Apple Buys Chip Company For $300 Million

In what could only be interpreted as a peek into the future for the iPhone maker, Apple has announced its decision to buy PA Semi, a microprocessor design company for almost $AUD 300 million.

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As usual Apple declined to comment on the reasons or terms of the deal, except to say that it "buys smaller technology companies from time to time," and it does not comment on "purposes and plans."

However analysts note that it is not typical for a company like Apple, to buy hardware firms, particularly as it relies on ready-made components from a variety of manufacturers such as Intel, Samsung and Infineon.

The acquisition has fueled speculation that Apple intends to design custom processors for devices like the iPhone or the iPod, possibly as a means of distinguishing its platform, but potentially in order to retain high margins on the sale of each unit.

It is likely to be at least a year before Apple products with PA Semi chips are released.

Apple's iPod shuffle price cut will buoy iPod sales

Apple's decision to cut prices on its iPod shuffle range should help the company meet shipment forecasts across its iPod range, an analyst said Wednesday.
American Technology Research analyst Shaw Wu said: "We view this development as an incremental positive that helps eliminate one of the key risks lingering from its December quarter, namely that being light iPod units (we think from poor low-end shuffle sales) caused Apple to miss consensus shipments by 2-3 million."
The analyst, who rates the stock as one to buy with a price target of US$175 per share, expressed a little disappointment that Apple management failed to cut prices in the crucial Christmas quarter, saying that doing so would have helped drive "incremental demand" as new users grew hooked on Apple's music ecosystem.
"We believe these lower-cost shuffles could bring incremental sales of 500,000-1 million units per quarter, he said, observing the move will likely "put pressure on competitors."
The analyst concluded: "While near-term trends look difficult with a looming recession and a slow-down in consumer spending, we continue to believe Apple is well-positioned to weather the storm better than most with its strong fundamentals."

Apple lowers price of iPod shuffle to $49, intros 2GB model

Apple on Tuesday introduced a new 2GB model of its iPod shuffle that will cost $69 and lowered the price of its original model, which is now 1GB, to $49.

“At just $49, the iPod shuffle is the most affordable iPod ever,” said Greg Joswiak, Apple’s vice president of Worldwide iPod Product Marketing. “The new 2GB model lets music lovers bring even more songs everywhere they go in the impossibly small iPod shuffle.”

The iPod lineup now includes the iPod shuffle; iPod classic holding up to 40,000 songs; the iPod nano with video playback and the iPod touch.

The $49 1GB shuffle is available immediately. The $69 2GB model will be available later this month.

New iPhone and iPod Touch models debut with higher prices

Apple on Tuesday rolled out new iPhone and iPod Touch models with beefed-up memories and bumped-up prices.

A premium iPhone with 16 gigabytes of memory and a 499 dollar price tag is now the top of that line, ahead of a model with half the memory and a price of 399 dollars.

An iPod Touch with 32 gigabytes of memory costs 499 dollars, relegating the 399 dollar 16-gigabyte model to second position. Apple sells an eight-gigabyte iPod Touch for 299 dollars.

"For some users, there's never enough memory," said Apple vice president for iPod and iPhone marketing Greg Joswiak.

Apple chief executive Steve Jobs says the California company has sold more than four million iPhones, touch-screen mobile devices combining telephone, video, music, and Internet connectivity.

IPod Touch models are essentially iPhones without the mobile telephone capabilities.

Apple's enhancement of memory capacities in its devices comes a month after the company added a movie rental service to its iTunes online entertainment store menu.

IPhone and iPod Touch models can download and present content from iTunes.

Charger juices iPhone, iPod at wall, car

Incase has introduced its 2-in-1 Wall & Car Charger, a device that can top off your iPod or iPhone's battery either from an AC outlet or from the cigarette lighter/accessory jack found in your automobile. It costs $39.95.

The device is worldwide-compatible with wall voltages, and DC-compatible with 12v and 24v power supplies. It features hideaway wall socket prongs, and it will charge the iPod or iPhone in standby or play mode. It sports a smooth rubber grip exterior and five-foot cable extension with built-in management system. An LED indicates when the unit is powered.

The 2-in-1 Wall & Car Charger is certified for use with iPods with a dock connector (it works with the iPhone as well, according to Incase). Look for it later this month at Apple retail stores and at the Apple store online, as well as Incase's Web site.

Incase's Web site had not been updated with information about the new accessory as Macworld

posted this article.

Mac owners officially sexier than Windows

Mac users spend more on sex toys than Windows users, but less than Linux louches

Computer users argue over many statistics, but when it comes to sex toys: Mac users spend more on adult recreation than Windows users; but it's Linux users that invest the most in enhancing the pleasures of the flesh, an adult toys website claims.

Adult toy seller Lovehoney has published its Google Analytics logs, which show the system platform preferences of its sensation-seeking customer base.

As reported by Reg Hardware: "Mac users spent an average of five minutes 56 seconds on the site, just ahead of Linux users' five minutes 16 seconds and Windows folks' five minutes 14 seconds."

The report claims Linux users spend on average £48.55 when they shop on the site, Mac users £40.38 and Windows users £35.90. iPhone users are also reportedly purchasing hanky-panky products using their device, spending slighly less than Windows users do on average, £34.59. iPod touch users spend £31.76.

This report into the sexual significance of operating systems emerges scant days since the publication of new research from the University of Portsmouth.

Cybersex expert Dr Trudy Barber (who doesn't reveal which OS she uses) earlier this week delivered a Royal Society lecture during which she disclosed that fetishism and sexual proclivities are helping change the way people use technology.

Dr Barber, an expert on cyberspace and sexual subcultures, has spent years researching how people's sexual choices help shape new technology, including the internet, which she likens to the development of video players which brought pornographic films into the home in the late 1970s.

"Computer technology touches so many aspects of our lives it's really not so surprising that it would infiltrate and influence our sex lives. In contemporary western society sex is for pleasure and for entertainment and computers will have an increasing role to play," she said.

She observes: "The role of deviation as a key to innovation must not be overlooked as it will contribute to our understanding of new intimacy, culture and the future of developing information and communications technologies."

iPod dominates Amazon

iPod models hold eight of ten top-selling slots on Amazon in US and UK

Apple's iPod continues its dominance at online retail giant, Amazon.

In the UK, iPod's hold eight of the top ten places within Amazon's list of top-selling products, with the 80GB iPod classic the leading model sold by the retailer, followed by the silver 4GB iPod nano, with the 8GB black iPod nano in third place.

The 16GB iPod touch is the fourth most popular iPod model sold by Amazon, despite its £234 (excluding VAT) price on that store. In fifth place sits the 80GB silver iPod classic, with the 8GB iPod touch in sixth place.

The only two non-Apple products among the top ten sellers in Amazon UK's MP3 and Digital Audio categories come from Sony and Creative, with SOny'sNWZA818 Walkman at number eight, and the recently-launched Creative Zen Stone Plus 2GB player at number ten.

Amazon US displays a similar pattern of iDominance, with Apple holding eight of the top ten selling models within the retailers MP3 Players list. Miccrosoft's Zune, while briefly in the top ten, has now slipped to 22nd place.

The silver 4GB iPod nano is the top-selling iPod on Amazon US, followed by the 8GB iPod touch and, in third place, the 80GB iPod classic.

Non-Apple media players among the top ten in the US at time of writing include the Creative Zen 4GB player in seventh and the 1GB Sansa Clip in eighth place.

Inside Apple's iPod sales figures

From October to December 2007, Apple sold more iPods than in any quarter since the introduction of the mobile music player six years earlier. Record quarterly sales of 22.1 million iPods helped Apple tally $9.6 billion in revenue and a $1.5-billion profit for its fiscal first quarter.

And financial analysts and media reacted by clobbering Apple’s stock, partly because Apple offered projections for its second-quarter performance that were below what Wall Street was anticipating but also because the record iPod sales failed to meet expectations. Headlines proclaimed that sales of the music player were a warning bell for investors, that the shine was off the company , and that iPod sales totals were plodding.

What gives? The disparity between Apple’s reported iPod sales and the strong reaction to them boils down to what aspect of the iPod results you’re looking at.

As is readily apparent from glancing at a chart showing the number of iPods sold, unit sales have never been higher. “Apple’s results are actually quite good compared to the rest of the category,” said Ross Rubin, director of analysis at market research firm NPD Group. Apple moved more than 22 million iPods last quarter, keeping the company lodged securely in first place in the digital music player market in December with a share of 67 percent, according to NPD.

All about the growth

But what the analysts and the media were reacting to was a lack of growth in iPod sales over the previous year. For the fiscal first quarter 2007, Apple sold 21 million iPods, meaning that year-over-year, the iPod unit sales grew only 5 percent—still an increase, though not the kind of robust growth Wall Street had come to expect.

Over the last few years, iPod sales numbers have shown dramatic growth, particularly in the quarter that encompasses holiday purchases. The 21 million iPods Apple sold in the 2007 first quarter was 50 percent higher than what it sold in the previous year. In the 2006 quarter, iPod sales grew 207 percent while 2005 first-quarter iPod sales shot up an astounding 525 percent from the year-ago quarter.

iPod sales are affected by a high degree of what analysts call seasonality, meaning yearly sales figures typically follow the same pattern. In the iPod’s case, the highest sales peak typically comes in Apple’s fiscal first quarter, which coincides with the holiday buying season. While total unit sales grew over the 2006 quarter, sale growth rate had fallen. Most analysts attribute that slowdown to market saturation: MP3 players in general, and the iPod in particular, have become so popular that the market of people looking to buy one is dwindling.

That’s not the only potential reason for slowing growth in iPod sales, however. Tim Bajarin, president of consulting firm Creative Strategies, thinks the strained economy could also clamp down on iPod sales growth.

“In the holiday quarter, consumers were very cautious on buying technology that’s not mission critical, such as music players,” he said. Many analysts were looking to Apple’s results for good news about the economy and were not reassured by the lower growth rate of iPod sales.

But the holiday quarter wasn’t the only one to see slower growth in the past year. For Apple’s 2007 fiscal year, fourth-quarter iPod sales grew 16 percent over the previous year, third-quarter sales rose 21 percent, and second quarter figures rose 23 percent—again, all positive numbers, but in 2006 those quarterly iPod sales grew by 35 percent, 31 percent, and 60 percent, respectively. Clearly, iPod sales growth has been slowing for at least the past year and, even though the numbers of iPod sold each quarter continue to trend upwards on the whole, they’re increasing more slowly than they have in the past.

Then again, slowing growth isn’t really a surprise. Apple would have had its work cut out for itself if, say, it hoped to sustain that 525-percent growth of 2005’s first quarter: that would have meant selling 28 million iPods in the first quarter of 2006, more than 174 million for the 2007 quarter, and an outrageous 1 billion iPods in the most recent quarter.

Keep in mind that, as of April of last year, Apple sold its 100 millionth iPod. Given the runaway success of iPod sales in the past several years, growth was bound to slow eventually; it was just a matter of when and by how much.

The touch emerges

Even as iPod unit-sales growth slows, it’s hardly the end of the world for Apple. During a conference call with analysts last week, Apple Chief Financial Officer Peter Oppenheimer pointed out that the holiday season is just one of two major sales drivers for music players; the other is product launches.

Oppenheimer repeatedly stressed that Apple was concentrating on creating innovative products, and both he and Apple Chief Operating Officer Tim Cook cited the iPod touch as a specific example of how the iPod’s market is bigger than just playing music and videos. According to Oppenheimer, the touch is an “entirely new type of iPod,” one that Apple sees moving the iPod beyond its roots as a mere media player, becoming “the first mainstream Wi-Fi mobile platform.”

Apple doesn’t break out individual product lines when reporting its quarterly results, so there are no specific numbers on iPod touch sales. But the impact of the widescreen iPod first introduced last September is definitely being felt.

For one thing, Apple reported that the average selling price of an iPod in the most recent quarter was $181, the highest that number’s been in the last year and a half. It’s likely that the touch, available for either $299 or $399, is helping drive that.

Another sign of the touch’s impact comes from the growth in revenue for Apple’s iPod and music segment—up 147 percent in the fiscal first quarter from the previous quarter. That number also compares favorably to the same quarter from last year, in which the segment grew just 120 percent in revenue—another indication that the iPod touch has bolstered the iPod’s bottom line.

“Consumers have been very familiar with what Apple has in the iPod line,” Bajarin said. “They’re waiting for the next level of innovation. There’s still a market for the nano and the shuffle, but there could be greater pent-up demand for something like the touch.”

Since that’s the direction in which Apple clearly intends to push the iPod line, it bodes well for the continued success of the iPod segment. “The touch did quite well for a premium-priced product, particularly one with low capacity in its price range,” NPD’s Rubin said. “Even though the iPod is known for its media playback features, the promise of the [forthcoming Software Development Kit for the iPhone] is to turn it into a platform for future development.”

MacBook Air Chip Going Into Other Computers

More computers will be running on Air. Chip-maker Intel is reportedly selling to other computer makers the miniaturized Core 2 Duo processor that helps make Apple's new MacBook Air so thin.

The manufacturers include Lenovo and Fujitsu, who will use the 65-nanometer custom chip to create their own Windows-based ultrathin notebooks. No date has been announced for the new machines, and Intel and the computer makers have declined to comment.

No Exclusivity Announced

Earlier this month, Apple CEO Steve Jobs unveiled the MacBook Air at the annual Macworld conference. The new laptop is so thin -- three-quarters of an inch at the thickest part -- that it fits into a manila envelope. The svelteness is achieved in part by a special chip Intel designed for the new machine, based on the older Merom line of processors.

During the Macworld presentation, Intel CEO Paul Otellini said Jobs had asked Intel to design a smaller processor. But Intel has not made any public commitment to Apple for exclusivity.

While nearly two-thirds smaller than earlier Meroms and requiring less power, the MacBook Air's Core 2 Duo has reduced performance compared to other Intel Core 2 Duo chips. But Apple has optimized the operating system and other features to maximize performance.

Since small is in, Intel has also been working on other small chips, especially for new generations of handheld devices and the ultra-portable PC that it has helped promote. In particular, it has been developing smaller processors using its new 45-nanometer process.

Difference in Packaging

Martin Reynolds, an analyst with industry research firm Gartner, noted that the difference in the Air chip is in the packaging, not in the chip itself. He added that he expects to see it appear in various computer makers' small devices.

The MacBook Air represents a new level in the game of creating the most portable, most powerful computer. It weighs three pounds, features a 13.3-inch display, a built-in iSight camera, a backlit full-size keyboard, and its Core 2 Duo runs at 1.6 GHz. It is also heir to the multi-touch interface made famous by Apple's iPhone, with a trackpad that, for instance, allows the user to expand a photo with a two-fingered gesture.

Steven Levy of Newsweek, citing the MacBook Air's "gorgeous design," called it "the Audrey Hepburn of laptops." But, unlike the virtually perfect Hepburn, there are several omissions in the Air. Lenovo, Fujitsu or others could exploit these omissions in smaller laptops with the same chip.

Among other things, the Air lacks an optical drive, although there is an option for wirelessly connecting to an external drive. The battery is not removable by the owner and the initial version includes a hard drive of only 80GB.

Intel To Sell Apple MacBook Air Chip To PC Makers

Other PC makers are reportedly looking to slim down their laptops like Apple did this month with its MacBook Air.

Intel has reportedly sold a version of the miniaturized Core 2 Duo processor in Apple's recently released MacBook Air to other manufactures, which could then build Windows-based competitors to the ultrathin and light notebook.

Two PC manufacturers have already signed on to use the custom-designed chip, and products powered by the processor are expected to be released soon, CNET and tech magazine PC Advisor reported Wednesday, both quoting a source familiar with the plans.

An Intel spokesman declined to give any sales details but did note that Apple is the only hardware manufacturer that sells a laptop based on this specific Core 2 Duo processor.

"If other OEMs are interested in this 65-nanometer Core 2 Duo processor, we are welcome to talk with them," an Intel spokesman told InformationWeek.

Apple chief executive Steve Jobs unveiled the Air this month at the Macworld conference in San Francisco. The thinness of the notebook was achieved in part by a miniaturized 65-nanometer Core 2 Duo processor that came from Intel's older Merom line. The processor is 60% smaller than the typical Merom chip and uses less power while delivering comparable speeds. The processor, however, is significantly slower than the latest Intel Core 2 Duo processors used in other new notebooks. Performance is not necessarily an issue with Apple as it customizes its operating system to maximize performance out of any processor it uses.

Nevertheless, the size and weight of the Air, which has a 13.3-inch display and full-size keyboard, placed the machine in a class of its own. The notebook weights 3 pounds and is three-quarters of an inch thick at the hinge, tapering to 0.16 of an inch at the opposite side.

Intel is working on smaller chips for ultramobile PCs and handheld devices, including a processor that's built using 45-nanometer process technology. But miniaturizing the Merom processor gave Intel a product that would fit Apple's slim design for the MacBook Air and deliver the necessary horsepower.

In making the Air thinner than other notebooks, Apple also left out a DVD drive, adding instead software called "remote disc" that can recognize an optical drive on a PC or Mac computer through a wireless network. Tapping into those machines, an Air user can install software from a CD or DVD.

The MacBook Air design has also caused some frustration among Mac users who want to use software from older Macs to install the sleek new laptop's operating system. The installation media that comes with other Macs can't be used to install "Leopard" on the MacBook Air, Apple said Wednesday.

Iphone not arriving any time soon

THE iPhone will not be arriving on Australian shores any time soon, according to an independent phone retailer that has reviewed the product.

Crazy John's, Australia's largest independent phone retailer, reviewed the iPhone in a recent promotional magazine distributed in Australia.

Unfortunately the reviewed device does not indicate an impending release, according to Crazy John's head of sales and marketing Stephen Morley.

"I don't believe the product is imminent here in Australia," Mr Morley said.

Mr Morley said the handsets reviewed were not Australian models and that they were sourced from "partners in other markets".

"We've had several staff testing the product over the past 6-8 weeks.

"We test lots of products, regardless of if we'll be selling them or not."

The iPhone is already in Australia unofficially, due to consumers importing the device and performing unauthorised modifications for use on local networks.

In most countries where the iPhone has been released, Apple has chosen a single phone network to provide service for the handsets. iPhones can be "unlocked" to work on other networks, but doing so will void the phone's warranty.

Another type of software modification, known as a "jailbreak", allows users to install non-Apple software such as games on their iPhones – but also voids the warranty.

The handset pictured in the Crazy John's review appears to have been modified, as it has third-party applications on the screen and displays "Vodafone" in the status bar.

Apple has confirmed the iPhone will be released in Australia this year, but no further details about the date or the network have been provided.

The company is currently working on a second-generation 3G iPhone which would offer faster data transfer on local high-speed networks.

Vodafone said it expected the Australian release date to be delayed until the 3G model was available.

"Most handset manufacturers’ range of devices in market are designed to provide customers with high-speed access to content, such as mobile music, mobile TV and entertainment, within coverage areas," Vodafone said.

"Vodafone would be surprised to see an iPhone released in Australia before a 3G or HSPA-enabled model becomes available."

Last October Telstra chief executive Sol Trujillo said the carrier had been in talks with Apple, but there have been no confirmations from Apple or other networks about an Australian deal.

"Almost every supplier has big plans in the next six to 12 months with their version of an iPhone in response," Mr Trujillo said.

Spokespeople for Telstra, Optus, Three and Apple had no further details.

Apple's latest laptop

San Francisco - There's never been a laptop as skinny as the new MacBook Air from Apple. At its thinnest, it measures just about four millimetres. "When you first see MacBook Air, it's hard to believe it's a high- performance notebook with a full-size keyboard and display," gushed Apple CEO Steve Jobs while presenting the new laptop at the keynote speech of the MacWorld Expo in San Francisco. "But it is."

The excitement at the Moscone Centre was also sparked in typically reserved observers like Michael Gartenberg, research director at the US market research firm Jupiter Research:

"This will become the object of lust for all tech fans this year," Gartenberg told Deutsche Presse-Agentur dpa.

In advance of the MacWorld Expo, the chatter on many websites was focused on a potential combination of the iPhone and a normal laptop - more or less a retooling of the "Newton" PDA concept that Apple phased out 10 years ago. The MacBook Air is instead a full-value laptop with a robust aluminium casing with a 13-inch display and a full sized keyboard.

During his presentation, Steve Jobs compared the MacBook Air, which costs about 1,700 dollars, with the Vaio TZ series from Sony.

"The thinnest part of the Vaio is the thickest part of the MacBook Air," the Apple CEO told the cheering crowd. What he didn't mention in his comparison is that unlike the MacBook Air, the Sony laptops come with a DVD burner, a modem, and an integrated UMTS module.

With an Intel Core 2 Duo processor with 1.6 or 1.8 gigahertz (GHz) of processing power, Apple has certainly sent its new laptop out into the world with a significantly stronger CPU than the Japanese devices against which it is competing.

The standard model contains a 1.8 inch hard drive offering 80 gigabytes (GB) of storage space. Users willing to hand out another 900 dollars can upgrade to a 64 GB Flash hard drive. Flash memory works more quickly than a hard drive and consumes less power. The battery in the MacBook Air lasts five hours when working with a traditional hard drive.

The second major MacWorld Expo announcement centred on a second attempt at the "digital home" market, as well as launching an online video rental service. To facilitate all of this entertainment, Apple introduced an improved version of its "Apple TV" TV set-top box. It will enable HD video films to be rented from the Internet without having to connect with a computer.

Steve Jobs gained the support of all significant Hollywood studios for the "iTunes Video Rentals" platform. In the United States, DVD- quality films will cost 3 or 4 dollars for a rental limited to 30 days. High definition (HD) films will cost 1 dollar extra.

"This is going to turn the video industry inside out the same way the iTunes store changed the music industry," says Jupiter analyst Michael Gartenberg. Ross Rubin from the market research institute NPD disagrees, seeing Sony and Microsoft as enjoying the better start position:

"Both of those Apple competitors have already placed their Trojan Horses in the living room through the Playstation 3 and the Xbox 360." Each game consoles is capable of downloading HD content online.

It's unclear how the Apple movie rental model will work outside the US. Jobs indicated plans to launch the service in Europe "later this year."

UK iPhone sales 'disappoint'?

Apple's UK iPhone sales may be slightly under target, according to the Financial Times.

Apple's UK mobile network partner O2 had expected to achieve 200,000 iPhone sales in the first two months of sale, but has apparently fallen short on the target by 10,000 units, the FT claimed citing "people familiar with the situation".

O2 wouldn't comment on the report. The company says it is "delighted with the response to the iPhone, which has seen unprecedented levels of customer satisfaction”. The mobile operator also said the iPhone is its fastest-selling handset “by a significant margin”.

Price could be the problem. In the UK the device costs £269, but customers also need to sign-up for an 18-month contract at a minimum £35 per month. In the UK market, such extensive commitments to a network and such a high price for the mobile itself are unheard of, forcing many potentially interested customers to opt for an alternative to iPhone.

Reacting to the report, JupiterResearch analyst Ian Fogg remarked: "If Apple and its partners persist in not reporting UK sales results, especially after one of Apple's partners has named a specific target sales figure for the first two months of 200,000, then it's only natural that observers such as the FT will assume the worst."

Apple last week revealed four million iPhones have been sold so far. prompting Fogg to add: "The iPhone family has to be more than a one hit wonder over a couple of months for iPhone to meet everyone's expectations, including those of Apple and its operator partners."

Apple, the $20 iPod touch update and GAAP

Since my post yesterday about the $20 iPod touch software update several readers have contacted me to explain how Apple had to charge for this update because of generally accepted accounting principles (GAAP). This issue, so I’m told, is much the same as the way Apple had to charge $1.99 the 802.11n enabler for the Intel-based MacBooks and MacBook Pros. Personally, I don’t buy this. If this is going to be Apple’s defense over the charge, then I say it’s nothing more than a smokescreen. Here’s why …

The accounting rules are complex but the issue here boils down to the fact that a company can only record the revenue associated with a specific piece when it is delivered to the customer. But, according to experts it is important to note that there’s nothing in the GAAP requirements that forces Apple to charge its customers for a software upgrade. The only requirement imposed by GAAP is that Apple must account for the separate value that the software brings. OK, with that in mind, let’s examine the case.

First off, put the iPod touch and the iPhone side by side. Eliminate the cellphone aspect of the iPhone and what you have is an iPod touch with a camera. However, the software apps available to the end user are fundamentally different. Why? Someone at Apple made the decision to eliminate a handful of applications probably so that the iPod touch and the iPhone didn’t seem too closely related. The idea that no one at Apple preempted the fact that iPod touch users would appreciate apps that made use of the WiFi connection to access online services is simply incredulous. Had this been anticipated early on, Apple could have planned this into their accounting and been able to offer the software for free.

OK, so Apple didn’t do that. Right, let’s look at the value offered by the software. As I’ve said before, $20 buys you a lot of code nowadays so this charge for the addition of applications that were already developed and delivered on an almost identical platform seems awfully steep. It’s especially steep considering that the iPod touch runs code designed for the iPhone that’s totally useless to it (for example, the iPod touch is running a Bluetooth stack all the time even though it has no Bluetooth capability).

But then again, maybe it’s not the actual code we’re paying for, but the value that it offers. OK, let’s see what we have. Here are the new apps that have been added to the iPod touch:

OK, Stocks and Weather offer little more than access to online services. These apps are the iPod’s equivalent of Gadgets or Widgets and are of negligible overall value (because if you’re going to have to go down the road of saying that these have a $10 value, the cost of something like an entire operating system should be astronomical). Then we have Maps, which seems like nothing more than a wrapper for Google Maps. Again, try to put a price on that. That leaves us with Notes and Mail. To try to justify that any of this offers a $20 value is hard, especially when you consider the overall value that MacBooks and MacBook Pro customers got from the 802.11n switch on. Over the life of a MacBook that has to represent more than $1.99 worth of value if I’m paying $20 for a few apps, does it not?

Still not convinced? OK, let’s look at this a different way. Let’s say for that the bundle is worth $20. Now, for simplicity let’s just say that each app is worth $4. Why not just let the end user decide which apps they wanted and which they didn’t?

Alternatively, why not open the platform to developers and allow others to offer low-cost/free software to users? The community that’s sprung up around hacked iPhones and iPod touches shows that people are willing to develop software for the platform for free. That move would have had no GAAP implications whatsoever.

And finally, can someone please tell me what the difference is between the iPod touch upgrade which costs money and the Apple TV upgrade with is free and transforms an existing Apple TV device into what PC World is calling a substantially different product?

Nah. This isn’t about accounting rules. Apple’s carefully thought this through. I figured this out last night when I had to enter my credit card details into iTunes for the very first time to get my hands on the download. That’s a pretty slick move on Apple’s part. Apple has managed to get millions of users onto a platform that was deliberately crippled and the company is now monetizing the slow uncrippling process. My guess too is that this won’t be the last paid upgrade for the iPod touch - customers will be asked to put their hand in their pocket regularly until the battery dies, then they get the opportunity to put their hand in their pocket a little deeper. Apple will be monetizing the ownership of the product. Finally, when the iPod is dead, you’ll start the cycle all over again. And don’t think that this is limited to the iPod touch. I’m pretty sure that the iPhone 2.0 will have some magic new that can be added to existing iPhones - for a fee.

If this trend continues, pretty soon all Apple products are going to feel like slot machines.

Apple Patches iPhone, iPod, QuickTime Security Flaws

Apple has released its first security updates of the new year, fixing bugs in its QuickTime media player and iPhone and iPod touch devices.

As with previous updates, the iPhone 1.1.3 software patch sent those who had installed the unauthorized Jailbreak software -- used to run third-party applications on the iPhone -- scrambling to get their phones up and running. That's because Apple's updates have so far always rendered Jailbreak unusable, forcing users to go through a complex re-installation process.

According to the Unofficial Apple Weblog, it is possible to run third-party software following this latest update, but the process is complex. A simpler Jailbreak 1.1.3 script is expected to be posted eventually at the iPhone Wiki, which is the hub of much iPhone hacking.

The iPhone update fixes two flaws in the Safari browser, including a critical bug that could be exploited to run unauthorized software on the device. A third bug could let an unauthorized user bypass Passcode Lock and launch iPhone applications. The iPod touch is susceptible to the Safari bugs, Apple said.

These updates will be rolled out to customers over the next week via the devices' iTunes update mechanism.

The QuickTime 7.4 update fixes four critical flaws in the software that could be exploited by attackers to crash the media player or even run unauthorized software on a victim's computer. The update is available for both the Windows and Mac OS X operating systems.

However, the software does not fix a serious flaw in the player that was disclosed over the weekend.

Security experts are particularly concerned over this flaw because attack code showing how it can be exploited has also been published. Apple is still working to fix the vulnerability, which has to do with QuickTime's use of the Real-Time Streaming Protocol (RTSP).