London-based mobile app seller GetJar created a stir today by releasing a study saying the mobile apps business will grow to $17.5 billion by 2012.

With 4 billion-plus mobile phone users around the world, that suggests an average of $4 per user generated by mobile apps.

Downloads of mobile apps will grow from 7 billion in 2009 to nearly 50 billion in 2012. The value of apps sold would then be greater than sales of music CDs, the study said.

Also predicted is a continuing shift away from "on deck" apps distributed by phone companies toward downloads from app stores, such as GetJar. The study predicted that on-deck applications' share of sales will fall to 23 percent, from 60 percent in 2009.

By 2012, Europe will be a bigger market for apps than the U.S., spending $8.5 billion versus $6.7 billion.

Asia now accounts for the most downloads, but consumers there spend far less on them than North Americans -- they're spending an average of 10 cents per app, vs. the $1.09 spent in this region.

The study predicts the overall average selling price of apps will fall 29 percent, from its current level around $1.90, but ad revenue from apps is expected to stay flat.

GetJar also predicted a shakeout in the number of app stores, which grew from eight to 38 last year and will continue growing this year.

"This report signifies a battle for survival of the fittest among app stores worldwide -- with app revenue and growth opportunities growing significantly," Chief Executive Ilja Laurs said in the release. "There is no way that this many app stores will survive in the long term and while the value of the global app economy is set to be astoundingly high by 2012, we think only a few app stores will share this revenue."

The study was done for GetJar by Issaquah mobile consultant Chetan Sharma. GetJar has other local ties; its vice president of sales, Bill Scott, is a Seattle native who used to work at InfoSpace.

(Today's column ...)

Every time I turn around, I'm hearing Microsoft's top brass praising Apple.

It's like seeing a big, white rabbit. Can't everyone see it, right over there?

First it was Steve Ballmer at the University of Washington, praising iTunes' App Store.

Then a few days ago it was Brad Smith, the company's general counsel and senior vice president.

Bellevue's Valve Software may get credit for the next jump in Mac market share.

The company today announced that it's extending its hugely popular Steam game distribution service to the Mac platform, which has long had relatively few games compared with Windows PCs. Steam and Valve's library, including "Left 4 Dead 2," "Counter-Strike," "Team Fortress 2" and the "Half-LIfe" series, are coming to the Mac in April.

Valve is also going to release future versions of its games on the Mac simultaneous with their release on the PC and Xbox platforms starting in the holiday season with "Portal 2," a sequel to the hit puzzle game initially developed at Redmond's DigiPen Institute of Technology.

"As we transition from entertainment as a product to entertainment as a service, customers and developers need open, high-quality Internet clients," Gabe Newell, Valve president, said in the release. "The Mac is a great platform for entertainment services."

Valve's Steam service will let players switch between Mac and PC versions at no extra charge.

John Cook, director of Steam development, explained further in the release:

"We looked at a variety of methods to get our games onto the Mac and in the end decided to go with native versions rather than emulation. The inclusion of WebKit into Steam, and of OpenGL into Source gives us a lot of flexibility in how we move these technologies forward. We are treating the Mac as a tier-1 platform so all of our future games will release simultaneously on Windows, Mac, and the Xbox 360. Updates for the Mac will be available simultaneously with the Windows updates. Furthermore, Mac and Windows players will be part of the same multiplayer universe, sharing servers, lobbies, and so forth. We fully support a heterogeneous mix of servers and clients. The first Mac Steam client will be the new generation currently in beta testing on Windows."

I wonder if the timing of Apple's lawsuit against HTC over iPhone patents has anything to do with an Android developer that surfaced this week.

HTC is the primary manufacturer of Google Android phones, which have been on sale since late 2008.

Apple has dominated mobile developer mindshare with the iPhone's App Store. But that story began to wobble over the past year or so as developers realized they weren't making as much money as they thought they would.

Then on Monday, word, came that the gold rush is now happening on the Android platform.

At least it is for Eddie Kim, who told the world he's making $13,000 a month selling his "Car Locator' app for Android.

The headline on ReadWriteWeb.com: "Watch Out, iPhone Devs: One-Man Android App Nets $13K Monthly."

"There's money to be made there, and the userbase is only getting bigger," gushed the RWW blog, which is influential with developers.

Apple surely has been exploring the patent suit for some time, but is it a coincidence the filing comes a day after Android finally gets its Klondike Kim story?

HTC is based in Taiwan but its U.S. headquarters -- named in the suit -- are in Bellevue. Its software interfaces targeted in the suit were probably partly developed in HTC's secretive (and Apple friendly)Pioneer Square software development lab. A picture I took last year in the lab:

Apple came out with its horns blowing, issuing a press release with a sharp statement from Steve Jobs:

"We can sit by and watch competitors steal our patented inventions, or we can do something about it. We've decided to do something about it," Jobs said in the release. "We think competition is healthy, but competitors should create their own original technology, not steal ours."

Who knows who stole what, but squabbling over patents is a cornerstone of the tech industry. Most every player -- including Apple -- has been found to have poached someone's technology at one point or another.

An HTC spokesman in Bellevue said the company is still digesting the suit. He provided a statement noting that HTC "is a mobile technology innovator and patent holder that has been very focused over the past 13 years on creating many of the most innovative smartphones" and "values patent rights and their enforcement but is also committed to defending its own technology innovations."

The statement:

"HTC only learned of Apple's actions this morning via media reports, and therefore we have not yet had the opportunity to investigate the filings. Until we have had this opportunity, we are unable to comment on the validity of the claims being made against HTC."

People are underestimating what a hit Apple's iPad will be, according to Morgan Stanley analyst Katy Huberty.

In a note to clients today, Huberty predicted Apple will sell 6 million iPads this year -- way more than the 3 million to 4 million consensus estimate.

Huberty believes "recent negative sentiment" since the iPad unveiling have set Apple's stock up for a bounce after the device launches in March and new iPhones appear in June.

She reiterated her target of $250, up from the current $205 (the stock's up about 3 percent today).

The report predicted new iPhones coming in June will have new capabilities, perhaps including new gesture controls, and lower cost of ownership -- suggesting a lower device price and perhaps lower service plan options.

From her comment on the iPad:

We expect Apple to ship its first iPad and announce additional content deals in late March to better than expected demand. We see the iPad targeting the sub-$800 consumer notebook market, which equates to 30M annual units just in the US (120M globally). We expect iPad points of distribution to expand through CY10, both in the US and International markets, which could add 500K-1M units from channel fill alone.

From her comment on the iPhone:

"We expect Apple to launch new iPhones in June that offer both a lower total cost of ownership and new functionality, potentially including gesture-based technology. As we've highlighted in the past, the cost of device + service plan is currently the biggest barrier to incremental demand in both mature markets like the US and emerging markets like China."

Apple's iPad is "nice" but it's nowhere near as great as the iPhone, Microsoft chairman and former chief tablet enthusiast Bill Gates told Bnet's Brent Schlender.

Part of his quote:

"So, it's not like I sit there and feel the same way I did with iPhone where I say, 'Oh my God, Microsoft didn't aim high enough.' It's a nice reader, but there's nothing on the iPad I look at and say, 'Oh, I wish Microsoft had done it.'"

Gates was more enthused about a demonstration of the Hayden Planetarium's Virtual Universe that he saw this week at the TED conference, calling it "very cool" in a Twitter post yesterday. Maybe if Apple could get the vritual universe on a pad ...

Dick Brass, who led Microsoft's efforts to develop e-reader technology a decade ago, couldn't take it anymore.

The now-retired executive wrote a long, thoughtful essay outlining how Microsoft's culture stifled creative work, including some that was later mirrored in successful products from Apple.

Brass, a former journalist now living on San Juan Island, launched Microsoft Reader with ClearType rendering technology in 1999, eons before the Kindle and iPad. But, he revealed in his essay published today in the New York Times, it fell victim to internal turf wars in Redmond.

An excerpt:

Although we built it to help sell e-books, it gave Microsoft a huge potential advantage for every device with a screen. But it also annoyed other Microsoft groups that felt threatened by our success.

Engineers in the Windows group falsely claimed it made the display go haywire when certain colors were used. The head of Office products said it was fuzzy and gave him headaches. The vice president for pocket devices was blunter: he'd support ClearType and use it, but only if I transferred the program and the programmers to his control. As a result, even though it received much public praise, internal promotion and patents, a decade passed before a fully operational version of ClearType finally made it into Windows.

Brass defends Microsoft against its haters:

The company's chief executive, Steve Ballmer, has continued to deliver huge profits. They totaled well over $100 billion in the past 10 years alone and help sustain the economies of Seattle, Washington State and the nation as a whole. Its founder, Bill Gates, is not only the most generous philanthropist in history, but has also inspired thousands of his employees to give generously themselves. No one in his right mind should wish Microsoft failure.

But he concludes by saying that its "dysfunctional corporate culture" is snuffing out its creative spark.

Taiwanese manufacturer Pegatron Technology was chosen by Apple to build the next-generation iPhone coming out later this year, according to a report in Taipei-based DigiTimes.

It noted that Microsoft has also hired Pegatron to build the "Project Natal" controllers for the Xbox 360 that will go on sale later this year.

Imagine if they jumbled things up and shipped motion-sensing iPhones or Natal controllers that synced to iTunes.

Pegatron "has reportedly landed a contract to undertake OEM production of the next-generation iPhone scheduled for launch later in the year, joining Foxconn Electronics which manufactures current iPhones for Apple, according to industry sources," the report said.

Not much was said about the Natal device, which has been kept largely under wraps. Here's an image I took of one of the prototypes that Microsoft has provided to studios developing Natal games; this one's mounted on a camera tripod:

Here's a quick little gallery of some iPadalooza pics I sent earlier to Twitter. This will be my last iPad post for awhile, promise.

Steve Jobs perusing his new bookstore:

The MLB app for the iPad will stream live games to the device and display stats and other information. But will you be able to order beer like you can on the Nintendo DS?

Fake Steve Jobs - in red - finally getting his hands on an iPad:

Chasing Jobs, just like America:

The launch of Apple's iPad is bittersweet for Otto Berkes, a Microsoft manager who led the company's earlier effort to develop a handheld, wireless, touchscreen slate computer.

Microsoft's "Origami" project surfaced in 2006 and gave early definition of a new category of devices between phones and laptop computers. It led to the Ultra-Mobile PC category that never caught on after early models were priced over $1,000 and the device was caught in the Windows Vista turbulence.

Berkes, who now works in Microsoft's entertainment and devices group, shared his thoughts on the iPad on his personal blog, where he said the iPad is nicely designed but won't be the last word on the slate computer. He also posted a photo of Bill Gates displaying a handheld device in 2004 that points toward yesterday's arrival of the iPad.

A few tidbits:

Apple gets credit on execution and good packaging of available technology. That said, their thin slate is an unsurprising product in the context of an evolutionary timeline that spans decades of innovation and effort chasing the slate computing dream.

On the size of the iPad:

As a device, the iPad seems somewhat large and ungainly to me. With the 7"-display-based Haiku/Origami, I aimed for greater mobility in the tradeoff between mobility and display real estate. Not having a way to write on a pure slate device the size of piece of paper also seems pretty unnatural to me. One of the iPad demos shows a legal-pad background for note-taking, but then you have to use the on-screen keyboard. Say what? There's a real cognitive disconnect there. Of course, display size is highly subjective (hence the many variations in laptops) as is the relative importance of stylus functionality for different users and uses. There is plenty of room for continued development of and innovation with the slate form factor, and it will be interesting to see how the industry responds to Apple's interpretation.

UPDATE: Here's a video with Otto outlining the history of Microsoft's ultra-mobile PC effort:

SAN FRANCISCO -- Apple's legendary reality distortion field couldn't protect its new iPad from the sanitary napkin jokes.

The Wall Street Journal pounced on the story, noting:

Jokes about the sanitary napkin connotations of iPad's name abounded at offices and on the Internet. "But does it have wings?" tweeted one user. "They decided to call it the iPad? was iTampon taken?" wrote another.

Fast Company's headline: Apple's iPad Name Not the First Choice for Women. Period ...

SAN FRANCISCO -- After spending some time with the long-awaited Apple iPad, I see why it starts at $499.

At that price it seems like a very nice accessory for a wired home, where it would become a shared Web kiosk and media browsing device, tapping into the home's wireless network.

Instead of waiting to use a shared computer to check e-mail, you could just grab the iPad. Especially one that's docked with the $69 accessory keyboard, taking the place of iPods that a lot of people keep on the kitchen counter.

It's also the perfect iPod for middle-aged consumers who may squint at previous iPods' small screens and have trouble with their small buttons and controls.

The device looks and feels just like a big iPod Touch. It's solid and smooth, but the bigger expanse of screen had me wondering how well the device would resist being sat upon and dropped off of sofas, where it's probably going to get most of its use.

The iPad also has a little bit of that "too light to be true" feeling of the MacBook Air --- as though you're holding a piece of glass supported by a few wafers of metal and plastic. The iPhone seems sturdy in comparison.

Younger buyers with an iPhone may wonder what all the fuss is about, and it's not going to be a must-have device for anyone happy with their iPhone, iPod touch or laptop.

Flicking through photo galleries is fun and pictures look great on the device, although it's pretty similar to the photo handling applications that come with touchscreen PCs.

Controlling iTunes is nice on the device -- so nice I think it's going to hurt sales of touchscreen media control systems like the Sonos and Logitech's Duet system. The iPad can function like a remote control for computers running iTunes in the home, but you can't stream media directly from the device. There are no connectors for plugging one to a TV, although Apple's offering a VGA adapter intended mostly for business uses, such as making presentations.

Books on the device are pretty to look at and have a high-def, glistening feel. Pages of text are about the size of a mid-size paperback and it's a breeze to slide your finger across the screen to turn them.

I didn't have time to immerse myself in a book -- there were 20 devices in a room with 250 journalists and analysts at a time jostling to try one -- but I wonder if the books are too bright and crisp to comfortably read for a long period of time. The bookshelf interface seemed awfully similar to the Library application built by Seattle's Delicious Monster software company.

Games were a little underwhelming, but it could be a nice device for casual and social games like "Bejeweled" or digital Scrabble.

Electronic Arts' "Need for Speed" iPhone game looks great when enlarged on the iPad. It has sensitive enough accelerometers to control the racing game by tilting the device, but if I was at home I'd put down the iPad and play the game on a console connected to a TV.

Newspapers on the device are nicer than on a phone or Kindle but pretty similar to how they appear on a computer. The demo units I saw only had papers' Web pages and not the special iPad versions that the New York Times and others are developing.

The killer iPad application for newspapers may be their puzzle pages. Crosswords, Sudoku and the Jumble will work great on the touchscreen device, especially if they could be zoomed to a larger size for the middle-aged readers thrilled to have an iPod they can use without reading glasses.

SAN FRANCISCO -- Apple's Steve Jobs must be expecting positive news coverage of the iPad computing device he just unveiled.

"I haven't seen Walt this giddy in a long time," he told a few employees clustered around him in the demo room afterward.

Jobs was apparently referring to the Wall Street Journal's influential technology columnist, Walt Mossberg, who was elsewhere in the room.

SAN FRANCISCO -- It's called the iPad, it looks just like what everyone expected -- like a supersized iPod Touch -- and it's first and foremost a Web and media tablet.

Introducing Apple's much anticipated new gadget at a launch event in San Francisco, Steve Jobs said, "it is the best browsing experience you've ever had ... way better than a laptop, way better than a smartphone. ... To see the whole web page is phenomenal."

Apple is set to begin delivering the devices in 60 days and models with 3G wireless service from AT&T in 90 days.

Prices will start at $499 for a Wi-Fi-only version with 16 gigabytes of storage.

"At $499 a lot of people can afford an iPad," Jobs said.

A 32-gig Wi-Fi model will cost $599 and a 64-gig version will be $699.

Versions with 3G wireless capability will cost an additional $130, or $629, $729 and $829 for 16-, 32- and 64-gig models.

Apple is also selling a keyboard/docking station accessory that could enable people to use the iPad as a low-powered desktop workstation.

"The iPad, if you were to sum it up, is our most advanced technology in a magical and revolutionary device at an unbelievable price," Jobs said.

At its starting price, the iPad will compete with lower end laptop computers, media browing devices and electronic reading devices such as Amazon.com's Kindle.

In a direct challenge to Amazon, Jobs announced a new online bookstore called iBooks that links to the iPad, has one-click purchasing and places your purchased books onto a rendering of a wooden bookshelf.

Jobs praised Amazon's early work with the Kindle, but said the iPad will "make a terrific e-book reader."

"We're going to stand on their shoulders and go a bit further," he said.

Some models of the iPad will come with AT&T 3G wireless available in two plans for iPad owners. One provides up to 250 megabytes of data per month for $14.99 per month, while the other offers unlimited data for $29.99 per month -- "real breakthrough prices," Jobs said.

The AT&T service is contract-free, available month-to-month, and is activated from the device. Internationally, the company plans to have service plans available by June, but in the interim carriers' GSM micro SIM cards may just work in the "unlocked" device.

After a quick review of its features to start off today's presentation, Jobs sat in a cushy leather chair for a full demo -- simulating the at-home experience of using the iPad. He began by showing how the New York Times renders on the device, whetting the appetite of media companies.

The device has a nearly full-sized on-screen touch keyboard that can be called up for doing e-mail and other text-entry tasks. The only button on its front bezel is a home button, just like an iPhone or an iPod Touch.

"Watching it is nothing like gettiing one in your hands and feeling all that right in your hands and right underneath your fingertips," he said, beflore listing specs:

-- It's 0.5 inches thin and weighs 1.5 pounds. "That is thinner and lighter than any netbook," Jobs said.

-- It has a 9.7-inch IPS display with full capacitive multitouch.

-- It has a 1 gigahertz Apple-engineered "A4" chip and 16 to 64 gigabytes of Flash memory storage, 80211.n Wi-Fi, Bluetooth 2.1.

Jobs said the device has 10 hours of battery life and a month of standby battery capability, drawing big applause. "I can take a flight from San Francisco to Tokyo and watch video the whole way on one charge," he said.

Jobs demonstrated e-mail and a calendar on the device and searched maps (Paris and Napa ...). He also used the iPad to peruse photos and show a quick slideshow of a trip to Paris.

The device also has a "built-in iPod" -- he flicked through a media collection and tapped to play the Grateful Dead and Bob Dylan, all while sitting back in the leather chair.

Despite the tension between Apple and Google, Jobs used Google Maps in a demonstration of the iPad's mapping capability and a YouTube video to show its video playback.

Earlier Jobs said Apple wants to kick off 2010 with a "magical" product, but first he's going to deliver a few updates, including news that the company sold its 250 millionth iPod a few days ago, 3 billion apps have been downloaded from iTunes and Apple just reported $15.6 billion in quarterly revenue.

"That means Apple is over a $50 billion company," he said.

Apple is a mobile devices company, Jobs said, noting that its revenue comes from iPods, iPhones and Macs that are mostly laptops nowadays.

"It turns out that by revenue Apple is the largest mobile device company in the world now," he said.

That was a setup for him to explain that there's an opening for a new product sized between phones and laptops:

"All of us use laptops and smartphones now. Everybody uses a laptop or a smartphone. The question has arisen lately is there room for a third category of devices in the middle, something that's between a laptop and a smartphone? We've pondered this question for years now...

"Those devices are going to have to be far better at doing some key tasks ... better than the laptop, better than the smartphone."

Netbooks were a solution seen by some, but "the problem is, netbooks aren't better at anything -- they're slow, they have low quality displays and they run clunky old PC software,'' he said.

Apple's software senior vice president, Scott Forstall, later demonstrated how the iPad runs iPhone applications.

"All of those iPhone apps that you know and love will run on the iPad," he said.

But it looks like iPhone apps may look best in a roughly iPhone-sized window that runs in the middle of the screen. That's how he demonstrated the "SnoCros," a snowmobile game, before enlarging it to run full-screen.

Apps made for the iPhone will run on the iPad, but developers wanting to take advantage of the device's larger screen are being offered a new software developer kit.

"We think it's going to be a whole nother gold rush for developers as they build apps for the iPad," Forstall said.

Apple also announced new word processing, spreadsheet and presentation productivity applications developed for the iPad with touch controls. The new iWork apps will sell for $10 apiece.

There's one big question remaining about the mythical tablet device that Apple is expected to unveil Wednesday.

We've already learned, from whispers of those in the know, that it's basically a supersized iPod touch with a 10-inch diagonal screen and it may cost about $1,000. (Here's a speculative rendering by Jeroen van Goor, a Dutch Flash developer.)

In addition to playing music and video, it's going to display digitized books, newspapers and magazines.

It will have a browser, Wi-Fi, the ability to run Web applications and probably an option to connect through a wireless phone network.

So the unanswered question is, why would you want one? A few possible reasons, if you're so inclined:

Someone's taking all the rumors about Apple introducing a tablet/slate computer/digital reading device pretty seriously.

On Wednesday, Amazon.com more than doubled the royalties it offers authors and publishers using its Kindle self-publishing system.

Today, the Seattle company went after Apple developers and others building applications for mobile devices, opening up the Kindle to outside developers and providing them with a new Kindle software developer kit.

"We've heard from lots of developers over the past two years who are excited to build on top of Kindle," Ian Freed, Amazon Kindle vice president, said in a release. "The Kindle Development Kit opens many possibilities -- we look forward to being surprised by what developers invent."

Early participants include games giant Electronic Arts, which Apple has used in the past to show off the gaming capabilities of the iPhone and iPod Touch.

Other applications being developed now include a Zagat guide and casual games from Sonic Boom. Amazon said the applications will be available in the Kindle store "later this year."

Apple hasn't said anything yet about the tablet computing device it's expected to announce on Jan. 27, although its success would depend on Apple's ability to make it an attractive platform for software developers whose applications were key to the iPhone's success.

Among all the stories speculating on Apple's device, the definitive one so far is today's piece in the Wall Street Journal that describes how the company's been talking to book publishers, newspapers, magazine publishers and movie and TV companies about getting content onto the device (including media conglomerates such as News Corp., the WSJ's parent company ...). Its sources say the device will have about a 10-inch diagonal screen and cost around $1,000.

The device may also have some of the standard applications that come with touchscreen PCs such as "sticky notes" for posting messages on the shared device.

One tidbit in the WSJ story that stood out was Apple's plans to offer an online version of the iTunes store that it would proliferate with "buy this song" type buttons that could be added on all sorts of Web sites - replicating Amazon's online store and affiliate program.

Amazon has long worked with Web developers who use its commerce and online computing platforms, but it has been obsessive about controlling the Kindle and the experience it provides to users.

Today's announcement suggests the company's not opening up much -- it's limiting access to the Kindle developer kit and imposing various controls on its usage, which won't help woo iPhone developers. From Amazon's release:

Starting next month, participants in the limited beta will be able to download the Kindle Development Kit, access developer support, test content on Kindle, and submit finished content. Those wait-listed will be invited to participate as space becomes available. The Kindle Development Kit includes sample code, documentation, and the Kindle Simulator, which helps developers build and test their content by simulating the 6-inch Kindle and 9.7-inch Kindle DX on Mac, PC, and Linux desktops.

Apple's reportedly haggling with book publishers over deals to put their content on the slate computing device the company's expected to announce next week.

But it's not the only "A" company that's hustling its book platform this week.

Amazon today announced new royalty rates for books distributed via its Kindle platform, offering authors and publishers a 70 percent royalty after distribution costs, as long as they keep their Kindle editions priced below $9.99 and 20 percent less than paper editions. The rates apply to authors and publishers using the company's self-service Digital Text Platform for self-publishing.

Whether that rebuffs Apple is unclear as the new royalties are aimed at smaller publishers using the self-publishing platform. The price limitations attached the royalties are also a sore spot for publishers, according to a Publisher's Marketplace story relayed by Bookseller.com's on Apple's talks with publishers:

"What is clear is that US publishers are desperate to combat the $10 Kindle price tag pushed by Amazon.com, and believe that if enough weight is given to it other retailers will be forced to follow. But PM notes that Amazon executives are also in New York meeting with publishers and agents this week with "simultaneous ebook release of new titles and pricing" foremost in their minds."

Apple would be the latest of many competitors challenging Amazon's nascent Kindle business, with more reading devices being introduced by startups with intriguing new technology and consumer electronics giants such as Sony and Samsung.

But with the hardware's evolution still in its early stage the real battle now is over whose standards and publishing tools will dominate the business. Will Amazon, Apple, Google or someone else run the iTunes of publishing?

Amazon's Digital Text Platform terms have offered a 35 percent royalty after various charges. Its press release suggests publishers generally receive about a 25 percent royalty for books

"Today, authors often receive royalties in the range of 7 to 15 percent of the list price that publishers set for their physical books, or 25 percent of the net that publishers receive from retailers for their digital books," Russ Grandinetti, vice president of Kindle content, said in the release. "We're excited that the new 70 percent royalty option for the Kindle Digital Text Platform will help us pay authors higher royalties when readers choose their books."

All they need now is a color, touchscreen Kindle. Or maybe just a nice Kindle app for the Apple iTablet.

Today's column is a Q&A with RealNetworks founder Rob Glaser on his departure as chief executive, plans for the future and outlook for the digital media industry.

Here's a longer version with more Q&A than what fit into the paper:

Rob Glaser's resignation last week from RealNetworks seemed abrupt, but it was actually in the works for several years.

Glaser said he had the first "serious conversation" with Real board members about stepping down more than two years ago, not long after his first kids were born.

But the discussion was interrupted before it went too far.

"When the great recession hit, I just put my head down and I'm like 'I can't even think about this for 2008, most of 2009. I've just got to focus on helping the company through this rough period of time,'." Glaser said Friday in a wide-ranging interview about his past, future and final days running the pioneering Seattle digital media company he founded in 1994.

Glaser, who turned 48 Saturday, stepped down as chief executive Wednesday afternoon, then flew to Washington, D.C., for a White House meeting with a group of executives providing advice on federal technology spending plans. It was the longtime Democrat's second visit in the last month; President Obama also invited him and his wife to a Christmas party in December.

On Friday, Glaser was back in Seattle, reflecting on where he and the digital media industry are headed next. He already helped Real develop a new strategy that will be revealed in a few weeks by Bob Kimball, its general counsel and now acting chief executive.

Glaser has been under pressure from investors who watched Real's leadership position and value erode over the past decade. But he characterized the decision to find a new chief executive as his, and one made amicably.

"I feel very, very happy with the decision," he said. "It's something I wanted to do for a long time. I'm very proud of the company and thrilled I get to stay associated with the company in my capacity as chairman, a signicantly shareholder."

Here's an edited transcript of the interview:

Q: It seemed abrupt when you stepped down and immediately left town.

A: Literally, I sent the message to employees and did the final tweeting of it sitting on the plane going to D.C. It was one of those photo-finish kind of deals.

Q: You said you'll get more involved in civic projects. Like what?

A: There are two or three projects associated with the [Glaser Progress] Foundation that I'm very excited about. There's some AIDS relief work we're involved with in Rwanda, a team on the ground in Kigali that does amazing work. I'm hoping to get there this summer. That's an example. Rather than going to Rwanda every five years maybe I can go every one or two years now.
After our kids were born in 2006 I pulled back. I have not engaged in much of that because my life was 110 percent full being a husband and a dad and my day job.
Before 2006 we would give two, three or four political fundraisers a year; since then we've probably given one a year. To some extent it's about getting back to the level of civic engagement I had before we had kids.

Q: Will you run for office?

A: I think that's pretty unlikely. As much respect as I have for [politicians]) and as mch respect I have for the importance of what they do, I'm not sure that role on an executive level or a legislative level is the best fit for me personally.
I think you've got to say 'never say never' when you're 48 years old, and you've had the incredibly lucky life that I've had, but I would say it's definitely in the unlikely category.

Q: What's next for Real?

A: We kicked off a strategy process in the middle of last year, the most thorough and rigorous review in the company's history. We did great work. Bob and the team will talk more about it soon, when the time is right. It's not my place to initiate the discussion about it.

Q: Is there animosity between you and the board?

A: These are people I've known for a long time . The right way to think about this is, once you decide to do something like this, the interesting debate is, "Do you do it slow or do you do it fast"?

Q: Looking back, what are you most proud of, and what would you do differently?

A: I can give you the proudest one: I'm incredibly proud of the team here and the innovation that we've created. I can think of three or four things we've done that had never done before, going back to creating streaming audio 1995, making streaming video practical in 1997, what we did with sort of birthing the casual games industry in the early 2000s, weathering the dot-com crash in some pretty intense competition that might have involved questionable practices from an antitrust standpoint.
But rather than curling up in a ball we weathered that and came out stronger on the other side, pivoted the company in some interesting ways around first consumer services and then carrier applications and services solution like ringback tones and music on demand and video on demand and the like.
There's some stuff in the pipeline that will rival those innovations in my view if we do a good job with it, rolling it out in the market, so I feel like I'm passing the baton at a time where not only did we weather the downturn . The pipeline for where we go next is in great shape.

Q: What's going to happen to the digital media business five years out?

A: Speaking from a conceptual level, when I got involved in this I thought digital media is going to be a 25-year thing, which is to say there's going to be a long period of time before the innovation flattens out. We're 15 years in -- we launched RealAudio in April 1995. The industry as a whole has taken tremendous strides and there's a lot of work to do.
Think of it from a consumer standpoint. You want to be able to watch any piece of video you have a right to watch anywhere at any time. There are pieces of the solution, but the thing you really want is that seamless "it just works." It's not 10 minute videos on YouTube or buying things on your iPhone that you may already own.
There's enough of the pieces in place where you can envision how it all comes together, but it will be three to five years before that seamless thing that Jeff Bewkes of Time Warner dubbed "TV Everywhere." Rhapsody is the best of that in the music world, but today those are not mainstream, seamless experinces that work for tens, 100s of millions of people. Big picture, for audio-video, that's the biggest set of things that I think are coming.

Q: It seems like pieces are falling into place like 3G and 4G networks and cloud services.

A: I would say the barriers at this point are as much business models and alignment of rights as they are technology. I knew it 16 years ago, but I would say I understand it more vividly now. The technology is a necessary foundation element but it's not sufficient.
You have these industries that set up windowing of content, methods of distribution, different rules for rental vs. purchase that make sense in a physical context. But in a digital world you need to harmonize and integrate all those rules and business models and it's a hard thing to do that.
Really, in my view, it's the intersection of the technology and the business model/economics. That's where the complexity lies and frankly where the opportunity lies if you can fit those pieces together in a way that works for everybody.

Q: Why is Apple now the dominant digital media company and not Real?

A: Fundamentally we've been in area where it didn't all work seamlessly. The best way to make it work seamlessly was to go vertical. You make the hardware, you make the software, you connect it to your services. That's a totally different business than the historical business that most companies were in that were in the software-services business.
On one hand, you can count all the companies that have fit all those pieces together. It's a huge undertanking. I'd say BlackBerry pulled it togoether in their space of messaging. Apple's done it twice, first witht the iPod and now with the iPhone/iPod Touch, and you could say Amazon's on the road to doing it with the Kindle.
Think of the IT industry. IBM was vertical. The minicomputer industry was vertical, then the PC came along and it was horizontal. Those of us that grew up in that area made the supposition that the horizontal model was going to the dominant model in this business.
It's very complicated to go from being horizontal -- like Google is or like Microsoft and Real -- to go vertical. There are many successful companies but you have to say that in the digital media space the biggest successes have been these vertical successes. That's something that's incredibly hard for a startup to do.
If I knew in 1995 what I know now, would I have approached the vertical-horizontal thing differently? Maybe, but the wreckage of companies that tried to go vertical - Go/Eo, WebTV, I can go down the list, there are dozens of companies -- it's super, super hard to do that vertical thing. I'm very proud of the success and scale we got to taking the horizontal approach we did.
If you take the long view - the next five or 10 years view -- I think there's going to be a renaissance of that horizontal model as the standards come together to link together all these things.
This next decade, I think it's a very interesting strategic question, which model is going to be dominant.

Q: Has Seattle's opportunity passed?

A: No, I would say the opposite. The Seattle high-tech community is alive and well for sure. Hopefully, we played a role helping seed the ecosystem.

Q: Will you get involved with other companies, as well as civic affairs?

A: I don't know what the mix is going to be yet. I turn 48 tomorrow [Saturday], not 84. I feel like I have time in my life to pursue a mix of things depending in what captures my passion."

BillShrink.com updated its handy dandy phone cost comparison chart, adding Google's Nexus One.

Bottom line: It'll cost you $2,579 over two years, a hair more than a Palm Pre but less than an iPhone or Droid.

The Wall Street Journal added a few more details to the unfolding story of Apple's long-awaited tablet computer.

It's reporting today that the device will have a touchscreen 10 or 11 inches diagonally and will go on sale in March. That would follow a launch event expected around Jan. 26 or 27 in San Francisco.

The brief story doesn't pinpoint the price but referred to analysts expecting the device to cost around $1,000.

An excerpt:

While the shipping time hasn't been finalized and could change, people briefed on the matter said the new tablet device will come with a 10- to 11-inch touch screen. An Apple spokesman said the company doesn't comment on rumors and speculation.

Meanwhile blogger Mary Jo Foley is wondering if Apple's making everyone forget all the work Microsoft did to advance tablet computing and questions whether Microsoft will resume its push this year:

Though you'd never know it from reading most of the recent iSlate posts and stories, Microsoft actually had a pioneering role in the tablet space.

Both Microsoft and Apple may face new competition from Google. Australia's Smarthouse is reporting that Google's not only working on its own branded phone, it's developing a Google tablet device with HTC -- an Android Shift, perhaps?

(An illustrated version of the preview column that ran in today's paper ...)

Las Vegas always seems like it's in another dimension, but this week it will be even more so when the 2010 International Consumer Electronics Show takes place.

More than 20,000 new products will be shown by 2,500 companies starting Thursday.

They're expecting to sell $166 billion worth of TVs, phones, stereos and other gadgets in the U.S. alone next year.

You'd never guess the economy's limping and millions are out of work.

FoxNews.com nudged up speculation about Apple launching some sort of Tablet or supersized iPod Touch in January.

The news site on Wednesday said "a source inside Apple" confirmed there will be a "big" event that "will focus on the mobility space" in San Francisco.

It follows a Financial Times piece last week that broke the story of Apple planning a January 26 launch event at Yerba Buena Center for the Arts, where Steve Jobs launched the newest iPods in September.

Bloomberg News is reporting that Apple is buying music-streaming service Lala, which would give the company a platform to finally add streaming services to iTunes.

Palo Alto, Calif.-based Lala lets users hear a song once for free, and build online playlists and collections. It also sells songs with a tiered system, with online-only songs selling for 10 cents and downloadable tracks starting at 79 cents.

Bellevue's Ignition Partners is among Lala's backers.

A big batch of information about mobile phones and carriers is appearing in the January issue of Consumer Reports, including results of a survey ranking the top carriers in 26 U.S. cities.

Verizon is tops -- nailing customer support, voice and data service -- "but it tends to be costly," with one in five saying high cost is their top complaint, the mag's release said.

T-Mobile USA was the next highest rated provider "in overall satisfaction, and worth considering as a good value for some. However, the carrier received lower marks in voice, messaging, Web and e-mail services."

Sprint and AT&T were ranked lowest, taking hits for customer service. "While AT&T's main weak spot is voice connectivity, they also scored below average in every attribute except Web access and texting," the release said.

"America is in love with the cellphone, but they are lukewarm about cellphone service," said Paul Reynolds, electronics editor at Consumer Reports. "They're especially concerned about its cost in these tight economic times."

Yet the magazine and its survey respondents are still huge fans of the AT&T exclusive iPhone. Here's a summary of its phone picks, by carrier.

On Verizon: The $100 LG enV Touch is "an impressive phone and multimedia device enhanced with touch-screen navigation and a Qwerty keyboard for easier e-mailing and texting." The $40 LG VX8360 "is a very good, straightforward cellphone at a bargain price."

Verizon's $147 Samsung Jitterbug has "large buttons, free directory assistance and a comfortable earpiece. Negatives include pricey service and a thick phone that lacks common features."

Among Verizon's smartphones, the mag likes the $200 HTC Touch Pro2 and $50 BlackBerry Storm 9530.

On T-Mobile: Consumer Reports especially likes the $200 Samsung Memoir with its 8 megapixel camera and the $130 Samsung Comeback "with a keypad that facilitates phoning and a 2.6-inch screen and keyboard to satisfy texters."

Among Tmo's smartphones, it called out the $150 myTouch 3G as "the best choice for multimedia use with intuitive navigation, easy access to main functions and direct downloading of music, games, applications and services."

(I'm partial to the T-Mobile BlackBerry Bold 2 9700 I began using a few weeks ago, and found out yesterday that its power cable -- which I'd misplaced -- uses the same connector as Amazon's Kindle.)

On Sprint: Consumer Reports calls out the $80 Samsung Exclaim as "a good bargain" with a "dual-slider design that slides up to reveal a keypad for phone calls and slides right to reveal a keyboard for e-mail and text messaging." Sprint's $150 Palm Pre "is a good bet for multitaskers with the ability to link contacts, calendars and messaging."

On AT&T: The magazine recommends the $150 LG Xenon, $125 Samsung Impression and $100 Samsung Solstice, which all have "large touch-screen displays and are compatible with AT&T's Video Share, which streams live, one-way video to a compatible phone."

The magazine said the $200, 16 gigabyte iPhone 3G S and $100 iPhone 3G from AT&T "ranked highly for multimedia use, with the best MP3 player Consumer Reports has seen in a phone to date." Its survey found a "staggering 98 percent of iPhone users were satisfied enough that they would buy the phone again, despite below-par ratings for AT&T."

Only 54 percent of readers it surveyed were completely or very satisfied with their mobile phone service, and 38 percent had switched carriers in the past two year to get a specific phone.

Here's Ethan Lowry showing the new reservation feature of Urbanspoon, which is detailed with screenshots in this post.

Something big is shaking at Urbanspoon, the Seattle company behind a hugely successful iPhone restaurant-finding application.

The company is launching a reservation service called "Rez" that adds a new dimension to its eponymous app and Web service.

Google's going to raise the profile of digital music in its search results, offering people ways to discover and buy music through a partnership with Seattle-based iLike and Lala, according to reports out of the Bay Area today.

But Google's "One Box" initiative doesn't sound like a full-blown music destination/distribution service like Microsoft has tried various ways, Amazon's doing with its MP3 store and MySpace is building.

Techcrunch's initial OMG story said Google's building a music service with major record labels on board. Then it added news that iLike and Lala will stream music from the search results and it will all be announced Oct. 28.

Cnet's report suggests its going to be enhanced search results that present not just links but music information and buying opportunities via iLike and Lala, a Palo Alto-based Web music service.

Why hasn't Bing done this sort of thing already? You'd think it could pretty easily tap the Zune service, if Zune's licensing deals would allow it, or surface MSN's rich music features.

Google's service sounds cool but nowhere near a YouTube for music (gTunes?). If it was going there, perhaps it would have bought iLike or some other startup that indexes and infers people's taste in music.

This also sounds like a middle finger extended toward Apple during its messy divorce from Google.

Backup Awareness Month is usually in June, but I think Apple and Microsoft must have decided to move it to October.

Both companies are giving users spectactular reminders of why you must regularly backup important files.

Microsoft's getting most of the attention for the glitch that lost contacts and other files stored online by users of the Sidekick mobile phone, which its Danger unit developed and powered for T-Mobile USA. It began with an outage last week and is still being analyzed by the companies.

Microsoft should check and see if its $500 million purchase of Danger -- which closed in April 2008 -- is still under warranty.

Meanwhile, Apple acknowledged Tuesday that some people who upgraded their Macs to Snow Leopard, then logged into "guest" accounts they had created earlier on their computers, had their personal files erased.

Apple told InformationWeek the company is "aware of the issue that occurs in extremely rare cases, and we are working on a fix" but didn't specify when it will be ready.

From the story:

According to Apple discussion forums, the problem is related to a change in the way Snow Leopard handles guest accounts. Users who upgrade from Leopard to Snow Leopard with guest account enabled have found that opening the guest account in Leopard can destroy personal data.

I wonder which glitch erased more files. Either way, it's time to save your stuff somewhere safe.

Well-to-do parents who get lost or bored taking their children to the zoo have a new lifesaver: The Woodland Park Zoo just released an iPhone App.

The 99 cent program uses the phones' GPS system to pinpoint location and nearby exibits, play areas, restrooms and concession stands. It also provides a schedule of activities, animal fact sheets and a "friend finder" that locates other iPhone users at the zoo.

Additionally, the app ties into Facebook and Twitter, so users can keep their online pals updated while roaming the zoo.

The zoo contracted with Austin, Texas-based Avai Mobile Solutions to develop the software. Proceeds from its sale "go toward the zoo's animal care, education, conservation and operations costs," the release said.

A photo by the zoo's Ryan Hawk:

Are Apple and Microsoft playing PR games -- or trying to psych each other out -- with dueling leaks about their upcoming tablet devices?

The latest round in the whisper campaign told blogger Mary Jo Foley that Microsoft's "Courier" tablet runs Windows 7, builds on the OneNote concept, rectifies shortcomings of TabletPC apps and may be built and sold by Microsoft in mid-2010.

She's following up on the original Courier leak to Gizmodo.

With Microsoft getting some mindshare for its tablet, whispers about Apple's new tablet began appearing today.

The iLounge blog has a really tantalizing batch of details about the device, which now has a 10.7-inch diameter screen, runs the iPhone OS and will be available in early 2010 with and without 3G wireless service. It's not a netbook or productivity tool as much as a media tablet, bringing apps and Apple services to a larger device.

Both sound like major challengers to the Kindle and other e-books, if they can keep the prices reasonable.

If the rumors are to be believed.

It's been awhile since we've heard about Starbucks working with Apple, but the coffee giant today is releasing two iPhone apps, including a mobile payment system it's testing in Seattle and Silicon Valley.

The first app, "myStarbucks," is a locator that shows where you can find a Starbucks in case there isn't one across the street. It displays information such as whether a particular store has a drive-through, hot food or a Clover coffee machine. It can also be used to store and share favorite drinks and other items and check drinks' nutritional details.

The second app, "Starbucks Card Mobile," brings the chain's payment card to the iPhone and iPod touch. You can add money to your card account from the app, and spend it at Starbucks stores by rendering a 2-D barcode on the device's screen.

Other apps are available to locate coffee shops and even display barcodes on mobile devices, but the Starbucks brand and promotions will probably drive a lot of downloads.

Both apps are free, and, no, you can't use either one to order ahead and jump the line for a finished, pre-paid beverage.

A spokeswoman said the company looked at pre-ordering with the apps, but it's difficult to be sure the timing will be just right, and that customers don't arrive to find a cold, stale beverage sitting on the counter waiting for them.

Here's the list of stores testing the "Starbucks Card Mobile" payment trial. In Seattle, they are at Key Tower, Columbia Center, 1st Interstate / Wells Fargo, 40th Floor Columbia Tower; Seventh & Stewart; Seventh & Pike; University Village II; and Madison Park.

The California stores include:

20520 Stevens Creek Blvd., Cupertino
5180 Stevens Creek Blvd., San Jose
1037-C El Monte Ave., Mountain View
Shoreline & Pear, Mountain View
Castro @ High School, Mountain View
Miramonte & Cuesta, Mountain View
Charleston & Independence, Mountain View
1687 Hollenbeck Ave., Sunnyvale

Some of Microsoft's new retail stores may be run by former Apple store managers, according to a report on The Loop blog.

I'd love to know how they'll be reprogrammed by the Borg.

From the Loop report:

People that have spoken to The Loop on condition of anonymity confirm that Microsoft has contacted a number of Apple's retail store managers to work in their stores. In addition to "significant raises," the managers have also been offered moving expenses in some cases.

Once hired, the ex-Apple employees are then contacting some of the top sales people in the Apple retail organization offering them positions at Microsoft retail.

But is it all roses in Apple's retail network? Workers at the Alderwood Mall location are considering an Oct. 3 walkout over working conditions, according to the ifoAppleStore blog:

If it occurs, it would be the first such labor action by Apple store employees. According to insiders, the employees' complaints haven't been fully investigated by the company's human resources department.

Comments written there by people alleging to have worked at other Apple stores are interesting.

Was the Alderwood crew blocked from helping customers install Google apps?

Apple chose not to hassle Real Networks over the Rhapsody iPhone app, apparently. It's on iTunes today, perhaps because Apple expects limited uptake given the price of Real's service.

The app itself can be downloaded for free, but it only streams music from Rhapsody if you pay for Real's $15 a month "Rhapsody-To-Go" mobile service, which is a premium over the standard $13 Rhapsody service and only works with Windows PCs.

(To clarify - if you have the standard "ultimate" service, you can upgrade for $3 more a month to use the app.)

It's a cool application - it streams songs from Rhapsody's library of more than 8 million songs to iPhones and iPod Touches and can be used to create playlists or play Rhapsody radio stations - but iTunes apps generally have to be cheap to be hits. How many iPhone users will be interested in a $15 month music service on top of their already expensive service plan?

Investors seem to think a lot - Bloommberg noted that RNWK climbed as much as 14 percent today on news of the app approval. Wow.

At last check it was up about 7 percent, to $3.63, but maybe Wall Street is more impressed with the buzz around Rhapsody releasing the new Jay-Z album "The Blueprint 3" two weeks early.

The $15 cost isn't shown on iTunes, although the app's description mentions - in the third paragraph - that a subscription is required.

Real provides a seven-day free trial of the mobile service, which is stingy compared to the 30-day trial offered on the desktop service.

Real's announcement said the company will release an Android version later this year and is looking into versions for Windows Mobile, Palm Pre and other phone application outlets.

Maybe the ill-fated HD DVD format was just a placeholder until Microsoft got its Silverlight digital video platform up to snuff.

The company today announced a pilot launch of downloadable movies via Silverlight, starting with British retail giant Tesco this fall.

Microsoft said it will be waaay better than Blu-ray, promise. From the release:

"The new service, built on Microsoft Silverlight technology, will deliver a similar level of quality as consumers have come to expect from DVD and Blu-ray, but with advanced Web-based interactivity and a viewing experience that goes beyond other digital playback products in the marketplace."

This tracks with Microsoft's expectations of downloads eventually overtaking movie discs, which it's been talking up since the HD DVD format it favored was quashed by Sony-backed Blu-ray in 2008.

Microsoft already offers high-def video downloads to the Xbox, and its video service is getting upgraded this fall.

The Silverlight service won't require a special box. When people buy "certain home videos" from Tesco, they'll be able to download digital copies to Windows PCs or Macs in a "'virtual DVD' experience, the release said.

"The digital copy versions will include a similar level of video quality, interactivity and bonus content available on the physical products. In addition, the digital copy versions will provide consumers with extra network-connected features such as auto-updated trailers, exclusive bonus content, movie viewing parties with online chat, related music offerings such as MP3s and ring tones, and networked games."

Microsoft's "virtual DVD" may also compete with the "iTunes Extras" that Apple announced today. Apple's offering bonus features with "select movies" purchased from iTunes.

Not to mention Sony, which today announced a new networked Blu-ray player that bridges the gap, combining a high-def disc player and the ability to stream on-demand movies and TV shows from the Web. The $250 BDP-N640 going on sale next month also streams from YouTube, the Slacker music service and soon Netflix.

"Whether its full HD 1080p or streaming video and audio from the Internet, entertainment comes in so many flavors that consumers want choice," Chris Fawcett, vice president of Sony Electronics' home audio and video business, said in the release.

Apparently they're getting it.

Sounds like a thin batch of Cupertino cider today, judging from the testy coverage of Apple's hyped "rock and roll" press conference today.

Silicon Alley Insider: "Good to see Steve again. But a snooze fest for any Apple fans expecting new, must-buy products."

Engadget on the new iPod nano: "We came and we saw ... but there's not much to say. It's exactly the same save for that new coating, bigger screen (which does help), and tiny little camera around back. Video quality looked decent, but you really can't tell on the small screen. If you've ever held a nano -- this is the same experience."

Engadget on the new iPod Touch: "We just got done handling the new model, and really, there's not much to say. It's a little snappier, but we didn't do any heavy game playing, and otherwise it's exactly the same. We thought it seemed thinner, but the cold hard specs stopped that idea in its tracks."

Gizmodo: "I don't expect Apple to deliver on rumors. After all, most rumors are crap, even John Gruber's iPod touch camera prediction. But that doesn't stop me from asking questions: Why the hell there is no camera on the iPod touch?"

Ars Technica: "All of the updates are unsurprising, and for the most part keep the various iPod models up to date. The nano obviously received the bulk of the attention this time around, making it arguably the value leader among the various options. We are still scratching our heads over the ho-hum refresh of the iPod touch, though. Despite the bump in speed and capacity, ignoring the other possible upgrades, especially the camera, seems like a very un-Apple-like blunder."

9to5 Mac: "Having rushed back from the European briefing, got to say the general consensus is that while the new improvements in iTunes look good, and while the iPod nano has been given some great new features, most felt a little underwhelmed."

I wonder if the off-put pack of gadget journalists will find anything to love in the redesigned Zune launching on Tuesday, or if you they won't be satisfied until MP3 players finally get 12 megapixel cameras, 4G wireless and terabyte flash drives.

Meanwhile, the new $150 nano+video camera is probably going to top holiday wish lists of well-off kids across the nation.

RealNetworks went public today with its pending Rhapsody iPhone application, which will stream music from its 8 million track library to the device and allow users buy MP3s.

Unless Apple decides that Rhapsody diminishes the experience of using iTunes and rejects the application.

Apple and Real have gone at it before, but Real's timing is pretty smart: With regulators looking into its rejection of Google Voice, Apple doesn't need any more bad press about rejecting competitive apps.

Real's also developing an Android version of the Rhapsody application.

The buzz around the Rhapsody app may get more subscribers, but if Real really wants to invigorate its service, it will have to cut the $13 to $15 per month price to compete with Napster's $5 per month offering.

Here's a video of the Rhapsody app that Real released as part of its geurilla app application campaign:

Rhapsody on iPhone from Rhapsody on Vimeo.

The old Microsoft rule is that it takes three tries for the company to really nail a product. It looks true to form with the upcoming Zune HD, the third and apparently best version of the company's underdog digital music player.

Microsoft is clearly excited about the device, which it has been showing off for months at semi-private events.

Details are also leaking out from retailers. The device will go on sale Sept. 15, according to display material that Gizmodo received.

Amazon.com helped its cross-lake neighbor promote the upcoming gadget by disclosing prices early, briefly listing a black 16 gigabyte model for $220 and a platinum 32 gig model for $290, according to PC World.

The prices undercut the equivalent iPod Touch models targeted by the HD, which includes a touchscreen, Wi-Fi, a browser and high-def video (720p) that's output via HDMI.

The HD feels good -- it has a solid, machined metal feel and a great interface -- but it's also much lighter and more pocketable than its hard-drive-based predecessors.

Of course its success will probably depend in part on whether Apple lowers Touch prices and comes up with cool new iPods this fall, if it's not too focused on the rumored iPhone Nano and Web tablet.

Apple is apparently sharing details of its long-rumored tablet device with media companies, including book publishers hoping to get their content on the Kindle competitor due to launch by the holidays, according to a big scoop in the Financial Times.

It's still early days in the mobile application marketplace and Apple's App Store hasn't won yet, competitors told game developers during a panel at the Casual Connect conference this afternoon.

A new version of Microsoft's equivalent, a Windows Mobile marketplace, will start taking submissions from developers on July 27, said Steve Hegenderfer, Windows Mobile group product manager. The company's still trying to figure out things like whether to set price tiers.

Hegenderfer said Apple has "early mover" advantage but the industry is still in its infancy, with all sorts of new opportunities, he said.

"If anyone thinks Apple is going to run this thing they're sorely mistaken," he said, adding that "we are so early, we are barely scratching the tip of the iceberg, and it's exciting."

Nokia launched its "Ovi" mobile application store on May 23, said Patrick Stanton, the Finnish phone company's director of content operations.

Stanton didn't comment directly on how it will compete with Apple's App store, but noted that the Ovi store software is being preloaded on Nokia phones and the company ships about 300 million units per year.

There will eventually be half a dozen big marketplaces and developers are going to offer their applications in all of them, Stanton said.

"We're all playing in similar spaces so you're going to have to look at how these things evolve over time,'' he said. "It's going to be a competitive marketplace for some time to come."

Hegenderfer said the winning mobile marketplaces will be the ones that enable developers to make a living.

"That's what its gong to come down to ... who is going to allow you to make more money than anyone else," he said.

But developers in the audience said it gets complicated to develop for platforms with multiple devices.

"If I build for you I've got to build for nine form factors," one told Hegenderfer, before telling Stanton that writing for Nokia's Symbian platform "doesn't do me any any good on the PC platform or Mac platform" and "it's wickedly hard to develop for because of your memory model."

If an Apple representative was in the room, he continued, he'd tell that company to open up its platform.

Hardware analysis firm iSuppli has posted one of its fascinating teardown reports, on the iPhone 3G S, showing the source of components and estimating the manufacturing costs.

It estimated the 16 gigabyte phone's parts cost $172.46 and manufacturing costs are $6.50, for a total of $178.96. That's up just a bit from iSuppli's $174.,33 estimate for the previous 8 gigabyte iPhone 3G.

Backing up the speed claim, the new device has a 600 Mhz ARM processor made by Samsung, up from the previous model's 400 Mhz processor.

One intriguing tidbit: Apple switched to a Broadcom wireless chip that has FM radio capability, as well as Wi-Fi and Bluetooth. Previously the iPhone used a Marvell WLAN chip and a Cambridge Silicon Radio Bluetooth circuit.

Could FM capabilities finally be coming to the iPhone and iPod Touch? An Apple spokeswoman declined to comment.

Here are few images from the iSuppli report, used with the company's permission:

If you're shopping for a new PC, you may want to wait until Friday. That's when Microsoft and computer makers could start giving coupons for a free copy of Windows 7 to people who buy a new Windows Vista PC.

The coupons are intended to encourage people to keep buying PCs instead of holding off until a new operating system is released. It may be a crucial incentive this time around, since Vista has such a bad reputation and Windows 7 will be widely available on Oct. 22. (I've asked Microsoft for confirmation and will update when I hear back. UPDATE: I heard back but they're holding comment/info until Thursday morning)

It's also a good deal, because it gives buyers two operating systems for the price of one. (Assuming the older system will continue to have value after the newer one's released ...)

Microsoft hasn't said much yet about the coupons, but enthusiast blog Tech ARP has been posting what looks like authentic details of the program, dubbed the "Windows 7 Upgrade Option."

If the details are correct, computer makers may offer the coupons between June 26 and Jan. 31. Within that timeframe, they can decide how long to offer the deal. Customers would get Windows 7 on Oct. 22 at the earliest, and April 20 at the latest.

The coupons will offer the same tier of operating system -- buyers of Vista Premium could get Windows 7 Premium, Vista Ultimate buyers would get Windows 7 Ultimate, and Vista Business buyers would get Windows 7 Business. Vista Basic systems won't be eligible, the report said.

If you're buying a Mac and wondering about upgrading to the "Snow Leopard" operating system coming in September, Apple plans to provide single copies for $29 and five-packs for $49.

Heading to Paris or Rome with your iPhone?

You lucky dogs may be interested in new iPhone Apps from Edmonds travel guru Rick Steves.

The apps are multimedia walking tours that show your location and can be tapped to present more information about nearby sites, history and viewpoints.

A compass icon can be used to find nearby hotels and restaurants, with prices and phone numbers, plus the nearest restrooms.

The latter feature could be worth the $4.99 price per tour.

Publisher Avalon Travel today announced the first four apps, which are sold individually: Rick Steves' Historic Paris Walk & Tour, Rick Steves' Louvre Tour, Rick Steves' Orsay Museum Tour, and Rick Steves' St. Peter's Basilica Tour. Coming by July are tours of Versailles and the Roman Forum and Colosseum.

The apps also include a "pull-down" audio player to hear Steves talk about sections of a tour or work. Some sights also include video clips from his PBS travel show.

They're also self-contained, so they won't cause roaming charges after they're downloaded (other than the price of the trip ...).

Seattle developer Ubermind Inc. built the apps.

Talk about a nice debut: Fremont software development shop Rogue Sheep won an Apple Design Award for its very first iPhone App.

Rogue Sheep started working on its "Postage" app a few months ago and finished just in time to enter the design contest, which concluded at this week's Apple Worldwide Developer Conference.

"Postage" is a $4.99 application $4.99 (but on sale at $2.99 until June 17) for turning photos into post cards before they're sent from an iPhone. Apple's award site said "Postage sets a new standard for attractiveness and ease of use in an iPhone app."

Rogue Sheep was started five years ago as an Adobe development shop by former Adobe engineers Christopher Parrish, Daniel Guenther, Matt Joss and Jeff Argast.

Parrish said they're hoping to consult with companies looking to develop iPhone apps and build more apps on their own. They've already seen a surge of traffic since the award was announced Tuesday night.

"It definitely looks like it's going to be one of the bigger bumps we've had,'' he said.

I'm looking forward to trying Apple's new Snow Leopard OS but it's hard to miss the harumphing about Apple's Worldwide Developer Conference news. AT&T's getting some of the heat (for holding up new iPhone features on its network), but not all. Is the reality distortion field on the fritz?

Barron's Tech Trader noted that AAPL has fallen for three days since the WWDC began Monday and said Apple may be cutting iPhone production:

Collins Stewart analyst Ashok Kumar this morning asserted in a research note is morning that Apple (AAPL) has reduced its planned June quarter iPhone production to 4.6 million units from 5.2 million. Kumar attributed the data to "checks" with Hon Hai, which manufactures the phone for Apple .... Kumar maintains a Buy rating on the stock, but writes that "if current build plans hold, they present a risk to Apple."

From Macworld, on Apple being secretive about the specs of the iPhone 3G S:

All Apple wants you to know about the iPhone 3G S is that "the S simply stands for speed," to quote Apple's senior vice president of worldwide product marketing Phil Schiller - speed at opening apps, speed at playing games, speed at downloading stuff on the network. How does that speed get in there? Let's not go there.

UPDATE: If you're curious the 3G S specs are trickling out elsewhere. A T-Mobile Netherlands Web site reportedly posted some, according to MacRumors: a 600 MHz processor and 256MB of RAM, compared to the 412 MHz processor and 128 MB RAM in the current iPhone.

Download speeds of up to 7.2 megabits per second (theoretically) will be available on AT&T's 3G network after upgrades are completed this year, the company said today.

The catch is you'll need a new phone or laptop card to get the fastest speeds. Users should also expect "typical real-world" speeds to be "less than the theoretical peak and will vary based on a number of factors, including location, device, and overall traffic on the local network at a given time."

The chorus of rumors about an Apple tablet computing device became a roar today after Piper Jaffray analyst Gene Munster said it's coming early next year.

Munster's guess is the device will be basically a really big iPhone, with a 7-inch to 10-inch diameter screen and an Apple-developed microprocessor. He's triangulating info from Asian suppliers, Apple moves and patent filings.

From AppleInsider's writeup of the Munster report:

For his part, the analyst believes the device will end up retailing somewhere in the range of $500 - $700, bridging the gap between the $399 iPod touch and the $999 MacBook. He expects that it will be driven by a proprietary microprocessor designed in-house by engineers Apple adopted in the acquisition of P.A. Semi and others it's known to have hired in recent months.

It doesn't sound like a netbook. It sounds a bit like the Origami ultramobile PC concept Microsoft and Intel floated a few years ago; that effort lost steam after chunky Vista-based version ones failed to soar, and Intel began pushing Linux alternatives.

Speaking of Microsoft, I wonder if Apple will discourage people from calling its new device a tablet, which could remind people of the Tablet PC.

My guess is that Apple's working on a whole portfolio of touch machines and the next version of the iMac could have a multitouch screen option. It seems pretty likely that Apple will leverage the enthusiastic army of iPhone App developers and offer new platforms for their touch-based software.

That's the gist of an AdAge story, drawing on research by BrandIndex. An excerpt:

The perceptions of value the two brands offer has shifted dramatically in the eyes of 18- to 34-years-olds since Microsoft began running its "Laptop Hunters" campaign in late March. Apple's "value perception" has fallen considerably, while Microsoft's has risen.

The story said Apple's value perception bounced back among 35- to 49-year-olds, and it's tied with Microsoft among people 50 and older.

Older people also have more money to spend nowadays; maybe that's why Apple seems to be targeting them with its new ads, making fun of PC tech support calls.

There's a flurry of mobile phone rumors and tidbits today, which is distracting from the actual news from Sprint and Palm. Wonder if that's a coincidence ...

Sprint and Palm today announced pricing and launch details for their hot new Palm Pre smartphone, which they're blatantly pitching as an iPhone killer. The phone will be available June 6 for $199 (actually $299, with a $100 rebate and obligatory two-year contract).

Here's a Sprint-provided image of the Pre, which has a 3.1-inch touchscreen, a slideout Qwerty keyboard, a 3.0 megapixel camera, 8 gigs of memory and a tablike interface for flipping through applications, which can be run simultaneously:

Simultaneously, new details of the next iPhone were "leaked" to an enthusiast Web site, which I couldn't access but which was pounced on by gadget blogs. It said iPhone 3.0 will launch July 17 with a 3.2 megapixel camera and more memory -- 16 and 32 gigabytes.

Whether it's real or not, the info from Appleiphoneapps.com is tantalizing:

-- 32GB and 16GB to replace current capacities
-- $199 and $299 price-points to be maintained
-- 3.2 megapixel camera
-- Video recording and editing capabilities
-- Ability to send a picture and video via MMS
-- Discontinuation of the metal band surrounding the edge of the device
-- OLED screen
-- 1.5x The battery life
-- Double the RAM and processing power
-- Built-in FM transmitter
-- Apple logo on the back to light up
-- Rubber-tread backing
-- Sleeker design
-- Built-in compass
-- Combination of the camera, GPS, compass, and Google maps to identify photo and inform about photo locations.
-- Turn by turn directions

Other challengers joined the rumble.

Microsoft today opened the beta version of its My Phone Web service to the public. The free site gives users an online repository where they can store and sync contacts, appointments and photos from their mobile phones. The site can be used to backup and restore information on a phone, or share photos taken from mobile phones. So far it only works with Windows Mobile 6, though.

Also surfacing is a glimpse of the new Android "Rosie" interface being developed by Google, HTC, to distract the Android crowd from the Pre and iPhone 3.0 perhaps?

A video of "Rosie" from ">Androidguys.com:

Anonymously sourced story of the day: BusinessWeek reports AT&T may lower prices on iPhone data plans, starting with a $10 per month reduction this month:

"The possible price cut likely reflects the back-and-forth between AT&T and Apple as they work out whether and under what terms AT&T would remain the sole U.S. iPhone carrier."

Looks like a companion piece to the "Verizon getting iPhone" stories that emerged a few weeks ago - hardball negotiations are underway, with press leaks applying pressure.

It's hard to get too worked up about iPhone applications now that jillions are available, but the new Zillow iPhone App debuting tonight is amazing.

It could be one of those bits of software that convinces iPhone holdouts that, maybe, it's finally time to get the hardware.

Especially if they're real estate voyeurs, as two-thirds of Seattle has become over the past decade.

Everybody wants to play with Verizon, apparently.

First rumors began swirling about Apple working with Verizon on a budget iPhone and Web tablet device.

Now Microsoft has joined the party, offering Verizon a touchscreen, multimedia phone, according to a new report from the Wall Street Journal.

The story suggests this is the Microsoft mobile product code-named "Pink," which has been linked to the Zune group by previous speculative articles.

According to the Journal, it involves Microsoft software on phone hardware another company will manufacture.

Here's my guess: The device Microsoft is offering to Verizon will be a blend of what Microsoft believes are its best mobile software products -- a melange of the upcoming Windows Mobile 7, with groovy design input from the Danger group and Zune's music discovery and social networking features.

I'm winging it there. More authoritative is BusinessWeek's new piece on what Apple's working on with Verizon. An excerpt:

One device is a smaller, less expensive calling device described by a person who has seen it as an "iPhone lite." The other is a media pad that would let users listen to music, view photos, and watch high-definition videos, the person says. It would place calls over a Wi-Fi connection. One of these devices may be introduced as early as this summer, one person says.

With serious competitors for its MediaSmart home server finally coming to the U.S., Hewlett-Packard today is announcing a big software update of the Windows Home Server-based system.

Highlight include new software for automatically converting videos to a mobile format so they can be loaded onto the iPhone, iPod, PlayStation Portable and other mobile devices.

HP also developed an iPhone app called "iStream" that enables users to stream video from their home server directly to an iPhone or iPod Touch.

The system will store two versions of video content, one optimized for mobile devices and the original high resolution version for streaming around a home network.

HP has dominated the U.S. market for prebuilt Home Servers with only scattered competition, but Asus and others are rolling out their own systems, including some based on the power-efficient Atom processor. The products also face growing competition from increasingly sophisticated network attached storage devices that still aren't nearly as powerful but cost much less per gigabyte.

The latest generation of HP MediaSmart servers were announced in January. The software update announced today also includes improvements to its "media collector" feature, the way it interacts with Apple's "Time Machine" backup system and the ability to create public and private folders in its photo viewer application.

Servers built on Microsoft's Windows Home Server software centralize home file storage, provide Web access to files and backup and restore PCs on a home network. HP's start at $599 but street prices for the base model range from $499 to $550.

An HP spokeswoman declined to comment on whether a lower-end, 640-gigabyte version is coming soon, as suggested by recent reports on gadget blogs. The company also said the upgrade is only for the latest, Celeron-based MediaSmart servers.

Acer today launched the first Atom-based PC with Nvidia's ION graphics processor, which could transform the netbook/nettop category by giving it full-blown graphics horsepower.

ION boosts the graphics capability of Atom-based systems by 10 times, giving them enough oomph to easily play full 1080p content, product manager Dave Ragones said.

Nvidia expects ION to transform the desktop PC market similar to the way low-cost netbooks have upended the laptop business.

"We fundamentally believe 2009 is going to be the year of the small desktop PC,'' Ragones told reporters in an online briefing, simultaneous with an Acer launch event in New York.

Atom-based systems currently rely on Intel's integrated graphics system, which limits their ability to handle video and 3-D games and applications.

ION is debuting in Acer's AspireRevo, a tiny Windows Vista PC that's 7 inches by 7 inches by 1.2 inches high. A price wasn't available yet, but Ragones dropped a hint: He said ION is debuting in systems around $299.

Revos can have up to 4 gigs of memory and 250 gig hard drives. They also have HDMI output for connecting to a TV or receiver, an eSata connector for external drives, a card reader and USB 2.0 ports.

Acer is upping the ante in the nettop space with a system that's small enough to mount on the back of a monitor, for a do-it-yourself all-in-one system.

It's also small enough to mount on the back of a TV, where it would be a great alternative to a cable box for people who switch to Web video.

The ION processor will soon appear on other systems -- netbooks, desktops and all-in-ones running Vista and soon Windows 7 -- where it will add about $50 to $100 to the cost, Ragones said.

I wonder if Microsoft will expand its "laptop hunters" ad campaign to look at desktops. Revo looks like a pretty tough competitor to Apple's $600 Mac Mini, which has basically the same Nvidia graphics processor. (Although the Mac has a DVD drive and a more powerful Intel processor ...)

A new report by comScore found that most users of Apple's App Store are well-off -- more than half make over $75,000 a year, and about a third appear to have incomes of more than $100,000.

Prepare for the flood of in-app advertising, now that comScore's taken a stab at identifying the demographics.

Here's the firm's list of the top 25 apps, topped by Tapulous's Tap Tap Revenge, which was installed by 32 percent of App Store users:

The value of microreporting: Three sentences in Taiwan's Digitimes set off reams of speculation about Apple's next iPhone.

Supplier OmniVision has a contract to supply 3.2 megapixel image sensors for the next generation iPhone, the mag reported. The current iPhone has a 2 megapixel camera that's pretty weak for a top-end phone nowadays.

AppleInsider relayed the news and suggested the next iPhone may also finally be able to capture video.

OmniVision is also supplying 5 megapixel sensors "for another Apple product expected to be launched later in the year."

Highlights from Apple's preview of the new iPhone software: It's finally getting cut-and-paste capability and MMS.

Apple's also offering new tools for companies to produce digital book stores for the iPhone and subscription services through the App Store, adding some of the key business capabilities in Amazon.com's Kindle.

I wonder if the New York Times and other papers will stop offering free news apps on the iPhone, now that Apple's giving them tools to charge for subscriptions.

The 3.0 software upgrade is coming this summer. A few of the features -- including MMS and A2DP Bluetooth -- won't work on the first generation iPhone. The upgrade is also available for the iPod Touch, for $10.

This is culled from live blogs from the Cupertino event include Engadget and Eric Savitz.

Meanwhile, on the other side of the country, Amazon was sued today in Delaware by Discovery Communications, which alleges the Kindle infringes on Discovery's patented copy protection technology.

Apple is seeking to patent a "wand" remote control device that can control a TV screen cursor by waving and flicking it around, according to a report today by AppleInsider.

The device could use a combination of infrared light, gyroscopes and accelerometers.

Apple Insider posted a few images of Apple's patent filing, showing how the device works, but they missed this one:

That's the latest question posed by Seattle venture capitalist Peter Zaballos on his new blog, Open Ambition.

Zaballos, vice president at Frazier Technology Ventures, today described his personal Apple museum, including a Newton MessagePad 110 he bought in 1994.

When his family had a similar laugh trying the new Google voice search app on his iPhone, he recalled playing the same game with the Newton's imprecise voice translation feature. Even Doonesbury and "The Simpsons" mocked the system.

All the rest of what made the Newton incredibly revolutionary got swept aside, and to a large degree pronounced a premature death sentence on the product line, and the whole category until Palm, and now the iPhone.

So, where are the comics ridiculing Google's voice search for the iPhone?

That should get more attention than his previous, but equally thoughtful, postings on topics such as "The nuance of Series B financings."

Apple may be preparing a touchscreen netbook computer for release this fall, according to a vague report today in Digitimes.

The Taiwanese publication covering the hardware industry passed on word from China that Apple's ordering touchscreen panels for a netbook coming in the third quarter.

Wintek, a Taiwanese manufacturer, is supplying the hardware, the report said. An excerpt:

Wintek revealed that it is currently working with Apple to develop some new products, but it said it does not know what applications the new products are for.

Apple's made touch one of its hallmarks and it's long been rumored to be working on a lower end computer.

Releasing a touch netbook in Q3 would give Apple a potential blockbuster to compete with all the new Windows 7 machines expected by the holidays, including many that are likely to build on the software's touch capabilities.

Maybe Apple's aiming for back-to-school sales with a low-end laptop. Could it also function as a digital textbook reader?

If the report is correct, it will be a great time to shop for a computer this fall. If you still have a job.

The Kindle iPhone application that Amazon.com released last night is just the start.

Amazon plans to extend its digital book software -- especially the Kindle's "Whispersync" technology -- to all sorts of phones and computers, according to Chief Executive Jeff Bezos.

It's more evidence that the Kindle was built not just for reading, but for buying books. It's part of a broader effort to extend Amazon's core franchise to mobile devices.

The iPhone application makes more sense when you think of it as an extension of the Kindle bookselling platform, as well as a bargain way for iPhone owners to get a barebones version of Amazon's reading device.

But it's still a neat application and the timing -- just a week after the Kindle 2 launch -- shows how aggressively Amazon is pushing ahead.

Bezos previewed the strategy -- and the vision for Kindle on the iPhone and other devices -- in this interview at the Kindle 2 launch event last month. He said the plan was to get the Kindle digital bookstore on "just about every device."

An excerpt:

After inadvertently posting details of its new MyPhone service online, Microsoft went ahead and confirmed that it will unveil the service at the upcoming Mobile World Congress wireless show starting Feb. 16.

It looks pretty interesting -- and like Windows Mobile finally has an answer to the groovy cloud services offered by Nokia, Apple and Google.

Seattle mobile media venture Melodeo toda announced that it's bringing its nuTsie application - which enables remote access to iTunes libraries - to the BlackBerry Storm.

The $19.95 application is already a top seller on the iPhone, BlackBerry.com, Alltel, Nokia Download, Handango, Handmark and Danger Sidekick, Melodeo said.

"We think this bridges the gap for the hardcore BlackBerry user who wants a touchscreen and the functionality of an iPod while carrying only one device,'' nuTsie Chief Executive Jim Billmaier said in the release. "With smartphone ownership at 20% of U.S. mobile users and headed quickly toward 50%, it's important to stay nimble and keep nuTsie current with the latest and greatest devices such as the Storm."

If you're thinking about buying a new computer and don't urgently need a replacement, you may want to wait a few months.

Two speculative analyst reports out today suggest the options could get a lot better by early summer.

After word came out today about Apple boss Steve Jobs and his worsening health situation, Microsoft co-founder Paul Allen issued a public statement:

"I wish Steve a speedy recovery from his medical issues. He has made extraordinary contributions to the personal computer industry, and I really enjoyed working with him in the early days of the Macintosh."

Like Jobs, Allen fought back cancer. Allen left Microsoft in 1983 after being diagnosed with Hodgkin's lymphoma and chose to pursue other opportunities.

Maybe it's Jobs' turn to buy a huge boat and start exploring the South Pacific and Mediterranean film festivals.

No wonder there's been so much buzz about layoffs at Microsoft: PC sales just stank in the last quarter.

Mirroring the awful fourth quarter for overall retail sales, PC sales fell 0.4 percent in the fourth quarter, according to a new report from research firm IDC.

The holiday season drop pulled annual PC sales growth down to 10.5 percent, after averaging 15 percent a year over the last five years.

"As expected, demand for PCs in the U.S. faced a challenging environment, with a substantial reduction in spending among both consumer and commercial segments amid tightening credit, eroding confidence, and growing unemployment. Not only unit growth was constrained, but the value of the market also shrank as a result of competitive pricing and the introduction of lower-priced mini notebooks,'' IDC's Doug Bell said in the release. "Unfortunately, the first half of 2009 looks pretty shaky as the economic fundamentals need to recover before spending on PCs will resume."

Also released today was the annual PC sales report from Gartner, the other big tech research firm. It said the PC industry "suffered its worst growth rate since 2002" in Q4 with shipments increase just 1.1 percent, to 78.1 million units. For the year, Gartner estimated PC sales grew 10.9 percent to 302.2 million units sold.

Pundits are all over Apple's iPhone numbers disclosed during Tuesday's earnings report, but another thing stood out:

It's not really fair to constantly compare the first Google-powered phone, the T-Mobile G1, with the Apple iPhone.

That's like comparing a PC to a Mac.

But that PC-Mac comparison became more obvious during the week or so I tested the G1 in and around Seattle...

Apple did lower prices on its entry-level MacBooks today, but not as low as rumored last week. Steve Jobs said the price is falling from $1,099 to $999, according to this live report by Engadget and these releases from Apple.

Of course you'll get more for your $1,000 - a new enclosure, faster graphics and a nicer LED display -- but it's still not $800.

Steve Jobs had more to show today:

If you're using a Mac Pro and it has a strong smell, you may want to open the window.

French newspaper Liberation is reporting that the systems may be emitting toxic vapors, including benzene, according a report relayed by ZDNet.

ZDNet noted that this came up on Apple user forums last year, with some tracing the smell to plastic melting on heatsinks.

None of this apparently factored into this week's AAPL downgrades, which contributed to the stock's Monday drop.

That's the word from Goldman Sachs, via AppleInsider, which reports that Apple's Asian suppliers are saying design of the next iPhone is nearly done and it will have the same form factor but with a different look and 3G capability.

New in the report is word from the same sources that the sputtering AppleTV product is being reworked and may include an LCD display. So does that mean it's morphing into a full-blown TV set, or will it have a small iPod-like (or Sideshow-like) display showing status and content and letting you control the device directly?

The report also notes there was little info about the rumored subnotebook -- Apple's Origami? -- and that it may be delayed because of design challenges.

That's the word from Goldman Sachs, via AppleInsider, which reports that Apple's Asian suppliers are saying design of the next iPhone is nearly done and it will have the same form factor but with a different look and 3G capability.

New in the report is word from the same sources that the sputtering AppleTV product is being reworked and may include an LCD display. So does that mean it's morphing into a full-blown TV set, or will it have a small iPod-like (or Sideshow-like) display showing status and content and letting you control the device directly?

The report also notes there was little info about the rumored subnotebook -- Apple's Origami? -- and that it may be delayed because of design challenges.

A new USB gadget from ATI will give Macs the ability to record high-def video broadcasts, closing a gap with Windows Media Center.

ATI announced today that a Mac version of its TV Wonder 650 USB tuner will go on sale later this month for around $149. In addition to tuning over-the-air and analog broadcasts, it includes an electronic programming guide and software to watch, pause and record high-definition video.

Macs already use ATI graphics cards. Apple ought to give people the option of ordering one of its computers with an internal TV tuner, especially since iTunes is losing its grip on TV show sales, but until then the $149 dongle sounds like a nice option.

The announcement, from ATI parent AMD, also mentioned that its video cards are giving the 20-inch and 24-inch iMacs HDMI output, which would make it easier to tie them in to a newer home entertainment network. HDMI ports aren't yet listed on the iMacs' tech specs though, and I haven't heard back yet from the spokesman I asked for clarification.

Lots of spicy feedback to my post about Leopard being still too buggy.

If the commenters accurately reflect the experience of Leopard users, most people are perfectly happy with the system.

But those folks sound like enthusiasts and early adopters. I still think average users and companies that can't afford snags should hang back awhile until the bugs and drivers are sorted out, just as IT types did with Vista. That was the TUAW advice I referred to in the original post.

I probably could have been more specific, and said there are bugs to be sorted out and compatibility issues because key applications aren't yet ready for Apple's new operating system. Just like most every other new operating system.

It that smells like FUD reeking of the Microsoft taint befouling the Puget Sound region, so be it.

People considering a Leopard upgrade who use Adobe applications should probably ignore all the politics and go straight to the source for the final word on whether the applications they're using (Acrobat 8 Pro and Reader 8?) will work with the new operating system. (Adobe issues were part of TUAW's great advisory but it was deemed FUD by some, so who can you trus?.)

Adobe's support site said it's been working with Apple on compatibility but some apps won't get Leopard compatibility updates until December and January. Here's the source material and an excerpt:

Thanks to close collaboration between Adobe and Apple, most of the CS3 applications and associated technologies, such as Adobe Bridge CS3, Version Cue CS3, and Device Central CS3, are compatible with Mac OS X Leopard without requiring additional updates. However, the following CS3 applications will require updates for full compatibility with Leopard: Adobe Acrobat 8 Professional and our professional video applications, including Adobe Premiere Pro CS3, After Effects CS3 Professional, Encore CS3, and Soundbooth CS3. We expect to publish free Leopard compatibility updates for the video applications in December 2007 and for Acrobat 8 Professional and Adobe Reader 8 in January 2008. For a complete overview of compatibility between Adobe creative applications and Mac OS X Leopard, see the chart on page 2 of this FAQ.

Q. Will older versions of Adobe creative software -- such as Creative Suite 2 and
Macromedia Studio 8 software -- support Mac OS X Leopard?

A. While older Adobe applications may install and run on Mac OS X Leopard, they were designed, tested, and released to the public several years before this new operating system became available. You may, therefore, experience a variety of installation, stability, and reliability issues for which there is no resolution. Older versions of our creative software will not be updated to support Mac OS X Leopard.

A reader in Texas made an interesting comment on last week's post about Apple being rushed to finish Leopard:

Very disappointing. Leopard has bugs, bugs and more bugs. No print drivers survived the upgrade. Photoshop CS3 and InDesign CS crash when working together. ICC profiles are gone. Mail has no stationary [sic] as proclaimed, and if there is something to do to make it appear in the interface I can't find it, nor find documentation about it. I have had the system less than a day and am still exploring. Bottom line: I want my old system back, and I want to return the family pack of 5 licenses for a single license. It will not be installed on my notebook or children's computers.

I didn't call the comment out at first, because I wasn't sure if it was a firebomb. But now even the Apple priests are saying Leopard's buggy -- so much so they're advising people to hold off upgrading.

The Unoffical Apple Weblog summed it up on a podcast, then posted highlights today:

If you have only one computer and it's your production machine, don't upgrade. The 10.5 upgrade is a big one -- not a small update, not a few bug fixes. Lots of stuff gets broken and if you need to keep getting your work done, just wait. Let a few dot releases ease things out.

If you work with Adobe software and need your software to work reliably, don't upgrade. Apple didn't get its gold master out to third party developers in time for the upgrade path to proceed smoothly. Everything was rush, rush, rush. Developers simply did not have the time to work with the final product and make sure their apps would be compatible. If you need Acrobat (and I do) or In Design, you need Tiger. Don't upgrade to Leopard.

That makes it just embarrassing that Apple built a nasty jab at Windows into Leopard -- the visualization of a PC as a dowdy old monitor displaying a crashed system that Anil Dash ripped into Sunday, and he didn't even note the bugs or Leopard's own "blue screen" issue.

Walt Mossberg and David Pogue both like Leopard, Apple's new operating system going on sale Friday, but they weren't blown away and they each had a few niggles.

It's not surprising that the OS is considered evolutionary and not revolutionary -- and that Pogue found a few bugs -- since Apple struggled over the past year to get both the software and the iPhone done on time. It diverted engineers from Leopard to get the phone done on schedule, and it's releasing the OS too late for the back-to-school season.

For a change, Leopard doesn't seem to be creating any significant gap between the capabilities of the operating systems from Microsoft and Apple.

Still, it sounds like there are enough new features to persuade Apple users to upgrade.

There's also enough of a cloud around Vista that Leopard will probably lure more potential Windows buyers.

Here are some highlights from the two influential reviewers' Leopard reviews.

Mossberg:

While Apple claims the new system includes more than 300 new features, there is nothing on the list that could be considered startling or a major breakthrough. Some of Leopard's features are unique, but many others -- such as backing up data and quickly viewing files -- have been available on both Windows and the Mac via third-party programs or hard-to-find geeky methods buried in the operating systems. Leopard has made them easy to find and use.

Pogue:

Apple's Web site lists 300 new features in Leopard. They're not all earth-shattering; they include a Braille font, a "Word of the Day" screen saver and a Danish spelling checker. (Settle down, folks.)

Fortunately, others really do make you slap your head and say, "Of course!"

Both were surprisingly critical of Leopard's interface design. They said its transparent menus can be hard to read depending on the background, and Mossberg said the icons aren't as nice as Vista's or the previous Mac OS.

Pogue's take:

Often, Apple's snazzy graphics are justifiable because they make the Mac more fun to use. In this case, though, nothing is gained, and much is lost.

But both reviewers are still fans, though, and they contrasted Leopard with weak spots of Vista PCs.

Pogue noted that Leopard doesn't come cluttered with trial software and nagging notification balloons. Mossberg did side-by-side speed tests that highlighted Vista's slow startup -- nearly two minutes -- vs. Leopard's speedy 38-second Le Mans start.

Both liked the Time Machine backup program. Lots of people are using a variety of backup programs and extra hard-drives for backup nowadays. Dell in particular has a fairly standard option that adds a second drive to constantly and automatically mirror your data.

I haven't used it yet, but the big advance in Time Machine seems to be the simplified process of recovering files after a crash -- you visually skim through snapshots of your backups and choose where you'd like to resume.

Pogue also found glitches that I'm guessing resulted from the stress Apple's engineering team faced, trying to develop Leopard simultaneous with the iPhone.

Graciously acknowledging the challenges of building today's super complicated operating systems, Pogue noted "the usual minor set of 1.0 bugs" and "a few programs and add-ons that will need updates to run in Leopard."

The story I'd like to read, though, is what Apple would have included in Leopard if it had more time.

In particular, Apple still hasn't built in features for recording televisionlike premium versions of Vista. That could have revived the AppleTV product and led to some interesting playback options with the iPhone and iPod.

Walt Mossberg and David Pogue both like Leopard, Apple's new operating system going on sale Friday, but they weren't blown away and they each had a few niggles.

It's not surprising that the OS is considered evolutionary and not revolutionary -- and that Pogue found a few bugs -- since Apple struggled over the past year to get both the software and the iPhone done on time. It diverted engineers from Leopard to get the phone done on schedule, and it's releasing the OS too late for the back-to-school season.

For a change, Leopard doesn't seem to be creating any significant gap between the capabilities of the operating systems from Microsoft and Apple.

Still, it sounds like there are enough new features to persuade Apple users to upgrade.

There's also enough of a cloud around Vista that Leopard will probably lure more potential Windows buyers.

Here are some highlights from the two influential reviewers' Leopard reviews.

Mossberg:

While Apple claims the new system includes more than 300 new features, there is nothing on the list that could be considered startling or a major breakthrough. Some of Leopard's features are unique, but many others -- such as backing up data and quickly viewing files -- have been available on both Windows and the Mac via third-party programs or hard-to-find geeky methods buried in the operating systems. Leopard has made them easy to find and use.

Pogue:

Apple's Web site lists 300 new features in Leopard. They're not all earth-shattering; they include a Braille font, a "Word of the Day" screen saver and a Danish spelling checker. (Settle down, folks.)

Fortunately, others really do make you slap your head and say, "Of course!"

Both were surprisingly critical of Leopard's interface design. They said its transparent menus can be hard to read depending on the background, and Mossberg said the icons aren't as nice as Vista's or the previous Mac OS.

Pogue's take:

Often, Apple's snazzy graphics are justifiable because they make the Mac more fun to use. In this case, though, nothing is gained, and much is lost.

But both reviewers are still fans, though, and they contrasted Leopard with weak spots of Vista PCs.

Pogue noted that Leopard doesn't come cluttered with trial software and nagging notification balloons. Mossberg did side-by-side speed tests that highlighted Vista's slow startup -- nearly two minutes -- vs. Leopard's speedy 38-second Le Mans start.

Both liked the Time Machine backup program. Lots of people are using a variety of backup programs and extra hard-drives for backup nowadays. Dell in particular has a fairly standard option that adds a second drive to constantly and automatically mirror your data.

I haven't used it yet, but the big advance in Time Machine seems to be the simplified process of recovering files after a crash -- you visually skim through snapshots of your backups and choose where you'd like to resume.

Pogue also found glitches that I'm guessing resulted from the stress Apple's engineering team faced, trying to develop Leopard simultaneous with the iPhone.

Graciously acknowledging the challenges of building today's super complicated operating systems, Pogue noted "the usual minor set of 1.0 bugs" and "a few programs and add-ons that will need updates to run in Leopard."

The story I'd like to read, though, is what Apple would have included in Leopard if it had more time.

In particular, Apple still hasn't built in features for recording televisionlike premium versions of Vista. That could have revived the AppleTV product and led to some interesting playback options with the iPhone and iPod.

The big surprise isn't that Apple's going to open the iPhone up to application developers, as Steve Jobs announced today.

Jobs said in May that the company would figure out a way to give developers iPhone access without compromising the device's security:

"Sometime later this year we will find a way to do that,'' he said at a Wall Street Journal conference.

What's really new today is Jobs' mentioning, in a postscript, that he'll also let developers write applications for the new touchscreen iPod. I'll bet people will do amazing things if Apple lets people really tinker with the wireless gadgets.

You've got to wonder how that's going over in Redmond. Microsoft hasn't had much luck rallying developers around its handheld, touchscreen computing platform, the Ultra-Mobile PC.

Five years ago Microsoft was way out in front with mainstream, touchscreen computing when it introduced the Tablet PC, but that's sort of fallen off the radar, even though Tablet features are built into Windows Vista.

The Zune could also be a nifty playground for developers, but in trying to build a seamless, Apple-like experience around the players, Microsoft hasn't given them any tools to work with the software.

Maybe Microsoft's more focused on mobile phones and Web services nowadays. But I can't imagine it will stand by and let Apple become the platform of choice for developers writing mobile, touch-computing applications.

iPhone: The price was cut $200. It's now $399 for an 8 gigabyte model, down from $599. That was quick; must not have been selling as fast as expected.

iPod touch: A new model based on the iPhone design was released. It has Wi-Fi and touchscreen controls. A 16 gigabyte model costs $399 and an 8 gig model is $299.

iPod classic: There's more capacity for the "standard" model with a new 160 gig version now available for $349. The 80 gig model gets a price cut, to $249. Microsoft better hurry up and release the new Zunes, because its 30 gig model seems puny now.

iPod nano: A new model with video playback on a larger, two-inch screen and the "coverflow" interface for scrolling through songs via album art. Also five new colors; 4 gigs for $149 and 8 gigs for $199.

iPod shuffle: Four new colors.

Ringtones: Apple is finally selling ringtones, joining the crowd. A bunch of songs on iTunes can now be used as ringtones, if you pay an additional 99 cents when you buy them. If you already bought a song that's ringtonable, you can pay 99 cents to make it a tone.

Wi-Fi iTunes: When your iPod or iPhone is connected via Wi-Fi, you can directly purchase music from Apple's online store instead of having to connect via a computer.

Starbucks: Wi-Fi iPods and laptops running iTunes will display a Starbucks button when you're logged on in the stores. You can then see information about songs that are playing in the store and purchase them with a click. Starbucks already had a deal to distribute music via iTunes; this adds the wireless capability.

I wonder how long it will take for other retailers and venues will add buttons to iTunes and wireless iPods, so you can buy what you're hearing. I'll bet Pottery Barn and Banana Republic will be next.

Just days after a fallout with Apple, ending its iTunes distribution deal, NBC Universal announced today that its video content will instead be sold through Amazon.com.

NBC shows such as "The Office" and "Heroes" are now available through Amazon's Unbox download service, the companies announced today. Episodes of "30 Rock," for instance, are available for $1.99 and a full season costs $32.49.

Starting Sept. 10, they'll also provide free downloads of pilot episodes of NBC's new shows such as "Bionic Woman."

Universal movies have been distributed via Unbox for a year now, the companies noted in the release, so the TV content deal builds on an existing relationship.

NBC's quote in the release sounds like a dig at iTunes:

"With the addition of NBC Universal TV content to Amazon Unbox, fans now have the ultimate convenience for enjoying their favorite shows whenever or wherever they want," said Jean-Briac Perrette, president, NBC Universal Digital Distribution. "This further expands our longstanding relationship to bring a robust content offering to the marketplace in a variety of ways that will benefit the consumer and, at the same time, protects our content."

I wonder if Amazon is luring content owners from iTunes, or if content owners are just shopping around for a better deal.

We're finally getting to the meat of Apple's dealings with wireless carriers.

It sounds like what's really revolutionary about the iPhone is the way it's shifting control from carriers to device manufacturers.

From an impressive Financial Times story breaking the news that T-Mobile, Orange and O2 will carry the iPhone in Germany, France and England:

The deal gives manufacturers of handsets for the first time a direct share of the revenues a mobile phone operator makes from calls and data transfers, marking a shift in the relationship between the parties.

Until now, mobile operators have campaigned fiercely against such an approach, but industry experts expect that Apple's success in securing the deals could spur other handset manufacturers to try to secure similar terms.

I wonder, though, Apple really has as much pull over carriers as the story implies. Are carriers really being snowed by Apple? They're crafty negotiators who may care more about the deals being made than the portrayals of their new partner.

You've also got to wonder about the kind of relationships Apple is building, if it really is dictating terms and snubbing executives. If it bullies them with iPhone 1.0, it may have a tougher time making deals with iPhone 2.0 and 3.0.

The new desktops that Steve Jobs unveiled today will sell themselves, but Apple couldn't resist putting this onto its iMac page:

But the real interesting competition may be between Apple and Microsoft, since Jobs also announced a new version of its iWork productivity software including a spreadsheet and improved word processor.

I wonder if that was a factor in Microsoft delaying the new version of Office for the Mac.

That's Valleywag's snarky take on the New York Times' outing of a Forbes editor as author of the Secret Diary of Steve Jobs.

Valleywag questioned whether the outing was nudged along to promote an upcoming book.

I wonder if the outing is payback for the satirical blog's particularly sharp (and relatively unfunny ...) jabs at the New York Times lately.

Payback or not, the blog seems to go off track when it does insidery media critiques. Would Steve Jobs bother to parse the coverage of Microsoft's financial analyst meeting?

University of Washington engineering grad students Jeff Cole and Brandon Smith had a surprise hit when they released iConcertCal last Christmas.

The free software plug-in for iTunes notifies you of upcoming shows featuring bands in your music collection. Among the kudos was a 3 1/2 mice rank from Macworld magazine, which listed it as a Mac Gem. Lifehacker also provided an early boost by calling it out as a "download of the day."

Today they announced the release of a new version that adds CD release dates, links to buy albums and two social features -- the ability to share concert calendars with friends and to find other concertgoers in your city.

Seattle's iLike has similar features and rich backers, so I wondered if a merger was in the works.

"We wondered the same thing, but I guess they decided to compete with us instead of buy us,'' said Cole, who lives a few blocks from iLike's Capitol Hill office.

After Cole and Smith started getting notice, iLike was among the big companies that contacted them. Another was Ticketmaster, which invested in $13 million in iLike in December.

Cole said he's not looking to add music-recommendation features that are the foundation of iLike and instead wants to keep the software a lightweight concert and music referral service.

Smith has graduated and Cole still has another quarter to go.

Even if nobody buys the company, they might start to make money in addition to the donations some users have made. They'll get a percentage of sales from Amazon.com when users pre-order upcoming albums through their software.

This is a lilypad in the great lake of iPhone news this week, but it could mean a lot to affected customers.

Late last week AT&T regional Vice President Mike Maxwell sent a letter apologizing to iPhone buyers who waited in line June 29 at some AT&T stores, only to be told they couldn't buy the phone unless they also bought $50 worth of accessories.

Maxwell's letter said it was a mistake, apologized and said the accessories can be returned for a full refund.

It's funny, someone at the AT&T store on Capitol Hill called me three week ago, apologized and said the price would be refunded automatically on my account and I could keep the accessories anyway. I still took them back.

Here's how Maxwell characterized the situation:

"We have become aware that in isolated incidents at a few of our stores, certain customers may have received the impression that they were required to purchase accessories with the iPhone. Please know that was not our policy. If you were under that impression, we extend to you the optionof returning the accessories to the store of purchase to receive a full refund."

It wasn't an impression. The clerks at the Capitol Hill store at least wouldn't hand over the iPhones unless you bought the accessories. I protested at the time and they wouldn't budge.

I don't think I was getting a special letter from Maxwell. It was sent to my house, using the name on the AT&T account I set up to try the iPhone.

But AT&T did get its revenge for my publicizing the forced iPhone bundling.

Our floors were refinished last week so we were away from home when the letter arrived on Saturday. It came through the mail slot and embedded itself in the freshly applied Swedish finish, leaving a semi-permanent reminder that I'll see every time I walk through the front door.

I wonder what Apple fans will think of the next iPod if it mimics the Zune's wireless-media sharing feature.

That's a direction suggested by a newly surfaced Apple patent application. Macsimum News dug it up and CNET chased the story today.

Now, if Apple, Microsoft or someone else would blend Wi-Fi, touchscreen navigation and DRM-free song sharing, then we'd be getting somewhere. I'd like one with a 64 gigabyte solid-state drive?

I just received a call on my iPhone from the AT&T store where I bought it on Friday.

I don't think the caller knew that I've written about the device -- it was a standard customer service call that the store told buyers they would receive.

The caller apologized for the long activation process and asked if I had any other concerns.

I said I was disappointed that the store required people to buy $50 worth of accessories to get the phone. He apologized for that as well, and said it was the result of a "miscommunication to the store." Then he credited my account for the cost of the accessories and said I could keep them free of charge. (I still plan to return them).

Since I had him on the line, I asked about the stock. He said there were a few of the $499 4 gigabyte models left in the store, but none of the $599 8 gigabyte models. The eights have been outselling the fours by 5 to 1, he said.

That's not reporting and it doesn't mean the same thing is happening nationally, but it's an intriguing tidbit. I'd be curious to know if Apple's take is bigger on the higher-capacity models.

The company's expected to have a profit margin of more than 55 percent on the iPhone, according to an iSuppli teardown analysis of the 8 gigabyte model, a revelation that's believed to have boosted Apple stock today.

Among the comments on my iPhone stuff, my favorite so far is from "KG" who suggested I'm an "inner city fashion technology junkie."

Here's my iPhone likes and dislikes list, amplifying today's column.

Five things I really like about the iPhone

1. Its touchscreen interface. Apple was a little ambitious with the virtual keyboard and the browser buttons are too small, but the basic controls are really impressive. Instead of forcing users to move through menus, the screen displays all the major functions as a set of widgets that you tap to use. Forget the scroll wheel -- it's much easier and more fun to sort through a digital music collection by tapping and flipping through CD cases with a swish of the finger. If Apple puts interface on standard iPods (and gives them more storage) it'll keep dominating the category.

2. Finally, an iPod with a speaker. I have never liked earbuds and always prefer to play music through speakers -- more BFR than Walkman. It's not high fidelity, but you can play songs on the iPhone loud and clear enough to use the device without headphones in a car or cubicle.

3. The software for handling photos is terrific, fixing a pain point on cellphones. It has a nice slideshow feature, but best of all is the button you tap to decide how to use photos stored on the device. It gives you four choices -- use as wallpaper, e-mail photo, assign to contact or cancel. Too bad the camera itself doesn't have more features.

4. The iPhone looks and feels great. It feels smooth and touchable and has a nice heft without being heavy. You can't compare it to Microsoft's Zune, but they both have a more satin feel than earlier music players. It's subjective, but I think it's past time to move past the shiny plastic look. I'll bet the next Macs and iPods will have the iPhone's style, with a mix of brushed metal, satin and piano black plastic and chrome accents.

5. Consumers will benefit from the halo effect the iPhone will have on the mobile device and phone industry. Most functions of the iPhone were developed and released earlier on other devices. But Apple blended and presented them in a way that improves the user experience, like a chef that figures out a better way to make mac and cheese. Other phone manufacturers are now under pressure to improve their software, add more features and simplify their interfaces.

Things I really don't like about the iPhone

1. The network is way too slow, and saying that you can use Wi-Fi instead is cop-out. When pressed on the network issue, Steve Jobs has said people can just jump onto faster Wi-Fi networks, but that's utopian. Sure, you'll use the faster Wi-Fi at home, the office and your favorite coffee shop. But it's not an adequate substitute for AT&T service when you're mobile.

The iPhone does a nice job transferring from the AT&T network to Wi-Fi networks when they're available, but they usually aren't. Jobs may be able to walk around Palo Alto and hop from network to network, but it doesn't work reliably in Seattle and most other places. More often than not, people lock down their home networks for security reasons. Networks like the ones at Starbucks stores require additional monthly fees. Free networks are scattered and have varying levels of service. I couldn't get my iPhone to connect at all to the Bremerton ferry's Wi-Fi service on Saturday.

2. Durability is a question mark. I'm nervous about carrying a $600 phone that's half covered in glass. Its power and vibrate-mode buttons don't seem especially sturdy. Some people will be bothered that the glass front is constantly smudged by fingertips, especially since they have to hold it against their cheek to use the phone. Mine already has a few scratches on the chrome bezel and brushed metal back after just two days of use.

3. Battery life isn't adequate for the iPhone to be my primary mobile phone. I expect a mobile phone to last at least a full work day. I'd rather have a single-function phone that only needs a charge every few days than a multifunction device that can't stray far from an outlet or a car charger. I haven't experimented with power settings to maximize battery life, but if you have to shut off all the fancy stuff why bother to carry such an expensive phone?

4. The network lock-in leaves you feeling shanghaied and limits the appeal of the iPhone as a portable computer or iPod replacement. Apple and AT&T are telling consumers the iPhone is worth the huge investment because it's a phone, a computer and an iPod, but Web browsing on the network is slow and the iPod gets no benefit at all from the connectivity.

On top of a $60 to $220 monthly fee, two-year commitment and $500 to $600 device cost, the $36 activation fee seems like a gouge, not to mention the $50 worth of accessories forced on buyers at at least one AT&T store.

The partnership between Apple and AT&T may work well for introducing Apple to the phone business, but it's also providing cover for some serious issues with the iPhone such as the lack of access for application developers and the inability of the browser to properly display Flash Web sites. Pressed on the developer question, Jobs has pointed toward AT&T and its security concerns. Both companies need to be more transparent about challenges and direction.

5. Apple's smug attitude will keep a lot of people from even considering this device. Individuals I've dealt with at the company seem very nice, but the institution exudes a better-than-you attitude that I find repelling.

I'm not bitter that Apple gave iPhones to Walt Mossberg and David Pogue first, but I am amazed that Apple gets a pass for its attitude and controlling behavior. It acts just like a politician who refuses to participate in open debates and expects voters to decide based on slick ads and a few handpicked appearances in sympathetic venues. That may be today's reality but we shouldn't stand for it.

Sales were good.

Goldman Sachs is estimating that Apple sold at least 700,000 units since Friday, double its previous estimate. It also upped its forecasts to 5.25 million this year, up from 4 million, and 12 million in 2008, up from 10.5 mllion.

From its note to clients today:

Our checks show that better-than-expected supply and mix throughout the weekend was met by a frenzy of demand, driving our unit, ASP, and margin expectations for iPhone higher.

Activation was bad. It took AT&T nearly nine hours to activate the phone I bought Friday evening. Others had similar problems and the issue is becoming the Monday iPhone story.

The registration/activation process seemed smooth until a screen appeared saying that activation would take awhile and AT&T would send an e-mail when it was finished.

I expectantly checked my e-mail for an hour and gave up around 11:30 p.m. The activation wasn't done until after 7 a.m. the next morning.

AT&T ought to refund the $36 activation fee it charged customers.

I had mentioned the activation process in today's column but it was cut when we trimmed it for length. It also seemed like a predictable anomaly -- hordes of people were all registering at once, and I'd mentioned earlier in the blog that AT&T's retail system was bogging down in the rush.

Now the question is whether the system can handle the ongoing and presumably steadier flow of new customers. We'll have to see what happens after the next big batch is delivered to people who didn't get them in stores Friday.

Goldman still expects Apple stock to hit $135, despite concerns about the activation process. From its note:

If not resolved as iPhone sales ramp, early support issues with AT&T could degrade the overall user experience with the phone and slow sales.

There was a surprise for people who waited in line for hours to buy an iPhone at the AT&T store on Capitol Hill - you couldn't get one unless you also bought a minimum of $50 worth of accessories.

People in line found out when it was loudly (and profanely) disclosed by a few of the first buyers when they emerged from the store after 6 p.m.

Everyone still seemed happy and excited about the new gadget, but the bundling and the slow checkout process toned things down a bit. I saw a few tense jaws as people waited for the bogged-down systems to approve their unexpectedly full shopping bags.

The clerks said you had to buy a case and a car charger. The cheapest case was $19.99 and the cheapest charger was $29.99.

I protested, and the clerk had a ready response. The case is "ultimately going to protect your phone" and "you'll want a backup charger,'' which sounds ominous.

She also confirmed that I can bring them back for a refund within 14 days, which is absolutely going to happen.

Was it really worth the extra bucks to dampen the mood? It seems to me that the surprise bundling will cost AT&T some good will with all these new customers.

Altogether it cost me $706.74 to get out of the store with an 8 gigabyte iPhone. Next I have to activate the phone and choose between AT&T service plans that range from $59.99 to $219.99 a month.

I joined the line at about 3 p.m. and was 19th. The first batch of people went in right at 6 p.m. (a security guard in a suit let people in a few at a time as spots opened up), but the purchasing was going slow and I didn't get in until 7. The process sent you to an adviser/greeter doing demos while you waited for a salesperson to become available. That took another five minutes, and I finally got out of the store at 7:15.

The device feels a bit like one of those old lighter-fluid fueled chrome handwarmers. I'll write more after I've fired it up.

For people wanting to buy one immediately, the Capitol Hill store had about 100 phones and when I left it sounded like it would all be taken by the people who had waited in line.

You can go to the stores until 10 tonight and through the weekend, but you'll probably have to place an order and have the phone sent to your house. They'll take about three days to arrive, according to the clerks.

It will be awhile before AT&T stores, or at least the one I visited, will have more iPhones to buy and carry out. There are more in the warehouses, but they are going to be sent first to the people placing orders for phones to be delivered. After those orders are fulfilled, the stores will get more stock, a clerk told me. Maybe next week, maybe later?

If you don't have one by now, don't be sad. You've got a little time to shop around and choose whether or not you buy the extras.

At the corner of Broadway and Pike, where about 40 people are waiting outside an AT&T store to buy iPhones, a woman with dreadlocks and tatooed ankles showing beneath a vintage skirt, walked by pushing an old 10-speed bike.

"Are you guys waiting in line for a phone? That's weird,'' she said.

Then she hollered at the top of her lungs: "I love geeks!"

For the record, they're not all guys in line, but mostly. I wonder if I'm seeing an accurate reflection of the demographic of early iPhone buyers.

Of the 40 or so people in line, most are white guys between the ages of 25 and 45 and more than a few are wearing jeans and black shirts, just like Steve Jobs.

(I'm wearing a hot purple raincoat I bought at a used clothing store around the corner on Broadway for $5; I wasn't prepared to be out in the weather, and it was that or a burgundy Member's Only jacket for $16.)

Approximately 10 of the 40 are women and maybe eight are black or Asian. There's also a chihuahua.

The word from management is there are more than enough phones -- even 8 gigabyte models -- for the assembled crowd.

An AT&T guy just carried in a stack of Domino's pizzas that they'll munch during the 4:30 p.m. to 6 p.m. closure when they'll prepare for sales to begin at 6.

That's just crazy when you're a block away from Via Tribunali.

A few commenters suggested last week that UW technology integration architect Tony Chang be flayed for sharing information about developing iPhone applications, but it's not going to happen.

Chang caused a minor flap last week when he shared information from Apple's recent developer conference. After being told that the information was secret, the UW removed the blog post, but not before it was spotted.

There were no repercussions. Chang's job is safe, and Apple hasn't said anything to the UW about the transgression, according to Chang's boss, Oren Sreebny, executive director of the school's emerging technology group.

Sreebny said the positive outcome is the group learned to be more circumspect on its blog.

I was glad Chang made the post not just because he shared timely information gathered on the public's dime, but because it introduced me to the emerging technology group.

It's a three-person unit started in January to look at upcoming technologies and help the school's computing and communications IT group prepare and strategize.

Sreebny said they're looking "just over the horizon at what's coming soon that's likely to be useful in our environment."

The group is helping push out the campus wireless network, exploring online services and studying whether the school ought to create its own social networking service.

It's also monitoring hardware needs. Recent surveys indicated that about 20 percent of faculty and staff are using Web capable devices such as smartphones and Blackberries, a number that Sreebny expects to grow to more than 50 percent within two years. Student usage of Web capable devices is lower and probably limited by cost.

As for computer usage on the campus, the group found that about 20 percent of the faculty uses Macs and even fewer students use them. Students are price sensitive, which is also why Sreebny's not expecting a huge takeup of the iPhone at the school.

Sreebny said that while students may have laptops and wireless network access, they often opt to leave the computers in their rooms rather than lug them around.

In the first reviews out of the gate, the iPhone received somewhat mixed reviews from the two highest profile Apple fans in the country.

Walt Mossberg, the Wall Street Journal's influential columnist and avowed Apple fan, called the iPhone a "breakthrough handheld computer" but said its typing feature doesn't work as well as a BlackBerry.

New York Times' reviewer and Mac enthusiast David Pogue said it's great but also flawed:

As it turns out, much of the hype and some of the criticisms are justified. The iPhone is revolutionary; it's flawed. It's substance; it's style. It does things no phone has ever done before; it lacks features found even on the most basic phones.

Pogue gushed about the screen and the device in general, but his comment about the phone functionality really stood out:

Making a call, though, can take as many as six steps: wake the phone, unlock its buttons, summon the Home screen, open the Phone program, view the Recent Calls or speed-dial list, and select a name. Call quality is only average, and depends on the strength of your AT&T signal.

It looks and feels great, Walt said, but he was critical of the "pokey" AT&T EDGE network. The phone also has built-in W-iFi, Mossberg and co-reviewer Katherine Boehret wrote, "But this Wi-Fi capability doesn't fully make up for the lack of a fast cellular data capability, because it is impractical to keep joining and dropping short-range Wi-Fi networks while taking a long walk, or riding in a cab through a city."

The device is "simply beautiful" and Walt overcame his skepticism about the touchscreen, though it's not perfect:

In general, we found this interface, called "multi-touch," to be effective, practical and fun. But there's no overall search on the iPhone (except Web searching), and no quick way to move to the top or bottom of pages (except in the Web browser). The only aid is an alphabetical scale on the right in tiny type.

There's also no way to cut, copy, or paste text.

And the lack of dedicated hardware buttons for functions like phone, e-mail and contacts means extra taps are needed to start using features. Also, if you are playing music while doing something else, the lack of hardware playback buttons forces you to return to the iPod program to stop the music or change a song.

Keyboard: The virtual keys are large and get larger as you touch them. Software tries to guess what you're typing, and fix errors. Overall, it works. But the error-correction system didn't seem as clever as the one on the BlackBerry, and you have to switch to a different keyboard view to insert a period or comma, which is annoying."

Most interesting to me is how Walt's review focused on the device primarily as a pocket computer.

Also, the concerns about call quality and the touchscreen typing will probably raise enough concern among CIOs that they'll wait before authorizing too many iPhone purchases at their companies.

Although the reviews are generally positive, the niggling concerns of Mossberg and Pogue could also make a lot of consumers think twice before making the big investment that an iPhone requires.

Mac priest Leander Kahney threw a bone to bloggers desparate for iPhone tidbits, saying on Saturday that fanatics are hiring people through Craigslist to wait in line for iPhones.

CNET amplified the story today with a sample of iPhone line ads.

I'm not sure if it means anything, but there's practically none of that silliness happening in the Seattle area.

Probably motivated by Kahney's post, someone in Olympia posted an ad on Sunday saying they would wait in line, with bids for their services starting at $150.

Apparently there wasn't a lot of demand. Today what looks like the same person posted another ad offering to wait in line for a flat $120.

If the price keeps falling at that rate, the iPhone line waiting service will only cost $30 on Thursday and nothing on Friday when the phone actually goes on sale.

I e-mailed the person to get more information but haven't heard back. Maybe he or she is already out at University Village, where there's a handy water feature outside the Apple Store for iPhone campers to perform their toiletries.

Launch lines are feeling less like a sign of grassroots enthusiasm and more like a predictable component of major consumer product launch marketing plans.

Remember how Krispy Kreme openings used to get big lines? The company whipped up the frenzies and staged the events, before its stock crashed.

More recently we saw game console campouts stoked by giveaways, celebrity appearances and the promise of quick resale profits on eBay and Craigslist. The last one I covered was actually at University Village, for the PlayStation 3.

I'll bet the iPhone lines will be more subdued because there's not the same opportunity for gadget flippers. It will be harder, more expensive and riskier for people to resell the phones since they're sold with a two-year service plan.

For a great history of touchscreen computers and devices, check out the illustrated history prepared by Bill Buxton, a Microsoft researcher I interviewed for today's column on the iPhone's interface.

I didn't do justice to the research and broad comments provided by Buxton or the University of Washington's James Landay or Stanford's Scott Klemmer, but they all have Web sites with more information on the subject.

The University of Washington emerging technology group briefly posted details from an Apple developer conference session on writing Web content for the iPhone, but took it down out of concern it would violate Apple non-disclosure rules.

That horse is out of the barn, however. Computerworld caught wind of the posting and published highlights today and a link to the material is still in Google's cache.

I hope the UW didn't remove the blog entry because it had sassy comments like this:

"No flash and No Java of course this means no Microsoft Silverlight"

Since it's already out in the wild, I might as well share the rest of the entry here:

Apple WWDC iPhone Development, Tony Chang, 18 Jun, 2007, published in Uncategorized

The intro slide for this session is called Designing Web Content for the iPhone. Notice it doesn't say developing iPhone client applications for the iPhone. So the first thing the speaker says is that developing for the iPhone is easy as cake, just develop for Safari. A web browser that no one uses and hasn't been in the wringer like IE7 or Firefox in terms of security vulnerabilities. Steve Jobs touts that Safari is the fastest web browser in the world by running a precanned demo of one website.

So what does the iPhone offer for websites. Lets take a look at what Apple has to say:

1. developing websites for the desktop and in most cases it will just work on the iphone
2. browsing the web with iphone is easy thru Safari
3. scroll using two fingers
4. double tap for zoom in on content
5. the page view feature lets you look at multiple websites and documents by scrolling thru them one after another
6. full support for PDF

The speaker goes thru a bunch of popular websites to show that many websites are already good to go for the iPhone so ideally only limited tweaks are required. However I dont know if those sites have already been prepped to work well with iPhone prior to the WWDC.

Pageview is a feature in iPhone to help you view webpages and documents. Since the iPhone does not have windows it uses page view to allow users to see the content.

The speaker then talks about Safari and its capabilities.

-- it supports all latest internet standards
- WHATWG
- HTML5
- 10MB max html size for web page
- Javascript limited to 5 seconds run time
- Javascript allocations limited to 10MB
- 8 documents maximum loaded on the iPhone due to page view limitations
- Quicktime used for audio and video

No flash and No Java of course this means no Microsoft Silverlight

Good design practices for iPhone:
- separate html and css
- use well structured and valid html
- size images appropriately dont rely on browser scaling
- tile small images in backgrounds
- dont use large backgroung images
- avoid complicated framesets, better yet dont use framesets at all
- iPhone supports both EDGE and WiFi. EDGE pipe is smaller then WIFI pipe so think about bandwidth when developing.
- XHTML mobile documents supported
- stylesheet device width:480px
- apply different css for the iPhone. For example displaying a one column page for iphone vs a 3 column page on a desktop.
- there are no scroll bars or resize knobs. the iphone will automatically expand the content
- framesets
- avoid them if you can
- scrollable frames are automatically expanded to fit the content
- frames exploded to the full scale and then fit to the screen

Safari User Agent for iphone:

Mozilla/5.0 (iPhone; U; CPU like Mac OS X; en) AppleWebKit/420+ (KHTML, like Gecko) Version/3.0 Mobile/1A538a Safari/419.3

Without any addition coding on your website the iPhone automatically offers these features to your website.

- double tap for zoom in
- one finger as a mouse used to
- pan page
- press and hold to display the information bubble
- two fingers as a mouse used to
- pinch content to shrink - zoom out
- pan page
- scroll wheel events
- new telephone links allows you to integrate phone calls directly from your webpage. remember this is only on safari.
- built in google maps client for integrated mapping from your website

Encode content for iPhone: (Sorry guys I know almost nothing about video and audio stuff so I tried my best just to jot down stuff verbatim but it might not make sense to everyone)

H.264 baseline profile level 3.0 up to 640 x 480 fps

bitrate
- with iphone content can arrive over net
- bitrate determines whether playback will stall
- iphone screen size 480 x 320
- encode move size 480 x 360

Exporter encoding
- Move to iphone
- Movie to iphone (Cellular)
- Movie to ipod
- Movie to MPEG-3

Reference movies types
- list of urls for your movie on your website and create a decision tree to pick them
- detect the bitrate and choose capabilities of the device

- iphone with media playback requires byte range support from http server
- supported by most http 1.1 servers
- also known as content-range or partial-range support

May need MIME types for .mp4, m4v, .3gp

Embedding Video into webpages

- embedding quicktime on webpages link to article on apple websites

Links to movies on a web page will take users directly to video full screen playback

- Use new quicktime exporters
- provide low-bitrate versions of content
- use reference movies to auto stream best verson
- setup your media server to support byte-range required
- use poster jpegs
- provide direct links to podcast episodes

Here is some information from David Cox to shed some light on what this means for UW servers.

There is a little more info about the requirements of the iPhone, and it has me thinking about an old issue.

It looks like the iPhone will NOT support streaming media from the streaming media servers (at least at launch). They will require the media to be installed on HTTP accessible servers (such as Homer or Dante). But I don't think Homer or Dante are going to work very well under their current configuration.

The problem is that these systems do not know the mime type for most of the file types that the iPhone will be able to play. I am guessing that the iPhone will have the same issue that Safari has when this happens. Safari does not assume that it knows better than the server when it comes to file types. If the server says that a mimetype is not known, then Safari will not try to figure out what to do with the file extension. Rather, it will try to show the data as a text file, or download the file, depending on what the servers "default type" is (for homer and dante, it shows the links as big text files).

The iPhone (as well as Safari on both Mac and Windows) should be able to handle .mov and .mp3 files on homer and dante, as the mimetypes seem set for those media files. But .mp4 .m4a .m4b will probably result in a long wait followed by a large page of text being given to the client.

When I have mentioned this in the past, the feeling was that the Streaming Media Servers were the place for such files, and that the HTTP servers were NOT the place for such files. I can fully see the tech reasons for this, but I wanted to point out this new data point (a high profile media centric device that will NOT work with our media streaming servers) before we see them in the wild.

As a quick work around, users can create .htaccess files to provide support for these mime types on a site-by-site instance (as people have had to do to support individual download options for 'non-mp3′ podcasts hosted on depts/staff/student accounts for a while now). It is not ideal, but a good work around :).

CARLSBAD, Calif. -- Here's a sample of Wednesday night's chat between the PC pioneers, provided by the D conference organizers.

More videos of their appearance are here, along with the D blog of the event.

CARLSBAD, Calif. -- Answering one of the big questions about the iPhone that's arriving in late June, Apple CEO Steve Jobs said the company will allow third-party software developers to write programs for the device later this year, after the company sorts out the balance between securing the phone and opening it up to developers.

"Sometime later this year we will find a way to do that,'' he said.

But in a conversation with Wall Street Journal tech columnist Walt Mossberg, Jobs didn't provide any more specifics about when the phone will be released, other than to reiterate "late June."

The chat also showed off Mossberg's influence. He jokingly said he heard that Apple has a new phone. Jobs said "I'll send you one." "Thanks," the columnist replied.

Later, Mossberg asked if Apple will turn away from building computers as it pushes further into consumer electronics. Jobs said the company remains "totally" committed to its computer business.

Jobs also declined to say anything about when and how Apple will next overhaul the iPod line. His vague comment could have applied to the iPhone -- which Apple considers to be its latest iPod as well as a phone and Internet device:

"All I should really say is that were working on the best iPods that weve ever worked on and they're awesome.''

The phone made a brief appearance when Jobs pulled one out of his pants pocket and held it up for a few seconds, but he didn't turn it on or give a demonstration. Nor did he announce any new features.

Jobs did talk up its three key features, particularly the high-quality browser. That's probably a preview of the marketing theme since it echoed the way AT&T's point man on the iPhone, Glenn Lurie, described the device to me last week.

Jobs also shared his perspective on why AT&T (then Cingular) took a leap of faith with Apple on the phone project and agreed to partner on a device it hadn't seen yet. He thinks the company made the deal for two reasons -- first, "music on phones hasn't been successful so far" and, second, because it wanted to find a way to improve the Internet experience with phones and make better use of its high-speed network.

"They along with everyone else in the business have spent or are spending a fortune to build these 3G networks," Jobs said. "So far there ain't a lot to do with them. ... People aren't signing up to use bandwidth."

So that's why AT&T will require iPhone buyers to sign up for unlimited data plans, as Lurie told me last week.

But Sling Media Chief Executive Blake Krikorian called Jobs on his 3G reference. The iPhone actually works on a slower network, AT&T's EDGE, that's considered 2.5G, he pointed out.

Jobs replied by pointing out the phone also has Wi-Fi, which is faster than EDGE, and the phone automatically switches to Wi-Fi when in range. He also noted that there are lots of Wi-Fi networks around, especially in Palo Alto, Calif., where he lives.

"Some of them are people's personal ones you can just take a ride on," Jobs said, adding that "there's like 10 times more Wi-Fi out there than even I thought there was."

Hmmm. I guess that's one option some people may take. (Jobs' other options weren't discussed.)

Mossberg repeatedly joked about delays in Apple's upcoming "Leopard" operating system, but Jobs never took the bait and said anything about the timing or cause of delays.

Indirectly acknowledging Apple TV hasn't caught the world on fire yet, Jobs described the device for streaming media from a computer to a television as a "hobby" instead of a real business for Apple.

"The iPod started this way. The iPod's a really great phenmenon, today it's a great business today, but it started off a lot smaller, it started off feeling like this."

A new feature he announced today was nifty but probably won't have people rushing out to buy Apple TVs. Jobs showed a new "YouTube" menu item that lets people search, select and play videos from the Google-owned video-sharing site.

Mossberg asked why Apple didn't include a video browser so users can play content from other online video sites. Jobs said he thinks "a normal Web browser is not what people want to see in living room."

I wonder if the feature design was influenced by Apple's growing relationship with Google, whose chief executive sits on Apple's board and whose Web applications are among the first non-Apple programs that will run on the iPhone.

The obligatory nasty Microsoft comment came when Mossberg pointed out that the free iTunes jukebox is one of the most widely used applications on the Windows platform.

Jobs reply:

"We've got cards and letters from lots of people saying iTunes is their favorite app on Windows. It's like giving a glass of ice water to somebody in hell."

Mossberg's comeback:

"There's that humility, that Steve Jobs humility."

Offsetting that a little bit was Jobs' acknowledgement that he sometimes reads "The Secret Diary of Steve Jobs," a parody blog that pokes fun at his style and personality.

"I have read a few of the fake Steve Jobs things lately and I thought they were pretty funny,'' he said.

Here are more edited Q&A's from my conversation last week with Glenn Lurie, AT&T president of national distribution and point on the iPhone partnership.

Q: Will the iPhone be competing not just with phones but Internet devices like the Nokia tablet and Ultra Mobile PCs?
A: I think our customers will tell us. With every device like this that's a game-changer -- and it's well advanced of anything that's on the maket -- I think we're going to find out how people decide to use it. We have our own ideas and our guesses, but as customers buy this device, experience it, they're going to make those decisions as to what it is and we'll learn as well.

Q: The iPhone seems to be raising the bar on interface design. We're going to get a lot of exciting devices over the next year, chasing the iPhone or coming out simultaneously.
A: You're absolutely right. We know this from the past. Whenever somebody brings out something new or something that is a leapfrog it causes more innovation from everybody else. I remember when the Motorola StarTac came out. It was 2000, it was this small flip-phone. I actually have one in my office, the original one. Well you picked that up and said, "Oh my gosh." At that time it was a leapfrog. What did the other manufacturers do? Start making small, tiny little flips to try and catch up. In this case, what Apple's done is going to raise the bar, it's going to cause innovation throughout the industry which we all know is terrific for everybody.

Q: Can your network support a subscription service that would stream music to the iPhone?
A: Yes, but the device that's being launched is not that, that's not where we're going. This is going to pull music on just like an iPod does.

Q: You'll sync music from a computer.
A: Yes, it's the same process you have today with an iPod Nano or Video or whatever. That's the plan. Obviously, our networks can do lots of things as we launch HSDPA, 3G, etcetera, but with this particular product it's going to be focused to work on our EDGE network, which is going to be great. All the music side stuff is going to be tethered.

Q: You've received some flack for choosing the EDGE network for the iPhone.
A: I think it's interesting. Our network is terrific, the EDGE network is phenomenal. It's the largest high-speed network in the country. Obviously, we also have this HSDPA network that's growing as well, but this gives customers full coverage nationwide. The applications work terrific on EDGE. Like I said, when people get it in their hands and use it they will be very, very excited about how it works.

Q: The iPhone has other radios, including Wi-Fi. How will that work out?
A: Wi-Fi is a great partner for our network. Obviously, we're part of AT&T, which is the largest seller of broadband services in the country; we see some synergies there. You walk into your home, this goes onto your Wi=Fi network at home for data -- what a great experience for the customer. On the same front, when you walk out of your home, you want that contiguous coverage, you'll be on our EDGE network on the data side. On the voice side, it's always on our network.

Rex Sorgatz / Fimoculous.com

The iPod Amnesty bin at Zune headquarters in Redmond.

The source of the now-famous photo of the iPod Amnesty recycling bin at Zune HQ in Redmond?

It was MSNBC.com's Rex Sorgatz, who took the photo last week and casually threw the image onto Flickr. He didn't even mention it on his Fimoculous blog until today, after it had been discovered and spun into a blogosphere hissy fit.

Rex responded on Flickr to an outraged Apple fan who decried the waste, the sacrilege, the travesty:

I think it's more of a joke than you're suggesting. Microsoft isn't actually dumb enough to think that people are going to drop their iPods in the bin -- it's a way to show they have a reasonable degree of levity.

Some clever traders apparently used Engadget, instead of the New York Post, to jigger a stock -- in this case Apple's, whose market cap dropped as much as $4 billion at one point today.

The AOL-owned gadget blog/magazine reported a "leak" saying that the iPhone and Leopard were delayed, but that turned out to be a hoax. Michael Arrington noted that the fake news came on top of real news that Amazon.com's going after iTunes' download business.

It will take more than a bunch of strikeout marks and a blog update for Engadget to get past that boo-boo.

UPDATE: Engadget explained the backstory here and said it has learned "a very serious lesson."

Apple must be paying attention to Seattle-based iLike, a "social music discovery" service built largely by ex-Microsoft engineers.

Lots of people are starting to use iLike's sidebar for iTunes. It samples music that you're listening to and suggests similar tracks that you might like, offering both free tracks from garageband.com and songs you can buy from iTunes and other online retailers.

Yesterday iTunes debuted a new feature called "If You Like ..." in its iTunes newsletter. Apple describes it as "a new iTunes feature that highlights a specific song and finds an array of similar tracks."

But instead of using technology to analyze what you're listening to, as iLike does, Apple is pitching a cluster of pre-selected songs. Tuesday's feature suggested several songs that fans of British crooner Amy Winehouse would like.

Hadi Partovi, iLike's co-founder, took the high road when I asked for his take:

"I guess I'd say imitation is the sincerest form of flattery, and especially flattering from somebody we admire as much as Apple."

Microsoft and Apple have come up with a new Vista patch so iPods won't get scrambled when using Vista's "safely remove hardware" controls.

Apple had urged people to hold off buying Vista after the bug surfaced, although Apple was late making Vista updates to its software. Microsoft then issued a patch in March.

That's all water under the bridge. Tuesday, an updated "final" patch that both companies worked on was made available, according to a ComputerWorld report pointing to an announcement on the Vista team blog.

The patch will be delivered to Vista users via Windows Update on May 22, or you can download it now from this section of microsoft.com.

Today's column talks about how AppleTV, Xbox and consumer electronics makers are bumper to bumper in the race to connect televisions and the Internet. But maybe we should keep an eye on Kristyn Heath instead.

I wonder if the 16-year-old San Francisco inventor, or some other unknown tinkerer, will figure out the best way to digify the home. She's built a great gadget for sharing music on an iPod, at least according to this Technology Review article that mentions Microsoft program manager Mike O'Malley.

It's already time for Heath to create a workaround for the AppleTV. Here's a note I received today:

Brier,

Read your column on AppleTV. I bought one last week and have been attempting to use the device as a media hub, primarily for DVD title management.

My wife and I are movie buffs and have a rotating stack of DVDs we watch regularly. With the AppleTV we thought we could RIP our DVDs to a hard disk similar to how we managed (and then abandoned) our CD collection to mp3.

In order to transcode my DVD movies I need to essentially break the law by using fringe software and techniques on content I have legitimately purchased. Unless the movie industry moderates their copy protection policies or Apple adds the ability to at least record ATSC, the AppleTV will probably remain a niche device.

GETTY IMAGES

The AppleTV grabbed a good deal of attention when it arrived on the market last week.

An intriguing comment in response to Tuesday's AppleTV post:

"You will most likely see a new Xbox 360 with a 120gb hard drive and HDMI out next month."

I think the commenter is a Texas musician -- great to hear from him, some of my favorite music comes from that state -- but who knows? He may have an inside line. Or maybe he's just an optimist.

An Xbox refresh was going to happen sooner or later, since Microsoft is pitching the Xbox 360 set-top box. AppleTV's got to be making it sooner.

I've asked Microsoft for more info.

UPDATE: In the meantime, a helpful reader in Woodinville pointed to a few sites that earlier predicted a special edition 120 gig/HDMI Xbox code-named Zephyr may arrive in April for $479, followed by those features becoming standard in late summer. Still waiting for confirmation though.

Interesting to get an update on the Xbox video downloading service from the team's PR agency today, just as Apple launches its TV device. (You can order AppleTV now for $299, with three- to five-day shipping).

The similarly priced gadgets really will compete, taking the Apple vs. Microsoft fight to the living room.

Both are boxes that will stream video and other media from a PC to a television.

Xbox didn't mention Apple's device in the news release, but it was clearly one of those "anything you can do I can do better" things. Its bullet points:

-- Within four months of launching, Xbox Live has become the number one online distributor of television and feature film content in the living room where it's most easy for consumers to access.

-- In the same four months, the service has quickly become the number two online distributor of television and feature film content, second to iTunes.

-- Is currently the ONLY online distributor of major feature films and television programming in high definition (HD) resolution.

-- The service is a breakout success, with double-digit, month-over-month growth since launching.

-- Monthly downloads from Xbox Live went up 400 percent since the service launched in November.

On the other hand, Apple's device seems to have a simpler interface than the Xbox blades. But then Apple's interface looks awfully similar to the Media Center.

Apple also gave its set-top box a bigger hard drive (40 gigabytes vs. the Xbox's 20) and an HDMI port.

I'll bet we'll now be seeing a bigger drive and HDMI on Xbox (the 360.2?) before the holidays.

A reader saw the headline on Monday's viaduct rant and thought I was going to write about running Vista on a Mac. The email:

"I only read the first few words of your title and thought you were going to talk about how a lot of people are now buying Apples and running XP/Vista in Parallels V.M."

Sorry to disappoint. Great suggestion for a future column.

On Monday I asked, indirectly, who will follow Steve Jobs and become the industry's next thought leader?

Eastside reader Jean-Jacques Dubray, who has met both Jobs and Bill Gates, predicts it will be the Google guys, Larry Page and Sergey Brin. He said they're the logical choice since Web 2.0 has moved the center of gravity from clients to the servers, where the content lies.

AP

The Google guys: Larry Page, left, and Sergey Brin.

"We have entered another area, the next 20 years will see giants emerge and eclipse the desktop boys,'' Dubray said.

That's a pretty good guess.

I was wondering if we'd see a superstar rise out of Korea, China or India, or maybe even Scandinavia, but that may take another generation or two.

Any other predictions?

Feedback on the Steve Jobs column has been interesting. Here's an example:

"I wish we could replace you with someone more like Steve. Your an idiot with a head too big for your pea of a brain. Your writing is full of poor opinions based on gossip. 90% of what is written on these subjects by the media contains very little material facts. Their aim is get attention (PERIOD)."

For those who care deeply about this issue and want to learn more, here are some links to additional material. I see a cavalier attitude toward authority here, but everyone's welcome to his or her opinion.

On trademark protection, Apple repeatedly called Cisco's claims to the iPhone trademark "silly." That was after Jobs announced the iPhone, knowing that he hadn't secured the trademark, prompting Cisco to engage the court system.

I didn't have space to go into this, but it's not the first time Jobs has been casual about intellectual property. Apple shareholders probably didn't think it was silly that the company had to pay $100 million to Creative after using the Singapore company's interface design on the iPod.

Apple invoked accounting standards to charge for an upgrade. The Wall Street Journal followed up with a story quoting the former chief accountant of the SEC and a member of the Financial Accounting Standards Board, which is the authority on standards.

Here's a quote from the story:

"GAAP doesn't require you to charge squat," says Lynn Turner, managing director of research at Glass Lewis & Co. and a former chief accountant of the Securities and Exchange Commission. "You charge whatever you want. GAAP doesn't even remotely address whether or not you charge for a significant functionality change. GAAP establishes what the proper accounting is, based on what you did or didn't charge for it."

Separately I asked FASB for an opinion. It wouldn't comment on a specific company but its communication director, Gerard Carney, said "I can tell you that, to be certain, GAAP does not require companies to charge customers. Further GAAP does not tell companies how to run their business. GAAP requires you to report transactions to users of financial statements."

Regarding the securities regulators, here's the John Markoff story where Jobs says "everything is fine." Here is the Wall Street Journal story that appeared two days later, asserting that the case was still being actively investigated. Here's an earlier story on the options investigation.

Whether or not Jobs is personally implicated, he's at the center of this and, as chief executive, bears responsibility for the culture and behavior of his company.

Apple's European legal troubles haven't received a lot of coverage in the U.S. but Jobs' Feb. 6 letter ("Thoughts on Music") is raising their profile.

I don't think the column needs amplification, and I didn't want it to be read as an Apple vs. Microsoft thing. But today I learned about another way that Jobs was probably repurposing his European legal work.

The letter also skewers Microsoft, which made a big announcement today about its new DRM technology. He surely knew the announcement was coming, and it's a long tradition in the tech industry to upstage competitors.

Mobile devices are one of the big battlefields for DRM, now that phones are becoming more like iPods. I'm sure even Jobs would agree that Microsoft's DRM also has more capabilities than Apple's FairPlay. Today Microsoft extended its lead there with a new mobile DRM suite called PlayReady that it announced at the 3GSM conference.

Microsoft's statement said PlayRead "supports a broad spectrum of business models, such as subscription, rental, pay-per-view, preview and super-distribution, for many digital content types -- music, video, games, ring tones and images. It also goes beyond Windows Media audio and video (WMA.WMV) and also supports audio/video formats like AAC/AAC+/HE-AAC, and H.264."

Already Microsoft's DRM enables companies like Yahoo! and Napster to offer subscription music services, where consumers pay a monthly fee for unlimited access to their music catalogs. Microsoft also licenses its DRM to other companies, an approach that Jobs rejected in the letter.

I don't like either companies' DRM system. They're both designed more for content owners than consumers. Their battle also sheds more light on Jobs' letter: Microsoft is getting creamed in digital music, where its biggest toehold is DRM. What did Jobs call for last week? Getting rid of DRM.

The column also said that Jobs was positioning himself as an instigator with the letter. Here's the latest on record companies working on their own toward DRM-free music sales, and an overview story from a music industry conference last month.

Feedback on the Steve Jobs column has been interesting. Here's an example:

"I wish we could replace you with someone more like Steve. Your an idiot with a head too big for your pea of a brain. Your writing is full of poor opinions based on gossip. 90% of what is written on these subjects by the media contains very little material facts. Their aim is get attention (PERIOD)."

For those who care deeply about this issue and want to learn more, here are some links to additional material. I see a cavalier attitude toward authority here, but everyone's welcome to his or her opinion.

On trademark protection, Apple repeatedly called Cisco's claims to the iPhone trademark "silly." That was after Jobs announced the iPhone, knowing that he hadn't secured the trademark, prompting Cisco to engage the court system.

I didn't have space to go into this, but it's not the first time Jobs has been casual about intellectual property. Apple shareholders probably didn't think it was silly that the company had to pay $100 million to Creative after using the Singapore company's interface design on the iPod.

Apple invoked accounting standards to charge for an upgrade. The Wall Street Journal followed up with a story quoting the former chief accountant of the SEC and a member of the Financial Accounting Standards Board, which is the authority on standards.

Here's a quote from the story:

"GAAP doesn't require you to charge squat," says Lynn Turner, managing director of research at Glass Lewis & Co. and a former chief accountant of the Securities and Exchange Commission. "You charge whatever you want. GAAP doesn't even remotely address whether or not you charge for a significant functionality change. GAAP establishes what the proper accounting is, based on what you did or didn't charge for it."

Separately I asked FASB for an opinion. It wouldn't comment on a specific company but its communication director, Gerard Carney, said "I can tell you that, to be certain, GAAP does not require companies to charge customers. Further GAAP does not tell companies how to run their business. GAAP requires you to report transactions to users of financial statements."

Regarding the securities regulators, here's the John Markoff story where Jobs says "everything is fine." Here is the Wall Street Journal story that appeared two days later, asserting that the case was still being actively investigated. Here's an earlier story on the options investigation.

Whether or not Jobs is personally implicated, he's at the center of this and, as chief executive, bears responsibility for the culture and behavior of his company.

Apple's European legal troubles haven't received a lot of coverage in the U.S. but Jobs' Feb. 6 letter ("Thoughts on Music") is raising their profile.

I don't think the column needs amplification, and I didn't want it to be read as an Apple vs. Microsoft thing. But today I learned about another way that Jobs was probably repurposing his European legal work.

The letter also skewers Microsoft, which made a big announcement today about its new DRM technology. He surely knew the announcement was coming, and it's a long tradition in the tech industry to upstage competitors.

Mobile devices are one of the big battlefields for DRM, now that phones are becoming more like iPods. I'm sure even Jobs would agree that Microsoft's DRM also has more capabilities than Apple's FairPlay. Today Microsoft extended its lead there with a new mobile DRM suite called PlayReady that it announced at the 3GSM conference.

Microsoft's statement said PlayRead "supports a broad spectrum of business models, such as subscription, rental, pay-per-view, preview and super-distribution, for many digital content types -- music, video, games, ring tones and images. It also goes beyond Windows Media audio and video (WMA.WMV) and also supports audio/video formats like AAC/AAC+/HE-AAC, and H.264."

Already Microsoft's DRM enables companies like Yahoo! and Napster to offer subscription music services, where consumers pay a monthly fee for unlimited access to their music catalogs. Microsoft also licenses its DRM to other companies, an approach that Jobs rejected in the letter.

I don't like either companies' DRM system. They're both designed more for content owners than consumers. Their battle also sheds more light on Jobs' letter: Microsoft is getting creamed in digital music, where its biggest toehold is DRM. What did Jobs call for last week? Getting rid of DRM.

The column also said that Jobs was positioning himself as an instigator with the letter. Here's the latest on record companies working on their own toward DRM-free music sales, and an overview story from a music industry conference last month.

A blogger (in New Zealand?) floated the possibility, based on an assumption that Apple' would continue growing 25 percent to 30 percent a year.

Mathew Ingram at the Globe & Mail explored the scenario.

I've been getting a hard time from a few commenters over the Zune vs. iPhone headline on a post yesterday.

I responded in the comments a little too soon. I wish I'd first seen the Zune trademark paperwork dug up by blogger Long Zheng and called out by Mary Jo Foley.

Microsoft asked that the Zune trademark apply not only to multimedia players but also to "entertainment and communications devices," including cellphones.

Zune services described in the application include most everything on the iPhone feature list and more:

telecommunication services; electronic transmission of data files, documents, music and videos over the Internet and wireless networks; electronic mail services; web messaging services; text messaging services; paging services; streaming of audio and video material over the Internet and wireless networks; wireless voice mail services; voice-activated dialing services; providing wireless access to computer networks and the Internet; cellular telephone services; and audio, video and television broadcasting and transmission

It's not a surprise that Zune phones are coming. I reported on this in September.

But it's fascinating to see the array of potential services covered by the trademark, which was processed by the patent office yesterday.

Who knows what form Zune phones will take -- a slab touchscreen would seem lame at this point -- but Microsoft is clearly thinking about hybrid phone/media players similar to the iPhone.

This isn't rah-rah Microsoft stuff. The company goofed by not getting out there sooner with a multifunction device, letting Apple stay ahead. It's also going to be sticky if Microsoft goes head to head with the phone makers that are warming up to Windows Mobile.

This should also be good news to Mac fans -- not because they want a Zune phone, but because competition from Microsoft could force Apple to make the iPhone more affordable and flexible with its phone platform.

The influential Wall Street Journal reviewer called Windows Vista it "a worthy, but largely unexciting, product."

It's not as rosy as Walt's Office 2007 review, but it's not a pan, either.

After months of testing Vista on multiple computers, new and old, I believe it is the best version of Windows that Microsoft has produced. However, while navigation has been improved, Vista isn't a breakthrough in ease of use. Overall, it works pretty much the same way as Windows XP. Windows hasn't been given nearly as radical an overhaul as Microsoft just applied to its other big product, Office.

Much of the review lists features that are also available on Mac OS X. He also notes the hardware requirements, as I did in my November Vista preview.

That's the latest word from Microsoft, which passed along NPD sales data showing the Zune accounted for 10.2 percent of sales of hard-drive-based portable music players in December.

Robbie Bach said as much at CES but the release adds a bit more detail, and some rah-rah about Zune reaching its goal of becoming "the clear number two seller this holiday behind an entrenched competitor."

"No other single device has been able to achieve these kinds of results in a six week launch period and we remain on track to exceed one million units in sales by the end of the current fiscal year (ending June 30, 2007),'' it said, then reiterated that Micrsoft has a "thee-year plan to solidify our presence within this market."

At first I wondered why Microsoft sent out the release, midway between Robbie's presentation at CES and Microsoft's quarterly earnings report on the 25th.

Then I figured out that, duh, it's a counterpoint to Apple's news about a banner holiday for iPod sales.

Not much commentary on the iPod numbers over at the official Zune blogs, yet. I wonder if David will stir the pot as he did with the Forrester iTunes report.

Apple just reported a record $1 billion profit for the quarter that ended in December, but some investors weren't excited about the fine print and the stock bobbled down a bit in extended trading.

Mac sales were up 28 percent by unit, 40 percent by sales.

Sales of iPods were up 50 percent by units, 18 percent by sales, reflecting the broader line of low-end models.

Overall company sales were up 24 percent to $7.12 billion, or $1.14 per share. That blew past expectations of 78 cents per share.

The current quarter may be more disappointing. Apple said it's expecting sales of $4.8 billion to $4.9 billion, and earnings per share of 54 to 56 cents.

Wall Street had been expecting 60 cents during the current quarter.

Apple deflected a bunch of questions from investors about the iPhone, saying more details will be available just before its June launch.

Gene Munster said the iPhone sales forecast -- 10 million units in 2008 -- seems low and asked if Apple's going to be limited by manufacturing capacity.

"It seems like that number should be more than easily achievable,'' he said.

That was the setup on KUOW's "The Works" show last night, where I appeared along with some other guy who writes about Microsoft. KUOW posted a podcast and MP3 replays that will probably work on a Zune.

The show was sort of a farewell to "The Works" host John Moe, who is giving up the show and leaving KUOW on Friday to become a senior reporter with Weekend America.

To help fill the gaping maw left in KUOW's tech coverage, Glenn Fleishman is going to step up his appearances on the station.

On the show, I referenced a Jack Schofield report in the Guardian that pegged the total cost of iPhone ownership at around $3,000. It has interesting comments vetting the estimate.

Schofield's report played off John Markoff's skeptical piece comparing the iPhone with the Mac.

It's interesting how quickly the iPhone hype is being replaced by thoughtful stories raising serious questions about a device that won't even go on sale for another five months.

The hype reminds me of Microsoft's overhyped Origami project, which overshadowed the European equivalent of CES last year. Then the devices turned out to be too big and expensive to take off, at least in their first iteration.

Bloggers have been working themselves up over the best source of Apple news. Maybe it's late-night comedians.

This video seems like a rebuttal to Ferguson. Maybe Conan still feels bad about ripping Bill Gates at CES a couple of years ago.

John Markoff is making the most of his Macworld interview with Steve Jobs, his last perhaps with the Apple CEO.

Putting the iPhone hype in perspective, he points out today that the Macintosh computer:

... was received with the same kind of wild hyperbole that greeted the iPhone this week. But a year later, the shortcomings of the first-generation Macintosh cost Mr. Jobs his job at the company he founded nine years earlier with a high school friend, Stephen Wozniak.

In light of the iPhone's closed appliance-style design, it is worth recounting the Mac's early history because of the potential parallel pitfalls that Mr. Jobs and his company may face.

During the Markoff interview, Jobs also shrugged off the federal investigation of his backdated stock options and blamed the media for distorting the story.

"It's raised questions," he was quoted as saying in Markoff's Wednesday story, "but some of the journalism has been so off the mark. But I know the truth. It's painful to read some of this stuff, but I know it's kind of ridiculous and will pass."

That flip attitude apparently didn't go over well with regulators investigating the options scandal. What may be their response appeared in a Wall Street Journal story today that says the SEC and federal prosecutors are "actively investigating" Jobs' backdated options.

Jobs ought to ask Bill Gates and Martha Stewart what happens when you're flip with the feds.

Craig Ferguson is a funny guy. Too bad we'll never see him as the celebrity talent in any Microsoft launches, skits or promotions:

LAS VEGAS -- The next edition of the new Apple TV product may use ultra wideband radio technology instead of the proprietary 802.11n wireless system used in the device introduced today.

Tzero Technologies, a Sunnyvale, Calif.-based UWB chip maker, has been talking to Apple about using its modules, its senior director of marketing, Matthew Keowen told me at CES today.

Keowen said the technology used in Apple TV lacks the capabilities of WiMedia, but Apple's entry into the market is great for the business.

"I think Apple is going to create a huge amount of interest in wireless video,'' he said. "I think they have an incredibly elegant solution."

But it doesn't distribute full 1080p high-definition.

Tzero's chips support a new standard known as WiMedia that's fast enough to transmit 1080p wirelessly at speeds up to 480 Mbps.

It calls its solution "Wireless for HDMI," referring to the all-in-one HDMI cables increasingly used to connect high-end TVs to receivers and DVD players.

In its booth, Tzero was showing several upcoming devices that stream 1080p content, including a pair of receiver/transmitters from Asus that will sell for about $300 sometime before June. The devices are each about the size of a small cable modem or wireless router, and transmit video signals from any source -- including a computer, set-top box or receiver -- to a TV display.

All these gadgets seem to be interim steps, though, until TV makers start putting these sort of modules directly into their sets. You shouldn't have to buy all these $300 gadgets to make everything work smoothly.

One Chinese television manufacturer, Hisense, announced at the show that it will add use the Tzero modules,but the company is still trying to get top manufacturers such as Sony to use them.

"We are trying to embed our module inside the TV," said Jihyo Chung, an engineer from the company's Korea office.

Keowen estimates that WiMedia devices like the Asus set will be broadly available later this year and televisions with built-in high-def streaming capability will start appearing around the holidays. He expects they'll be widely available in 2008.

LAS VEGAS -- Glad to see Steve Jobs Apple put storage into its new TV device, called Apple TV.

The interface looks especially nice, though Apple's actually playing catch-up here with Microsoft's Media Center controls.

Software is clearly the great contribution that the PC industry can make to consumer electronics. Hundreds of companies here are building nice entertainment boxes and adding all the right storage and connections. But it's hard to find interfaces that come anywhere close to what Microsoft and Apple have done.

Apple TV is also interesting in light of Microsoft's turning the Xbox into a set-top box. If nothing else, Apple's device will also put pressure on Microsoft to hurry up and add an HDMI port and bigger hard drive to the Xbox. Maybe Microsoft is saving the hardware upgrade news for the spring game conferences.

On the other hand, Apple may have goofed by making it stream only 720p video. I think the 720 vs. 1080 debate is a little overblown, but Apple's device may get thumbs down from enthusiasts who have ponied up for the higher quality 1080 displays. Apple's spec sheet is a little hard to read on this point; it says the device works with 1080p displays, but it also says the device only supports 720 video.

A 720 device may become a question mark for all the people getting ready to make the high-def plunge. They'll be less likely to uses Apple's product as a key piece of their setup if it doesn't seem future-proof.

But the Achilles heel of Apple TV may be a business decision Apple made to protect its iTunes franchise. I haven't seen all the details yet, but if the device only streams content that you buy from iTunes, it doesn't have a big future.

Most of the video content people watch is free, or at least part of their cable or satellite service.

Why would people buy a $299 Apple device and pay $1.99 per show to watch the content they already get for free? It's a convenience to download at will from iTunes, but it's an expensive luxury.

That scenario doesn't come close to the price and flexibility of using a Media Center PC, TiVo or hard-drive video recorder that can record TV shows off the air and play them back on a PC or TV.

Apple's insistence on making people buy content from iTunes could make Macs an also-ran in the coming world of broadband digital video. The iMacs could make great TV-PC combo devices if Apple would build in TV tuners and recording software, but they don't. Maybe that was the deal it made with networks and studios to get content for iTunes.

If Apple TV doesn't work with non-iTunes content, it will indeed lead to a revolution --- among Apple fans who will take up pitchforks and demand freedom to use its great hardware to stream and watch whatever they want, without paying extra.

Apple fans are drooling over the iTV device the company is developing to stream movies and music from a computer to home entertainment systems. Details about the device were expected at next week's Macworld show but the latest buzz is that the device may be delayed.

In the meantime, there's a way to stream content from a PC using Nintendo's Wii console, according to Orb Networks, an Emeryville, Calif., company that produces software for streaming digital media around the home.

Orb pointed to a YouTube video explaining the procedure -- basically you download Orb onto a PC, then use the Wii browser to navigate to Orb's Web site and log on there.

It looks like a cool application for the Wii, but it's not the final solution for streaming media, judging from all the clicks needed to find and play a song or video. Here's the video:

The Los Angeles Times has a strong story today on the Steve Jobs stock option flap.

It starts out relating how Apple timed the first batch of options in question to benefit from Microsoft's 1997 investment in the company.

Who, besides the secretive folks at Apple, really knows whether iTunes is seeing a downward trend?

Analysts, fans and skeptics are having a field day with a provocative Forrester report disseminated Monday. It was amplified by The Register, then widely reported by the wire services. The Register is now saying that Forrester is backpedaling under pressure from hedge funds worried about Apple's stock, and comScore chimed in with a rebuttal and defense of iTunes.

What's more interesting to me is the impressive public relations jujitsu by Apple. Somehow, after the iTunes flap pushed down the stock, some key Wall Street analysts got their hands on details of Apple's upcoming iPhone. They've issued a bunch of rosy reports today and the stock has recovered.

So while the zealots scream at Forrester (and us for printing a Bloomberg story on the Forrester report), Wall Street's already moved on and is focusing on how the phone could boost Apple in 2007.

Here are the phone specs, as disclosed by Morgan Stanley and posted by Barron's:

List prices: $599 for the 4 gig; $649 for the 8 gig.
Design: slightly larger than screen size (2.8 x 2.1 inches) and ~0.4 inches thick, which would be wider than a Nano, thinner than the iPod with video. On-screen virtual click wheel.
Material: Metal, in multiple colors: Black, white, silver, maybe others.
Capacity: 12 million units in calendar 2007.
Carrier partner: Cingular in the U.S.
Functionality: 3 megapixel camera, MP3, video. E-mail and calendar functions unconfirmed.

Manufactuer: Foxconn
Application/Media processor: Samsung
Camera module: Foxconn
Case: Foxconn
Baseband: Infineon (IFX)
RF Transceiver: Infineon
Bluetooth: CSR
Wi-Fi: Marvell (MRVL)
Memory: Samsung primary; Toshiba secondary supplier
Battery: Sony, others
O/S: Apple. Duh.
Display: Sharp, others.

Funny, Apple has a habit of suing journalists who disclose info about its upcoming products, but that hasn't happened today.

A mass mailer from Dell is offering 10 percent off Zunes purchased at "your local Dell store," which around here means the stores at Northgate, Southcenter, Tacoma and Alderwood malls.

Is Dell eating this discount, or is Microsoft using selective price cuts to move more Zunes?

Ten percent doesn't seem like much, but a Zune at $225 starts to really undercut Apple's $250 30 gigabyte iPod.

Then again, Dell may tack on shipping and handling fees that make the discount a wash.

Next month Toshiba will start producing 1.8-inch 100 gigabyte drives that will be used in the next generation of MP3 players and portable computers, according to this ComputerWorld report pegged to the Consumer Electronics Show.

Apple is one likely customer. But Toshiba's also close to Microsoft -- it's building the first generation Zunes and using Windows Portable Media Center software in Toshiba branded players. So who will sell the first 100 gig player?

Toshiba says the drives can accommodate more video on personal devices. They may also be used to produce even smaller computers, perhaps Ultra-Mobile PCs.

Dave Winer said he had an early peek inside the Zune corridor and saw lots of motivational images of Steve Jobs. He also wants details of the device's protocols.

As expected, Microsoft gave the first Zune review opportunities to the Wall Street Journal's crusty Apple-loving Walt Mossberg and the New York Times Macaholic David Pogue.

Dean Rutz/Seattle Times

The Zune was unveiled in a press conference in September.

Walt liked the Zune's interface, saying it's actually better in some ways than the iPod's. But he was persnickety about the "big chunky" case and the battery life that he called "very disappointing."

Pogue was even more conflicted. He said the "noticeably thicker" Zune can't match the coolness of his iPod, he dissed its control wheel and gave it the old "Microsoft version 1.0" dig. But he acknowledged the Zune is an "excellent" player, he didn' take issue with its battery life and he said its software is "beautiful, simple and graced by brief, classy animations."

I've played with the Zune several times and didn't find the case big and chunky, especially compared with devices like the MusicGremlin. The Zune is a bit bigger than the iPod, but we're still talking about 30 gigabytes of music storage in something that's about the size of a deck of cards. I think their deep and unwavering love for the iPod is revealed by their making a big deal out of 0.2 inches of thickness on a device that has a bigger screen and radio features that the iPod lacks.

Walt didn't mention the finish, which seems like an important point of differentiation since the devices are meant to be fondled and fiddled with like a pipe or worry beads. On that front, I prefer the velvety feel of the Zune to the slick, metal and plastic feel of the iPod. That's pretty subjective -- it's sort of like choosing to drink beer in a brown glass bottle instead of an aluminum can -- so I'd definitely make sure to hold both devices before deciding which one to buy.

More objective is the battery life testing that Walt was able to do with the Zune. Microsoft hasn't yet given this lowly Seattle journalist a chance to do this sort of test, so I was really interested in Walt's take. He concluded that Microsoft overstated the battery life, but I wonder how much people will really care if they get 12 hours instead of 14 hours of music on a single charge.

Microsoft claims 14 hours of music playback on a single charge with the wireless feature turned off -- the same as the comparable iPod -- and 13 hours with wireless turned on. But Microsoft bases these claims on strict and unnatural usage conditions, such as never increasing the default volume, playing only one album over and over, and keeping the backlight on for just one second.

I tested the Zune in more normal conditions, shuffling through hundreds of songs, adjusting the volume where needed, skipping or repeating songs occasionally and using a 30-second backlight. In my test, I got just 12 hours and 18 minutes of music playback, versus 14 hours and 44 minutes from an iPod under the same usage pattern. With the wireless turned on, battery life on the Zune was worse -- just 10 hours and 12 minutes, even though I didn't send or receive any songs.

Pogue rightfully gives Microsoft the third-degree for its previous missteps in the media player business before he gets to the Zune.

As it turns out, the player is excellent. It can't touch the iPod's looks or coolness, but it's certainly more practical. It's coated in slightly rubberized plastic, available in white, black or brown -- yes, brown. It won't turn heads, but it won't get fingerprinty and scratched, either. It sounds just as good as the iPod.

The Zune matches the price ($250) and capacity of the 30-gigabyte iPod. But it's noticeably thicker (0.6 inch vs. 0.4), taller (4.4 inches vs. 4.1) and heavier (5.6 ounces vs. 4.8). Battery life is the same for music playback (14 hours), slightly better for video (4 hours vs. 3.5). The three-inch screen has the same 320-by-240-pixel resolution, but it's larger (3 inches vs. 2.5), so movies and slide shows feel more expansive.

What looks like an iPod scroll wheel, though, is a fakeout. It doesn't turn, and it's not touch-sensitive. Instead, it's just four buttons hidden under the compass points of a plastic ring.

Scrolling accelerates as you press the top or bottom button, but the iPod's wheel is much more efficient. On the other hand, the Zune's left and right buttons jump between menus (for example, Album, Artist, Genre) with less backtracking. The software design is beautiful, simple and graced by brief, classy animations.

I doubt the hipsters that Microsoft is targeting with the initial Zune marketing will pay much attention to either review, but you know the team at Bear Creek is parsing every word. The Word of Walt may even factor into their performance reviews.

RealNetworks will continue extending its Rhapsody subscription music service to new devices, including two categories of mobile phones over the next 12 to 18 months, Senior Vice President Dan Sheeran said today.

"You'll see mobile phones come to market that fit both those categories,'' Sheeran said during a presentation at the Northwest Entrepreneur Network's "Entrepreneur University" event at the Seattle Sheraton.

Rhapsody will go onto phones that can stream music stored on the network -- what Sheeran chacterized as the "celestial jukebox." The music platform will also be used on phones that can both stream network music and play music stored locally on the devices.

The phones with local storage are likely to use flash memory such as the Micro SD cards produced by SanDisk, one of Real's key partners as it moves its technology onto devices. SanDisk also manufactures flash-based MP3 players, including the first Rhapsody branded device introduced a month ago.

In his presentation on the role of platforms in business, Sheeran described how Real weighed different approaches for its new platform approach. It considered the closed-platform approach that Apple's using with its iPod and iTunes and the more open approach Microsoft tried with its "Plays for Sure" digital music platform over the past four years.

Real tried to use Plays for Sure but the platform had technical problems with interoperability and limited how much Real could develop unique products, he said.

"What we found was when we were dealing with somebody else's technology platform we were limited by innovation we were able to do,'' he said.

"Even if it worked at an interoperability level it was going to lead to a lot of services and devices that all looked the same."

That situation benefited the platform provider more than companies selling services based on that platform, he said.

Real realized several years ago that Plays for Sure wouldn't prevail and Microsoft would go a different direction, which it's now doing with the Zune product and its Apple-like closed platform.

"We knew that regardless of what they did we were going to have to get onto our own platform,'' he said. "We thought it was only a matter of time before they made the shift they did."

So Real developed what Sheeran characterized as a "hybrid" approach for its Rhapsody platform, similar to those used by TiVo and XM radio. Real maintains controls on copy protection and file transfer technology and specifies technology on the consumer interface such as the music guide.

"The goal is to define enough of the touchpoints between the different parts of the customer experience that we could really deliver on a brand promise if we put the Rhapsody logo on a device,'' he said.

Microsoft's mixed messages with Zune and Plays for Sure gave Real an opening to work with Best Buy, which is now the major outlet for SanDisk Rhapsody MP3 players, Sheeran said.

"Zune tells them that Microsoft doesn't believe in its own Plays for Sure market,'' he said.

As for competition going forward, Sheeran said Real faces "strong competition" from Apple and Microsoft.

"There will be more than one winner,'' he said.

UPDATE: A little context, now that I'm back in the office. Perhaps Sheeran was expanding on what to expect from Real's September acquisition of WiderThan, a South Korean mobile music company. Here's Tricia's write-up of that deal.

Flamebait of the day: A new report by ABI Research asserts that 58 percent of iPod owners would be "somewhat likely" or "extremely likely" to choose Microsoft's Zune when they buy their next portable media player.

"Our conclusion is that iPod users don't display the same passionate loyalty to iPods that Macintosh users have historically shown for their Apple products," principal analyst Steve Wilson said in the news release.

Only 15 percent of iPod owners surveyed by the Oyster Bay, N.Y.-based firm said they were "not very likely" or "not at all likely" to choose Zune when they buy their player. Among that group are the folks who e-mail me sometimes.

A New York Times story today starts off in the same direction as the ABI report, leading with a nice profile of a consumer anxious to buy a Zune. Then it draws on commentary from Zune skeptic Ted Schadler at Forrester Research, and concludes that Apple will maintain its dominance this holiday season.

Wilson said Zune's ballyhooed Wi-fi music sharing feature "isn't all that compelling, at least not for now" and Apple had better come up with something new in 2007 to maintain its lead.

"Apple needs a new high-end device that works really well and looks really cool, because other brands are catching up,'' he said in the release.

What does that mean for the iPod halo effect?

iThink iLike will be a hit, if enough iTunes users discover the free social music discovery service launched today by former MSN manager Hadi Partovi and his brother, Ali.

A handful of key MSN developers left Microsoft to work on the startup, which has offices in both Seattle and San Francisco.

So far the service is for users of iTunes, but support for players including Windows Media Player and Musicmatch is coming. What launched today is a public beta version that's available here.

The service works online and on the desktop. Online, you create a profile and import a list of friends from Web mail services such as Hotmail and Gmail. You can share their musical tastes by letting iLike see your music library and what you've been playing recently. Users can see what their friends have been listening to recently, and find new friends with similar musical interests.

On the desktop, iLike adds a pane that appears alongside iTunes when you run the jukebox on a PC or a Mac. When you play a song, it suggests similar music that you can buy from iTunes, Amazon.com and other sources.

What's really appealing to cheapskate music fans like myself is that it also suggests similar music from emerging artists that you can download free from Garageband.com, another company run by Ali Partovi. When I'm playing Harvey Danger, for instance, it suggests I may be interested in free tracks such as "The Purple Song" by Mister Vertigo.

The pane also displays songs recently played by people on your friends list. You can send them text messages and comment on their musical tastes. It also has a feature for checking to see how compatible your musical tastes are with someone.

But there's more. Another tab in the pane lets you create "smart" playlists of music that's similar to the song you're currently playing. The lists can include music from your collection, free music from independent artists and music that you may yet buy from an online store.

I'd use iLike a lot if I had iTunes running all the time on my desktop, which I don't. If my friends were using iLike and sending messages that way, I'd be more likely to keep both applications up and running. As it is, I'll probably use iLike as a way to build playlists at home and learn about new music now and then.

The Partovis announced the venture in June and a month later received $2.5 million in funding. Here's a story I wrote on the June announcement, when the service had the code name iJam.