iPhone Simple

Steve Jobs asked tech blog Gizmodo.com to return a secret iPhone prototype that Apple says was stolen after a company engineer lost it in a bar, according to court documents.

The lost iPhone is being investigated as a possible trade secret theft, according to California state court documents made public after media organisations asked that they be unsealed. Apple reported the phone stolen last month. The legal wrangling is over a product that accounted for more than 30 per cent of 2009 sales for Apple.

An Apple lawyer said publicity about the “invaluable” prototype was “immensely damaging to Apple” because it would hinder iPhone sales, according to an April 23 affidavit by Detective Matthew Broad of the San Mateo County Sheriff’s Office.

“I want to get this phone back to you ASAP and I want to not hurt your sales when the product themselves deserve love,” Gizmodo editor Brian Lam said in an email to Jobs, Apple’s chief executive officer.

“But I have to get this story of the missing prototype out and how it was returned to Apple with some acknowledgment it is Apple’s.” Lam sent the email after Jobs contacted Gizmodo seeking return of the prototype after the blog dissected it and posted pictures and video.

Lam said he would return the phone only if Apple provided him with confirmation that it belonged to the company, according to Broad’s affidavit.

Gizmodo posted a copy of a letter from Apple’s general counsel Bruce Sewell, dated April 19, asking for return of “a device that belongs to Apple”. Sewell then picked up the prototype at the home of Gizmodo blogger Jason Chen, according to Broad.

Gizmodo, which is owned by Gawker Media, said it purchased the phone for US$5000 after it was found at a German beer hall in San Francisco by 21-year-old college student Brian Hogan. Based on Apple’s claim that the iPhone prototype was stolen, a computer crimes task force last month broke down the front door of Chen’s home and seized computers and other electronics, court filings show. Gawker Media is challenging the taking of Chen’s equipment, citing laws that protect online journalists from having newsroom equipment seized.

Retail research kingpin the NPD Group is reporting that Android-based phones are now outselling iPhones. Or at least they did last quarter in terms of unit sales in the U.S. according to NPD’s study, which found that RIM’s BlackBerries held 36 percent of the market, phones running Google’s Android had 28 percent, and the iPhone was at 21 percent.

Something like this was inevitable, given that:

Two models of the iPhone (the 3GS and 3G) are doing battle with scads of Android handsets in an array of shapes and sizes;
You can buy an Android phone for a lot less than an iPhone (the original Droid launched in November at the same contract price as an iPhone 3GS-now Amazon has ‘em for twenty bucks);
Three out of four major U.S. wireless carriers still don’t have the iPhone.
It’ll be fascinating to see whether Android’s unit sales edge persists-and grows. (There are new Android models every month, but some iPhone admirers are presumably waiting for the next-gen iPhone which will likely be available in June or July.)

Will Apple feel forced to respond to the Android explosion with price cuts, the introduction of budget-minded new models, or other moves that could steal back marketshare? It’s not a given. Between the iPhone’s healthy pricetag and the walled-garden megamall known as the iTunes Store, Apple is perfectly capable of being the most profitable smartphone company even if it doesn’t sell the most phones.

Here’s what would cause Apple to shift its strategy: Any sign that Android was managing to convert marketshare dominance into Windows-like ecosystem dominance. If a booming market for Android phones resulted in popular apps being available first on Android, or content owners striking Android-only deals, or makers of popular accessories not bothering to support the iPhone, Apple would react but quick.

In 2010, the Android Marketplace’s offerings have improved noticeably in terms of both quantity and quality. So far, though, it’s still near the start of a very long game of catch-up with the iPhone. And if there are any signs that the iPhone ecosystem is suffering, I can’t see them.

Any predictions on where things will be, say, one year from now?

Apple has a long relationship with Adobe. In fact, we met Adobe’s founders when they were in their proverbial garage. Apple was their first big customer, adopting their Postscript language for our new Laserwriter printer. Apple invested in Adobe and owned around 20% of the company for many years. The two companies worked closely together to pioneer desktop publishing and there were many good times. Since that golden era, the companies have grown apart. Apple went through its near death experience, and Adobe was drawn to the corporate market with their Acrobat products. Today the two companies still work together to serve their joint creative customers – Mac users buy around half of Adobe’s Creative Suite products – but beyond that there are few joint interests.

I wanted to jot down some of our thoughts on Adobe’s Flash products so that customers and critics may better understand why we do not allow Flash on iPhones, iPods and iPads. Adobe has characterized our decision as being primarily business driven – they say we want to protect our App Store – but in reality it is based on technology issues. Adobe claims that we are a closed system, and that Flash is open, but in fact the opposite is true. Let me explain.

First, there’s “Open”.

Adobe’s Flash products are 100% proprietary. They are only available from Adobe, and Adobe has sole authority as to their future enhancement, pricing, etc. While Adobe’s Flash products are widely available, this does not mean they are open, since they are controlled entirely by Adobe and available only from Adobe. By almost any definition, Flash is a closed system.

Apple has many proprietary products too. Though the operating system for the iPhone, iPod and iPad is proprietary, we strongly believe that all standards pertaining to the web should be open. Rather than use Flash, Apple has adopted HTML5, CSS and JavaScript – all open standards. Apple’s mobile devices all ship with high performance, low power implementations of these open standards. HTML5, the new web standard that has been adopted by Apple, Google and many others, lets web developers create advanced graphics, typography, animations and transitions without relying on third party browser plug-ins (like Flash). HTML5 is completely open and controlled by a standards committee, of which Apple is a member.

Apple even creates open standards for the web. For example, Apple began with a small open source project and created WebKit, a complete open-source HTML5 rendering engine that is the heart of the Safari web browser used in all our products. WebKit has been widely adopted. Google uses it for Android’s browser, Palm uses it, Nokia uses it, and RIM (Blackberry) has announced they will use it too. Almost every smartphone web browser other than Microsoft’s uses WebKit. By making its WebKit technology open, Apple has set the standard for mobile web browsers.

Second, there’s the “full web”.

Adobe has repeatedly said that Apple mobile devices cannot access “the full web” because 75% of video on the web is in Flash. What they don’t say is that almost all this video is also available in a more modern format, H.264, and viewable on iPhones, iPods and iPads. YouTube, with an estimated 40% of the web’s video, shines in an app bundled on all Apple mobile devices, with the iPad offering perhaps the best YouTube discovery and viewing experience ever. Add to this video from Vimeo, Netflix, Facebook, ABC, CBS, CNN, MSNBC, Fox News, ESPN, NPR, Time, The New York Times, The Wall Street Journal, Sports Illustrated, People, National Geographic, and many, many others. iPhone, iPod and iPad users aren’t missing much video.

Another Adobe claim is that Apple devices cannot play Flash games. This is true. Fortunately, there are over 50,000 games and entertainment titles on the App Store, and many of them are free. There are more games and entertainment titles available for iPhone, iPod and iPad than for any other platform in the world.

Third, there’s reliability, security and performance.

Symantec recently highlighted Flash for having one of the worst security records in 2009. We also know first hand that Flash is the number one reason Macs crash. We have been working with Adobe to fix these problems, but they have persisted for several years now. We don’t want to reduce the reliability and security of our iPhones, iPods and iPads by adding Flash.

In addition, Flash has not performed well on mobile devices. We have routinely asked Adobe to show us Flash performing well on a mobile device, any mobile device, for a few years now. We have never seen it. Adobe publicly said that Flash would ship on a smartphone in early 2009, then the second half of 2009, then the first half of 2010, and now they say the second half of 2010. We think it will eventually ship, but we’re glad we didn’t hold our breath. Who knows how it will perform?

Fourth, there’s battery life.

To achieve long battery life when playing video, mobile devices must decode the video in hardware; decoding it in software uses too much power. Many of the chips used in modern mobile devices contain a decoder called H.264 – an industry standard that is used in every Blu-ray DVD player and has been adopted by Apple, Google (YouTube), Vimeo, Netflix and many other companies.

Although Flash has recently added support for H.264, the video on almost all Flash websites currently requires an older generation decoder that is not implemented in mobile chips and must be run in software. The difference is striking: on an iPhone, for example, H.264 videos play for up to 10 hours, while videos decoded in software play for less than 5 hours before the battery is fully drained.

When websites re-encode their videos using H.264, they can offer them without using Flash at all. They play perfectly in browsers like Apple’s Safari and Google’s Chrome without any plugins whatsoever, and look great on iPhones, iPods and iPads.

Fifth, there’s Touch.

Flash was designed for PCs using mice, not for touch screens using fingers. For example, many Flash websites rely on “rollovers”, which pop up menus or other elements when the mouse arrow hovers over a specific spot. Apple’s revolutionary multi-touch interface doesn’t use a mouse, and there is no concept of a rollover. Most Flash websites will need to be rewritten to support touch-based devices. If developers need to rewrite their Flash websites, why not use modern technologies like HTML5, CSS and JavaScript?

Even if iPhones, iPods and iPads ran Flash, it would not solve the problem that most Flash websites need to be rewritten to support touch-based devices.

Sixth, the most important reason.

Besides the fact that Flash is closed and proprietary, has major technical drawbacks, and doesn’t support touch based devices, there is an even more important reason we do not allow Flash on iPhones, iPods and iPads. We have discussed the downsides of using Flash to play video and interactive content from websites, but Adobe also wants developers to adopt Flash to create apps that run on our mobile devices.

We know from painful experience that letting a third party layer of software come between the platform and the developer ultimately results in sub-standard apps and hinders the enhancement and progress of the platform. If developers grow dependent on third party development libraries and tools, they can only take advantage of platform enhancements if and when the third party chooses to adopt the new features. We cannot be at the mercy of a third party deciding if and when they will make our enhancements available to our developers.

This becomes even worse if the third party is supplying a cross platform development tool. The third party may not adopt enhancements from one platform unless they are available on all of their supported platforms. Hence developers only have access to the lowest common denominator set of features. Again, we cannot accept an outcome where developers are blocked from using our innovations and enhancements because they are not available on our competitor’s platforms.

Flash is a cross platform development tool. It is not Adobe’s goal to help developers write the best iPhone, iPod and iPad apps. It is their goal to help developers write cross platform apps. And Adobe has been painfully slow to adopt enhancements to Apple’s platforms. For example, although Mac OS X has been shipping for almost 10 years now, Adobe just adopted it fully (Cocoa) two weeks ago when they shipped CS5. Adobe was the last major third party developer to fully adopt Mac OS X.

Our motivation is simple – we want to provide the most advanced and innovative platform to our developers, and we want them to stand directly on the shoulders of this platform and create the best apps the world has ever seen. We want to continually enhance the platform so developers can create even more amazing, powerful, fun and useful applications. Everyone wins – we sell more devices because we have the best apps, developers reach a wider and wider audience and customer base, and users are continually delighted by the best and broadest selection of apps on any platform.

Conclusions.

Flash was created during the PC era – for PCs and mice. Flash is a successful business for Adobe, and we can understand why they want to push it beyond PCs. But the mobile era is about low power devices, touch interfaces and open web standards – all areas where Flash falls short.

The avalanche of media outlets offering their content for Apple’s mobile devices demonstrates that Flash is no longer necessary to watch video or consume any kind of web content. And the 200,000 apps on Apple’s App Store proves that Flash isn’t necessary for tens of thousands of developers to create graphically rich applications, including games.

New open standards created in the mobile era, such as HTML5, will win on mobile devices (and PCs too). Perhaps Adobe should focus more on creating great HTML5 tools for the future, and less on criticizing Apple for leaving the past behind.

Steve Jobs
April, 2010

Apple Inc. (AAPL) is expected to report strong double-digit gains in both revenue and earnings for the March quarter, as analysts see the company’s iPhone and Mac products continuing to rack up strong sales – offsetting any weakness in the company’s iPod line.

Apple is slated to report results for its second fiscal quarter after the closing bell on Tuesday.

Net income is expected to soar by 88% to $2.25 billion, with earnings per share coming in at $2.45, according to consensus estimates from Thomson Reuters. In the same period last year, the company earned $1.21 billion, or $1.33 per share.

Revenue is forecast to jump by 27% to $12 billion.

“We continue to believe that Apple is positioned to outperform in this tough macroeconomic environment with its defensible strategic and structural advantages and its vertical integration,” Shaw Wu of Kaufman Bros. wrote in a note to clients on Monday.

For analysts, the main question is not whether Apple will meet the targets, but whether it will exceed them enough to justify the recent run-up on its stock price, which has jumped by 16% since the first of the year compared to a 9% gain for the Nasdaq in that same time.

The shares briefly crested the $250 mark on Friday – a fresh all-time high on a split-adjusted basis, and double their level from 12 months prior.

The latest on that alleged iPhone 4G prototype: Brian Lam, Gizmodo’s editorial director, has published an official letter he received from Apple requesting that the device be returned immediately. Gizmodo believes that such official communication proves the device is real. However, it should be noted that this does not necessarily mean that the device is the next iPhone–just that it’s an Apple prototype of some sort.

How the Phone Was Found-
The iPhone 4G prototype–at least, that’s what Gizmodo assumes it is–was reportedly found by an anonymous bar-goer at Gourmet Haus Staudt, a German beer garden in Redwood City, near San Francisco. The phone was discovered on a barstool at midnight on Thursday, March 19. The person who found the phone asked around the bar to see if anyone had lost an iPhone 3GS (the phone had a case on it that made it look like a 3GS), but nobody claimed it. The person then unlocked the phone and found the Facebook page of Apple software engineer, Gray Powell, still signed in. The person decided to try to return it in the morning.

Gizmodo says that the person woke up to find the phone dead–thanks to Apple’s MobileMe service, which allows users to wipe their stolen iPhones of all data, remotely. The person then noticed the phone looked different from other iPhones–for one thing, it had a front-facing camera–and managed to remove the “disguise” case. Upon discovering that this iPhone was not like any other iPhone out there, this person promptly forgot their promise to find Gray Powell and return the phone, and started selling to the highest bidder.

According to Engadget, they got their dirty little palms on a new 4.0 iPhone.

To see more pix, go to Engadget.