Byte of the Apple - BusinessWeek

Apple: 1.5 Billion iPhone Apps Downloaded

Arik Hesseldahl — Tue, 14 Jul 2009 08:45:36 -0500

Apple just announced the latest figures for application downloads for the iPhone.

The new milestone is 1.5 billion apps downloaded. That's an improvement of 500 million since it hit the 1 billion-download mark on April 24, and it works out to a daily run rate of 6,173,000 million apps downloaded per day.

The store now offers 65,000 applications, up from 35,000 when last counted, for an average of 370 new applications per day.

Apple provided no breakdown on how downloads of free apps compare to paid apps.

Apple's Rumored Tablet Makes Sense, But Faces Challenges

Arik Hesseldahl — Mon, 13 Jul 2009 18:46:25 -0500

The rumors about an Apple tablet device continue to gain strength, and the fact is they make perfect sense.

With the iPhone still selling at a healthy clip, and Mac sales still going strong, Apple will be under growing pressure to bring out a new class of product to keep its revenue base growing. The latest indications that a tablet, a device that's larger and presumably more powerful than the iPod touch, but not quite as large or powerful as a full-fledged notebook is in the offing, at least according to reports that surfaced in Taiwanese media. Contract manufacturers Foxconn, and two others, Wintek and Dynapak have received orders for the device, according to reports in Information Times. (Here's a link to a translation of the original report.)

Such a device would fit logically in Apple's product lineup and as Spencer Ante and I reported in April, there are people in the wireless industry who've seen just such a device. Now that the iPod touch has proven itself so useful as an Internet device, it makes perfect sense for Apple to offer one that sports a larger screen and perhaps some improved features, like a more robust Web browser, and maybe a front-facing camera for video chats. I like my iPod touch so much I keep it on my bedside table for checking email, the weather and as an iTunes remote. A bigger screen might make it better for reading, and so conceivably give Apple a more complete answer to Amazon's Kindle e-reader device.

But there are many questions I have about it. For instance: Will it be more closely related to the iPhone or the Mac? Will it be, for all intents and purposes a larger iPod touch? Or will it do more? Consider for a moment: Apple's MacBooks all sport front-facing cameras for video chats. This handheld could conceivably do the same thing, and thus open the door to video chats via iChat or Skype.

One important factor will be the cost of the display. If as one could reasonably expect, Apple uses a multi-touch interface similar to that found on the iPhone and the iPod touch, it would be both wondrous to use but expensive to build.

That's going to force Apple to strike a difficult cost balance. I have some serious doubts that consumers are going to pay Mac-like prices for this gadget. A research note from Gene Munster at PiperJaffray added to the chatter. Having spoken to a Taiwanese component supplier that he declined to name, he wrote that he continues "to believe that Apple will launch a tablet, not a Netbook, by early calendar year 2010," and that he believes it will be priced in the $500 to $700 range.

That price range is too high for a few reasons. If this tablet is not a personal computer, then it is, by a reasonable argument something less than a personal computer. As such, in the mind of many consumers, it should be priced at a level below that of the cheapest personal computer, in this case, the Mac Mini, which starts $599, only $200 more and the highest-end iPod touch, at $399. Knock the price of the that iPod touch to $250 or so, and the sweet spot price for this tablet becomes apparent: $400 to $450.

But can Apple build such a tablet and sell it at that price profitably? The key hurdle is going to be the display. The 3.5-inch multi-touch display module is the second most costly component in the iPhone 3GS, according to an iSuppli teardown analysis done last month, and is estimated to add $19.25 to the iPhone's bill of materials. And the cost isn't coming down, says Vinita Jakhanwal, an
iSuppli analyst. "The pricing hasn't yet come down to commodity levels, and so there will be significant costs if the size of that display grows to five or seven inches," she says.

A doubling of the display size doesn¹t necessarily indicate a simple doubling of the cost of the display she says. It might cost more to manufacture. A bigger screen might require more powerful chips to drive it pushing the materials cost on the device even higher. That in mind, she suggests that Apple might opt to go grow the size of the screen to only about 5 inches. "It makes for a more logical progression," she says.

And the most likely timing for such a release? I'd say September. As I've noted before, Apple has released a new iPod during the fall in every year since 2005.

Apple Will Strike iPhone Deal In China Three Months Earlier Than Expected, Says Analyst

Peter Burrows — Fri, 10 Jul 2009 14:15:11 -0500

The Chinese government received an application from Apple today, seeking a Network Access License to sell the iPhone for officially-sanctioned use in the country. So says Wedge Partners, a Colorado-based stock research firm.

Maybe more surprising is that the application is for an iPhone that doesn't include wifi connectivity. This has been a sticking point in negotiations with the Ministry of Industry and Information Technology, which wants the phone to only run on the cellular networks. “Apple was hellbent on having the iPhone be wifi-enabled," says Wedge analyst Matt Mathison. "The Chinese government has been just as adament that it not be."

This removes one more obstacle towards getting official clearance to sell iPhones in China--beyond the million or more people who are using unlocked versions of the phone brought into the country from elsewhere. Now, that official launch may come three months or so earlier than expected, says Mathison. He says it typically takes four to six months for such an application to be accepted. And he believes the approved license will accelerate talks with China Unicom, one of the three big state-controlled carriers in China. As such, "we now expect it to come before the Spring Festival in [January] 2010."

Wedge believes the iPhone outlined in the application runs on the GSM standard, like all other iPhones, and is not a new model that runs on the CDMA standard used by huge Chinese carriers such as China Telecom. That jives with what Apple has said in the past, despite talk of it doing a deal with Verizon, another huge CDMA-based carrier. Apple chief operating officer Tim Cook told stock analysts in April that CDMA "doesn't rerally have a life to it after a point in time," since it would be largely replaced by the LTE standard within a few years.

Apple did not comment on Wedge's report, except to note that Cook said during that April earnings call that the company "would like to be in China within the next year (i.e. anytime within the next 12 months) and we’re clearly working on that."

If Wedge's timetable proves to be accurate, it will be another case of Apple under-promising and over-delivering--by about three months.

Consumer Reports Loves The iPhone, Twice

Arik Hesseldahl — Wed, 01 Jul 2009 16:15:08 -0500

In its latest round of ratings on smart phones, Consumer Reports has given Apple's iPhone its two top spots.

Two? Yup. The iPhone 3GS came in at number one, and the iPhone 3G came in at number two. On the 3GS, the display, battery life and other features is what carried the day over the Blackberry Storm and the Palm Pre, though CR says those models bested the iPhone on messaging. CR also produced an iPhone vs. Palm Pre video that's worth watching.

Mac Sales Get A Shot In The Arm From Maine Schools

Arik Hesseldahl — Wed, 01 Jul 2009 15:36:17 -0500

Good news for Apple on the Mac education sales front. The Maine Department of Education said it has placed an order with Apple for 64,000 MacBooks and will order another 7,000 within the coming week. They'll be going to students in grades 7 through 12 throughout the state. The machines are being purchased under the auspices of the Maine Learning Technology Initiative, which has provided students in that state with Macs since 2002. More details in the original announcement here. Meanwhile Ars Technica's Chris Forseman notes that Kansas, Iowa and Louisiana are handing out Macs to students as well.

How Evernote Is Related To Apple's Newton

Arik Hesseldahl — Wed, 01 Jul 2009 14:05:32 -0500

Last night as I was closing today's story about the application Evernote, I learned an interesting bit of trivia, that Newton fans will find interesting.

Evernote founder Stepan Pachikov was a co-founder of ParaGraph, a Russian concern that in 1993 supplied the CalliGrapher handwriting recognition engine to Apple's Newton line of PDAs. Retired in 1998 not long after Steve Jobs took over as CEO from Gil Amelio, the Newton is fondly remembered by enthusiasts, but more widely remembered for being lampooned by cartoonist Garry Trudeau in Doonesbury, mainly because its text recognition abilities weren't quite ready for prime time.

As anyone who's used it can tell you, one of Evernote's best features is its ability to quickly recognize text in photos, and even in images of handwritten notes on paper or white boards. I asked CEO Phil Libin if there were any connection between the two. There is, absolutely, he said. Some of the people who worked on the original CalliGraphy engine are working on Evernote's text-recognition capabilities now, and so the two products are very much related, he says. So if you're an Evernote user now, and were a Newton user at any time in the past, you can appreciate the connection.

It's Official: Steve Jobs is Back at work at Apple

Arik Hesseldahl — Mon, 29 Jun 2009 12:48:16 -0500

Bloomberg News moved an alert on its wires at 12:36 PM Eastern Time saying that Apple CEO Steve Jobs is back at work. The Associated Press followed up with an alert of its own at 12:48 PM. This now makes it official.

I don't know exactly why anyone should be surprised, given how its both the end of June, and Apple has consistently, maddeningly, repeated over and over in response to practically any question about the CEO, that "Steve looks forward to returning to work in June."

That statement, usually attributed to Apple spokesman Steve Dowling has been replaced by a new one: "We are very glad to have him back."

Additionally, there was the little bit about Steve being quoted in the press release concerning sales of the iPhone 3GS.

Apple stock is up 32 cents or 0.22% as of 1:20 PM EDT.

The next step in the process is for Jobs to be seen at some kind of Apple event. I'd start looking for that in September. With the iPhone and MacBook upgrades now out of the way, there isn't a lot of major product news to expect from Apple for the remainder of the summer, though I should hedge that by saying that Apple hasn't — at least in recent months — been sticking to its well-worn product-introduction patterns.

For the last few years Apple has refreshed its iPod line every September since 2005, and it would seem that the iPod touch would be the next likely candidate for some attention. Now that the iPhone 3GS is sporting 32 gigabytes of storage capacity, it would make some sense for the iPod touch to go to 64 GB, and to perhaps get a camera and maybe even an internal microphone — for audio recording apps and for VOIP-over-WiFi apps like Skype, and to ship with iPhone OS 3.0 pre-installed. It would make sense for Steve to introduce just such a product in person at an Apple media extravaganza, would it not?

Steve Jobs Liver Transplant Confirmed By The Doctor Who Did It

Arik Hesseldahl — Wed, 24 Jun 2009 10:12:45 -0500

Finally there has been some official confirmation about the June 20th report in The Wall Street Journal that Apple CEO Steve Jobs has received a liver transplant. Word comes from the hospital where the operation took place, Methodist University Hospital Transplant Institute, in Memphis. The official press release from the hospital is here. The disclosure was made with the permission of Jobs himself, though there are still many details unknown, such as the date the operation took place, nor the precise nature of the condition from which he was suffering. More from the Associated Press here.

I've confirmed that Dr. James D. Eason, (pictured) program director of Methodist University Hospital Transplant Institute and the source of the hospital's statement, was the lead surgeon on the team who performed the transplant. Jobs is, Eason says, "recovering well and has an excellent prognosis," but declined to give any further information about his condition. Eason is a former Major in the US Air Force, received his medical degree from the University of Tennessee, and is an associate editor of the American Journal of Transplantation.

The hospital also shot down any speculation that Jobs' received any special treatment because of his wealth or status. Under a medical scoring system called MELD – short for Model for End-Stage Liver Disease – Jobs was the sickest patient on the waiting list with his blood type when a liver became available. More about the MELD system can be found at Medscape, and at Wikipedia

Apparently, Jobs picked a good place to have the transplant done. Methodist University Hospital performed 120 liver transplants in 2008, making it one of the ten busiest liver transplant centers in the U.S.

And while this disclosure may certainly cool any lingering criticism around how the transplant came to happen, it still satisfy the corporate governance critics who say Apple, and specifically its board of directors, hasn't been forthcoming enough with information around the medical condition of the CEO. But as I reported on Tuesday, there has been precious little guidance from the US Securities and Exchange Commission on precisely when the illness of a CEO becomes a material matter that must be disclosed to shareholders. That leaves companies to meet, arguably, only the minimum requirements of the law.

Update: Now the United Network for Organ Sharing has put out a statement on transplant. This is the organization that under federal contract operates the national Organ Procurement and Transplantation Network (OPTN), and it explains more about the MELD score. "Whenever a person known to the public receives a transplant, it is tempting to compare that person's waiting time to national averages," it says. "Any comparison of one person's experience to that of thousands of others can be misleading."

It goes on: "Liver waiting time is greatly influenced by a formula that assigns priority for organ offers based on the candidate's risk of dying within three months without a transplant. For candidates 12 or older, this formula is called a MELD score."

MELD uses tests of liver and kidney function, and can range from 6 which is least urgent, to 40, the most urgent score. Those candidates with a score of 15 or higher are at considerable risk of dying in the short term without a transplant. OPTN policy assigns a priority to liver candidates in the local region of the donor with a MELD score of 15 or higher before less-urgent candidates may be considered.

Of candidates listed in the United States with an initial MELD score between 19 and 24, half receive a liver transplant within approximately 15 weeks, the organization says. Of those listed with an initial MELD score of 25 or higher, half receive a transplant within 20 days. Candidates with lower MELD priority may often wait months to years for a transplant opportunity, it says.

We do not know what Steve Jobs' MELD score was. Based on the fact that it was reported first in January by Bloomberg News that Jobs was "considering" a liver transplant, and that the operation itself occurred in April, then we can deduct that his need for a transplant was fairly urgent, and as such that his MELD score was likely higher than 15. If this is the case, then it suggests that the illness was serious enough that Jobs was closer to death than anyone has yet indicated. It's hard to argue under any circumstances that this was not a material fact to which investors aren't entitled, medical leave or no.

Confirmed: Apple Sold 1 Million iPhone 3G S units

Arik Hesseldahl — Mon, 22 Jun 2009 08:32:40 -0500

Turns out that whisper number I mentioned earlier was on the mark. Official word out of Apple hot off the wires says that the company sold 1 million iPhone 3G S units over the weekend. Additionally, 6 million iPhone and iPod touch owners downloaded the iPhone 3.0 software over the weekend.

Interestingly, the press release quotes Apple CEO Steve Jobs, who as we all all know was revealed to have undergone a liver transplant two months ago. Having been out on medical leave since Jan. 5, he's expected back at work at the end of this month. The last time Jobs was quoted in an Apple press release was on Jan. 21 when the company reported earnings for its first fiscal quarter. Maybe I'm trying too hard to read something out of the tea leaves, but could this be the signal that Jobs is back on the job?

Apple stock is as I type, up slightly, by about 27 cents on the news in pre-market trading, after trading down by as much as a dollar less than an hour to go. More after the regular session opens.

Update: Piper Jaffray analyst Gene Munster says in a research note issued moments ago that the 1 million-unit number represents phones sold into the channel. What that means is that these are iPhones sold from Apple to retailers, to AT&T stores, and into its own retail channel, but he says that's a pretty good mirror of sell-through to end-users. "The one million units sold in the first weekend are technically one million units sold into the channel, but closely approximates sell-through. In other words, the one million units sold into the channel mirrors the sell-through number."

Meanwhile, Apple stock opened higher initially this morning by more than a dollar, but is now trading down about 70 cents.

Analysts Estimate Weekend iPhone Sales

Arik Hesseldahl — Mon, 22 Jun 2009 07:51:05 -0500

By all accounts weekend unit sales of the iPhone 3G S have been setting records in all the markets where they’re available, and now Wall Street analysts are giving their estimates. In conversations over the weekend I heard whisper numbers as high as 1 million units, though I think that is probably high.

Here’s what the analysts have to say this morning:

Gene Munster, Piper Jaffray: “We spent Friday at Apple stores in New York and Minneapolis quantifying the iPhone 3G S launch. Early sales indications including our survey results, comments from carriers, and lines at stores were more positive than we were anticipating. …The only true benchmark for judging the launch of the iPhone 3G S will be the time it takes Apple to sell 1m units (assuming the company announces the 1 millionth unit). Apple sold 1m 1st gen iPhones in 74 days and 1m iPhone 3G units in 3 days. … Our early read on iPhone sales for the first weekend is about 750,000 units.”

Yair Renner, Oppenheimer Equity Research: “Lines for this year's launch were about a third as long as last year, a fact likely explained by four factors: the ability to pre-order; the lack of a price cut; the separate launch of the $99-8GB iPhone; and prior assurances by AT&T and Apple that products would be plentiful. … Compared to the 3G launch, the 3G S debut was more about sparking replacements (for Apple) and service renewals (for AT&T) then landing fresh customers (a task better left to the $99 model). 55% of buyers already had an iPhone (33% last year); 25% were new to AT&T (37% last year). … We estimate that 400K-500K 3GS iPhones were sold in the first weekend. 1M 3G iPhone's were sold in the opening weekend last year, but this year's launch was geographically limited (8 countries vs. 21) and staggered (with the $99-8GB model launching earlier).”

More as they come in.

Apple Fixes Java Vulnerabilities

Arik Hesseldahl — Tue, 16 Jun 2009 09:36:39 -0500

Brian Krebs at the Security Fix blog hosted by The Washington Post notes that Apple has issued an update to its version of Java that fixes a big batch of security problems. Last month he criticized Apple for taking an average of six months after patches have been issued by Sun Microsystems to fix its version of Java. In any event, it would be a good idea, if you haven't done so already, to run Software Update today and make sure you get the latest version of Apple's Java.

More On The Psystar Bankruptcy

Arik Hesseldahl — Fri, 12 Jun 2009 15:56:51 -0500

More filings have appeared in the matter of the bankruptcy of Psystar, the small Florida company that had tried to build a business of selling Mac clones. According to documents on file with the US Bankruptcy Court for the Southern District of Florida, Psystar appears to owe Apple $75,000, though it not entirely clear for what. Computerworld suggests that it may be for some 581 copies of Mac OS X Leopard.

As noted before, other debts are to lawyers, shipping companies, payment processors and the IRS. It appears to have recorded $412,417 in revenue in its business operations from January to May of 2009.

One other interesting revelation: Many had hoped to find out who has been bankrolling Psystar. No answer there. Page 25 of the 26-page filing lists “equity security holders.” Psystar’s answer: None.

I pulled the filing myself, and uploaded to Scribd. Have a look for yourself.

Apple Debuts iPhone 3GS, New MacBooks at Developers Conference

Arik Hesseldahl — Mon, 08 Jun 2009 16:35:59 -0500

Steve Jobs didn’t appear, but a new iPhone chock full of new features and new MacBooks, soon-to-sport a spanking new operating system all did appear at Apple’s World Wide Developers Conference in San Francisco.

Speaking for two hours before a crowd made up mostly of software developers, Apple executives including VP for worldwide marketing Phil Schiller, Scott Forstall VP of its iPhone software division, and VP for software engineering Bertrand Serlet laid out an aggressive slate of product upgrades and introductions, starting with the debut of the iPhone 3GS on June 19.

The S, the company said, stands for speed. Among its new features are chips for faster 3G wireless connection speeds using a technology known as HSDPA that is capable of running as fast at 7.2 megabits per second. The new phone can also capture video, and boasts an improved capability for taking still pictures. The iPhone GS will hit the market on June 19, in capacities of 16 and 32 GB for $199 and $299. Meanwhile the current model, the iPhone 3G will now sell at $99 for 8 GB.

Along with the phone comes an update to its operating system software. Among its many new features is the ability to initiate transactions within an application. This feature will be especially popular among game developers, but others will take advantage of it as well. Scrollmotion, said it will offer a million books for download, including textbooks, plus 50 magazines and 170 daily newspapers, thus putting the iPhone and iPod touch in competition with Amazon’s Kindle digital reader device.

Apple's US carrier partner AT&T drew some criticism. One new major feature, Multi-Media Messaging Services (MMS) is coming with the new iPhone software but AT&T won't support it until September. An additional new feature known is tethering, which allows a mobile phone to be used like a modem when connected to a notebook PC, appears not to have support from AT&T as its name did not appear on a slide listing those wireless carriers around the world who are supporting it. AT&T didn't immediately comment.

The release came only three days after Palm released its Palm Pre smartphone on Sprint’s wireless network. The dropping of the price on the lower-end iPhone model, coupled with the forthcoming features of the new operating system, can’t help but place Palm in a difficult competitive stance for the time being. Palm stock fell 84 cents or more than 6% to close at $12.16 during regular trading. Apple stock fell 82 cents to close at $143.85.

The day wasn’t entirely about the iPhone. Apple announced updates to its MacBook Pro line of notebooks. It’s 15-inch MacBook Pro was updated with improved display technology, a faster Intel processor, and the addition of a slot for SD Memory cards. The 15-inch model has a starting price of $1,699 or $300 lower than the prior model. Apple also updated its $2,499 17-inch MacBook Pro, and 13-inch MacBook models, changing the branding on the latter to MacBook Pro with a starting price of $1,199. The MacBook Air was also updated with new Intel processors, and larger storage capacities, starting at $1,499.

Apple also demonstrated Snow Leopard, the next iteration of its Mas OS X operating system software, that will hit store shelves in September at a price of $29 for those who own the current version of the OS known as Leopard, and $129 for those buying it as a standalone product.

Rumors had suggested that Jobs, Apple’s longtime CEO who often takes the stage at events such as the developer’s conference, might appear in some capacity. The company has maintained that Jobs, who has since January been on medical leave, is on course to return to work at the end of June.

Apple WWDC Keynote Is Underway

Arik Hesseldahl — Mon, 08 Jun 2009 13:06:37 -0500

Apple's World Wide Developers Conference is underway in San Francisco. Here's a roundup:

-Schiller is focusing first on the Mac. He announced a new 15-inch MacBook Pro with a 7-hour battery similar to that of the 17-inch model announced earlier this year. The price starts at $1,699.

-17-inch model has been updated as well with a starting price of $2,499

-He also announced a new version of the 13-inch notebook, known as the MacBook. One important new feature is the addition of slots for SD Memory cards. It starts at $1,199 and has been re-branded as the MacBook Pro.

-MacBook Air has been updated with a faster 1.86 GHz Intel Processor, and a larger solid state hard drive. The new base price for the new model is $1,499

-Now Bretrand Serlet is talking about the new features and enhancements in Snow Leopard, the new version of Mac OS X.

-The Dock, the launching pad for Mac software can now be presented in a 3D manner on screen, much like Coverflow in iTunes. It also uses a new type of file compression, which means that when you install it over the current version of Leopard, you'll get six gigabytes of hard drive space back.

-Safari 4, the Web browser, is coming out of Beta today.

-Another new feature, native support for Microsoft Exchange in Apple's Email software called Mail. This will be hugely popular among the growing number of Mac-users in corporations.

-Snow Leopard costs $29 for those already running Leopard. $129 if you buy it standalone.

-Now on to the iPhone with comments from Scott Forstall. New stat: Combined unit sales of iPhone and iPod touch is now north of 40 million.

-Forstall: iPhone OS 3.0 brings with it more than 100 new features. First up, cut-copy-paste working across all applications. Also Undo: Shake to undo your last action.

-Rent or purchase movies from iTunes directly on your iPhone.

-Internet tethering. Treat you iPhone as a modem. A common feature with other phones, finally comes to the iPhone. Works wirelessly over Bluetooth or via a wired connection, and supports both Mac and PC. Interestingly AT&T is not listed among the wireless carriers who will support tethering.

-"Find My iPhone" -- a service via MobileMe helps you find your iPhone if it's lost. Includes a remote "wipe" command that will delete all the data. Plus if you do find it, you can quickly restore it with a connection to iTunes on your computer.

-Google Map applications can be embedded into applications. This includes turn-by-turn navigation directions that can be added to applications.

-On the navigation note, TomTom has taken the stage to show its navigation app, and a mounting device to use the phone like a personal navigation device. Essentially an iPhone dock with a speaker and a suction cup.

-ScrollMotion, demos a book, magazine and newspaper-reader application.

-iPhone OS 3.0 free for all iPhone customers and $9.95 for iPod touch customers. Available worldwide June 17. Developers walking out with a gold master of the OS today.

-iPhone 3GS confirmed. The S Stands for Speed. 7.2 MBPS HSDPA connection, 3 megapixel auto-focus camera. Includes a tap-to-focus feature. Captures video, just as Peter has been predicting. 30 frames per second, with white balance and auto-exposure. Includes editing.

-Voice control, hold down a the home button, and it brings up a voice interface. Say "Call so-and-so"

-Built-in digital compass

-Improved battery life (badly needed) 9 hours internet and Wi-Fi, 30 Hours audio, five hours 3G talk time. Price $199, 16 GB, $299 for 32 GB. Available in White and Black shells. Prior version of iPhone 3G at $99. iPhone 3GS available next week: June 19. No front-facing camera as had been rumored.

The New iPhone May Be Called The iPhone Video

Peter Burrows — Fri, 05 Jun 2009 01:34:42 -0500

The blog TUAW is reporting that the new iPhone, widely expected to be announced during Apple executive Phil Schiller's WWDC keynote on Monday, will be called the iPhone Video. The supposed proof is an alleged screen shot from an AT&T support website that listed "iPhone Video" as one of the iPhone modesl the carrier will support. Here's the image:

While this could be just another rumor, this name would fit perfectly with what a source told me in late April: that Apple would differentiate the new iPhone by making it the first device that makes home movie-making mainstream. Here's that post again:

Making Movies: The Next Big Thing in iPhones? Posted by: Peter Burrows on April 30
Think back to a time before iPods. Back then, digital music was such a hassle that few people bothered to buy portable MP3 players. Until Apple made it easy. Then came photos. Other than using snapshots as wallpaper on their camera-equipped cell-phones, few consumers bothered to keep all or even some of their favorite pics on a small portable device until the iPod photo was introduced in 2004. A year later, the “video iPod” became the first portable device on which most mainstream consumers would even consider watching a TV show, video podcast or the occasional movie. And since the iPhone debuted in 2007, tens of millions of people think nothing of downloading an e-book, using GPS maps to find a desination, or watching YouTube clips on their phone.

Now, I think we’re about six weeks away from the next big thing. At long last, after decades of having to mess with camcorders and cables and PC video editing software and hard drives, my gut tells me Apple will make the iPhone a one-stop studio for recording, editing, viewing and sharing your own videos. Actually, more than my gut. I’ve spoken with a source that is familiar with Apple’s plans for the next iPhone, which may well be announced at Apple’s Worldwide Developers Conference in early June. Evidently, shooting video is as easy as it is with a Flip, the ingenious device made by Pure Digital (recently purchased by Cisco). Then there’s an iMovie app that lets you quickly save the sections you want, right there on the phone itself. There may also be support for MMS, so the clips can be shared wirelessly with friends. And because of the iPhone’s relatively large screen, your friends don’t have to schlep to your PC or their Facebook page to see that video of your kids or your safari. Just hand them your iPhone.

The atmospherics suggest that I’m right. I’m referring to the loud silence from Apple—a company that is famous for pre-launch misdirection in order to maintain some element of surprise. For example, Apple made no mention of any video recording capability when it unveiled its iPhone 3.0 software a few months back. And yet blog posts from Gizmodo and others have pretty much confirmed that it’s in there.

Also, the timing seems just about right for Apple to make one of its famous late arrivals into a hot market. That’s what happened with music. Recall that in the late 90s, Macs didn’t even have CD burners so Napster fans could create their own CDs. But with iPod and the opening of the iTunes Music Store, Apple quickly put its stamp on the digital music market. A rather big stamp at that, given that Apple is now the world’s leading music distributor. Or consider the iPhone. Rivals had been making smart phones for years, until Apple waltzed in and totally redefined the segment. Same with the app store concept. Palm had one years ago (complete with TV ads which, like Apple, promoted apps more than its device), as have various carriers. Just not one as easy to use and as well-stocked as Apple’s, which just passed the 1 billion download mark. (Here’s Om Malik’s insightful analysis on what Apple got right in this regard).

Cut to today, when millions of people love to post YouTube videos—but don’t have a dead-simple way to do it. Apple’s new approach sounds like it may be the answer. People will shoot more video, since they will usually have their phone with them. Since they don’t need to mess with any PC or editing program, they may actually go to the trouble of editing it down to a bearable length (and given the excellent synching in iTunes, they won’t simply forget they shot the footage or forget where they put it). And while there is at least one great device for recording video (that Flip) and plenty for playing it back (any laptop will do), the iPhone could turn out to be the best at handling both of these tasks at once.

Then there’s the marketing opportunity. This one is right in Apple’s wheelhouse; the company should have no problem coming up with great ads that poke fun at how difficult it’s been to simply send grandma a video of the kids, and how Apple makes it easier. So my hunch is that Apple will be selling loads of iPhones to people who want to create their own videos, rather than just watch those made by the pros.