9to5 Staff

 Microsoft seems to be changing its attitude to the Yahoo deal, with the company’s bombastic boss, Steve Ballmer, changing his tune on the deal.

Microsoft is offering $44.6 billion to acquire Yahoo, but management there are stoutly resisting the offer, even though Microsoft is threatening to launch a proxy vote battle to see the current board replaced.

Yahoo’s resistance is so strong, including an unusual ads sharing deal with Google, that now Ballmer may be considering how he can exit the deal without appearing a complete failure – in the week CNBC’s Jim Cramer called Windows "irrelevant". "We’re prepared to move forward without a merger with Yahoo," Ballmer said onstage at a technology conference in Milan.

"Today Google has the lead, there’s no doubt about it and I wanna make sure that they have plenty of competition," Ballmer said. "We think the best way to move that forward quickly is to come together with Yahoo. I hope that it works, but if it doesn’t we go forward alone."

[youtube http://www.youtube.com/watch?v=tmja_g5h4Fg&hl=en]

 Apple raised $378 million through iPhone, iPhone accessory sales and payments from carriers, the company revealed during last night’s financial call.

CFO Peter Oppenheimer revealed the scale of payments from carriers during his preamble last night. He admitted to 1.7 million iPhone sales in the March quarter, and also revealed total deferred revenue from iPhone and Apple TV was $1.93 billion at the end of the March quarter, compared to $1.44 billion at the end of the December quarter.

"Because we announced the specific new features to be included in the iPhone 2.0 release and plan to provide them to iPhone customers as a free upgrade in late June, we will delay the start of revenue recognition for all iPhones sold on or after our March 6th announcement date until the iPhone 2.0 software is delivered," Oppenheimer added.

The revenue and cost of sales associated with these iPhones will be recognized over the remaining terms of their respective 24-month estimated lives, he added.

 CRM software maker Salesforce and Apple seem to be growing increasingly tight, with a major move to Mac now the speculation of the day,

At Apple’s March iPhone event, a Salesforce representative took the stage to demonstrate a version of that company’s sales software running as a native application on the iPhone.

“The opportunity to use the innovative iPhone OS platform to deliver compelling Software-as-a-Service applications to mobile users is empowering to us, and ultimately, our customers, “said Marc Benioff, chairman and CEO of Salesforce.com. “They are asking us for new ways to harness the power of Force.com to access their business information on any device regardless of location.”

Now it looks like Salesforce has taken Apple’s Mac message to heart – and plans to migrate its 4,000 employees to the Mac, making the company one of the largest enterprise software companies to use the Mac. The reason for the switch is telling, according to blogger (and iPhone developer) Alex Curylo: "Why, you ask, Security! The resources it takes to defend against all the stuff the baddies throw at a PC, it’s just cheaper/easier to pay a few bucks more for a Mac and not have any of those issues." It’s a major bonus for Apple’s increasing acceptance by business and enterprise shops as Mac sales climb 50 per cent year-on-year.

 There’s a new street art, and it’s iPod graffiti, at least that’s the latest Flickr picture that’s generating a buzz online, thanks to Jason Escapist.

 Apple’s stock options accounting nightmare just never seems to go away, with papers filed last week in the Superior Court of California, County of Santa Clara claiming new evidence proving management were "aware of and participated in the backdating scheme".

The case, number 1-08-CV-110403, was filed by the Boston Retirement Board, claiming new evidence to have been unearthed as a result of an investigation of Apple’s own confidential records. Boston Retirement Board says it cannot describe this evidence at this stage of the court filing because the court has not ruled yet on how the confidential information should be treated. 

It says the evidence may have to be submitted in a sealed form to the court, arguing that the case should be heard (even though the window in which such a case could be filed has passed) because of the time it took to secure the necessary clearance to examine Apple’s confidential papers. 

Papers have been filed against Jobs and former/current Apple directors/officers: William Campbell, Millard Drexler, Arthur Levinson, Jerome York, Gareth Chang, Edgar Wollard, Fred Anderson and Nancy Heinen. 

The Boston Retirement Board is attempting to prove Apple wasted more than $105 million on the extra value of backdated stock options granted to CEO Steve Jobs, reports FindLaw.com. It alleges Jobs and the directors knew options were not dated correctly. We’re just hoping the fallout from Apple’s admitted mistake fades away.

A moment of clarity perhaps?  Jim, though he still talks about ‘Conversation’ (is that his word?) seems to get at what differentiates Apple and it’s relationship with consumers.  As Apple users, it is nice to see someone from a financial  (he seems like he uses a cocaine IV) background that sees this relationship.

Update: Cramer simply can not get over this funky 5 year old technology called iChat.  Next thing you know, he’ll be on to this new browser called "Safari"

40% US Sales increase
47% international

Retail 50% new to Mac

51% growth year 3.5 times PC growth

2-3 times for last 3 years

37% desktop growth

portables 61%

MacBook Air  – No number
3-4 weeks channel inventory

73% US Marketshare of iPods

45 more stores in fiscal 2008

expecting 33% growth over year ago

Apple released some hard figures today ahead of the webcast:

• 2,289,000 Macs shipped which represents 51% unit growth, 54% revenue growth
• 10,644,000 iPods shipped which represents 1% unit growth, 8% revenue growth
• 1,703,000 iPhones sold (not going to hit 10 million at this rate)

Revenue of $7.51 billion and net quarterly profit of $1.05 billion, or $1.16 per diluted share

Q2 2007 was $5.26 billion revenue and $770 million profit, or $.87 per diluted share

International sales accounted for 44 percent of the quarter’s revenue.

RBC Capital analyst Mike Abramsky was pretty close with picks of:

Profit: $1.11 per share
Revenue: $7.2 billion
Gross margin: 34 percent
Macs: 2.2 million
iPhones: 1.8 million
iPods: 10.0 million
Current rating: Outperform
Price Target: $190

According to EETimes,

On Monday (April 21), P.A. Semi informed its customers it was being acquired and it could no longer guarantee supplies of its chips. The startup did not identify the acquiring company but said that company may be willing to supply the chip on an end-of-life basis, if it could successfully transfer a third-party license to the technology.

That license in question is probably a PowerPC architectural license that P.A. Semi has with IBM Corp. that allowed the startup to design its own PowerPC chip from scratch. IBM was not immediately available for comment on the issue.Apple has not publically detailed its plans for the acquisition, but may speak on the issue during an earnings cal scheduled for today (April 23). P.A. Semi customers were told the acquiring company was not interested in the startup’s products or road map, but is buying the company for its intellectual property and engineering talent.
P.A. Semi reportedly has about 150 employees and is being acquired by Apple for $278 million.

P.A. Semi’s customer base was largely military and there is even some concern that the U.S. government may not let the buyout happen unless the parts get delivered.

So the question: What is Apple going to do with all of this engineering talent – for which it paid almost $2 million a head for? (including support staff?!)

Wow, we didn’t see this coming at all.  Apple buys PA Semi, a fabless chip company that specializes in high performance, low power PowerPC based processors for $278 million in cash.   The founder of P.A.Semi, Dan Dobberpuhl, has a history of designing StrongARM chips – the kind currently in use in the iPod Touch and iPhone – from his former work at DEC.

Let’s get this straight.  This isn’t a company that makes graphics chips or coprocessors or anything else.  They make CPUs and they are based on the Power architecture that they license from IBM.    This means that Apple’s long term strategy includes the PowerPC platform?  In their handhelds – iPods and iPhones?   Will we see a  2Ghz PowerPC iPhone in the future? 

How about desktops?  Gaming systems? 

And what about the Intel Atom?  Lots of questions we’ll hopefully get answers to later today.

Or maybe Apple just bought PA Semi for their talent and expects the new company to help integrate chips into Apple products.

Still.  Wow.

More 9to5mac coverage here and here

The announcement that Apple bought P.A. Semi today for $278 million brings up a lot of questions.  What is this company about and why would Apple buy them?  At first glance, it seems very strange.

P.A. has one major product and about 150 really smart engineers.  They have lots of venture capital including money from Texas Instruments.  They also have a genius of a CEO in Dan Dobberpuhl, who has a long history in designing revolutionary chips – including DEC Alpha and the ARM architecture while he was at DEC in the 1980s and 1990s.

The most interesting thing about this purchase is the nature of P.A.’s one major product.  The PowerPC chip called PWRFicient.  Yes, the same architecture that Apple dumped in 2005 in favor of Intel’s x86 architecture.

As the name implies, the chips are extremely efficient low-power versions of the PowerPC…nothing that would find its way into a desktop or power laptop.  However, Apple is certainly interested in the low-power game, which in fact was the original reason for leaving IBM: Steve Jobs said "this performance/watt graph shows us we must move to Intel".

So what is this chip going to be going into?  We’d say anything between a MacBook Pro and iPod Nano is a good candidate.

When?  Who knows how long this has been brewing behind closed doors?  Apple may have a product ready at WWDC (Tablet?) or it might be a year out.   We’d guess somewhere in between.

Here’s where it gets interesting.  The PWRficient chip builds on StrongARM’s legacy of power efficiency while adopting a PowerPC core – take a gander at Dan’s (may we call you Dan?) Presentation (PDF link).  StrongARM is the current processor technology deployed in Apple’s iPod Touch and iPhones.

More info:

http://pasemi.com/processors/index.html

http://en.wikipedia.org/wiki/PWRficient

http://www.electronicsweekly.com/Articles/2005/10/24/36730/pa-semi-attacks-performancewatt.htm

In April 2005, Apple was at a crossroads.  IBM wasn’t delivering on its 3GHz chip promises and wasn’t making efficient, low power, high speed versions of its processors.  It just wasn’t a priority.  Apple had to do something.  At the time, that something turned out to be moving to Intel x86 processor lineup which blew away anything IBM had to offer (Apple was still using Motorola/Freescale G4s in its laptops) in terms of power/watt.

The Register broke the story a year later that there was a third player involved in that switchover.

P.A. Semi

P.A. Semi had a chip that would have kept Apple on the PowerPC processor roadmap for the next few years.  It had a low power 2GHz 64-bit dual-core PowerPC processor that matched up very well against Intel’s Core Duo line.  The problem was that this chip wasn’t going to be able to be produced in large quantities until 2007.  Far too long at that point to wait on an unproven technology.

Had Apple decided to go with P.A. Semi at the time, Adobe, Microsoft, and others wouldn’t have had to port their apps to work on Intel. Rosetta wouldn’t have had to be slapped on every Intel machine either.

Conversely, Mac users wouldn’t have had the option of using Parallels and VMWare Fusion as well as benefitting from lower-cost Intel parts and components.

Obviously Apple never lost touch with P.A. Semi and never really stopped working with them on some level.  Apple now sees their technology as so incredibly important to their core business that they’ve bought them with cash.

It is amazing how things in the technology industry come full circle…in such a short amount of time.

Mick Jagger may push his music through any digital music system going, but he’s an iPod user when it comes down to personal choice. And the Rolling Stones used Macs and GarageBand to help create their most recent album.

Variety has an interview with the band’s tech guru, Richard Kerris – yes, that Richard Kerris, the man who bought Maya to Macs, who led Apple’s video application teams and now works at Lucasarts. Kerris spills the beans on the Rolling Stones’ Mac and iPod usage. Each live performance during the band’s 40 Licks tour was filmed and pumped into a Mac, with stage crew then transferring the footage to the band’s personal iPods. When the band left the stage, the iPods containing their performance were popped into their pockets as they walked to their cars, and the band would then watch the footage back at their hotel. Soon after the iPod came out, "Mick was right on it. He was like, ‘I want to get every night’s show so I can listen to it that night and know what was good and what didn’t work, etc.’ So they established this whole thing working with the background crew, I showed them where you could daisy-chain the iPods and synchronize them at once. So it was really fun," Kerris explains. Kerris also reveals the ‘Stones used GarageBand for their last album as they did all their demos.

 Apple’s planning an international campaign to boost iPhone sales and propel it towards its ten million unit sales target for 2008.

Emerging reports claim Apple will introduce the 3G iPhone to the Belgian market by June, making available through all local mobile network operators.

Earlier this week La Repubblica reported that the iPhone will debut in Italy with Telecom Italia but will be sold unlocked.

These reports confirm Apple is abandoning its previous bring to market iPhone strategy, in which it reached exclusive distribution deals with a key partner in each territory.

While these deals have seen some success in terms of attracting new users to the chosen networks, in sales terms things haven’t truly worked out.

The Italy and Belgium deals seemingly propose a new M.O., in which one local network may have exclusive distribution rights for the device for a short time (a month or two) after which it will be made more widely available from multiple networks. Essentially users will be able to buy an iPhone and use them on the network of their choice. It will be sold unlocked.

Apple’s iPhone sales in Europe were dampened by its previous strategy. Mobile phone users here are a sophisticated bunch, and disliked it that Apple forced them to sign-up to a single network, rather than being able to shop around for the best deal or the most effective coverage for their area. A move away from exclusivity also removes one of the primary reasons customers weren’t purchasing the device.

Apple’s also set to answer a second major criticism – lack of 3G support, with an iPhone capable of support for the fast wireless data transfer network standard expected to ship by June. 

With a host of applications set to make their debut at WWDC 2008 (also in June), and new features within the in-development iPhone 2.0 software, Apple is also responding customer demands for features such as: MMS messaging, Bluetooth streaming support, voice over IP and enterprise class security.

Price remains a sticking point, but it seems the company is plotting a course to make iPhones more widely accessible. American Technology Research analyst Shaw Wu yesterday predicted: "In addition to a 3G version, our sources indicate that the 2.5G model could see a minor casing change and lower price point closer to $299-349 vs. its $399 price today."

Apple also seems to be plotting a more diverse iPhone roadmap, planning future versions which should be cheaper, if less well-featured, than before.

Apple’s PA Semi acquisition is the biggest news since the Intel switch, take a look at what our team’s dug up around the site. We expect more revelations during the company’s financial results call tonight. Despite the importance of Apple’s big news, the Mac news web is on fire this morning, read on…

Mac share doubles

Lehman Brothers yesterday began coverage of Apple stock, offering a $195 target price and predicting Apple’s market share will double by 2013. "Macs may have reached a tipping point with share on its way toward doubling over the next 3-5 years," said analyst Ben Reitzes. The analyst also observes Apple to be the most well positioned company to exploit the move toward mobile smart devices. More here.

Sony buys Gracenote

Look, Sony America has bought the Gracenote service. We don’t know how this is going to play out. It’s important because Gracenote (once known as the CDDB) is the software technology that drives the track and album recognition facility in iTunes – it’s what iTunes uses to identify the contents of CDs as you put them into your Mac or PC. And Gracenote is used by other media playing software, too. We’d like to know just how much data Gracenote has collected on user’s personal collections, and we’d also like to know what Sony plans to do with the service?

Yahoo earnings climb

Yahoo management seem to us to be doing a pretty good job of keeping Microsoft’s hostile takeover at bay, revealing a strong set of results (PDF). Microsoft is threatening to get dirty in its takeover bid with a proxy war, we just wonder how many of Microsoft’s former competitors also plan to engage in a protective mission. And if Microsoft fails in its attempt, well, will it be the beginning of the end for the world’s largest software company?

Microsoft dumps on customers

Remember MSN Music? Microsoft’s first attempt at an iTunes-killer? We do. Remember the DRM it used, and the way the company then dumped on its partners when it introduced the Zune? We do. Remember the debate about DRM, and what happens if the company that creates the DRM on music purchases ceases to support it? We do. Well, now Microsoft has royally dumped on MSN Music customers, announcing that it will no longer supply authorization keys for songs purchased from the defunct MSN Music service. That means that when your authorised set of computers stop working, so will the music you paid for. This underlines the inherent danger of DRM in general, and reinforces music fans in their negative perception of Yahoo’s unwanted suitor. We think former MSN Music customers should kick up a fuss, or switch to Mac.

Apple and design

Apple is the world’s leading designer of consumer electronics products, winning prestigious design awards on a regular basis. No surprise then that the company is once again in the running for the world’s most important design awards, with no less than eight products nominated for this year’s D&AD awards. 

Steve Jobs, Apple and Disney

Not news, per se, but fascinating all the same. Take a look at SeekingAlpha’s interesting opinion piece, in which Jason Schwarz speculates Apple boss, Steve Jobs, used Eisner’s Disney turnaround as a partial blueprint to transform Apple’s fortunes on his return to the company.

Mac’s get satellite TV

From the whisper and rumour dept., Terratec and Elgato are developing a USB TV card for Macs that accommodates a slot for a satellite TV validation card, effectively opening your Mac up to become a satellite TV receiver. It’s pretty cool.

Sorry for the late arrival of the round-up today – we’ve had a lot on our mind.

A midnight stroll down Regent Street yielded a particularly interesting view of the flagship Apple store.  It seems the place is getting a major makeover.  Massive chunks of the floor were being upgraded as well as a few large displays being unveiled.  Something in the works for tomorrow to coincide with the earnings call?  Doubtful…but the store is going to look a little "spiffier".  More pictures…

Update: My 2am grammar/spelling sux and iFoAppleStore says that this was an update to accommodate crowds.

 Apple’s US network partner AT&T this morning revealed positive financial results, boosted by its wireless unit profits climbed 22 per cent. However, investors were disappointed at the lack of any immediate breakdown in iPhone sales, sending Apple’s stock on a downward trajectory, currently trading at $160.26 (down $7.90).

Investor anxiety is high at present, with deepening gloom in the US economy and depressing forward analyses of consumer electronic spending. And with Apple set to reveal its Q2 FY 2008 financial results tomorrow, lack of an admitted iPhone sales boost seems to have been sufficient to drive the sell-off, regarded by some on financial bulletin boards as representing particularly heavy trading.

Despite the malaise, AT&T did admit some iPhone goodness: "iPhone continues to be very popular with customers, feedback is very good," the company said.

AT&T also confirmed a high average revenue per iPhone user, characterising these as in the "mid to upper 90’s" across its customer base.

The iPhone’s also acting as a miracle cure to attract new users to AT&T, the company admitted. "We continue to see customers adopting iPhone. Over 40 per cent are new to us."

AT&T’s 22 per cent gains were driven, at least in part, by iPhone usage and sales. The company revealed an 18.3 per cent increase in wireless revenues with wireless data revenues from areas such as internet access, messaging and media bundles up 57.3 per cent.

AT&T’s reported first-quarter 2008 net income totaled $3.5 billion, up 21.5 percent from $2.8 billion in the year-earlier first quarter, and reported earnings per diluted share totaled $0.57, up 26.7 percent from $0.45 in the first quarter of 2007.

All eyes now fix on Apple’s financial results announcement tomorrow. Analysts are generally optimistic on what is to be revealed, but many will be looking to Apple’s traditionally conservative guidance to figure out just how well company management hope to survive the current downturn.

 Apple’s legal teams are closing down unauthorised manufacturers of iPhone clones, applying the full extent of the company’s legal protections to protect its market.

It appears firms are both supplying iClones to the Chinese market and distributing them into markets outside of China.

Under no choice but to protect its trademarks, Apple is forcing them to stop with heavy threats. Apple is hitting them with the abuse of patents, passing off and similarity between the iPhone and the products the cloners are putting out.

Apple’s serious about closing iCloners down. The company is reportedly demanding they cease manufacturing and distribution of these non-Apple products, requiring they hand over any stock in hand, supply supplier details and is demanding contributions toward legal expenses, as well as damages.

At least one unlicensed iCloner complains Apple’s actions have sent them into bankruptcy (though quite why they felt making iPhone clones was a valid business plan in the first place escapes us here).  

A report explains Apple’s legal action against one iCloner, Digital Playworld. In order to avoid an expensive court case, that company’s Simon Rimmer reached an out of court deal: "I had to take several undertakings, which included amongst other things: Remove all said items from my site (or any other sites) and stop selling them. Sign an oath that I would not offer to sell, market, import or stock any products which are strikingly similar in design to Apple’s registered designs. Deliver to Apple’s legal team all remaining products in my possession, suppliers details, prices paid for them, numbers imported, marketed and sold." Rimmer had to contribute to Apple’s legal expenses and damages.

 The talented hands at Computer Choppers have put together this most enticing creature of desire, a gold and sapphire MacBook Air.

Essentially, the modification uberkinds have taken a standard edition of the lightweight Apple laptop and covered it in 24-carat gold, applying dozens of multi-coloured sapphires onto the Apple logo on the lid of the device.

Sure, gold isn’t the most ‘now’ choice in precious metals for the fashionistas, but it’s a recession-proof investment, and the modders also offer iMacs in platinum, so it’s not all bad. The price isn’t too appalling: $5,000 will get you one of these blinged-up MacBook Airs (normal price $1,799), which add just a couple of ounces to the product’s base weight. The sapphires cost you extra, though, you’ll need another 3,000 bucks for these.

Additional details: The modded-MacBook Air’s a standard 1.6GHz model with 2GB memory and an 80GB drive. And the company is also offering a polished gold external SuperDrive to go with its golden system.

 Just a rerun of an old favourite: A younger Steve Jobs speaks on Microsoft. Watch out for his classic delivery of the line, "for the most part". Enjoy!

[youtube http://www.youtube.com/watch?v=upzKj-1HaKw&hl=en]

It’s all about financial chatter and multimedia on the Apple news front this morning, with more analysts offering positive targets on the company’s stock and the debut of ITV on the Mac. 

In other news, Apple ships the Aperture SDK and reveals many plug-ins to match; Apple further improves its Chinese retail presence; MacBook Pro software updates and news Apple plans an IM client for iPhone. Read on…

Financial Chatter

As my colleague Cleve Nettles reported this morning, Apple’s at number 103 in the Fortune 500 list for 2008. That incredibly significant inclusion surrounds the fact most Wall Street analysts now think Apple has a strong chance to succeed, with Mac sales climbing much faster than the industry average. Analysts at Leham Brothers, RBC Capital, Goldman Sachs and Caris & Co have all issued positive comment on the stock in advance of Apple’s Q2 financial results announcement tomorrow. Price targets are slowly climbing back toward Apple’s 52-week top end of $200 per share.

iTunes, ITV and the Mac

UK broadcaster ITV this morning took two steps toward the Apple ecosystem, making selected shows available for purchase and download through iTunes UK, and launching the beta Mac version of its online catch-up TV service using Microsoft’s Silverlight technology.

Aperture plugs-in

Apple this week released the software development kit for Aperture which enables third party developers to build plug-ins for the professional application, extending its functionality. In conjunction with the release, several developers have moved to immediately introduce plug-ins, including the Dfx Digital Filter Suite from the Tiffen Company and Power Stroke, Light!, and Ozone from Digital Film Tools. Plug-ins from several other developers are expected soon.

China calling

China’s going to be in the headlines all year with global media attention focusing on the world’s leading internet-connected nation; now Apple’s opened its first store-in-store with Best Buy in Shanghai while local reports confirm two own-brand Apple stores are set to open in Beijing.

Updated laptop updater

We think this is happening too much recently. Apple has moved fast to ship an updated version of the MacBook Pro firmware update it shipped earlier this month. MacBook Pro EFI Firmware Update 1.5.1 "fixes several issues to improve the stability of MacBook Pro computers," Apple explains. Links to the previous iteration of the software no longer work – and reports claimed the previous build caused blank displays.

IM for iPhone

As we all know, the problem with the iPhone SDK is it doesn’t allow developers to have their apps running as a background application, which will cause some headaches for those cooking up Instant Messaging (IM) applications. Last night it emerged Apple holds a patent for an IM client for the iPhone. End of story.