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John Paczkowski — Mon, 23 Nov 2009 19:00:02 +0000

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Apple Joins AT&T/Verizon Spat With New iPhone Ads (See Them Here!)

John Paczkowski — Mon, 23 Nov 2009 18:19:50 +0000

Verizon’s merciless razzing of AT&T has finally elicited a reaction from Apple. Presumably peeved at seeing its marquee product banished to the “Island of Misfit Toys” in one of Big Red’s new holiday ads, Apple is launching a pair of new iPhone ads that tout the smartphone and the network on which it runs.

Scheduled to run tonight during programs like “House,” “The Daily Show” and “Dancing With the Stars,” the Apple (AAPL) ads tout the iPhone’s ability to handle data and voice simultaneously, something Verizon’s (VZ) CDMA network does not permit. “Say you’re on a call with a client and he asks, ‘did you see my email?’ You can say, ‘yep got it right here,’ all without ever leaving the call,” the ad explains. “Can your phone and your network do that?”

[ See post to watch video ]

Interesting to see Apple’s commercial messaging for the iPhone, which has to date focused on hardware and software, suddenly extended to include the features of the AT&T (T) network on which it runs. Apple, for its part, tells me the ads were done without any involvement from AT&T, and that may well be the case. But coming as they do after Verizon’s “There’s a Map for That” parody and a handful of other AT&T-bashing ads in which the iPhone is an unwilling participant, it’s hard not to view the new commercials as Apple coming to the defense of its exclusive carrier partner.

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Smartphone Price Cuts Ruining Long-Term Price Potential?

John Paczkowski — Mon, 23 Nov 2009 15:32:50 +0000

As we head into the holidays, smartphone prices are dropping to points that belie their advanced feature sets. While this is great news for consumers, it may well be problematic for smartphone manufacturers.

According to NPD Group’s latest Mobile Phone Track study, price cuts on devices like Apple’s (AAPL) iPhone and RIM’s (RIMM) Blackberry Curve inspired a three percent decline in the average price for all cellphones in the third quarter of 2009. The overall average purchase price for mobile phones in the U.S. for the period: $85. A year ago it was $88.

An interesting trend given the fast-advancing feature sets and presumably high development costs of the new state-of-the-art smartphones we’re carrying around these days. For while these lower prices mean more sales for smartphone manufacturers and more subscribers for their carrier partners in the short term, they may well be undermining the smartphone’s price potential in the long term. It’s hard not to see the $299.99 Palm (PALM) Pixi for $24.99 on Amazon (AMZN) or the $499.99 Droid Eris for $49.99 on Overstock (OSTK) as having some deflationary impact once those retailers are done with them.

“That impact will continue,” NPD analyst Ross Rubin told me. “The iPhone 3G at $99 has created a benchmark that competitors are responding to with handsets such as the Droid Eris and Palm. Even where a handset is competing closer to the $200 mark, carriers and retailers are using buy-one-get-one promotions (that help lock in family plans). And retailers are discounting even value-priced smartphones further to drive store traffic and accessory sales.”

Rubin’s conclusion: “We will soon reach the point where the handset is a minor expense consideration and the required monthly data fees become the limiting factor in smartphone adoption.”

Nokia R&D Workers Researching and Developing New Job Leads

John Paczkowski — Fri, 20 Nov 2009 18:21:53 +0000

Nokia’s workforce is deteriorating nearly as fast as its share of the mobile phone market. This morning, the company–which sacked 1,700 employees in March and another 450 in April–said it will cut 330 more jobs in its research and development group. But not to worry, says Nokia, that’s just two percent of the company’s 17,000-strong R&D staff.

Another sad turn of events for Nokia (NOK), whose dominance of the smartphone market is being steadily eroded by competition from the likes of Apple (AAPL) and Research In Motion (RIMM). In its latest quarter, the company’s smartphone market share declined to 35 percent from 41 percent. This slide is likely to continue unless Nokia is able to inspire a major revival in its smartphone volumes with a worthy iPhone rival.

Chrome: The End of Desktop Apps

John Paczkowski — Thu, 19 Nov 2009 19:02:23 +0000

Direct from Google headquarters and liveblogged by John Paczkowski, Google unveiled its Chrome OS. This is the first of three segments:

Google did not offer a beta of the new operating system today. Vice President of Product Management Sundar Pichai says Google is a year away from an official launch. The company, however, is making Chrome OS code available today.

According to Pichai, Google’s Chrome browser has some 40 million users one year after launch. He boasts about the browser’s speed, noting that it handles Javascript 39 times faster than Internet Explorer. There will be three more big Chrome announcements in the future: Chrome for Mac, Chrome for Linux and the debut of Chrome Extensions.

Google’s goal is to ensure that Web applications function as well as desktop apps, Pichai explains. The company is figuring out a way for Web apps to safely take advantage of the operating system in the same way that desktop apps do. A few examples: Graphics, video/audio applications, real-time communication, notification and local storage.

“By 2010 we expect to have all these things built into Chrome.”

The advent of Chrome coincides with a perfect storm of converging trends, Pichai notes, including the tremendous popularity of netbooks during the recession, the growing acceptance of cloud apps and the rapid innovation in mobile devices. Smartphones are becoming more like laptops, he adds, and laptops are becoming more like smartphones. Is there a better level of computing available for these devices? There is, says Pichai, and he believes it is Chrome OS.

Google's Chrome OS: "It Just Works"

John Paczkowski — Thu, 19 Nov 2009 17:51:03 +0000

Speaking at Microsoft’s Worldwide Partner Conference in New Orleans this past July, Microsoft CEO Steve Ballmer said of Google’s forthcoming Chrome OS, “Who knows what this thing is?”

Today, he found out. The operating system, a direct challenge to Microsoft Windows, was on display at a media gathering at the Google HQ this morning.

Sundar Pichai, vice president of product management, and Matthew Papakipos, engineering director for Google Chrome OS, presided over the event, which the company described as a “technical announcement.”

That meant that Google (GOOG) was not releasing a beta of the operating system this week, as had been rumored.

That said, it was an overview of Chrome, as well as Google’s plans for its launch in 2010, so let the Chrome OS liveblogging begin:

There will be no beta today. Pichai says Google is still a year away from an official launch. However, the company is making the code available today.
Pichai says that a year after launch, the Chrome browser has some 40 millions users. He boasts about the browser’s speed, noting that it handles Javascript 39 times faster than Microsoft’s (MSFT) Internet Explorer. There will be three more big Chrome announcements sometime in the future: Chrome for Mac, Chrome for Linux and the debut of Chrome Extensions.
Google’s goal is to ensure that Web applications function as well as desktop apps. Pichai says that the company is figuring out a way for Web apps to safely take advantage of the operating system in the way desktop apps do. A few examples: Graphics, video/audio applications, real-time communication, notification and local storage.

“By 2010 we expect to have all these things built into Chrome,” Pichai adds.
The advent of Chrome coincides with a perfect storm of converging trends, Pichai says, noting the tremendous popularity of netbooks during the recession, the growing acceptance of cloud apps and the rapid innovation in mobile devices. Smartphones are becoming more like laptops, Pichai adds, and laptops are becoming more like smartphones. Is there a better level of computing available for these devices?

There is, according to Pichai, and Google believes it is Chrome OS.
Among Chrome OS’s advantages, Pichai says: Speed, simplicity and security. Every application will be a Web application. There will be no desktop apps. Chrome OS is essentially a browser with a few modifications. All data in the Chrome OS resides in the cloud. Pichai: “We want all of personal computing to work that way….If I lose my Chrome machine, I should be able to go out, buy a new [one] and re-create my previous computing experience easily.”

Chrome OS will run completely inside the browser security model, he adds, noting that security is one of Google’s top priorities along with speed. “Turning on a PC should be like turning on your TV,” he says.
Chrome OS is very similar in appearance to the Chrome browser. “Chrome OS is Chrome,” says Pichai. Google made it look like a browser, because the browser is familiar.
And indeed, Chrome OS does look quite a bit like a browser. Multiple apps load into tabs, for example. It also features “Panels,” which Pichai describes as persistent lightweight windows. “All Chrome data resides in the cloud. Anything you put in the machine is immediately available to you anywhere.”
As netbooks become more advanced and battery life improves, they will evolve into entertainment devices, says Pichai, who notes that via Google Books, a netbook can become an e-reader, and, through YouTube, a video device.
A quick demo of the user interface, which seems very simple and intuitive. “It just works,” says Pichai in an unintentional nod to Apple (AAPL).

An interesting remark: Anyone who writes an app for the Web has written an app for Chrome, says Pichai, joking that Microsoft is already developing for it.
Speed, simplicity and security, says Pichai. We’re trying to make the computing experience delightful.

With that, Pichai hands the stage over to Engineering Director Matt Papakipos.

Papakipos, too, offers the “we want to make computing delightful” sound byte and notes once again that turning on the PC should be like turning on the TV.
Chrome OS eliminates the bootloader, auto-launching the browser. The OS also auto-updates itself, making sure that it’s always current with security patches, etc. Everything from the firmware to the kernel is secured with a cryptographic signature to ensure a secure boot. In the event malware is detected, the system repairs itself automatically.
The basic application security protocol for current operating systems allows apps the same privileges as the user. This presents obvious security issues. Whenever you install a new app, you’re taking a risk, says Papakipos.

But Web applications like those that Chrome OS use, are different. They are Web apps, so they don’t have system-level privileges. Additionally, all apps run in secured sandboxes that are separate from one other and from the OS. Finally, all apps must be signed and verified before each use.
In terms of file systems, Chrome’s is locked down. It’s a read-only root-file system, obviously quite different from other operating systems. All user data are encrypted and synched to the cloud. Essentially, Google uses the PC for caching. Again, if you should lose your machine, you buy a new one, fire it up and it synchs with the cloud, restoring your previous computing experience.
How will Google bring Chrome OS to market? The company is working with vendors to specify reference hardware. You cannot download and install Chrome on just any device, you will have to purchase a Chrome device. Google is looking at a launch window of late 2010, before the holidays.
Google sounds very concerned about the end-user Chrome OS experience. Pichai says the company wants to ensure that the displays, keyboard, etc., on the netbooks that run Chrome are robust and easy to use.
Pichai wraps things up, but before the Q&A, we’re shown a short explanatory video. “The first thing I want to do when I fire up my computer is browse the Internet….If there isn’t any Internet, I might not even use my computer….What if when you pressed on, your PC turned on, what if your operating system was more like a Web browser…what if it was a browser?…Chrome OS is a totally rethought computer that lets you focus on the Internet, which is what most of use our computers for these days anyway.”

Q&A

At this point, Pichai opens the event to questions:

If you’re specifying hardware components, do you must have an idea of what they’ll cost?

A: We expect Chrome netbooks to be in the price range of what people have come to expect….We are not specifying a price target. Price will be determined at the OEM level.

Will the APIs support W3C standards?

A: We’re working very closely with the W3C to standardize as much as we can….In general, we want to see everything standardized across multiple browsers.

Will there be an application store?

A: The Web offers hundreds of millions of applications. Our job is to make people aware of them.

What about desktop applications that are not available on the Web?

A: We expect most of our users to have a second machine at home….Chrome OS is about a delightful experience on the Web….If you’re a lawyer spending your entire day on contracts, etc., this is not the machine for you.

Will you support Microsoft Silverlight?

A: In the case of certain selection plug-ins, we are working to integrate them. No comment beyond that.

Since Chrome is open source, could people build their own variations?

A: Yes. We expect people will do many interesting things with it.

Do you see Chrome running on laptops or desktops?

A: We’re initially focused on netbook-like form factors–clamshells, etc. That said, the OS is being developed to work on other devices.

Is there any level of offline access? What happens when I’m on a plane and don’t want to pay for Wi-Fi?

A: Chrome devices are primarily intended to be Internet-connected. That said, it will have some caching abilities so, for example, you could play a game offline.

Virtualization?

A: Yes. You could run Chrome today on a virtual machine.

Are you working with outfits like Adobe to, say, build a Web-friendly version of Photoshop?

A: We’re very excited by things like Photoshop on the Web and we’re working hard to make that possible.

Will Android apps work on Chrome? Are there plans for third-party apps?

A: [Pichai dodges this one.] If it’s a Web app, it will work on Chrome. The Web works very, very well for our purposes.

Will Chrome work on both X86 and ARM?

A: Yes.

Is there a direct business model for Chrome OS or is this another variation of the-more-people-that-use-the-Web-the-better-for-Google?

A: We are working with partners. No plans for advertising. That said, Pichai notes again that anything that runs on the Web will run on Chrome. And of course, AdWords does, indeed, run on the Web.

[Sergey Brin joins the Q&A]

Do you want Android Apps to run on Chrome?

A: We are focused on creating the use case in which everything is a Web application, but hopefully we can do more in the future.

How does Chrome handle peripherals? Can it print?

A: Most keyboards, cameras, phones, etc., will work. In terms of printing…yes, Chrome OS will print and we’re working hard to make that possible.

What is Chrome’s strategic position for Google?

A: [Brin]: Call us dumb businessmen, but we really focus on user needs rather than focus on business strategies. We believe that the Web platform is a much simpler way of computing for individuals to use, and that’s a very important need in the market right now. That’s what we’re trying to fulfill.

If Things Get Really Bad, Palm's Pixi Will Make a Great Happy-Meal Prize

John Paczkowski — Thu, 19 Nov 2009 14:04:50 +0000

The official price of Palm’s (PALM) new Pixi smartphone is $99.95, but Wal-Mart is now offering the handset for $24.99 with a two-year contract, as is Amazon. That’s a 75 percent price cut.

Staggering, considering the Pixi arrived at market just four days ago, but perhaps necessary given early and widespread complaints about the device’s slow operating speed, some unfavorable reviews and the fact that the Pre–the Pixi’s more robust elder sibling–is now selling for $99.99 and $79.99 at Wal-Mart (WMT) and Amazon (AMZN), respectively.

UPDATE:

Palm’s aren’t the only smartphones being heavily discounted as we head into the holidays. Motorola’s and HTC’s are as well. Amazon is offering the Moto’s Droid for $149.99 and Overstock is peddling the HTC Eris for $49.99.

Time to Cut AT&T Some Slack, iPhone Users?

John Paczkowski — Wed, 18 Nov 2009 20:46:47 +0000

Since 2008, AT&T’s network in and around San Francisco has experienced an increase in 3G data traffic of 2,000 percent.

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]

Droid Invasion

John Paczkowski — Tue, 17 Nov 2009 18:30:18 +0000

[ See post to watch video ]

Palm Smartphone From Verizon by Early 2010

John Paczkowski — Tue, 17 Nov 2009 17:02:05 +0000

“Now we aren’t typically the carrier that comes out and announces what we are going to be selling 12 months from now. Other carriers do that, and the media loves to speculate on what we are bringing to market. But what I will tell you is that over the next six months or so you will see devices like the Palm Pre and the cousin on our network from Palm.”

– Verizon Wireless President and CEO Lowell McAdam

For Palm, 2010 will be a year of channel expansion, with its new webOS handsets coming to more carriers. Top among them, Verizon (VZ), which has been rumored to be getting a device “like the Palm Pre” since Palm (PALM) launched it. In a research note to investors today, Kaufman Bros. analyst Shaw Wu says a Palm smartphone on Verizon is pretty much inevitable.

“Based on our checks with industry and supply chain sources, we have fairly high conviction in Verizon carrying Palm’s webOS-based smart phones sometime in 2010 (potentially as early as 1H),” Wu writes.

“The reason,” Wu explains, “is three-fold: 1) despite heavy promotion and favorable reviews, sales of Android 2.0 smart phones (MOT Droid and HTC Droid Eris) have been somewhat disappointing and below expectations; 2) strong indications point to Palm’s launch exclusive with Sprint ending in 2009; and 3) our checks show high interest in webOS from Verizon including public comments by CEO Lowell McAdam.”

Interesting, especially the comment about Droid sales. If Wu is right, the device may not prove as daunting a competitive challenge as you would think.

“It’s too early to declare game over,” Wu says. “Talking with investors, most have written off Palm as a legitimate competitor and assumed Android will be the platform of choice at Verizon and other carriers. We believe Palm still has sizable advantages with its multitouch capability and vertical integration.”

Verizon to AT&T: Do Yourself a Favor and Shut Up

John Paczkowski — Tue, 17 Nov 2009 13:31:32 +0000

“AT&T did not file this lawsuit because Verizon’s ‘There’s A Map For That’ advertisements are untrue; AT&T sued because Verizon’s ads are true and the truth hurts.”

So begins Verizon’s (VZ) response to AT&T’s (T) complaints about its new ad campaign, and as you can see below, it pulls no punches. For 53 pages–all of them very obviously drafted with publication in mind–the new filing mercilessly thrashes AT&T, proving over and over again that the carrier’s carping over Verizon’s ads has transformed a no-win situation into a horrific PR disaster that only highlights AT&T’s shortcomings.

“In the final analysis, AT&T seeks emergency relief because Verizon’s side-by-side, apples-to-apples comparison of its own 3G coverage with AT&T’s confirms what the marketplace has been saying for months: AT&T failed to invest adequately in the necessary infrastructure to expand its 3G coverage to support its growth in smartphone business and the usefulness of its service to smartphone users has suffered accordingly. AT&T may not like the message that the ads send, but this Court should reject its efforts to silence the messenger.”

Brutal.

As I said earlier this month, 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. And, indeed, the lawsuit already is a mistake. Below, Verizon’s reply in full:

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verizonresponse –

Nokia Buy Palm? Riiiiight.

John Paczkowski — Fri, 13 Nov 2009 20:39:12 +0000

Palm shares are trading higher today, bolstered by anticipation of the Nov. 15 launch of the Pixi, the company’s second webOS handset and by some silly rumors about a potential takeover by Nokia (NOK). Does the company really need another software platform to add to Symbian, Maemo and Qt? C’mon.

At $12.34, Palm (PALM) is up well over seven percent as I write this, a nice gain that more than offset the four percent drop the company’s shares suffered last week. Clearly, the market is expecting a lot of the Pixi, and according to some analysts, it may get it. In a note to clients Friday, RBC analysts said they “expect positive consumer reception and healthy sell-through,” for the Pixi.

But not everyone agrees with RBC’s cheery assessment. Ashok Kumar, an analyst at Northeast Securities, has a much dimmer view of Palm’s prospects in the months ahead. He says his sell-through checks show a “substantial decline” in recent Pre sales.

“As a fading brand, carriers are likely to see better returns on their promotional and advertising dollars with other vendors,” Kumar writes. “WebOS has negligible smartphone OS share, 0.2 percent per Gartner estimates, and is unlikely to attract any meaningful third-party application support. Palm has bet the farm on webOS and there is a real possibility that they may not achieve critical mass.”

Perhaps. Perhaps not. We’ll see in the months ahead.

Dell Dials Up Smartphones

John Paczkowski — Fri, 13 Nov 2009 19:00:53 +0000

[ See post to watch video ]

Dellephone: China Mobile, Claro and Then, AT&T?

John Paczkowski — Fri, 13 Nov 2009 16:22:59 +0000

After nearly three years of rumor and speculation, Dell is finally entering the smartphone market–in China and Brazil. Later this month, China Mobile and Brazil’s Claro will begin selling the company’s Mini 3, a handset designed around Google’s (GOOG) Android mobile operating system.

Why China and Brazil? Well, for one thing, they are developing markets. For another, Dell (DELL) already has partners there.

“Besides size (China Mobile has over 500 million subscribers, and Claro serves more than 42 million), we have existing telecom partnerships with them,” Dell blogger Lionel Menchaca said in a post. “Back in April, we were the first to embed China Mobile’s technology into our Mini 10 netbook. And if you’ve been watching, you know Dell has agreements with lots of other providers like Vodafone in Europe, Australia and New Zealand. We’ve partnered with AT&T and Verizon in the United States to offer mobile broadband on different products, and we have agreements with other carriers in Asia.”

Interesting. Presumably this means we’ll see the Mini rolled out in short order in these other countries as well. As you may recall, Dell was rumored to be building an Android handset for AT&T (T) in early October.

Apple: From Zero to 17.1 Percent Smartphone Share in 2.5 Years

John Paczkowski — Fri, 13 Nov 2009 15:05:13 +0000

Lest there be any doubt that Apple’s iPhone is redefining the smartphone market, consider this: In less than two and a half years, the device has managed to claim nearly a fifth of the worldwide market for smartphones.

According to new data released this week by Gartner, Apple shipped some 7.04 million iPhones in the third quarter–up from just 4.72 million phones in the same period a year ago–for a 17.1 percent share of the market (see table below; click to enlarge).

That’s a 49.2 percent year-over-year increase in sales and it puts Apple (AAPL) in spitting distance of Research in Motion (RIMM), which also posted close to a 50 percent year-over-year gain to claim 21 percent of smartphone sales during the period.

With 39 percent of smartphone sales, Nokia (NOK) was the top seller during the period, and it’s clearly not ceding its spot any time soon. But RIM might, given the small gap between its market share and Apple’s.

In any case, RIM clearly has a fight on its hands as we head in the holidays, especially if Apple brings an 8GB iPhone 3GS to market in the next few weeks.

UPDATE: According to Apple’s last earnings announcement, the company said it shipped 7.4 million iPhones during the quarter. Why there’s a discrepancy between the company’s numbers and Gartner’s isn’t clear.