Apple

It's just a rumor at this point, but the usual anonymous tipsters have told the Boy Genius Report that Apple is planning to sell a $99 iPhone at Wal-Mart. There's been some debate about whether this would be a good idea for Apple. One financial analyst ran the numbers and believes that Apple would double or triple sales while still maintaining very healthy margins of more than 40 percent. Other onlookers have noted that Apple does not typically play the low-cost high-volume game; it certainly made fools of any suckers who believed the $800 laptop rumor.

(Credit: CNET Networks)

I'll throw my hat into the ring and say that a $99 iPhone would be a great idea. Why?

1. The smartphone market is new(er). Laptop computers have been around for more than a decade and have practically become a commodity, as evidenced by the recent rise of sub-$500 Netbooks. The typical way to compete in a commodity market is by ruthlessly slashing expenses and competing on price. But the better way--if you can swing it--is to break out of the commodity ghetto and position your product as a luxury exception. That's exactly what Apple has done, largely by way of design. (You can argue the merits of OS X versus Windows all you want, but there's no arguing that OS X has a simpler--not necessarily "easier"--and therefore more elegant appearance.)

But smartphones are still a relatively green market. Yes, we've seen "feature phones" capable of running simple applications like games for some time, but true smartphones--with large displays, sophisticated user interfaces, and the ability to run multiple types of computer-like applications--are still rare outside the business world. If Apple can compete aggressively on price now, it could dominate the consumer smartphone market, just as it dominates the MP3 player market today. Once that happens, all sorts of interesting long-term revenue possibilities open up--App Store revenue could become significant with 50 million iPhones out there, not to mention upgrade cycles, attached devices and services, and the "halo effect" on Apple's other products.

2. The competition is behind. As today's Gartner report on smartphones makes clear, the competition is in disarray. Nokia/Symbian's market share showed an annual decline for the first time ever in the third quarter because of a lack of competitive touch-screen devices. Windows Mobile fell behind the iPhone in North America. And while Research In Motion is also growing, its entrant in the touch-screen race, the new Storm, has been met with a decided "meh" or worse.

None of these competitors is standing still. Nokia's got its Ovi Internet services online and is unveiling touch-screen devices left and right; Microsoft's busy at work on Windows Mobile 7, which will almost certainly incorporate music functionality from the Zune and design and other features from Danger. And the Storm won't be RIM's last effort at a touch-screen phone.

3. The economy. Times are hard. Apple's got a backlog of 2 million iPhones in the channel, according to that Gartner report. RIM just downgraded expectations for its third quarter. What better way to dominate than by being the low-price leader and creating the product with the most mainstream appeal? It sure seems to be working well for Nintendo.

By striking now, the iPhone could become "everybody's" first smartphone. Five years from now, it could be as synonymous with smartphone as iPod is with MP3 player.

Google Earth now works as a Safari or Firefox plug-in on Mac OS X.

(Credit: Google)

Google has released a Mac OS X version of a plug-in that lets people use its Google Earth software as a browser plug-in.

The move means a smaller but significant crowd can rely on Web pages that employ the sophisticated aerial viewing options the software provides. But Mac fans should brace themselves for a 47MB download from the Google Earth API page.

The size is large because Google provided a universal binary file that runs on both PowerPC-based and Intel-based Macs, a Google representative said in a forum posting about the availability of the Mac version. "There are also some other space-saving changes that we may look into later on," he said, adding that Google plans to mention the software in a forthcoming blog post.

Digital Earth Blog, which surfaced the forum post Wednesday, points to a few sites such as EarthSwoop and Mini Flight Sim where people can try the plug-in.

In other Mac news, Jason Toff, an associate product marketing manager for the Google Mac Team, announced Wednesday on the Google Mac blog that the Mac-specific Google page is no longer just available in English. The site now works in German, French, Spanish, Japanese, Chinese, Taiwanese, Dutch, and Italian.

Update 9:45 a.m. PST December 4: Google's blog post about the plug-in is now live.

In it, Google also announced a new Google Earth plug-in game, Puzzler, and some bug fixes in the Windows version of the Google Earth plug-in.

(Via Google Earth Blog.)

Apple could be running into iPod shortages this holiday season, according to one analyst.

(Credit: Apple)

An iPod shortage at Amazon.com appears to have spread to other distribution channels, according to an analyst.

Shaw Wu of Kaufman Bros. reports that after checking in with his retail sources, he believes that Apple is experiencing an iPod shortage as holiday demand proves stronger than the company may have anticipated. Retailers such as Wal-Mart, Best Buy, and Target are now reporting iPod shortages after Amazon.com extended the lead times for its iPods following Black Friday, he wrote in a research note distributed Wednesday.

It had been unclear whether the public was responding to Apple's latest crop of iPods, despite the usual saturation advertising for the iPod Nano and iPod Touch. With the stock market in the tank and people worried about their jobs, it didn't appear that this would be the best holiday season for iPod sales.

Wu believes that consumers are indeed making hard choices about what they buy this holiday season, but thinks that the iPod benefits from "strong consumer understanding of the value it provides" when push comes to shove.

Other Apple analysts had predicted the company would sell just 18 million to 19 million iPods this holiday season, but Wu is a little more optimistic, with a forecast of 21 million units. During last year's holiday season, Apple sold 22 million iPods.

Is another company backing Psystar's Open Computer? Apple wants to find out.

(Credit: Psystar)

Apple has amended its lawsuit against Psystar to allow for the possibility that other parties are backing the company.

When companies file lawsuits, they'll often tack something like "John Does 1-50" onto the list of defendants, in order to allow for the possibility that other parties to the case who have yet to be discovered could be added at a later date. Apple did not do that the first time it filed suit against Mac clone maker Psystar, but has tacked such a paragraph onto an amended copy of its lawsuit against the company, as noted by Groklaw.

On information and belief, persons other than Psystar are involved in Psystar's unlawful and improper activities described in this Amended Complaint. The true names or capacities, whether individual, corporate, or otherwise, of these persons are unknown to Apple. Consequently they are referred to herein as John Does 1 through 10 (collectively the "John Doe Defendants"). On information and belief, the John Doe Defendants are various individuals and/or corporations who have infringed Apple's intellectual property rights, breached or induced the breach of Apple's license agreements and violated state and common law unfair competition laws. Apple will seek leave to amend this complaint to show the unknown John Doe Defendants' true names and capacities when they are ascertained.

It's always been a bit puzzling to ponder how Psystar emerged seemingly overnight with designs on challenging one of the tech industry's richest companies, retaining one of Silicon Valley's star law firms along the way. And it made ambitious, expensive claims, such as attempting to argue that Apple was in violation of antitrust law by refusing to license Mac OS X.

With that claim having been shot down by a judge, Psystar appears to be on borrowed time. There's no evidence that has surfaced tying Psystar to anything but the Pedraza brothers of Southern Florida, but if the company is forced to shut down, Apple may try to go after any person or organization that backed Psystar in an attempt to recover damages.

Apple also tacked on a DMCA (Digital Millenium Copyright Act) claim onto its complaint this week, alleging that Psystar is improperly modifying the code that prohibits upgrade copies of Mac OS X from being installed on anything but a Mac that has a previous version of the operating system already installed.

(Credit: CNET)

On Tuesday, the first promotional codes that will make iPhone apps free to some users began trickling out of the App Store.

Apple is finally bequeathing apps developers with a way to let some media testers review an app at no expense and reward or attract a few lucky users. (The first invite has already floated into my in-box.)

This is Apple, so there are limits. Fifty promotional codes per product, to be exact.

Also, as wonderful as it is to see the passcodes allowed and implemented, they are not free trials. Developers angling to hook new customers will still need to lure them with free, light versions of the software or the less popular approach of offering an app free for a limited time and then ratcheting up the cost when the window closes.

Still, we're happy to finally see some leeway for developers, who will also get a reprieve from issuing gift certificates that often lose them money as a workaround for letting select reviewers evaluate apps for free.

(Via MacRumors)

Updated 7:45 p.m. PST with expert comment, at 7:20 p.m. PST with context on previous coverage, and at 7:08 p.m. PST with background.

"We have removed the KnowledgeBase article because it was old and inaccurate," Apple spokesperson Bill Evans said.

"The Mac is designed with built-in technologies that provide protection against malicious software and security threats right out of the box," he said. "However, since no system can be 100 percent immune from every threat, running antivirus software may offer additional protection."

Apple's previous security message in its KnowledgeBase, which serves as a tutorial for Mac users, was: "Apple encourages the widespread use of multiple antivirus utilities so that virus programmers have more than one application to circumvent, thus making the whole virus writing process more difficult."

Security experts, while pleased that Apple would urge Mac users to install antivirus software, had warned that running multiple antivirus products could cause problems and recommended against it.

Apple's antivirus support note was initially published last year and was updated last month, despite reports that it was a new note.

One Apple expert speculated that Apple was merely removing a poorly worded support note and said it probably wasn't ever Apple's intention to tell Mac users they need antivirus.

"I bet you it was a low-level support note and it hadn't gone through the right approvals," said Rich Mogull, security editor of Apple news site TidBITS. "That's my guess."

To some, Apple's latest move will be seen as back-tracking given that it comes one day after those misleading reports circulated. The motive remains unclear, particularly because Apple didn't replace the previously published suggestion with an updated one.

The message that remains is that Mac users don't really need to take additional steps to protect against viruses and other malware. Telling customers they can run antivirus for "additional protection" could be interpreted as a way to protect against any liability.

There are no known viruses in the wild that exploit a vulnerability in the Mac OS, and Windows continues to be the overwhelming preference for malware writers to target their programs. But malware isn't just taking advantage of operating system weaknesses anymore. In fact, the majority of such threats now come from code that targets weaknesses in browsers and other applications that aren't platform specific.

Mogull said he doesn't recommend that the average Mac user install antivirus software because of the low-level of malicious software seen for Macs at this time.

To me, this new Apple statement poses more questions than it answers.

Regardless of the meaning of Apple's latest action, I'm pleased to now have open lines of communication with the company. Over the last few months, I have had an increasingly difficult time getting any response to my e-mails and phone calls. For instance, I got no response to my requests for comment on Monday's article about this topic. However, after talking to several Apple spokespeople on Tuesday about the matter I am confident that the situation has been cleared up.

I also was reminded of how much collective knowledge CNET readers have about Apple and would like to extend an invitation for people to feel free to contact me directly at elinor.mills@cnet.com with any feedback and tips related to Apple security issues.

The iPhone kept smartphone growth alive during the last quarter, according to one analyst.

(Credit: CNET)

One analyst thinks that if it wasn't for the iPhone, smartphone growth would have slowed to a crawl last quarter.

Charlie Wolf of Needham & Company released some data Tuesday, as captured by MacNN, and said he believes that Apple's iPhone accounted for virtually all the sequential growth in the market during the third quarter, which totaled 28.6 percent. That's when Apple launched the iPhone 3G and sold 6.9 million units, putting it in second place among all smartphone vendors with 16.6 percent of the market.

At first glance it seems a bit of a stretch to give Apple sole credit for keeping smartphone growth alive during the period. But market leader Nokia posted a lackluster quarter, and the smartphone market has been growing at a much faster clip than that for some time now. Wolf thinks that had the iPhone 3G not been such a hit, smartphone growth would have slowed to a trickle.

That might not bode well for the current quarter, as Wolf notes that as many as 2 million iPhones sold during the third quarter might have been designated for the channel, and not actually sold to real people until the fourth quarter. That could mean smartphone growth is going to flatline this holiday season or even fall as Apple's carrier partners work through channel inventory and the economy dampens demand. But Wolf thinks Apple and RIM are in decent shape because consumers--especially in the U.S.--are showing a preference for integrated hardware/software phones like the iPhone and BlackBerry.

You can't do much more with Koi Pond than feed the fish, but the mesmerizing virtual pond was the top-selling application in 2008 on the App Store.

(Credit: The Blimp Pilots)

It's clear from the list of top applications downloaded from the App Store this year that iPhone and iPod Touch users are looking for entertainment.

Every year around this time Apple releases the most-downloaded songs and videos on iTunes, and this year is particularly interesting because it's the first year of the App Store. Six of the top 10 paid apps were games, including Apple's Texas Hold-Em and the heavily promoted Super Monkey Ball from Sega, but Koi Pond's mesmerizing virtual aquarium led the way as the top-selling paid application for the iPhone and the iPod Touch.

On the free side, Pandora Radio took the top spot, followed by Facebook's iPhone application and Tapulous' Tap Tap Revenge. Other interesting apps that made the top 10 in both categories? iBeer (paid) and Lightsaber Unleashed (free).

Apple separates the top applications list into several categories on the iTunes Store, such as entertainment, utilities, social networking, and music. The full list (iTunes link) is worth a look if you've been searching for new applications to add to your iPhone. I added Recorder (ninth overall in the paid category) this morning as a way of finally putting my old digital recorder out of its misery. And check out these graphs from O'Reilly's Radar that take a look at certain stats such as the changing percentage of paid versus free applications.

Updated 10:50 a.m. PST December 2 to correct that Apple previously recommended antivirus software to Mac users, and at 1:50 p.m. PST with call back from Apple and link to 2002 Apple anti-virus item. A follow-up blog will be posted that goes into more detail about the coverage.

Apple is recommending that Mac users install antivirus software.

But don't read this as an admission that the Mac operating system is suddenly insecure. It's more a recognition that Mac users are vulnerable to Web application exploits, which have replaced operating system vulnerabilities as the bigger threat to computer users.

On November 21 Apple updated a technical note on its Support Web site that says: "Apple encourages the widespread use of multiple antivirus utilities so that virus programmers have more than one application to circumvent, thus making the whole virus writing process more difficult."

The item offers three software suggestions: Intego VirusBarrier X5 and Symantec Norton Anti-Virus 11 for Macintosh, both available from the Apple Online Store, and McAfee VirusScan for Mac.

MacDailyNews unearthed the same note posted by Apple in June 2007 and published it on Tuesday,a long with a link to a March 2002 note from Apple urging people to use an anti-virus program.

Apple representatives did not respond to e-mails seeking comment on Monday, but did return a call on Tuesday. A spokesman said he would look into the matter.

Brian Krebs, who first reported on the Apple antivirus recommendation Monday in his Security Fix blog at The Washington Post, said an Apple store employee told him he didn't need antivirus software when he purchased a MacBook three months ago.

Apple urges Mac customers to use antivirus software.

(Credit: Apple)

Apple didn't cut prices as much as some had expected on Black Friday, but it didn't seem to matter to consumers.

(Credit: CNET)

Few analysts were prepared to call Apple's Black Friday performance a blowout, but in general they thought consumers responded well to Apple's products and pricing last week.

Gene Munster of Piper Jaffray, Shaw Wu of Kaufman Brothers, and Maynard Um of UBS have weighed in with their thoughts on Apple's sales during the first official shopping day of the holiday season. Expectations had been muted going into the weekend, which many had thought would be dismal given the economic environment.

But the overall picture wasn't as bad as some had feared. And despite sticking with its historical Black Friday discount strategy rather than rolling out aggressive price cuts, Apple fared well, according to Munster. Checks at various Apple retail stores indicated that "Mac sales were better than expected" and iPhone sales were about in line with expectations, he wrote in a research note Monday.

Kaufman's Wu wrote, "Despite modest 5 percent-10 percent discounts by AAPL itself through its retail stores and website, our distributor and retail checks indicate strong foot traffic at AAPL stores and that iPods and Macs did fairly well, helped by bigger promotions by third-party retailers and unadvertised price matching by AAPL." There had been reports that Apple was planning to discount its products more steeply than in the past in response to concerns over the health of the economy, but the company stood pat.

UBS' Um also noted that Apple resellers, such as Best Buy and MacMall, were willing to discount prices more aggressively than Apple as well as apply discounts to products that Apple wouldn't touch in its own stores, such as the MacBook Pro and MacBook Air.