As many readers noted, one big problem–potentially–with the plan is that Adobe (ADBE) and Apple (AAPL) generally don’t play well together. And in the case of Apple’s iPhone, they don’t play at all: Adobe’s flash platform doesn’t work in the iPhone, which is why many video sites, which depend on flash, don’t work well on the gadget.

So what if this happens again with Apple’s tablet, if and when the thing finally arrives?

I noted this yesterday, but didn’t get to talk to Adobe and Condé about it until later. Now I have their responses. The short version: They sure hope it works out.

The longer version is that both Condé and Adobe plan on running on all sorts of devices. And there’s not a lot they can do to satisfy Apple’s (AAPL) tablet requirements in advance, since Apple won’t discuss the tablet or even acknowledge that the tablet is in the works.

Here’s Adobe’s official line, provided by Senior Experience Design Manager Jeremy Clark:

Adobe has taken initial steps to prepare Adobe AIR to support mobile with performance improvements (reductions in memory usage, runtime size, JavaScript CPU consumption, and reduced CPU usage for background applications), and support multi-touch input used by mobile phones and presumably a new generation of slate devices. In fact we just announced a beta for AIR 2.0 that incorporates many of these features.

Our job at Adobe is to help create a great digital publishing platform. If publishers like Conde Nast and NY Times are delivering brand-name content via Adobe AIR, we believe that the devices that will win in the marketplace, will be the ones that support this open format. It should also be noted that Adobe recently announced plans to enable Flash applications to be brought to iPhone and indeed several are available on the iTunes store.

So we’ll continue to look for ways to enable publishers to deliver their content to the widest possible range of platforms, even on platforms that don’t yet support our runtimes.

It’s a reasonable enough response, given the alternative, which is to wait around for Apple to bring forth the wondergadget–or not. And in the meantime, the companies would miss an opportunity to help set standards for other guys’ gadgets.

On the other hand, there’s the less politic response, which you’re not going to hear from either company on the record: “Boy oh boy, are we screwed if our stuff doesn’t work with the market leader.”

But here’s one version of that take, from Time Inc.’s Josh Quittner, who is working on producing tablet-ready magazines for the Time Warner (TWX) publishing unit:

I am a hyperbolic guy, not to mention a purple writer, but I think it’s conservative to say that in the miserable publishing business, there is no greater hope for salvation that the iThing. With visions of giant iPhones dancing in our heads, all of us are working on prototypes of magazines and newspapers that will work on 9.7-inch, multi-touch screens linked wirelessly to stores. And, while there are at least a dozen manufacturers heatedly working on their own iterations, we all await the iThing because history has shown us that Steve Jobs leads the parade. Chaos will ensue, with many idiotic and competing platforms drawing precious resources from content makers who have to try just about everything until a frontrunner emerges.

Oh. One more quick item: As Quittner says, there are lots of publishers working on this stuff, and I look forward to seeing all of their efforts. And in case anyone gets the idea that I’m only paying attention to the biggest dogs, here’s what FastCompany.com’s Noah Robischon has to say about his company’s digital plans:

We’re working on delivering the magazine in several different digital formats right now, including to e-readers. Assuming the iTablet is a real product, and it uses any of these formats–and I’ve got no inside knowledge, it’s all based on rumor and guesswork–then we’ll be on the device too.

We’ve been approached by a few different companies working on e-reader formats for magazine publishers, as well as a couple that want to create digital versions of the magazine pages for online display. So we’re evaluating our options now. This space has become very active in the last 6 months, and it’s great to have so many options.

So there you go. Next?

[Image credit: clarity]

But Condé, like other publishers, says Apple (AAPL) won’t actually talk to the company about its plans for the device, or even acknowledge that it has plans.*

Condé’s plan, meanwhile, is to create digital versions of its magazines that will work on all the upcoming tablets, using new software from Adobe (ADBE). Those tablets aren’t actually on the market yet, but the publisher says it’s confident that we’ll soon see multiple versions of machines featuring large color touchscreens and wireless connections.

So who’s going to make those gadgets? Condé Nast CEO Chuck Townsend says his company is working closely with Hewlett-Packard (HPQ) and that it has also been communicating its plans to Apple. But Townsend made a point of saying that Apple executives themselves refuse to acknowledge that they’re actually planning a tablet: “They’re not talking to anybody openly,” he says.

Adobe is creating a publishing tool for the new format, as well as magazine-reader software that may come pre-installed on the devices or may require a download. The software company says it is working exclusively with Condé now, but will offer its tools to other publishers next year.

[Important technical point several readers have brought up: Adobe says its new reader software will run using its AIR platform, which works on multiple operating systems, including Apple's desktop system. But neither AIR nor Adobe's flash software works on Apple's iPhone, so if the new mystery device runs on that operating system, there's a problem. I'm following up with Adobe to see what it has to say. UPDATE: Here's Adobe's response.]

Condé says its work with Adobe won’t preclude the company from joining the “Hulu for magazines” storefront/distribution joint venture it has been discussing with Time Warner’s (TWX) Time Inc. and other publishers. “Those discussions are ongoing and important and imminent,” Townsend says.

Okay. So what will Condé’s magazines look like once the tablets appear? The publisher has been showing a demo video to advertisers, industry executives and employees, and I’m trying to convince the company to show it to the rest of the world. (UPDATE: Here’s a partial, low-quality version of the video).

But until then, you can get a sense of it by checking out the publisher’s first attempt to port a magazine to the iPhone, which was released today at the iTunes App Store.

Like the iPhone version of GQ’s December issue, Condé says its tablet magazines will feature the same content found in the print versions, including original advertising, with the ability to view pages in their original form or in formats designed specifically for the device. They will also import multimedia content, like videos, and offer the ability to synch up with social networks and other Web sites.

Condé also thinks the business model for its tablet mags will mirror that of its iPhone app. The company intends to charge readers for each title, and it plans to convince the Audit Bureau of Circulations, the magazine industry’s standards board, that its online sales are equivalent to newsstand sales. That will allow Condé to charge advertisers the same rate as for print ads.

If all of this works, it’s a dream scenario for Condé and other publishers. The magazine industry gets to keep the revenue streams its print publications generate without having to make the “analog dollars for digital pennies” discount that the Web requires. Meanwhile, Condé gets to bask in the benefits of digital–lower distribution costs, more engagement with readers.

Or put another way: Publishers hope the new devices will repair all the value destruction the Web has wrought.

But all of this assumes that consumers, who’ve shown no inclination to pay for this stuff on the Web, will be willing to pay for it once it appears on devices no one owns yet. We’ll find out soon enough.

*One possible exception is the New York Times (NYT), where editor Bill Keller refuses to talk about possible talks with Steve Jobs and company.

The text in question: The passing reference to an “impending Apple slate” by New York Times (NYT) executive editor Bill Keller in an address to his staff. That’s it.

How is this considered news? Because while everyone in Appleland is positive Steve Jobs has a wonderous tablet computer up his sleeve, no one has actually seen one. But if the guy running America’s newspaper of record mentions it, then it must be true, right?

I had a different take on this: The Times, like every other big publisher, assumes Apple (AAPL) is working on a tablet and would like to figure out how to get its stuff onto the device. But I assumed that the Times, like every other big publisher, has had no contact with the famously secretive company about its plans.

That is, Keller could have said “the Apple slate or tablet or whatever that I believe the company is working on, but don’t know about firsthand.” But he whittled his thoughts down to three words–because he’s good at writing and words and stuff like that, the way you’d think the guy running America’s newspaper of record would be.

But just for kicks, I checked in with Keller yesterday to clarify: Does he actually know what Apple is up to? Or is he in the same boat as the rest of us?

His answer, delivered via a PR rep: “I ain’t sayin’.”

Okay, then!

Let’s start by noting that it’s possible that Keller is simply tweaking a reporter’s earnest query with a purposely delphic remark.

And even if Keller does know something about Apple’s plans, that doesn’t mean he knows much. Apple is famous for keeping its vendors and partners in the dark about its product plans until Steve Jobs unveils the devices onstage.

Still, if Apple has talked to Keller and the Times about its tablet in any way, that news will come as a surprise to other publishers I’ve talked to, who can’t get Apple to even wink or nudge about the device.

Earlier this month, for instance, I reported that executives at Time Warner’s (TWX) Time Inc. couldn’t get Apple “to even acknowledge to Time Inc. executives that it plans to produce a tablet device.”

Yesterday, I talked to an executive in charge of digital efforts at another big brand-name publisher who said the same thing. “You can’t even joke with them about a tablet,” said the executive. “They get very serious and cut the conversation short.”

Has Keller or any other Times executive had a longer conversation? I pinged Keller again last night for clarification, but haven’t heard back. If I do, I’ll update here.

In the meantime, if you want to read the tea leaves yourself, they show up around the 8:30 mark in this video, first published by the Nieman Journalism Lab:

Bill Keller speaks to the digital group at The New York Times from Nieman Journalism Lab on Vimeo.

EARLIER: After Michael Jackson died, fans flooded iTunes to snap up his music. But when “This Is It,” the singer’s final work, comes out this month, they’ll have to look somewhere else: Apple’s digital store won’t be selling the album.

So says Digital Music News, citing “confidential information.” The problem, supposedly, is that Sony (SNE) and Jackson’s estate want to sell the entire double album as a set, while Apple insists that all of the music it sells needs to be available as singles.

I’m checking with Sony and Apple to confirm, but the story is a familiar one, because it’s a longstanding dispute between Apple (AAPL) and the music business. The industry, for both financial and artistic reasons, has tried to keep music bundled together, while Apple insists on selling it a la carte.

Apple usually wins these disputes: Even the stubborn iconoclasts in Radiohead eventually bowed to Steve Jobs’s will and turned their precious albums into individual songs.

If there is a clamor for the new Jackson music online, it will reportedly benefit Amazon (AMZN), whose MP3 store does offer album-only releases.

But I’m not sure how loud the clamor will be: As best I can tell, the “new” release contains only a smattering of Michael Jackson you haven’t heard before: Two versions of the title song, plus “a recently discovered spoken word poem.”

The rest? Greatest hits you can already buy, song-by-song, on iTunes.

How do we put that in context? A couple different ways.

For starters, let’s note that the velocity of apps Apple (AAPL) is delivering is increasing: It took Steve Jobs and company a little more than a year to serve up the first 1.5 billion apps, which averages 4.1 million downloads per day. But Apple moved the next 500 million apps within 76 days. That’s a 6.6 million-per-day average.

Next, let’s acknowledge that while the money Apple makes from the app store is secondary to its core hardware business, it’s still a sizable amount.

Even if you assume that the majority of apps are downloaded for free, the remainder may still be generating sales of $200 million a month, mobile ad network AdMob guesstimates. Apple keeps 30 percent of that, which works out to be $720 million a year. Not bad for a side business.

I’m sure that Apple (AAPL) will indeed sell the Fab Four’s music via its digital music store one day. But it’s not happening at Apple’s keynote presentation tomorrow.

The Beatles estate, Electronic Arts (ERTS) and Viacom’s (VIA) MTV will be releasing a new version of “Rock Band” that features the band’s songs tomorrow. And on the same day, EMI Music Group will release all of the band’s music on remastered compact discs.

But that’s it, a source familiar with the band’s plans tells me. For now.

UPDATE: Want an on the record source? The Financial Times obliges with a follow-up:

“Conversations between Apple and EMI are ongoing and we look forward to the day when we can make the music available digitally. But it’s not tomorrow,” Ernesto Schmitt, EMI’s global catalog  president, told the FT’s Andrew Edgecliffe-Johnson.

Beatles-to-iTunes is a story that never goes away. And some day, it will turn out to be true–there’s no good reason for it not to happen. But predictions that it will happen Wednesday have been tied to wafer-thin logic.

Two years ago, the Web was convinced an announcement was in the offing because of the wording of an Apple keynote invitation. This year, even sober-minded publications are noting the timing of Apple’s keynote event and the Rock Band and CD launches, concluding that an iTunes launch makes sense too.

But I’d argue that it makes less sense: If you’re trying to convince people to spend $16.99 for a remastered copy of the White Album or as much as $250 to play along with the band’s ghostly avatars, why offer a competing product from Apple at the same time?

Nor do I see Steve Jobs expressing much interest in coordinating his marketing announcements with the likes of Viacom.

Anyway, if you really want to get the Beatles on the Web, you don’t have to wait for Apple–a quick Google search will do. Or you can head to Google’s (GOOG) YouTube, which is flooded with great clips like this:

[CORRECTION: My assertion about NPD's unit sales data below is incorrect: The tracking service counts 12 digital download singles as the equivalent of one CD. That makes Apple's share of the market that much more impressive, since singles make up the majority of iTunes sales.]

Ready to toss dirt on the old, unloved CD? You’re going to have to wait a while. Compact discs are increasingly hard to find (at least in physical stores), but someone out there keeps buying them: The ancient format still makes up the majority of music sales in the U.S.

Here are the data for the first half of the year, via the NPD Group consumer-tracking outfit: CDs made up 65 percent of the music market, while paid digital downloads accounted for 35 percent. The digital share has increased from 20 percent two years ago, and Apple’s iTunes (AAPL) alone makes up 25 percent of overall sales*, so you’re going to hear lots of proclamations about Steve Jobs’s ascent to the to top of the music industry.

But hold off on that, just a bit. Because those numbers are skewed even more in favor of the CD than they appear at first glance: They’re measuring unit sales, not dollars. And given that the majority of digital sales are in the single format (i.e., a dollar or so a pop), that means CDs (at $10 or so a pop) still account for the vast majority of music revenue.

Which is why the industry is still tied to CDs, even though no one you know buys them anymore. And it explains why the industry is working on two separate digital formats (dubbed “Cocktail” when sold by Apple, and CMX when sold by anyone else) designed to induce buyers to pay for CD-like bundles.

It won’t work. At best, they’ll convince some digital album buyers to upgrade, but the music business is once again a singles business, and it’s going to remain that way. But you can’t blame the industry for trying.

By the way, there are decent odds you’ll hear about Cocktail at Apple’s September event, which Digital Daily’s John Paczkowski says is scheduled for Sept. 9. Mark your calendar.

*If you’re keeping track: Wal-Mart (WMT) and Target (TGT) trail Apple in the overall market. And iTunes still dominates the digital download market with a 69 percent share, while Amazon (AMZN) is a distant second with eight percent.

But in true Apple fashion, the company has been noncommittal about the exact date of the event and what it will be showing off.

I’ve asked Apple for comment and will report back if the company responds. But the timing makes sense and shouldn’t come as a surprise since Apple (AAPL) has traditionally used the week following Labor Day to show off new products and refresh existing product lines.

Two years ago, for instance, Apple introduced the iPod touch, which has since become a key part of the company’s arsenal. Last year, the event featured less substantial changes, like an overhaul of the iPod Nano.

Given that Apple has tipped off music industry executives, it’s a fair bet that the event will incorporate music in some way. Perhaps it will show off the new “Cocktail” format that Apple has been working on, which bundles full-length albums with other goodies like album covers and interactive bells and whistles.

But unless Apple unveils its so-called iTablet, a touchscreen device that’s supposed to be a cross between an iPhone and a full-fledged MacBook laptop computer, there are going to be a lot of disappointed Apple acolytes.

The other big appearance the Apple faithful will be looking for will be Apple CEO Steve Jobs, who hasn’t made an official public appearance since a keynote presentation last October.

During Apple’s September 2008 keynote, Jobs took time to dismiss reports that he was in failing health. But in January, Jobs said a “hormone imbalance” required him to step away from day-to-day leadership at the company, and news later surfaced that Jobs had undergone a liver transplant last spring. He’s been officially back at work since late June.

To recap: Real wants to sell a $30 piece of software called RealDVD that lets you rip and store DVDs on your computer. Real’s software adds its own set of locks to the ripped file to prevent DVD owners from passing along their files to someone else, but that isn’t nearly enough to placate Hollywood.

Real and the studios have been in court since last fall, when U.S. District Court Judge Marilyn Hall Patel issued a restraining order preventing Real from selling the software. Yesterday, Patel (whom you may recall from the old Napster days, when she essentially shut that service down) turned the restraining order into an injunction, along with a sharply worded ruling that basically described Real as a group of willfully obtuse doofuses.

Now Hollywood is dancing, and Real says it needs to “determine our course of action.” I have a suggestion for Real: Move on.

I know there’s a legitimate use for software that lets you rip DVDs you own–and more importantly, software that lets you circumvent the locks the studios put on their discs. But why not let the many other smaller companies fighting this fight, fight this fight?

Best-case scenario is that you end up with software that’s useful for a relatively small group of people: The ones who buy DVDs and want to watch them multiple times. Worst case is the one you have now: An expensive legal battle and the prospect of a product you’ll never be able to sell.

I’ve been puzzling about Real’s plan for this software from the get-go. Why release a product that is destined for a court battle?

A few people familiar with the company’s thinking have tried to explain that this fits into CEO Rob Glaser’s vision for Real’s future, which involves creating software that maintains a connected home entertainment hub. But that seems like a roundabout way to get there.

I have another theory: Glaser is a smart, pugnacious guy with a fondness for big public fights.

He spent some time in the earlier part of this decade jousting with Steve Jobs about Apple’s (AAPL) walled-garden approach to iTunes music, and lost that one. But he did get Microsoft (MSFT) to hand over $760 million to settle an antitrust case in 2005, and he still has a chunk of that cash in the bank.

Or maybe there’s an entirely different impulse behind RealDVD. But whatever it is, I’d love to hear it. Here’s a clip of Rob Glaser explaining the software’s features, but not the rationale behind it, to BoomTown’s Kara Swisher:

]]> http://mediamemo.allthingsd.com/20090812/realnetworks-still-barred-from-the-dvd-backup-business-why-does-realnetworks-want-to-be-in-the-dvd-backup-business/feed/ 0 http://mediamemo.allthingsd.com/20090625/cnn-we-dont-need-youtube-and-twitter-to-tell-us-whats-going-on-in-iran-weve-got-ireport/ http://mediamemo.allthingsd.com/20090625/cnn-we-dont-need-youtube-and-twitter-to-tell-us-whats-going-on-in-iran-weve-got-ireport/#comments Thu, 25 Jun 2009 18:06:35 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=8533 The “Iran is Twitter’s defining moment” meme is losing momentum to the “Iran is YouTube’s defining moment” meme. But CNN has a different spin. Time Warner’s (TWX) cable news channel wants us to know that it isn’t dependent on either the micromessaging service or Google’s (GOOG) video site to report what’s happening in Iran–it has iReport.

For those of you who don’t watch CNN or visit CNN.com with any frequency, iReport is the news service’s attempt to create its own user-generated news hub. It’s supposed be to be able attract eyeballs on its own and in some cases, feed the Web site and the cable channel with free content donated by viewers.

To date, iReport is best known as the place where someone posted a bogus item about Apple (AAPL) CEO  Steve Jobs. But CNN says it has been using the site heavily to augment its Iran coverage. From a press release it sent out earlier this week: “Since last week, we’ve received 4555 iReport submissions related to Iran–including more than 1600 this past Saturday and Sunday alone, and an additional 689 just yesterday. To date, 150 of the Iran-related iReports have been vetted and verified by CNN producers for use on CNN air or online–something the likes of YouTube or Flickr just aren’t equipped to do given their lack of newsgathering infrastructure.” (Yesterday CNN told me it added another 399 Iran-related iReports, and that seven had made it onto air. Presumably those numbers are still increasing.)

The breast-beating seems a bit much given that CNN, like every other cable network, has been happy to play up any bit of social media it uses in its Iran reporting. But the point about the vetting and verification is interesting.

I checked with CNN rep Jennifer Martin, who spelled out what that means: That CNN producers have contacted the people who sent in all of the Iran-related iReports it has featured on the network and at least verified that they are who they say they are. That in itself seems worthwhile, and maybe even worth bragging about.

Andy Plesser at Beet.TV has more, including an interview with CNN.com producer Lila King.

Here’s an example of some the “verified” footage the network has used so far. For some reason the play/pause/etc. controls don’t show up on these embedded videos, but I’ve been able to get them to start and stop by clicking on the image:

Iranians shouting “Allah O Akbar” at night:

A pro-Mousavi rally:

]]> http://mediamemo.allthingsd.com/20090625/cnn-we-dont-need-youtube-and-twitter-to-tell-us-whats-going-on-in-iran-weve-got-ireport/feed/ 2 http://mediamemo.allthingsd.com/20090618/just-how-much-search-share-does-twitter-really-have/ http://mediamemo.allthingsd.com/20090618/just-how-much-search-share-does-twitter-really-have/#comments Thu, 18 Jun 2009 19:04:16 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=8344 Twitter notched yet another milestone yesterday when it finally showed up on comScore’s index of Web search milestones. The catch: It barely registered, pulling down a search share of just 0.001 percent.

ComScore says Twitter logged 30.1 million search queries in May, more than Time Warner Cable (TWC), but not even on the same playing field as search also-rans like Ask.com.

But what if comScore is dramatically undercounting Twitter’s search–not just the standard undercounting that Web publishers always complain about, but something more significant?

It’s a given that comScore is undercounting. I know this because the research outfit told me so: The company confirmed today that it only measures searches executed at Twitter.com. But at least half of Twitter’s users are accessing the service without visiting the site, via third-party clients like Tweetdeck. And within that group of users is the power-user set, which is far more likely to be executing searches, many times a day in some cases, than Oprah fans who just joined the service last month.

So it’s easy enough to conclude that the majority of Twitter’s searches are going uncounted by comScore (SCOR). But how big is the gap? I’ve asked Twitter to share its search numbers, but I’m not holding my breath on that one. (UPDATE: See bottom of post)

In the meantime, let’s do some guesstimating.

Start with this year-old post by John Borthwick of Betaworks, who at the time was an investor in Summize, a Twitter search engine at the time (Twitter later bought Summize outright).

Borthwick reports seeing a huge number of search queries on Twitter on the opening day of Apple’s (AAPL) 2008 developer conference, topping out at an average of 190 queries per second. Tease that out over a full day, and you get 16.4 million searches in 24 hours.

For argument’s sake, let’s say that most of those searches occurred in an eight-hour stretch before, during and after Steve Jobs’s pronouncements that day, and knock that total down by two-thirds, to something like 5.5 million queries.

Steve Jobs pronouncements are rare things so it would be wrong to assume that Twitter sees similar usage patterns every day. But then again, Twitter has had an insane growth spurt in the last year: The most recent comScore traffic numbers peg monthly visitors at 32 million world-wide, up from a couple million a year ago.

See where this is going? Again, for argument’s sake, let’s say that Twitter’s peak traffic a year ago is now close to daily traffic today, and extrapolate that 5.5 million query guesstimate out for a month: You get something closer to 165 million queries.

Want to tweak any of my assumptions above? Be my guest. But no matter how you cut it, I’m sure that Twitter’s real search numbers are going to be several times higher than comScore’s number, at the very least.

Again, this matters in the end because Twitter’s most compelling investment thesis is that it can provide real-time search. And for that to mean something, the company is going to have to start registering as an actual search competitor at some point, not just to Time Warner Cable but to Yahoo (YHOO), Microsoft (MSFT) or even Google (GOOG). So how close, or far away, is that from happening?

UPDATE: Twitter cofounder Biz Stone responds, but declines to hand out any numbers. No surprise. I am a bit surprised to see him play down the importance of search at Twitter. I wonder if his investors are also surprised.

We don’t share absolute data such as total requests or queries per day but we do look at the whole ecosystem when we measure these things (not just Twitter.com).

Also, we are focused on the sharing and discovery of tweets so comparing Twitter to web search is interesting but not necessarily how we would measure success.

]]> http://mediamemo.allthingsd.com/20090618/just-how-much-search-share-does-twitter-really-have/feed/ 0 http://mediamemo.allthingsd.com/20090512/7278/ http://mediamemo.allthingsd.com/20090512/7278/#comments Tue, 12 May 2009 09:00:35 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=7278 Apple iPhone and iPod Touch users have downloaded one billion apps for their devices in nine months. Someone other than Steve Jobs and co. ought to be able to make money from that, right?

That’s more or less the logic behind Medialets, a start-up that serves up ads on Apple’s (AAPL) mobile applications, and to a lesser degree, programs designed for Google’s (GOOG) Android mobile platform. The New York-based company, founded last June, is announcing a $4 million Series A round led by Foundry Group. DFJ Gotham and angel investor Bobby Yazdani also participated.

Medialets also provides free analytics services for mobile applications. But its revenue comes from its mobile ad platform, which specializes in serving up iPhone and Android app users.

Given that mobile ads in general are in their infancy, this is a nascent market at best. Medialets CEO Eric Litman figures that the market for mobile display ads tops out at perhaps $300 million, and that ads for iPhone and Android apps can’t be more than $100 million.

But he figures that number will shoot up rapidly, of course, and perhaps hit $400 million within four years. He’s also betting that the majority of apps, and the majority of apps downloaded, will be free, advertising-supported ones.

In order for that to happen, both apps and the ads that run on them will have to move past the novelty stage. This Medialets-produced ad for Dockers, shown here running on SGN’s iBowl game, is sort of interesting. But it seems more like a proof of concept than anything else.

Still, it’s a start:

]]> http://mediamemo.allthingsd.com/20090512/7278/feed/ 0 http://mediamemo.allthingsd.com/20090422/live-apple-earnings-call/ http://mediamemo.allthingsd.com/20090422/live-apple-earnings-call/#comments Wed, 22 Apr 2009 22:07:30 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=6557 Next to no news from the Apple earnings call this afternoon, which is just the way Apple execs like their earnings calls. Once again, the company provided no information about CEO Steve Jobs’s health except to note that he is still scheduled to come back to work in June. And the company continued to pooh-pooh the concept of netbooks–supercheap, supersmall laptops with very little horsepower that are the hottest part of the PC business right now.

But COO (and temporary CEO) Tim Cook’s dismissal of the netbook market will continue to spark speculation that the company is readying something that sits in between a laptop and an iPhone (which is itself a computer, of course). Silicon Alley Insider’s Dan Frommer got more of Cook’s response than I did so I’ll reprint his quote here:

“When I look at what is being sold in the netbook space today, I see cramped keyboards, terrible software, junky hardware, very small screens, and just not a consumer experience and not something we would put the Mac brand on. So it’s not a space–as it exists today–that we’re interested in, nor do we believe that customers in the long term would be interested in. That said, we do look at the space and are interested in how customers respond to it. People who want a small computer than does browsing and email might want to buy an iPod touch or iPhone. We play indirect basis. Then of course if we find a way where we can deliver an innovative product that really makes a contribution, then we’ll do that. We have some interesting ideas in this space.”

EARLIER:

Apple (AAPL) just turned in a strong quarter and followed it up with conservative guidance. A fairly typical performance for the company. Now investors will want to know about new product lines, Steve Jobs’s health and other matters. I’ll be covering the call live. Please refresh this page for the most current information. Click here if you want to listen in yourself.

Joining call now. Tim Cook CFO Peter Oppenheimer going over info that’s already in the release.

Mac products: 2.2 million Macs, a three percent decline year-to-year. Tough comparison from last year. But better than the seven percent drop in PC sales overall. “We feel very positive about our Mac performance.” Began and ended quarter with three-to-four weeks of Mac inventory.

iPod: People still buying ‘em! iPod touch selling well, and so are apps. Claims people like the new shuffle player. [Dubious about that]. We own the MP3 player market. [Duh.] Began and ended the quarter with four-to-six weeks of inventory.

iTunes store: 35,000 apps available in store, up from 15,000 a quarter ago. “We are within hours” of one billions app downloaded.

iPhones: Unless I’m missing something, absolutely no new data here. Praising new iPhone 0S 3.0 that’s in the works. Apple delayed the start of revenue recognition of all iPhones sold after the company announced the new OS, which was March 17. Will start up again once OS is released.

Stores: Half our Macs sold to people who had never owned one before. Average revenue per store is down year over year, because the economy is lousy.

Gross margins: Commodity and other component costs lower than expected. Higher-margin sales better are also than expected. Apple also spent less on operating expenses than expected.

Guidance: Forecasting is “challenging” in macroenvironment. Again, noting delay in revenue recognition for iPhones (see above). Excited about new products in pipeline, etc.

Q&A

Outlook for pricing on component supply? Mostly favorable, but some commodities, like NAND, will increase sequentially. Cook does not expect to see the level of reduction seen in calendar Q1. Will it be down? It will be “in a similar range as last quarter.”

Cash flow issues? Not really, for several reasons: 1) Apple made prepayment to…. [sorry, I didn't catch who that was]; 2) accounts payable were down, from holiday quarter to spring quarter, which is standard; 3) at $1.3 billion, tax payments were up “significantly” from last year.

Mac business: Desktops selling well, but average selling price down quite a bit. What’s going on? Sales accelerated in March after Apple announced new product launch. Higher-end Pro products sold to professionals are down a bit, which is related to economy for obvious reasons. Education sales also down a bit, for same reasons. Hoping Federal stimulus funds will help with that.

Back to netbooks–why won’t Apple sell them? Cook is still criticizing netbooks. The ones available today are ”just not a consumer experience and not something we would put the Mac brand on, quite frankly. It’s not a space today that we’re interested in, and it’s not a space we think that customers in the long-term are interested in.” But… a slight hedge with regard to smaller computers, which are, of course, what the iPhone and iPod Touch are. We “have interesting ideas in this space.” Today’s netbooks really shouldn’t even be called computers, really.

App store: What’s the mix between paid and free downloads and the iPod and iTouch mix? Nope. Apple won’t say. Again, Cook notes that we’re just “hours away” from the one billionth download. Cook: One of the keys behind the growth of iPod has been that sales of the iPod touch “more than doubled year-over-year.” The iPod and iPod Touch have reached sales of 37 million units, a big platform for developers. So there’s a virtuous cycle there.

[Sorry, missed two questions here.]

Why is Apple still doing an exclusive with AT&T for the iPhone? And how’s Steve Jobs? AT&T (T) is the best wireless provider in the U.S. “They have done a very good job with iPhone….We’re very happy with the relationship we have and do not intend to change it.” Structurally, we’re using GSM architecture, and Verizon (VZ) uses CDMA, and we wanted a world phone.

And Steve Jobs? Apple CFO Peter Oppenheimer: “We look forward to Steve returning to Apple at the end of June.” [Translation: No news.]

[Yet another question missing here. Apologies.]

Any info on DRM-free/”iTunes plus” sales? Too early to tell.

How much impact did Wal-Mart (WMT) have on Apple sales? Very key partner for the iPod. The company believes Wal-Mart provides extended reach. Pleased with results, but “early going, and not much to report there yet.”

So many iPhone Apps. How can you make them easier to find on iTunes? (Same problem as music.) Any kind of unusual patterns? Nonanswer here.

Please talk about competition for smartphones–i.e., please discuss the Palm (PALM) Pre. “Difficult to comment on products that aren’t shipping. So there’s nothing intelligent I could say on the Pre.” But “we think we’re years ahead.” We see things through software lens and that has benefited us and customers very well. Power of device and ecosystem enormous and we’re now just scratching the surface.”

What about suing Palm re: patents on the Pre, etc.? “We think that Apple’s innovation is leading the industry by years. We think competition is great; we think it makes all of us better as long as other companies invent their own stuff.”

]]> http://mediamemo.allthingsd.com/20090422/live-apple-earnings-call/feed/ 6 http://mediamemo.allthingsd.com/20090422/apple-beats-the-street-guidance-a-bit-light/ http://mediamemo.allthingsd.com/20090422/apple-beats-the-street-guidance-a-bit-light/#comments Wed, 22 Apr 2009 20:37:39 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=6543 First quick look at Apple’s earnings: Tim Cook and company have beaten the Street’s expectations. Apple earned $1.33 per share on revenue of $8.16 billion, beating the consensus of $1.09 and $8 billion. The company also outperformed estimates for sales of the Mac, iPod and iPhone. At first glance, a strong quarter. But guidance for the next quarter may be a bit less than what  Wall Street was looking for, which is fairly standard for the company.

Next up: The company’s earnings call, where investors will be looking for more information about a product line refresh, Steve Jobs’s health and any other info the typically closemouthed company dribbles out. I’ll be covering that live at a separate post at 5 p.m. Eastern.

Relevant unit sales: “Apple sold 2.22 million Macintosh computers during the quarter, representing a three percent unit decline from the year-ago quarter. The Company sold 11.01 million iPods during the quarter, representing three percent unit growth over the year-ago quarter. Quarterly iPhone units sold were 3.79 million representing 123 percent unit growth over the year-ago quarter.”

Here’s what that looks like if you break it down (click to enlarge):

Earlier today, AT&T (T) said it had shipped 1.6 million iPhones this quarter, down a bit from the previous three months.

Here, from Silicon Alley Insider’s Dan Frommer, is what the Street was looking for:

• March quarter revenue: $7.69 billion consensus (6% y/y growth)
• March quarter EPS: $1.09 consensus
• March quarter GM: 32.5% guidance, 33.6% RBC estimate
• March quarter Mac shipments: 2.1 million consensus
• March quarter iPod shipments: 10 million consensus
• March quarter iPhone shipments: 3.3 million consensus (some analysts at 3.7 million)
• June quarter revenue: $8.28 billion consensus (11% y/y growth), guidance could be $7.8-$8.1 billion
• June quarter EPS: $1.12 consensus, guidance could be 92 cents-$1.02
• June quarter GM: 33% consensus, guidance could be 30.5%-31.5%

Press release excerpt:

CUPERTINO, Calif., April 22 /PRNewswire-FirstCall/ — Apple® today announced financial results for its fiscal 2009 second quarter ended March 28, 2009. The Company posted revenue of $8.16 billion and a net quarterly profit of $1.21 billion, or $1.33 per diluted share. These results compare to revenue of $7.51 billion and net quarterly profit of $1.05 billion, or $1.16 per diluted share, in the year-ago quarter. Gross margin was 36.4 percent, up from 32.9 percent in the year-ago quarter. International sales accounted for 46 percent of the quarter’s revenue.

In accordance with the subscription accounting treatment required by GAAP, the Company recognizes revenue and cost of goods sold for iPhone(TM) and Apple TV® over their estimated economic lives. Adjusting GAAP sales and product costs to eliminate the impact of subscription accounting, the corresponding non-GAAP measures* for the quarter are $9.06 billion of “Adjusted Sales” and $1.66 billion of “Adjusted Net Income.”

Apple sold 2.22 million Macintosh® computers during the quarter, representing a three percent unit decline from the year-ago quarter. The Company sold 11.01 million iPods during the quarter, representing three percent unit growth over the year-ago quarter. Quarterly iPhone units sold were 3.79 million representing 123 percent unit growth over the year-ago quarter.

“We are extremely pleased to report the best non-holiday quarter revenue and earnings in our history,” said Peter Oppenheimer, Apple’s CFO. “Apple’s financial condition remains very robust, with almost $29 billion in cash and marketable securities on our balance sheet. Looking ahead to the third fiscal quarter of 2009, we expect revenue in the range of about $7.7 billion to $7.9 billion and we expect diluted earnings per share in the range of about $.95 to $1.00.”

Apple will provide live streaming of its Q2 2009 financial results conference call utilizing QuickTime®, Apple’s standards-based technology for live and on-demand audio and video streaming. The live webcast will begin at 2:00 p.m. PDT on April 22, 2009 at www.apple.com/quicktime/qtv/earningsq209/ and will also be available for replay for approximately two weeks thereafter.

]]> http://mediamemo.allthingsd.com/20090422/apple-beats-the-street-guidance-a-bit-light/feed/ 0 http://mediamemo.allthingsd.com/20090303/that-was-fast-kindle-meet-the-iphone/ http://mediamemo.allthingsd.com/20090303/that-was-fast-kindle-meet-the-iphone/#comments Wed, 04 Mar 2009 05:40:33 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=4822 Remember last month, when Amazon said it planned to make its Kindle e-book titles available on other devices, but wouldn’t say what devices, or when?

Now we know. As of today, you can read Kindle titles on your Apple iPhone.

The free Kindle for iPhone App is just what it sounds like: It lets you read e-books that you’ve bought from Amazon. It won’t let you actually buy the titles from the online bookseller, though. To do that, you will need to use your Kindle or a Web browser.

But since you can use the iPhone’s built-in Safari browser to buy a Kindle book, that’s a fairly minor distinction. More important: Once you own a Kindle title, you can sync the titles between your iPhone (or iTouch) and your Kindle.

Wait a minute. Aren’t Amazon (AMZN) and Apple (AAPL) competitors when it comes to music and video sales? And won’t they be competing for years to come for all sorts of digital content sales?

Sure. But Apple’s Steve Jobs has been publicly dismissive of the e-book market, and Amazon clearly sees the Kindle as a superior e-book reader to the iPhone–it imagines that the iPhone, or any other non-Kindle device, will be something you use to read an e-book when you can’t actually get your hands on a Kindle.

The bigger picture: Apple is still, for the moment, a hardware company that uses content to make its gadgets more attractive. And Amazon is basically the inverse: It wants to sell a lot of Kindles so it can sell a lot more Kindle e-books. So the detente here makes plenty of sense.

Which is probably what Walt Mossberg had in mind when he reviewed the Kindle 2.0 last week:

Amazon says it is working to make the Kindle e-book catalog available on other mobile devices, such as smart phones, that people already own. The online merchant, which is so secretive it makes Steve Jobs seem like Joe Biden, isn’t saying which devices will get the Kindle service or when. I would bet it will be sooner rather than later.”

In a new Mossblog, Walt shares his first impressions of Kindle on the iPhone.

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