Google Gains From Creating Apps for the Opposition

originally appeared in The New York Times:

For many people, smartphone shopping comes down to a choice of Apple’s iPhone or one powered by Google’s Android software.

But now consumers can get an iPhone and fill it with Google.

Google has become one of the most prolific and popular developers of apps for the iPhone, in effect helping its competitor make more appealing products — even as relations between the companies have deteriorated.

While some of its Internet services were built into the iPhone from the start, Google has stepped up its presence in the last eight months, pumping out major new iPhone apps or improving old ones. It also has expanded efforts to hire developers to make more such apps.

A maps app Google released in December has been the most downloaded program for the iPhone for much of the last month. The company has cranked out a YouTube app, an iPhone version of its Chrome Web browser and better software for gaining access to its Gmail service. Two dozen iPhone apps from Google are available on Apple’s App Store, with variations for the iPad.

Google’s strategy may look self-defeating at first. But analysts and technology executives say it is simply acknowledging the obvious: that there is an enormous market of avid iPhone users it wants to reach, an audience that is a target for ads and that can yield a bonanza of data that will allow Google to improve the online products that produce much of its profits.

Google’s support for the iPhone also looks like a win for Apple, which, after all, makes money when it sells an iPhone that is used to gain access to Google services.

But potential risks lie in Google’s growing presence on Apple’s devices, especially when it comes to apps that replace basic functions like Web browsing, maps and e-mail.

IPhone users who spend much of their time in Google apps could deprive Apple of valuable data it needs to improve its own online services like maps. And those apps could help Google build a deeper connection with users that makes them more likely to switch entirely to Android smartphones later.

“The best way to recruit users to those devices is to get them using the services,” said Chris Silva, a mobile analyst at Altimeter Group, a tech industry research business. “Find them where they are, get them using the services and ramp them up so when they have devices equivalent to the iPhone, they are already in the market.”

Stephen Stetelman, a real estate agent in Hattiesburg, Miss., is a prime example of an iPhone user whose loyalties are divided between Apple and Google. The first thing Mr. Stetelman, 25, said he did when he got a new iPhone two weeks ago was to download all of Google’s major apps, including Gmail, Chrome and Google Maps — all of which he said he considered better than the comparable Apple apps that came with the phone.

“It’s a little ironic,” Mr. Stetelman said. “But I think honestly the grace of Apple is in their design and in their hardware. As far as online services and applications and stuff, I think Google is still top of the line.”

People like Mr. Stetelman make executives at Apple nervous. Early in the iPhone era, Steven P. Jobs, the company’s former chief executive, who died in October 2011, did not want Apple to approve any apps for the device that replaced its core functions, one former senior Apple employee said.

Apple executives have long believed that they would need to build up many of the same services that Google offers to compete long-term in the mobile market, according to this person, who did not want to be named to avoid jeopardizing relationships.

Eventually, under scrutiny from federal regulators, Apple softened its stance and began allowing apps for the iPhone, like Web browsers, that competed with important built-in apps.

Natalie Kerris, a spokeswoman for Apple, declined to comment for this article.

Apple has moved to reduce the presence of Google services in apps that come installed on its phones. Last year it removed the YouTube app — one that Apple created for the earliest iPhones so they would have access to YouTube videos. It also stopped using Google data to power its mapping application.

Instead, Apple began using its own maps service, which has been widely criticized for mistakes, including misplaced landmarks and inaccurate addresses. Timothy D. Cook, Apple’s chief executive, issued a rare apology last September for its maps product and later shook up the company’s management ranks, in part because of the problems.

Apple’s decision to stop including Google’s services on its devices forced Google to quickly ramp up its own software development for Apple’s mobile operating system, iOS.

While Google had engineers devoted to iOS projects, it had to hire outsiders to help quickly design a Google Maps app for the iPhone.

That app appears to be a huge hit. Widely praised by technology reviewers, Google Maps for the iPhone was downloaded more than 10 million times in the 48 hours after its release last December, Jeff Huber, a Google senior vice president, said in an online post at the time.

Other Google apps are among the most commonly used on the iPhone. Last November there were 11.8 million unique users of a new Google-created YouTube app for the iPhone in the United States, and 6.4 million users of its Google Search app, placing them both in the top 20 list of iPhone apps with the biggest audience, according to Nielsen.

In October, Google updated its search application for the iPhone with voice capabilities that more closely resembled those of Siri, the often-maligned virtual assistant included in the iPhone.

Google also bolstered its efforts last year to hire more iOS developers, many of whom might be unlikely to consider working for the company because of its focus on promoting the Android operating system on mobile devices.

Last July, Google bought Sparrow, a Paris-based start-up that made a popular app for using Gmail on the iPhone, and moved some of its engineers to Silicon Valley.

Last December, it began posting Web ads to recruit iOS developers, providing a link to a Q.&A. on the subject with the headline, “Wait, Google has iOS mobile apps teams?”

Chris Hulbert, a freelance programmer who spent three months working for Google in Australia last year, wrote a blog post in which he compared working on iOS apps there to “working behind enemy lines.”

Google said it had not changed its strategy on Apple devices, but rather was continuing to build apps for all devices.

“Our goal is to make a simple, easy-to-use Google experience available to as many people as possible,” said Christopher Katsaros, a Google spokesman. “We’ve developed apps for iOS for some time now, and we’re delighted to see the recent enthusiasm for them.”

Unlike Apple, Google makes its money not from selling phones but from selling ads that appear on those phones. So it cares less about which phone a consumer uses and more about whether that consumer uses Google apps — and shares data with Google and sees Google ads.

When a consumer uses Chrome on the desktop at work, for instance, then opens the same tabs and continues using Chrome on phones elsewhere, Google knows much more about that consumer’s behavior, including the consumer’s location and the searches. The company’s hunger for such data has, of course, raised privacy concerns.

Chetan Sharma, an independent mobile analyst, says Google’s focus on iOS should concern Apple. “It just pushes Apple to up their game in software,” he said. “They’re kind of behind.”

Apple’s Siri Changes Voice Technology

First appeared in Fox Business

Apple Inc. will again dominate conversations at CES, the world's biggest technology showcase. Only this time, the talk is extending beyond iPad and iPhone chatter to include "Siri," the voice app that is capturing consumers' imagination.

Apple's dulcet-voiced, speech-controlled personal assistant, a key factor in making the iPhone 4S a blockbuster, has breathed new life into the once-obscure and oft-maligned world of speech-recognition technology.

Siri, which can do everything from taking dictation for text messages and entering calendar appointments to answering general-knowledge questions, has intrigued users. Experts say it demonstrated emphatically that voice recognition has moved beyond the days of misheard commands, narrowly defined keywords and anguishingly slow speeds.

The smartphone industry is now scrambling to match and better Apple's offering. Google Inc and Microsoft Corp will likely want to cash in on an explosion of interest in an area they have invested in for years, without getting anything like the attention Siri is attracting.

"All the mobile phone manufacturers are investing in speech, expanding investments in speech, creating more elegant designs and integrating it more deeply into phones," said Michael Thompson, senior vice president for mobile at voice-recognition specialist Nuance.

Thompson was coy about his company's future plans but said he expects voice to be a central topic at the Consumer Electronics Show in Las Vegas as device makers jostle for attention from investors, media and consumers.

While voice is expected to be used in many areas of consumer electronics, the technology is particularly pertinent to cellphones because it simplifies functions from Web surfing to typing.

Internet merchants like eBay are also jumping on the bandwagon. And reports have emerged about a voice-control for TVS from South Korea's LG Electronics just before CES, which will open its doors in Las Vegas this week.

Many companies at CES are not yet ready to showcase products that can match or outdo Siri, Forrester Research analyst Charles Golvin said. But he said he expects the current flurry of activity to result in big voice product advancements in coming years as the technology is perfected.

Apple's rivals are planning to ship phones with improved speech technology in the fall, in time for the 2012 year-end holiday season, said Thompson at Nuance, which supplies and licenses technology to Apple but has its own voice app.

Even traditional PC makers will jump on the bandwagon: Intel announced at CES on Monday it will adopt Nuance's "Dragon NaturallySpeaking" voice-command technology on ultra-thin laptops -- dubbed UltraBooks -- coming out this year from the likes of Dell and Hewlett Packard.

"Voice as an input mechanism is going to be more and more useful and more and more prevalent," Golvin said. "Consumers have a lot of bad historical experience with it. They are going to encounter good voice interfaces more and more."

BANDWAGON ROLLS ON

Experts say the technology will evolve as more consumers get acclimated to it.

The interest in voice is already sparking acquisitions, with Nuance setting its sights on phones based on Google's Android operating system. Last month, it bought Vlingo, a developer of voice-control apps for a phones based on Android.

Android phone manufacturers -- all major rivals of Apple -- include Samsung Electronics Co Ltd, HTC Corp and Motorola Mobility, which Google is buying.

In the meantime, some developers are helping phone makers bridge the gap. A new app called "Ask Ziggy," launched a few weeks ago on Microsoft Windows-based smartphones, is generating buzz among users as it allows them to update Facebook, Twitter, answer texts and questions -- all through speech.

The free app helps a Windows phone mimic Siri's features and is already one of the top downloaded apps in its category.

"There's been a lot of interest globally," said Ask Ziggy developer Shai Leib, who told Reuters his inbox has been flooded with feedback from users, some even from Microsoft employees.

Leib plans to incorporate speech technology further in the app, to make phones completely hands-free. Microsoft's gesture-based Xbox Kinect gaming system has also raised the possibility of using hand gestures to manipulate screens and execute commands -- the so-called "Minority Report" interface named after the Tom Cruise sci-fi vehicle.

"With the success of the Microsoft Kinect and Apple's Siri, new ways to interface with CE devices have suddenly become top of mind," Ben Arnold, NPD's director of industry analysis, wrote in a blogpost last week. "I expect several companies to exhibit products using some of these new interface methods in an effort to differentiate themselves."

Leib argues there's nothing to stop smartphones also adopting gesture-recognition.

"The next level is to improve the speech, grammar and make the answers a little bit more conversational," he said. "The possibilities are amazing, especially with Kinect."

"I am looking forward to see what's going to happen with Windows 8 and if there are going to be future updates on the Windows phone that can recognize gestures."

HISTORY OF SPEECH

Apple was not the first to incorporate speech on phones. Google has had speech-recognition applications for Android smartphones for more than two years, and is now possibly trying to beef up its capabilities through the recent acquisition of a company called Alfred.

Alfred uses artificial-intelligence technology to sift through the Web's vast trove of data and recommend restaurants, bars and other real-world places users might like. Some experts say the technology could provide an important building-block that Google could pair with existing voice-recognition technology to create its own answer to Siri.

E-commerce companies are also playing catch-up, not wanting to be caught flat-footed should consumers become more comfortable using voice to search the Web and shop online.

EBay is planning a voice and image-based search function for its online market and "Red Laser" price-checking mobile software.

EBay Chief Executive John Donahoe has said he believes Siri is just the beginning, and sees a future where users can speak their preferences into phones to narrow down shopping choices.

Dan Miller of San Francisco-based Opus Research agrees. He was particularly intrigued by reports last November of an acquistion by Amazon.com of Yap, whose software coverts voice to text.

"The clock is ticking. In the next year or year and half expect a talking Kindle that supports commerce," Miller said.

Miller, who has studied voice technology for about 25 years, said he is gratified by the sudden spotlight on voice as he recalls years of consumer frustration over automated customer serivce systems.

"We're really happy to see this much positive attention," he said, "As opposed to "Oh the machine doesn't understand me."

Steve Jobs Made Phone Call Seeking Lost iPhone

Associated Press

 

Brian Hogan's world closed in fast almost as soon as he sold the next-generation iPhone he found in a Silicon Valley bar to a popular technology website for a stack of $100 bills, according to court documents released Friday.

By April 19, Hogan's roommate had tipped off investigators that he was at the center of the drama, Apple's top lawyers were meeting with police to press for criminal charges and Steve Jobs himself was personally demanding the iPhone's return.

The ordeal has set off ethic debates in journalism and law enforcement circles while Hogan and a website editor are now at the center of a criminal investigation that has been rife with speculation but devoid of many facts - until now.

On Friday, San Mateo Superior Court Judge Clifford Cretan ordered unsealed a 10-page sworn statement with details written by San Mateo Sheriff's Detective Matthew Broad to obtain a warrant to search the car and home of Jason Chen, a Gizmodo.com editor. Broad's statement was used to obtain a search warrant for Chen's home and car.

According to the statement, the saga began March 25, when Apple engineer Robert "Gray" Powell left the iPhone prototype in the bar area of Redwood City's Gourmet Haus Staud restaurant.

It said Gizmodo paid Hogan $5,000 for the device, cracked it open and posted images of it on April 20 despite a phone call from Jobs the day before demanding website editors return the gadget. Gizmodo promised Hogan an additional $3,500 bonus if Apple formally unveiled the device by July, according to Broad.

Now, Chen is under investigation for theft, receiving stolen property and damaging property, according to the affidavit. The affidavit also suggests Hogan and a third roommate, Thomas Warner, also may face criminal charges, and alleges the two panicked and attempted to hide evidence when they caught wind of the criminal investigation.

Nobody, including Chen, has been charged with any crime,

"The events have taken on a life of their own," said Jeff Bornstein, Hogan's attorney. "He thought it was dumb luck that he stumbled on to something valuable and he regrets not doing more to return it."

Bornstein said Hogan always intended to return the phone and didn't believe he was breaking the law in dealing with Gizmodo.

Bornstein also denied the affidavit's suggestion that Hogan was trying to get rid of evidence on April 21. That's when, shortly before midnight, Hogan's roommate Katherine Martinson called investigators and told them that Hogan and Warner were removing evidence from their apartment, the document said.

Investigators found Hogan at his father's Redwood City house and he directed them to nearby Sequoia Christian Church, where they recovered Hogan's computer and monitor.

Bornstein said that Hogan was in the process of moving out of the apartment and that Warner ended up with Hogan's computer, panicked and dropped them off at the church.

The investigation has prompted debate over whether he should be shielded from prosecution by California's so-called shield law, which protects journalists from having to turn over to police unpublished notes and the names of anonymous sources. But the shield law doesn't immunize journalists from breaking the law.

The investigators themselves have come under fire as well for apparently launching the investigation at Apple's behest. Detective Broad belongs to a special high technology task force called the Rapid Enforcement Allied Computer Team, which is comprised of investigators from several jurisdictions and investigates crimes against technology companies.

According to Broad, task force investigators met with two high-ranking Apple executives and outside lawyer George Riley on April 20, the day Gizmodo published the images. Riley told the task force that Gizmodo's action were "immensely damaging to Apple," because consumers would hold off buying iPhones until the new version was released. Riley didn't estimate a dollar figure, but said losses were "huge," according to the affidavit.

Apple is a member of the technology crime task force's board, but the company said it didn't use its influence to pressure law enforcement to investigate.

"We reported what we believe was a crime, and the D.A. of San Mateo county is taking it from there," said Apple spokeswoman Katie Cotton.

San Mateo County prosecutors had argued to keep the affidavit under seal to protect the identities of witnesses and the ongoing investigation. But The Associated Press and several other media companies convinced a San Mateo County superior court judge to make the document public, arguing disclosure was necessary to ensure that the raid of a journalist's home was proper.

Police Seize Gear from Gizmodo iPhone Blogger

 

SEATTLE (AP) - Authorities seized computers, digital cameras, a cell phone and other items from a technology blog editor who posted pictures and details of a lost iPhone prototype.

A computer-crime task force made up of multiple law enforcement agencies searched Gizmodo editor and blogger Jason Chen's house and car in Fremont, Calif., on Friday, according to a statement and search warrant documents provided by Gizmodo.

The warrant, issued by a Superior Court judge in San Mateo County, said the computers and other devices may have been used to commit a felony. Steve Wagstaffe, spokesman for the San Mateo County District Attorney's office, confirmed the warrant's authenticity.

Members of the Rapid Enforcement Allied Computer Team took several computers, hard drives, digital cameras, cell phones and other gadgets, plus Chen's American Express bill and copies of his checks.

Last week Gizmodo had one of the Web's hottest scoops when it posted photos of an Apple device that appeared to be a next-generation iPhone. It had been found in a bar in Redwood City, which is in San Mateo County, and sold for $5,000 by an unknown person to Gizmodo, a gadget blog owned by Gawker Media Inc.

After Chen, 29, posted photos and details about the phone, Apple acknowledged the device belonged to the company, and Gizmodo returned it.

Gawker Media said California law, which protects journalists from having to turn over anonymous sources or unpublished material to law enforcement during a search, should apply to Chen's property.

"Are bloggers journalists? I guess we'll find out," Nick Denton, who runs Gawker Media, wrote in an e-mail to The Associated Press.

Wagstaffe said the district attorney's office is examining that issue.

Apple spokesman Steve Dowling declined to comment.

Google Phone Now Works on iPhone's Wireless System

SAN FRANCISCO (AP) - Google Inc. has upgraded its Nexus One phone so it works on the same high-speed wireless network as Apple Inc.'s iPhone, putting the increasingly antagonistic rivals on an even more direct collision course in the mobile market.

The latest version of the Nexus One unveiled Tuesday could make the device a more serious challenger to the iPhone, which uses AT&T Inc.'s 3G network as its main communications channel in the United States.

The Nexus One had been running on AT&T's slower networks since Google began selling the handset in early January. The switch to AT&T's faster system represents another step in Google's attempt to siphon sales from Apple's iPhone with its own version of a sleek mobile phone that relies on touch-screen technology.

Analysts don't believe the Nexus One has made a big dent yet, despite Google's efforts to promote the Nexus One as a "super" phone that's a cut above the iPhone.

Nevertheless, Apple is aggressively protecting its turf as it tries thwart the Nexus One and several other mobile phone models that rely on Android, a software system designed by Google.

In a lawsuit filed earlier this month, Apple alleged HTC Corp. - the maker of the Nexus One and other Android-powered phones - has infringed on its touch-screen patent.

Google hasn't said how many Nexus Ones have been sold so far. BroadPoint.Amtech analyst Benjamin Schachter estimates Google will sell about 125,000 of the phones during the Nexus One's first three months on the market. Apple has sold about 40 million iPhones since the device's 2007 debut, including 8.7 million in last year's final quarter.

Nexus One's upfront cost can be substantially higher than the iPhone because Google is selling some models without subsidies from wireless carriers to make it easier for consumers move to other networks.

The unsubsidized version of the Nexus One sells for $529. The iPhone sells for as little as $99 with a two-year commitment to subscribe to AT&T.

Consumers willing to shoulder a two-year contract with T-Mobile can buy a Nexus One for $179.

AT&T has no plans to subsidize the Nexus One although it welcomes all phones compatible with its 3G network, said company spokesman Fletcher Cook.

Forbidden Fruit: Microsoft Workers Hide Their iPhones
The Wall Street Journal

Steve Ballmer Sours on Apple Product; Work for Ford, Drive a Ford

REDMOND, Wash.—Microsoft Corp. employees are passionate users of the latest tech toys. But there is one gadget love that many at the company dare not name: the iPhone.

The iPhone is made, of course, by Microsoft's longtime rival, Apple Inc. The device's success is a nagging reminder for Microsoft executives of how the company's own efforts to compete in the mobile business have fallen short in recent years. What is especially painful is that many of Microsoft's own employees are nuts for the device.

The perils of being an iPhone user at Microsoft were on display last September. At an all- company meeting in a Seattle sports stadium, one hapless employee used his iPhone to snap photos of Microsoft Chief Executive Steve Ballmer. Mr. Ballmer snatched the iPhone out of the employee's hands, placed it on the ground and pretended to stomp on it in front of thousands of Microsoft workers, according to people present. Mr. Ballmer uses phones from different manufacturers that run on Microsoft's mobile phone software.

A Microsoft spokeswoman declined to comment and declined to make executives available for this story.

Apple CEO Steve Jobs referred an email asking about iPhone use at Microsoft to a spokeswoman, who declined to comment.

Despite Mr. Ballmer's theatrics, iPhone users are in plain sight at Microsoft. At the sprawling campus here in a Seattle suburb, workers peck away on their iPhone touch-screens in conference rooms, cafeterias and lobbies. Among the top Microsoft executives who use the iPhone is J Allard, who helped create the Xbox game console and is chief experience officer for the entertainment and devices division.

Nearly 10,000 iPhone users were accessing the Microsoft employee email system last year, say two people who heard the estimates from senior Microsoft executives. That figure equals about 10% of the company's global work force.

Employees at Apple, in contrast, appear to be more devoted to the company's own mobile phone. Several people who work at the company or deal regularly with employees there say they can't recall seeing Apple workers with mobile phones other than the iPhone in recent memory.

IPhone usage at Microsoft is the latest twist in the rivalry between Apple and Microsoft, tech-industry titans that have mixed it up in everything from computer operating systems to digital music players.

For many top Microsoft executives, seeing so many iPhones around the office is a bit like how a Coca-Cola Co. manager might feel seeing underlings drink Pepsi—especially since Microsoft makes its own operating system, Windows Phone, that powers handsets.

Employee iPhone use has led to some spirited discussions among Microsoft executives. At a retreat last March for dozens of senior Microsoft executives at its corporate campus, someone asked about employee use of iPhones in a question-and-answer period.

According to several people present, Andy Lees, a Microsoft senior vice president who oversees development of the mobile-phone software business, and his boss, Robbie Bach, explained that Microsoft workers often use rival products to better understand the competition.

Kevin Turner, chief operating officer, scoffed at that explanation, these people said. Mr. Turner said he discouraged Microsoft's sales force from using the iPhone, they added. "What's good for the field is good for Redmond," Mr. Turner said, recalls one of the people who heard his comments.

Mr. Ballmer took a similar stance at the meeting.

He told executives that he grew up in Detroit, where his father worked for Ford Motor Co., and that his family always drove Fords, according to several people at the meeting.

In what some employees interpreted as a sign that Microsoft was clamping down on the iPhone, the company in early 2009 modified its corporate cellphone policy to only reimburse service fees for employees using phones that run on Windows Phone software.

Microsoft has said it made the change as part of a broader cost-cutting plan.

Some Microsoft workers take pains to hide their iPhones. While rank-and-file workers tend to use the iPhone openly around peers, some conceal them within sight of more senior executives. One Microsoft worker said he knows several colleagues who try to disguise their iPhones with cases that make them look more like generic handsets.

"Maybe once a year I'm in a meeting with Steve Ballmer," said this employee. "It doesn't matter who's calling, I'm not answering my phone."

Some executives have openly renounced their iPhones. Stephen Elop, president of Microsoft's business division, used Apple products before Mr. Ballmer lured him to Microsoft in early 2008. But at a meeting of Microsoft sales representatives after joining, Mr. Elop placed his personal iPhone into an industrial-strength blender and destroyed it in a reenactment of a popular Internet video, says one witness.

Others remain less shy about their iPhones. Microsoft software engineer Eugene Lin recently gave a public talk in Seattle about developing software for the iPhone in his spare time. One of his creations: a racy application called Peekaboo that lets people ogle scantily clad cartoon women. A YouTube video of the Seattle talk by Mr. Lin, who didn't respond to messages seeking comment, has been viewed more than 73,000 times.

Microsoft isn't uniformly opposed to employees using Apple products, in part because it makes some software and services for them. Apple's Macintosh computers are common in the Microsoft group that makes the Mac version of its Office software.

Still, Apple's ascendancy in mobile phones has been tough to stomach.

The iPhone accounted for 25.1% of the U.S. smartphone market during the three months ending Jan. 31, compared with 15.7% for phones running Windows Phone software, according to comScore Inc.

Windows mobile phones have lagged some of the innovations of the iPhone, including Apple's slick Web browser and the App Store for downloading software onto the device.

But there's positive buzz among Microsoft employees and others in the technology industry about an overhauled version of its software, Windows Phone 7 Series, expected to be on handsets in time for the holidays.

One person who isn't jumping on the iPhone bandwagon is co-founder and chairman Bill Gates. In an appearance on "The Daily Show" in January, host Jon Stewart asked Mr. Gates if he can have an iPhone since leaving full-time duties at Microsoft in 2008 to focus on philanthropy.

"I'm a very loyal Microsoft user," Mr. Gates replied.

Apple May Give Bing Top iPhone Billing

Business Week

Amid an accelerating rivalry with Google, Apple is discussing ways to make Bing the default search engine on the iPhone

In 2003, when Apple said its iTunes music software would work on PCs using the Windows software of its age-old rival, Microsoft, Apple made up posters that read "Hell Froze Over." Hell may be getting frosty again.

Apple (AAPL) is in talks with Microsoft (MSFT) to replace Google (GOOG) as the default search engine on its iPhone, according to two people familiar with the matter. The talks have been under way for weeks, say the people, who asked not to be named because the details have not been made public.

The discussions reflect the accelerating rivalry between Apple and Google, now the main provider of Web search on the iPhone. While the two companies have worked as partners in the past and Google Chief Executive Eric Schmidt had a seat on Apple's board, Apple and Google have more recently begun competing in several markets, including mobile phones. Google sells a smartphone, the Nexus One, that competes directly with the iPhone and it has spearheaded development of a wireless handset operating system that rivals the iPhone OS.

"Apple and Google know the other is their primary enemy," says one of the people, who's familiar with Apple's thinking. "Microsoft is now a pawn in that battle." Apple is also working on ways to manage ad placement on its mobile devices, a move that would encroach on Google's ad-serving business, the person says.

The discussions could still unravel and may not be concluded quickly. Microsoft spokesman Frank Shaw and Apple spokeswoman Katie Cotton declined to comment on potential involvement of Bing seo.

Default Reaps Financial Benefits

A deal between Apple and Microsoft may mean iPhone owners would automatically get Microsoft's Bing as the main search engine, possibly requiring users to actively change phone settings if they want to search via Google. Google is now the default search engine on the iPhone. To search via Bing, a user needs to download a Bing application or go through the browser to call up www.bing.com. Microsoft may also be lobbying to make Bing an alternative on Apple's Safari browser for Mac users. Currently, Mac users can choose either Google or Yahoo search through the Safari browser.

Being the default search engine on the iPhone carries financial benefits for Google, which collects revenue from ads placed alongside its search results and shares a portion of that with Apple. Most mobile advertising now is viewed on Apple's iPhone and iPod touch, according to mobile advertising company AdMob. To clinch the deal, Microsoft may be willing to share a higher portion of its revenue or pay a larger flat annual fee than Google seo does. Neither Apple nor Google discloses the financial terms of their search partnership.

Clinching the coveted default spot on the iPhone would also help Bing gain market share in the quickly growing area of mobile search. Of people who use mobile search, 86% used Google in November, according to the Nielsen Co. Only 11% used Bing.

Google Rivalry Unfolds

Apple and Microsoft are rivals, too, though cooperation between them is not unprecedented. Microsoft builds Mac versions of its Office suite of business programs, such as Word. When Apple co-founder Steve Jobs returned to the company in 1997, one of his first acts was to settle intellectual-property infringement claims in exchange for $150 million in much-needed cash and a promise from Microsoft that it would continue developing upgrades of Office for the Mac. Back then, Apple was in dire financial straits and desperate for friends. Now it's in a position of strength. "If you have to do a deal with the devil, you might as well deal with the devil that needs you most," says Forrester Research (FORR) analyst James McQuivey.

Apple initially agreed with little hesitation to use Google as the default search engine in the iPhone before it was launched in 2007, according to two people familiar with the negotiations. Besides using the search bar, the companies worked together to create special versions of Google Maps and the YouTube video player tailored to run faster on the device. At the time, Apple had little hesitation because Google's popular software could help drive the popularity of the iPhone—and because Google wasn't seen as a potential rival.

That began changing more than a year ago as the two companies encroached further on each other's turf. Apple has refused to approve two Google applications for distribution in its App Store—including one called Latitude that uses GPS data and other types of information to show users which friends are nearby.

Even if it's consummated, an Apple-Bing deal may prove short-lived. The person familiar with Apple's thinking says Apple has a "skunk works" looking at a search offering of its own, and believes that "if Apple does do a search deal with Microsoft, it's about buying itself time." Given the importance of organic search marketing and its tie to mobile advertising—and the iPhone maker's desire to slow Google—"Apple isn't going to outsource the future."

Researcher: Google Wave, iPhone and Android will be Heavily Attacked in 2010
USA Today

 

From the crystal ball of  Roel Schouwenberg: Google Wave, the iPhone and Android mobile phones will come under heavy cyber attacks in 2010.

Schouwenberg, a senior malware researcher at Kaspersky Lab Americas, predicts Google Wave will grab headlines in coming months -- but not necessarily for emerging as the next killer online networking app. Instead, he says, Google Wave is likely to become a top target of cyber criminals.

"Attacks on this new Google service will no doubt follow the usual pattern," Schouwenberg soothsays. "First, the sending of spam, followed by phishing attacks, then the exploiting of vulnerabilities and the spreading of malware."

Schouwenberg also anticipates a sharp rise in attacks on the iPhone and Android mobile platforms, following the successful probe attacks of 2009. "The first malicious programs for these mobile platforms appeared in 2009, a sure sign that they have aroused the interest of cybercriminals," he says.

Android users, in particular, seem ripe for plundering. "The increasing popularity of mobile phones running the Android operating system, combined with a lack of effective checks to ensure third-party software applications are secure, will lead to a number of high-profile malware outbreaks," he says.

Schowenberg's prescient orb also tells him that  the overheated race between Google, Microsoft Bing, and Yahoo Search to incorporate Facebook and Twitter posts in search results -- in real time -- is destined to aid and abet cyber criminals' deployment of phishing scams, banking Trojans and cutting-edge intrusions. "Malware will continue to further its sophistication in 2010," he says.

Apple in hot water in France over 'exploding iPhones'

Half a dozen new cases of "exploding iPhones" emerged in France on Wednesday, as Apple faced an official inquiry and calls to come clean over possible risks linked to its wildly popular smartphone.

An 80-year-old pensioner from the Paris suburbs said Wednesday his iPhone screen cracked up in his hands, a day after a supermarket watchman claimed he was hurt in the eye when his screen suddenly shattered this week.

Ten French consumers have now come forward saying their iPhone screens exploded or cracked without explanation, according to an AFP tally, including a first case in mid-August in which a teenager suffered an eye injury.

Apple is accused of trying to hush up 15 cases of iPod music players heating up and bursting into flames in the United States and in one similar British case, all apparently due to overheated lithium ion batteries.

None of the incidents has caused a serious injury but Apple was forced to defend the safety of its flagship smartphone before the European Union this month, insisting the exploding screen cases were "isolated incidents".

The US technology giant, which has sold 26 million iPhones and 200 million iPods to date, said it been informed of the French cases, but would not comment until it had examined the damaged phones.

"We are aware of these reports and we are waiting to receive the iPhones from the customers. Until we have the full details, we don't have anything further to add," Alan Hely, head of communications at Apple Europe, told AFP.

But France's official competition, consumer affairs and fraud watchdog, the DGCCRF, has launched an investigation to find out whether the Apple smartphone could pose a threat to consumers.

"An investigation is under way. We have been alerted to the problem and we are looking into it closely," a spokesman said Tuesday.

France's consumer rights group, UFC-Que Choisir, also called on Apple to come clean about possible faults with its iPod and iPhone devices.

"We want to know if this is an isolated incident as they claim, or a real problem involving the iPhone -- in which case, what are they planning by way of compensation and to prevent it happening again?" said a spokesman.

In the British case Apple came under fire for allegedly asking the young girl's family to sign a confidentiality agreement -- slammed as a "gagging order" -- before it would agree to refund her.

In the latest French incident, Rolland Caufman, a pensioner from the Paris suburb of Noisy-le-Sec, says his iPhone screen broke up on July 21, the week after he bought it.

"I went out shopping, with my iPhone in my left pocket, when I suddenly felt it heat up and start vibrating -- even though I never use the vibrate setting.

"I took it out of my pocket and held it to my ear -- and saw the screen crack up like a car windscreen," he told AFP.

Caufman says Apple initially refused to believe him, before finally sending him a free replacement.

On Tuesday, 26-year-old security guard Yassine Bouhadi, claimed he was hit in the eye with a glass shard when the screen of his iPhone cracked up. He said he would seek a full refund and file suit for damages.

French mobile phone operator Orange said it had been contacted by two customers with shattered iPhone screens, out of 1.2 million iPhones sold.

The European Commission has asked all 27 EU nations to keep it informed of any problems, under the community's rapid alert system for dangerous consumer products, known as RAPEX.

Commission spokeswoman Helen Kearns said "Apple has been very cooperative", stressing that RAPEX alerts were issued every week -- sometimes leading to mass product recalls, but at other times with no consequence.

"We're not there yet. We just need to monitor closely now and see if these are isolated incidents," she told AFP.

"We'll be vigilant and if necessary we'll take further actions. But we need to examine the situation better."