimated 40% of all downloads. Most importantly, we believe that gaming is providing yet another incremental, differentiated reason for consumers to purchase iPhones and iPod Touches, and creates powerful lock-in to the App Store platform and Apple products on a go forward basis.”

The upshot of all this is bad news for traditional gaming console developers–particularly those who have dismissed it as a novelty. “Most gaming developers today view the iPhone and other smart phones as an incremental opportunity, which targets the casual gamer but not the dedicating gaming enthusiast,” Sacconaghi explains. “Over time, however, we believe that the combination of evolutionary improvements in iPhone/iPod gaming functionality, the convenience of the App Store download model, the App’s Store leading title selection and lower price points could cause some migration among gaming enthusiasts to the Apple platform and/or pressure traditional gaming incumbents’ hardware and software pricing.”

And this is clearly what Apple (AAPL) is aiming for. Consider these recent remarks from Phil Schiller, the company’s senior vice president of worldwide product marketing: “People are starting to see what a great gaming device this is. When you think about the companies that came before us…when you played those other systems, they seemed so cool, but now when you look at them, they don’t stack up against the iPod touch….No Multi-Touch user experience, Games are expensive, No App Store, No iPod, Expensive Games ($25-$40) and uncomfortable retail buying experience. [There are] 607 games for PSP and 3,680 games for Nintendo DS. [But there are ] 21,178 Game and Entertainment Titles at App Store.”

“A study conducted by Microsoft Research shows that consumers can process results with images 20% faster than text only results,” Microsoft’s Todd Schwartz explained. “So it’s clear that images play a big part in helping consumers with a variety of search activities….Visual Search allows you to quickly scroll through the galleries or do a one-click refinement using the quick tabs on the left, which are specifically relevant to the type of results you are browsing through.”

Think of Microsoft’s innovation as iTunes Cover Flow for search. And though it currently works only for mainstream queries (celebrities, dog breeds, iPhone apps, FBI’s Most Wanted, etc.) it’s quite impressive. And if Microsoft (MSFT) works quickly to extend it beyond its currently limited purview, Visual Search could do much to differentiate Bing from Google (GOOG). Certainly, Google doesn’t offer anything quite like it at the moment.

Why? Well, the CLIQ, or DEXT as it will be confusingly branded in the U.K., incorporates Motorola’s new “MotoBlur” service, which essentially corrals Facebook, MySpace, Twitter, Picasa, GMail and MS Exchange activity into a single feed and presents them on your phone.

In form, the CLIQ is a sideways slider. Like the Palm (PALM) Pre, the device boasts a full touchscreen and QWERTY keyboard. It’s got a 320 x 480-pixel, 3.1-inch HVGA screen and a five-megapixel camera. The CLIQ is video-capable (play, stream and capture) and supports the broad spectrum of media formats. It runs Android 1.5 (Cupcake), and Motorola (MOT) claims a battery life of six hours.

Jha says the phone is not intended to be a single iconic device–like, say, Apple’s (AAPL) iPhone. Rather, it is the first of a broad line of handsets, all running Android and Motoblur, that will be targeted at different customer segments around the world.

A wise strategy in the current market? Who knows? But at least it’s a step in the right direction. Motorola clearly needs to do something to right itself after the past few disastrous years. Hard to believe the company controlled 16.1 percent of the global handset market just two years ago. It’s market share today? A modest 6.5 percent. The CLIQ will be sold through T-Mobile in the United States.

The device’s spec sheet below; click to enlarge.

Apple has sold some 225 million iPods to date, making it one of the most popular electronic devices ever. And it’s sure to sell even more after the updates the company announced at this morning’s event. Among them: Larger, cheaper iPod touches and nanos with cameras and FM radios.

Following introductory remarks by Apple (AAPL) CEO Steve Jobs, Phil Schiller offers details, noting that “the iPod has 73.8 percent market share. The next biggest category is ‘other,’ and after that, SanDisk and then Microsoft pulling up the rear.”

Schiller adds that Apple has sold 20 million iPod touches since the device debuted. He runs through a lengthy sales pitch for the iPod touch, touting it as a killer pocket computer and taking potshots at rivals like Dell (DELL) along the way.

Moving on to games, Schiller notes the discrepancy between the number of games on gaming platforms like the Nintendo DS and the iPod touch. The iPhone OS, he notes, has 21,178 games. The DS has just 3,680. Point taken.

Moving on to some new game demos now. First up: Ubisoft with Assassin’s Creed 2, which, we are told, is “all about visceral combat, brutal hand-to-hand combat and one-shot kills.” Behind the presenter, a warrior is mercilessly beaten into submission.

Schiller returns to the stage, “Boy, that looks like fun.”

Tapulous, the developer of Tap Tap Revenge, and Gameloft, follow, both introducing new games. Gameloft’s Nova–a first-person shooter with multiplayer option–seems a far more compelling effort than Tapulous’s Riddim Ribbon, which appears to be a Black Eyed Peas-heavy variation of Tap-Tap.

Up next, Electronic Arts, which is apparently headlining the games section of today’s event. EA’s Travis Boatman takes the stage to introduce Madden NFL 10. The game boasts both custom-kick and draw-a-play-on-screen features developed specifically for the iPhone OS. Madden NFL 10 is available today.

Schiller again returns to the stage. “The iPod touch is the most affordable gateway to the App Store,” he says, adding that $199 is a “magic price point” in the iPod market.

With that, he announces the iPod touch price cuts we heard about earlier this morning: An 8GB model for $199, 32GB for $299, and 64GB for $399. All three devices are significantly faster, says Schiller. Interestingly, none seem to feature that rumored camera.

Price drops as well for the nano, but we knew about these. Apple has dropped the price of the iPod shuffle as well: $59 and $79. And the company is offering them in a new selection of colors. Plus, there’s a special edition of the shuffle crafted from stainless steel.

Steve Jobs returns to the stage. So those are the iPods, but there is one more thing: A video camera. He talks about the exploding video market, mentions the Flip, etc. “We want to get in on this market as well and we’re doing it for free….Boy, this really is the new Apple,” he quips.

Yes, the iPod nano does indeed now feature a video camera. The video quality looks impressive. Whoa: Apple has also added FM radio, a voice recorder and a pedometer to the nano. New polished anodized aluminum colors. 8GB model for $149, 16GB model for $179.

After a few concluding remarks about the new iPod lineup, Jobs announces what has become an annual tradition at these events: A live performance. Today’s artist: Norah Jones.

The end of her set concludes today’s event. No iPlatform. No Beatles on iTunes. But lots of product refreshes, software intros, and price cuts. Plus: Steve Jobs is definitely back.

Live from Apple’s “Let’s Rock” Event

• iPod Updates, Games, Nano Video Cameras
• iTunes 9, iTunes LP, Home Sharing, Genius Mixes
• Steve Jobs: “I’m Vertical, Back at Apple and Loving Every Day of It”
• Event Photos by Adam Tow

Live from Apple’s “Let’s Rock” Event

• iPod Updates, Games, Nano Video Cameras
• iTunes 9, iTunes LP, Home Sharing, Genius Mixes
• Steve Jobs: “I’m Vertical, Back at Apple and Loving Every Day of It”
• Event Photos by Adam Tow

This morning, Apple (AAPL) broadcast invitations to a product launch gathering to be held that day at the Yerba Buena Center for the Arts in San Francisco. The invite features another variation of the iconic iPod silhouette and the tagline, “It’s only rock and roll, but we like it,” so presumably the event will focus on music, as expected.

Beatles fans will no doubt note that Sept. 9 is also the day the group’s Rock Band videogame will arrive at market. Coincidence, or could Wednesday be the day the Beatles catalog finally comes to iTunes? We’ll find out next Wednesday.

“We expect Motorola’s 2010 performance to hinge largely on the success of Android models debuting in 4Q09. Just months ago, the expected launches were ‘Morrison’ for T‐Mobile, ‘Sawgrass’ and ‘Heron’ for AT&T, and ‘Sholes’ and possibly ‘Calgary’ for Verizon” (VZ), Kuittinen said in a note to clients. “We believe the AT&T models have been canceled, and Verizon has pushed ‘Calgary’ into 2010.”

According to Kuttinen, “The loss of AT&T’s support for 4Q09 changes the winter outlook for Motorola dramatically. It is likely that the success of the $99 iPhone, combined with the possible November launch of the $99 Palm Eos could put AT&T in a situation where its $100 smartphone range for the Christmas quarter is already full of models featuring very advanced software and display technology.”

A worrisome turn of events and one that will weigh heavy on Motorola’s financials if it proves true. Said Kuittinen: “The narrowing of Motorola’s Android plans may have a substantial impact on the winter performance of the company’s handset division precisely because Motorola needs a rapid roll‐out of a wide range of follow‐up models for its ailing RAZR, Q and Z series models.”