All Things Digital

Scott Goldman uses his mobile phone to call friends and business contacts all over the world, from Britain to Australia. But the Southern California-based consultant doesn’t pay a dime in international tolls to his mobile-phone carrier, AT&T, the biggest in the U.S. Instead, Goldman places the international portion of the calls–roughly 100 minutes a month–through a service called Gorilla Mobile that relies on Internet-based technology to route wireless calls virtually toll-free. Goldman, a user of Apple’s iPhone, estimates that he saves hundreds of dollars a year with Gorilla’s service. He stands to cut wireless bills even more by signing up for another, iCall, that’s due for the iPhone in the coming weeks

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Strange but true: These are either the best of times or the worst of times for Apple’s reputation–and it all depends on which developments you choose to pay attention to.

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Pacific Crest analyst Andy Hargreaves released a note this morning with a bunch of data points showing the rising importance of Apple’s (AAPL) iPhone in Internet usage. And he implies that the current value of the shares could be closer to $184 than the current $176.15 at which the stock trades.

Hargreaves writes that based on data from privately held Internet measurement firm Net Applications, of Viejo, Calif., the Safari Web browser shipped on the iPhone accounts for .3 percent of all world-wide Web surfing in August so far, double its share in June, prior to the introduction of the iPhone 3G. “iPhone’s rapid share gains in Internet usage suggest potential upside to current estimates,” writes Hargreaves, “and are a strong indicator of what we believe are lasting competitive advantages.” He goes on: “As Web-based software and services become more ingrained in our every-day working and personal lives, Apple’s emerging advantage in the mobile Internet will, in our view, become increasingly valuable.”

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Pandora is one of the nation’s most popular Web radio services, with about one million listeners daily. Its Music Genome Project allows customers to create stations tailored to their own tastes. It is one of the ten most popular applications for Apple’s iPhone and attracts 40,000 new customers a day.

Yet the burgeoning company may be on the verge of collapse, according to its founder, and so may be others like it.

“We’re approaching a pull-the-plug kind of decision,” said Tim Westergren, who founded Pandora. “This is like a last stand for webcasting.”

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The huge success of the iPod and the incredible media hoopla surrounding the iPhone have transformed the way the world looks at Apple. … The public perception of Apple is that it’s a technology juggernaut with immense power at its disposal as it steamrolls over everyone else in the technology industry while creating one industry-busting product after another. There’s just one problem with that image: It’s not true. In the past year, we’ve seen numerous examples of how Apple’s reach can dramatically exceed its grasp.

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Best Buy (BBY) shares are on the rise this morning on news that the company’s Best Buy Mobile stores will carry the Apple (AAPL) iPhone starting Sept. 7.

Pricing will be the same as it is through Apple and AT&T (T) stores: $199 for the 8GB model and $299 for 16GB, with a two-year AT&T service contract. Best Buy stores already sell iPods and Macs.

Meanwhile, Radio Shack (RSH) shares are sliding today. The retail chain already sells AT&T wireless service, but for now at least, isn’t going to be selling iPhones. Also hurting Radio Shack: news that the company has sold $325 million of 2.5 percent convertible senior notes due 2013.

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It seems a safe bet that most of the money made by iPhone application developers will come in the form of advertising. That is the overwhelming lesson from the PC-based internet. So if Steve Jobs is right in saying that the marketplace for paid-for iPhone applications will eventually reach $1bn, how much bigger might the advertising market be?

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As sales of Apple 3G iPhones continue to grow, there are also increasing reports of trouble with 3G reception on the devices.

Certainly, demand is robust. Lehman’s Ben Reitzes today writes in a research note that “checks indicate” Apple (AAPL) iPhone demand in the fiscal fourth quarter ending September could top his current estimate of 3.8 million units. And he adds that this “bodes well for cash flow,” and for “an enhanced halo effect for Macs.”

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iPhone developer Armin Heinrich has released an application for the iPhone with two noteworthy characteristics: 1) Its primary function is to display a handsome glowing red jewel on your iPhone’s screen. 2) It sells on Apple’s App Store for $999.99, thereby explaining its name: I Am Rich.

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iPhoneDevCamp 2 took place in San Francisco this past weekend; one of the great things about the conference this year and last was the number of applications written by people who met there for the first time or who had no prior iPhone development experience.

Sometimes, the cleverest ideas and applications arise from these chance encounters, despite having only two days to come up with these applications.

Here are brief descriptions and a few screenshots of some of the nearly 40 applications developed or demo’d during iPhoneDevCamp 2. For a complete list, visit the iPhoneDevCamp 2 Web site.

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This weekend in San Francisco, the second annual iPhoneDevCamp 2 is underway. Whereas the first confab focused primarily on Web applications, this one has a definite native application flavor, thanks in large part to the fact that the iPhone software development kit (SDK) is out of beta and now available for developers.

When the iPhone was released in June, many developers were disappointed by the absence of an SDK for writing third-party applications on day one.

At D5, Steve Jobs explained to Walt Mossberg that Apple (AAPL) first needed to iron out some security issues before they would open up the device to outside developers:

We would like to solve this problem and if you could just be a little more patient with us, we’ll do it.”

–Steve Jobs at D5 on the availability of an iPhone SDK

Fast-forward to the first quarter of 2008, when Apple made good on its promise by releasing an early version of the iPhone SDK. The fruits of the patient developers’ labor was evident at the launch of the iTunes App Store, where 500 free or commercial applications were available to download onto the new iPhone 3G or the original iPhones running iPhone OS 2.0.

No longer were iPhone users confined to using Web applications running in Mobile Safari or resorting to jailbreaking their devices to use third-party programs.

The App Store made it dead simple for every iPhone user to duel their friends with PhoneSaber or satisfy their Dance Dance Revolution/Guitar Hero/Rock Band craving with Tap Tap Revenge, a game which recently celebrated its one millionth download.

At iPhoneDevCamp this year, there’s a greater and more palpable sense of excitement in the air than last year, and it’s reminding me of the time when I was writing applications for another Apple handheld product: the Newton.

While the green device from Apple was not a commercial success–it was surpassed in sales and popularity by the less-capable, yet smaller and more convenient Palm Pilot–the Newton nevertheless pioneered many features we now see perfected in the iPhone.

Fourteen years ago, the Newton could fax, send email and receive pages; the iPhone is a communications powerhouse with 3G/EDGE/Wi-Fi/Bluetooth.

Newton’s handwriting recognition was dramatically improved with Newton OS 2.0 in 1995; the iPhone has fantastic Chinese and Japanese character recognition.

Finally, the Newton promised a day when users everywhere had their own personal digital assistants in their pockets; today, millions of people have chosen their phone to be an iPhone.

Despite leading the Newton protest at Apple Computer in 1998, I admit that Jobs was right to cancel the Newton. He made the correct decision to focus the company’s efforts on Mac OS, and it’s paid off.

The iPhone, after all, is running a version of the same operating system powering today’s Macs. The release of the initial iPhone raised the bar significantly for mobile users tired of using the same-old devices from Palm, Microsoft, and Symbian.

At iPhoneDevCamp 2, the bar is rising even higher for native third-party applications. If you were excited about the first 1,000 apps, wait till you see what comes out this weekend!

Below are photos from Friday’s welcome reception at iPhoneDevCamp 2. For more information, visit the iPhoneDevCamp 2 web site.

The number of offerings on the App Store–the venue for independently produced programs that helps distinguish Apple’s smartphone from all others–hit 1,001 on Monday night. That’s roughly double the number that were available when the store opened just over two weeks ago (on July 11, the same day the iPhone 3G went on sale).

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Ice-hockey player Jim Balsillie, who’s also the co-chief executive of Research In Motion Ltd., said in a recent media interview that he plays offense on the ice, not defense. “There’s no glory in defense,” Balsillie commented, according to Bloomberg News. The same could be said about Research In Motion’s leadership position in the smart-phone market, where the long-dominant BlackBerry has been under attack by Apple and its popular entry, the iPhone.

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A year ago, we said that no iPhone SDK meant no killer apps. It came, and the apps are here in staggering numbers. But many of the amazing apps and concepts we grew to love as unofficial apps aren’t here, and only about 100 of the 500+ apps at launch in the official store are really useful or desirable—the rest are dupes or just bad. There are no less than five apps to turn my iPhone into a flashlight, yet I can’t turn it into a 3G-powered Wi-Fi hotspot. Why?

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The Beijing Olympics begin in two weeks. But for Apple, the China games have already begun. The company opened a shiny new Apple store in Beijing Saturday–the “first of many” in China, according to an Apple official. The race is on. But is this an event Apple can win?

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