Mac news from outside the reality distortion field
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May 13, 2008, 7:48 am

Sex and the iTunes Store

They’re there: Carrie Bradshaw. Tony Soprano. Jimmy McNulty. Jemaine Clement. Seth Bullock. Julius Caesar.

Early Tuesday morning, somebody at Apple’s iTunes Store flicked a switch and six of HBO’s most popular series became available for download for prices ranging from $1.99 to $2.99 per episode. They are:

  • Sex and the City: $1.99 per episode
  • The Wire: $1.99
  • Deadwood: $2.99
  • Flight of the Conchords: $1.99
  • Rome: $2.99
  • The Sopranos: $2.99

As widely reported on Monday, the deal is a breakthrough for both Apple (AAPL) and Time Warner’s (TWX) HBO.

For HBO, which is making individual episodes available for the first time, it’s a chance to expand viewership beyond its 40 million cable TV subscribers to Apple’s broader audience of 50 million registered iTunes users.

For Apple, it’s a strong signal that Steve Jobs has backed away from his stubborn insistence on flat-rate pricing — $1.99 for TV episodes, $.99 for songs — and is ready start a new round of deal making in Hollywood.

On May 1, Apple announced an agreement with Warner Brothers, 20th Century Fox (NWS), Walt Disney (DIS), Paramount (VIA), Sony (SNE) and others to make movies available for iTunes download the same day they are released on DVD at two price points: $14.99 for new releases and $9.99 for older films. (see Apple’s new Hollywood deal)

Could a rapprochement with NBC — which pulled its series off iTunes last December in a dispute over flat rate pricing (see here) — be far behind? The fact that NBC (GE) started streaming free episodes of two of its most popular shows, The Office and 30 Rock, to iPhones last week seems like a promising sign.

[UPDATE: Apple posted a press release this morning. HBO is "excited." Apple is "thrilled."]

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May 12, 2008, 12:53 pm

Fortune: Apple’s Ive helped design the heroine of Pixar’s Wall-E

It’s no accident that Eve, Wall-E’s sleek, pod-like love interest in the forthcoming Disney/Pixar animated feature film by the same name, looks like something out of Apple’s (AAPL) design department.

Writing in the current issue of Fortune, Richard Siklos reports that Jonathan Ive, head of Apple’s design department and the man responsible for the iMac, iPod and iPhone, had a hand in creating the robot.

In the piece, director Andrew Stanton tells Siklos:

“I wanted Eve to be high-end technology — no expense spared — and I wanted it to be seamless and for the technology to be sort of hidden and subcutaneous. The more I started describing it, the more I realized I was pretty much describing the Apple playbook for design.” (link)

According to Siklos, a call from Stanton to Steve Jobs in 2005 resulted in Ive spending a day at Pixar consulting on the Eve prototype. Siklos writes:

“Stanton said that it was a ‘lovefest’ with Ive, but that the notoriously tight-lipped design wizard offered few specific modifications. ‘Apple is so proprietary and so secretive that he couldn’t even really allude to where the future of technology was going,’ says Stanton. ‘The most he could do is nod his head to the things we said we wanted to do.’ (Through a spokesman, Ive declined to comment.)” (link)

Disney (DIS) bought Pixar in 2006 in a deal that made Jobs Disney’s largest individual shareholder.

Stanton, who directed Finding Nemo, says he’s been kicking around the idea for Wall-E for years, even before Toy Story was made. He has summarized it most succinctly like this: “What if mankind evacuated Earth and forgot to turn off the last remaining robot?”

The movie opens June 27, which is the day the smart money is betting that the 3G iPhone goes on sale.

You can read Siklos’ piece at Fortune.com here.

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May 12, 2008, 9:08 am

Apple rings up four new iPhone deals in Asia

The week opens with fresh reports of iPhone agreements with overseas carriers, as Apple (AAPL) continues its push to roll the Web-browsing cellphone out beyond the United States and Europe.

The Wall St. Journal, BBC and other sources reported on Monday that Apple and SingTel have signed deals to bring the iPhone to four countries in the Asia-Pacific region. SingTel, with 124 million mobile subscribers, is said to be the largest Asian provider outside the People’s Republic of China. The deals involve SingTel and three of its subsidiaries:

  • SingTel will bring the iPhone to its 2.3 million subscribers in Singapore
  • Bharti Airtel will offer it to its 64 million customers in India
  • Globe Telecom will offer it to 21 million subscribers in the Philippines
  • Optus will offer it to its 7 million customers in Australia.

Australia and India were among the countries that Vodaphone (VOD) said last week that it was covering (see here) — further evidence that Apple is signing contracts that don’t offer exclusivity.

Below: an update of CdnPhoto’s map of the iPhone world, redrawn to include the latest developments.

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May 12, 2008, 7:44 am

3G iPhone: Steve Jobs to deliver keynote June 9

[UPDATE: Apple made it official on Tuesday with this press release. Jobs' keynote is scheduled for 10 a.m. PT.]

Although no official announcement has been made, Apple public relations confirmed to Fortune that Steve Jobs will deliver a keynote address on June 9, the first day of the 2008 World Wide Developers conference.

It is widely expected that Jobs will use that speech to unveil the next generation of iPhones, including a so-called 3G model.

“The launch of the new model is imminent,” wrote Piper Jaffray analyst Gene Munster in a report to clients Monday.

Munster notes that beginning Saturday, May 10, first generation iPhones were unavailable through Apple’s online store in the United States, the most recent sign that the company is clearing inventory in advance of a new release. (Two days earlier, O2 ran out of iPhones in the United Kingdom.) On Sunday Munster called 11 Apple retail stores to check on their supply; five were completely out of stock and one of the remaining six had fewer that five phones on hand.

Munster also alerted his clients to the discovery, first reported over the weekend by MacRumors, of a switch in the latest release of the iPhone 2.0 firmware that will allow users to toggle 3G data ON for faster download speeds or OFF to conserve battery life.

Despite dwindling supplies, Munster still estimates that Apple will ship 1.7 million iPhones in the quarter that ends June 30. That’s because he expects Apple to start shipping the new model in large numbers before the end of the month.

Other signs — including the release of the new Software Developers Kit scheduled for late June and an AT&T Mobile (T) memo canceling staff vacations between June 15 and July 12 (see here) — point to Friday, June 27, as the day the new model will go on sale. That would give Apple four days of 3G iPhone sales before the quarter closes.

“Net-net,” writes Munster, “the initial surge of iPhone sales in June would likely offset the lost sales due to limited availability in May.”

The drumroll has already started on Apple’s (AAPL) website, where users can download a Dashboard widget counting down the hours before the June 9 WWDC by the days, hours, minutes and seconds.

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May 10, 2008, 9:07 am

How AT&T spilled the Starbucks beans

Here’s one thing the folks at Apple could teach their friends at AT&T: how to parcel out the good news.

Case in point: the Starbucks-iPhone-Wi-Fi deal that’s been on and off all week and generating all the wrong kind of headlines (see for example, here).

If Steve Jobs were running AT&T, he would have kept it simple. And a surprise. The first we would have heard about it would be when he announced it, with a flourish, as a fait accompli. Starting today, free unlimited Wi-Fi for every iPhone owner at all 7,000 Starbucks coffee shops and every other AT&T Wi-Fi hotspot — 17,000 in the U.S., 70,000 around the world.

Boom.

What we got instead was the public relations equivalent of second-day coffee, starting with the press release AT&T (T) issued back in February. The 13-paragraph document talks about free Wi-Fi for “AT&T broadband, AT&T U-verseSM Internet [and] AT&T’s remote access services business customers” but never mentions Apple (AAPL) or the iPhone — two hot-button words that would have given the news some real buzz.

Instead reporters focused on the fact that Starbucks (SBUX) was pulling the plug on T-Mobile, which had been providing it with wireless service since 2001.

Then, last week, without warning, AT&T turned the service on. I spotted it on April 30 when I tried to log on to my T-Mobile account and discovered an AT&T link that wasn’t there the day before. I was already thinking about how many extra shots of espresso I could buy with the $39 a month I would save.

And I was not alone. Apple rumor sites that day were flooded with tips from both coasts alerting them that iPhone owners were getting free Wi-Fi at Starbucks by just by typing in their 10-digit AT&T phone number. AT&T had apparently launched a nationwide test without telling anyone.

Then, four days later, the service stopped, as abruptly and mysteriously as it started, setting off waves of confusion and speculation about what the company’s on-again, off-again behavior might mean. (see here)

You might think that AT&T would have learned their lesson. But no. On Thursday, the text on its website was changed to add language about the new service — “access to AT&T’s more than 17,000 Wi-Fi hotspots, including Starbucks* all for use (sic) in the U.S.” — that iPhone owners took as a signal that the game was on for good.

Then the language disappeared, along with the Wi-Fi service, triggering another round of second-guessing. (see here)

Apparently the habit of firing before aiming — not to mention clearing it with publicity — had spread from AT&T’s networking guys to its marketing staff.

Officially, both AT&T and Apple have no comment, but the folks in Cupertino are clearly miffed. They saw the Starbucks deal as big news for iPhone owners, and they had hoped to work with AT&T to package it for high-profile release, probably in a matter of weeks.

They would have done it right.

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May 9, 2008, 3:25 pm

Apple legal clears its desk

Are Apple’s lawyers getting ready to go on vacation? For the second time in as many days, the company has agreed to settle a lingering class action suit.

On Thursday, it was a pair of complaints out of Canada that 1st, 2nd and 3rd generation iPods were delivering something like three hours of music, not eight hours as advertised. Although one case was granted class action status and the other wasn’t, Apple (AAPL) agreed to settle both, according to the Montreal Gazette, offering $44 store credit to any Canadian who purchased one of the affected iPods before June 24, 2004. As many as 80,000 could be eligible. Hearings are set for May 26 in Montreal and June 20 in Toronto.

Then on Friday, according to the LA Times, Apple agreed to pay some 2.3 million Mac owners refunds of $25 to $79 to resolve claims that some of its power supplies were prone to fray and spark and self-destruct. Customers who bought replacement adaptors for PowerBooks and iBooks could be eligible for the refunds, according to documents filed in federal court in San Jose. A final court hearing is scheduled for Sept. 8.

Still pending, notes the Gazette, is the case filed against Apple Canada last fall by law student David Bitton who was surprised to discover that his 8GB iPod Nano held only 7.45GB. According to his lawyer, Bitton is asking for the full $220 purchase price, but will settle for 7.5%, plus court costs.

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May 9, 2008, 9:09 am

iPhone graphic: Apple’s new map of the world

[UPDATE: Below the fold, CdnPhoto's latest version of the map, with Spain and Poland removed because they are still at the rumor stage.]

Like many Apple (AAPL) watchers, the investors at IMO’s Apple Finance Forum have been closely following this week’s flurry of announcements of iPhone deals with carriers around the world. One of the contributors to the forum — a regular from Toronto who posts as CdnPhoto — has summarized the information graphically in a color-coded map of the world. With his permission, I’ve pasted it below.

Countries where the iPhone is now available, or will be this summer, are marked in red:

[E-mail subscribers: click here to see the map.]

Switzerland, Spain and Poland probably should be tinted a light shade of pink; these were rumors, not official announcements (see here).

Of course, if unlocked blackmarket iPhones were included, most of the world would be colored Apple red. See The iPhones of Equatorial Guinea.

For those who prefer their information in list form, here are the countries added in the past couple weeks:

For Vodaphone (VOD) (link):
Australia
Czech Republic
Egypt
Greece
India
Italy (also Telecom Italia)
New Zealand
Portugal
South Africa
Turkey

For America Movil (AMX) (link):
Argentina
Brazil
Chile
Colombia
Dominican Republic
Ecuador
El Salvador
Guatemala
Honduras
Jamaica
Mexico
Nicaragua
Paraguay
Peru
Puerto Rico
Uruguay

For Rogers Wireless:
Canada

Rumors (link):
Switzerland
Spain
Poland

No word yet:
China
Korea
Japan
Russia

For updates, check APPLinvestors, which keeps a running tally here.

Updated version of the map below the fold:

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May 8, 2008, 4:33 pm

140 million copies of Vista sold. How does Leopard compare?

Apple has no numbers to compare with the 140 million copies of Vista that Bill Gates says Microsoft (MSFT) has sold since the latest version of Windows started shipping in late 2006. (link)

Literally, no numbers. The last time Apple (AAPL) released a Leopard sales figure was Oct. 30, 2007, when the company said that it had sold more than 2 million copies of Leopard in one long weekend (see here). Apple reported $170 million revenue from Leopard sales in the December ‘07 quarter, but that represents fewer than 1.3 million copies. Apple also sold 2.32 million Macs that quarter, more than 2/3 of which probably had Leopard pre-installed.

Even so, the two operating systems aren’t even playing in the same ballpark when it comes to raw sales.

Of course, Vista was greeted with brickbats and Leopard with raves, but Gates didn’t dwell on that in Tokyo Wednesday, where he gave his Japanese partners an update on how Vista is doing. “That’s a very rapid sales rate,” he said.

Not necessarily.

“The most significant number,” says Piper Jaffray analyst Gene Munster, “is Apple’s upgrade penetration vs. Microsoft’s. Apple estimated that about 19% of the OS X user base was on Leopard by the end of its launch quarter. By my math, Vista is used by about 12%-14% of the Windows user base more than a year after its retail launch.”

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May 8, 2008, 7:45 am

iPhones in Switzerland, Spain, Poland and beyond

News and rumors about the iPhone’s global expansion keep rolling in.

Citing a source at Swisscom, Lausanne-based Le Matin Online reported on Thursday that Apple had concluded an agreement to bring the 3G iPhone to Switzerland this summer (link, in French). Swisscom, with 5.1 million subscribers, is the country’s largest mobile carrier.

Meanwhile, France Telecom CFO Gervais Pellissier said on Wednesday that his company was in talks with Apple (AAPL) to extend their partnership beyond France and into “more than just two countries.” He was responding to a journalist’s question about whether the company was hoping to secure rights to sell the iPhone in Spain and Poland, the largest countries in Europe still without an iPhone carrier. (link)

Also on Wednesday, America Movil (AMX) confirmed that it had signed a deal to bring the iPhone to 16 countries in Latin America and the Caribbean. America Movil, based in Mexico City and controlled by billionaire Carlos Slim, has 159.2 million subscribers. (see here)

Earlier this week, Vodafone (VOD) announced that it had signed an agreement to carry the iPhone in 10 countries, Australia, the Czech Republic, Egypt, Greece, Italy, India, Portugal, New Zealand, South Africa and Turkey. The same day, Telecom Italia announced that it had also secured the rights to sell the phone in Italy, leading to speculation that Apple had abandoned its original iPhone business model and was no longer demanding revenue sharing in return for exclusivity. (see here)

But France Telecom’s Pellissier said that his company was sticking to the terms of its original agreement, which gives it the exclusive right to sell the iPhone in France for another two and a half years. France Telecom is resisting pressure to lower the price of the original iPhone — as O2 and T-Mobile did in the U.K. and Germany, respectively — at least until the 3G iPhone arrives. “We’ll see with the next model,” said Pellissier, according to Macworld, adding that the arrival of a new iPhone “will boost sales.” Pellissier declined to give exact sales figures, but said his company had sold more than 100,000 since November, 2007.

According to Piper Jaffray analyst Gene Munster, exclusivity agreements may soon be the exception, not the rule. He notes that the Vodafone announcement, unlike press releases issued by the first wave of carriers, “did not reference any exclusive terms.” He expects Apple will start to feel the impact of the loss of revenue sharing from these nonexclusive deals in 2009, but still views them as a net positive for the company.

“While we expected an international rollout in CY08 (with the exception of China), this announcement is both sooner and more expansive that we were expecting. … The iPhone’s international rollout is about 6 months ahead of our original expectations.”

On Tuesday, April 29, Rogers Wireless, Canada’s largest cellular carrier, announced that it too had signed a deal to carry the iPhone “later this year.” (link)

Meanwhile, stocks of first-generation iPhones are running low. Spot shortages continue in the U.S., and Engadget reports that O2 on Thursday posted a notice on its website that iPhones — both the 8G and 16G models — are no longer available in its stores. The 8G model was on sale in the U.K., but the 16G model sold at full price until the shelves ran dry.

[Thanks to reader David C. in Switzerland for the tip.]

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May 7, 2008, 12:16 pm

America Movil to carry iPhone in Latin America

Another day, another subcontinent.

One day after Vodafone (VOD) announced it would be carrying Apple’s (AAPL) iPhone in 10 countries in Europe, Asia and Australia, Reuters reports that America Movil (AMX) will be bringing the iPhone to Latin America.

America Movil is a big player. With more than 150 million subscribers, the Mexico City-based Fortune 500 company is the largest mobile operator — and the largest corporation — in Latin America, with subsidiaries in Central America, South America and much of the Caribbean. Its founder and chairman is Carlos Slim Helu, one of the richest men in the world, with an estimated net worth $67.8 billion (link). This is the kind of CEO — and the kind of company — Steve Jobs likes to partner with.

As with yesterday’s terse announcement from Vodafone, there is no word on when the deal starts, what models are covered and whether it is exclusive.

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Philip Elmer-DeWittSilicon Valley veterans like to joke that Steve Jobs must be surrounded by a reality distortion field; if you get too close to him, you start to believe what he's saying. Thanks to the success of the iPod, the launch of the iPhone and the renewed interest in the Mac, Apple has made believers out of millions of customers - and made a lot of investors rich. But Philip Elmer-DeWitt believes that an ounce of skepticism never hurts when writing about the company. He should know. He's been covering Apple - and watching Steve Jobs operate - since 1982, first for Time Magazine, then for Business 2.0, and now for Fortune.
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