Wireless

Apple's iPhone and Android-based smartphones have both seen solid growth throughout the world this year, says a report released Wednesday by AdMob.

The iPhone's worldwide market share jumped from 33 percent to 40 percent over February to August, according to AdMob's "August Mobile Metrics Report," which tracked smartphone usage for that six-month period. AdMob, which serves ads for mobile Web sites and apps, bases its numbers on data from ad requests, impressions, and clicks.

Phones running Google's Android OS picked up a 7 percent market share by August versus only 2 percent in February, thanks to rapid gains in North America and Western Europe, said AdMob. Since its debut this summer, T-Mobile's Android-powered MyTouch has been a top seller in both of those regions.

(Credit: AdMob)

With the launch of the Pre, Palm's WebOS has also taken off, grabbing a 4 percent slice of the smartphone market in August.

Top smartphones across the world

(Credit: AdMob)

On the downside, older smartphone systems have witnessed a drop in market share, according to AdMob.

The global share for Nokia's Symbian OS fell from 43 percent in February to 34 percent in August. However, Nokia smartphones remain hot sellers, accounting for 12 of the top 20 smartphones tracked by AdMob. Nokia's N97 and 5800 XpressMusic units were the fourth and fifth most popular smartphones in the U.K. for August.

Research In Motion's slice of the market dropped slightly from 10 percent in February to 8 percent in August. Still, RIM's Blackberry devices accounted for three of the top 20 smartphones around the world. The Palm OS, running on older units such as the Centro, declined in share from 3 percent in February to 1 percent in August.

Finally, Microsoft's Windows Mobile also lost share, falling from 7 percent in February to 4 percent in August, according to the report.

AdMob sells and tracks ads on mobile Web pages and applications to more than 7,000 publishers. The company compiled the data for this report based on its analysis of more than 10 billion monthly ad requests from over 160 different countries.

Most new smartphone users are now consumers, a dramatic change from just a few years ago when the gadgets were primarily in the hands of business types, according to a survey released Wednesday by research firm CFI Group.

The survey "CFI Group Smartphone Satisfaction Study 2009" found that smartphone users are no longer just reading e-mail or scheduling appointments but also surfing the Web, streaming video and music, downloading games, and snapping pictures. Smartphones are now seen more by consumers as minicomputers than as cell phones, according to CFI.

Predictably, Apple's iPhone is credited with igniting the growth of smartphones, and it's the clear leader of the pack. The survey found that the iPhone has the most loyalty and praise among its users, with 92 percent of iPhone owners saying they have the ideal phone. Around 90 percent have recommended the device, while 35 percent said they bought the iPhone based on word-of-mouth advice.

The iPhone also is tops in customer satisfaction, ranking 83 on a 100-point scale, according to CFI. The newer Palm Pre and Android-based phones each scored 77 on the scale, followed by Research In Motion's Blackberry at 73 and the Palm Treo at 70. The rest of the pack, including phones running Windows Mobile and Symbian, trailed the list with an overall grade of 66.

(Credit: CFI Group)

"The iPhone is the best thing to happen to the smartphone industry because it captured the imagination of a whole new set of consumers that might not have made the smartphone jump," said Doug Helmreich, program director with CFI Group.

But the growing dependence on smartphones is a catch-22, since consumers now demand more from their devices. And wireless carriers, most notably AT&T, have struggled to provide the quality of service that people want. For this reason and others, the survey found a disparity between the most popular smartphones and the most popular providers.

Of the pack, Verizon Wireless was considered the ideal carrier among 86 percent of users questioned, and it scored 79 out of 100 for customer satisfaction. But only 38 percent of Verizon consumers said their phone is the ideal smartphone, the lowest among all carriers.

For AT&T, the situation is reversed, but more among iPhone users. Half of all iPhone owners surveyed said they would like to jump ship to another provider, but 75 percent of non-iPhone users said they would stick with AT&T. For customer satisfaction, AT&T scored 69 out of 100 among iPhone users, and 73 among non-iPhone owners.

(Credit: CFI Group)

The survey also raised the question of whether other carriers might take a hit as consumers continue to want more from the iPhone and its brethren.

"The iPhone raised the bar not only for other smartphones, but for the networks as well," said Helmreich. "The new breed of smartphone consumers expect more from their phones, and the iPhone may represent only the tip of a data-intensive iceberg."

To compile the survey, CFI Group questioned 1,074 people from August 3 to 10 about their smartphone use.

Will it or won't it? That's the question that Palm Pre fans are asking. They want to know if the Palm's touch-screen phone will be offered by Verizon Wireless early next year.

TheStreet.com reported late Thursday that sources close to the companies said Verizon was considering not offering the phone on its network, as had been expected. But now analysts are saying the rumors are likely bogus.

Palm Pre

(Credit: Sprint Nextel)

"Our checks continue to point to healthy carrier demand for the Pre early in calendar 2010," Deutsche Bank's Jonathan Goldberg said in a research note published Friday. "We believe Palm has placed orders with the supply chain for another version of the Pre, with features highly consistent with a Verizon launch."

Verizon Wireless CEO Lowell McAdam said in June, before the Pre was even launched, that he expected the device to be on Verizon's network within six months. Sprint Nextel currently has a deal to be the exclusive U.S. carrier of the Pre.

Neither Verizon nor Palm would publicly comment on the speculation. But on Thursday, Palm reiterated its financial guidance, which it gave just last week, when it reported third-quarter earnings. In a notice announcing that the company is raising about $360 million through a public offering, Palm "reaffirmed its fiscal-year 2010 outlook, and its planned product and carrier launches in the second half of Palm's fiscal year, ending in May 2010." The E-Commerce Times wrote on Friday that Verizon's Jim Gerace had confirmed the company still plans to bring the Pre to its network in January, and a source familiar with Verizon's plans later confirmed the plans.

Several analysts have also said they don't buy the rumor that Verizon would snub the Pre. Tavis McCourt, an analyst at Morgan Keegan, said in his research note that Palm's upbeat guidance would require the company to launch the device on Verizon's network. He also pointed to Verizon's long history with Palm.

"Verizon has carried just about every Palm product in its history, and the Pre is clearly the best," McCourt wrote in his note. "We do not have insight as to the marketing support Palm will get from Verizon, but we see little risk in not getting a placement at this carrier."

McCourt also said that he expects the Pre to hit Verizon's network in February. He suspects that the rumor had more to do with investors wanting to influence the company's stock price than any actual change at Verizon. He notes that just before Palm finalized its new funding this week, rumors were circulating that Nokia was looking to buy Palm. The news of the funding deal lifted the company's stock price. And when the subsequent rumor about Verizon not carrying the Pre surfaced, the stock dipped.

"The timing of the rumor, post-deal, makes it equally as dubious as the timing of the 'Nokia will buy Palm' rumor during the roadshow," he wrote.

While McCourt agrees that it's unlikely that Verizon will spend a lot of money marketing the Pre, he said it's not unusual for carriers to spend much less on marketing a device that has already been out on another carrier's network.

"Normally, for an exclusive like the Pre or the (BlackBerry) Storm, the carrier will provide more marketing support," he said in an interview. "But the Pre will have already been out for seven months. So I wouldn't be surprised if Verizon doesn't commit as much money to marketing it."

So what is a smartphone consumer to do? Since neither company is responding to the rumors, it's difficult to say for sure what will happen. But these analysts seem pretty confident that the Verizon Pre is still a go.

Verizon consistently wins high marks for its reliable network. And the company has one of the widest coverage footprints. But customers have long complained about Verizon's lack of cool handsets. So many customers have been waiting for the Pre. And many others are hopeful that Apple's iPhone will come to wireless carrier next year.

Verizon isn't saying anything about unannounced products. But the company is building its next-generation LTE network, which will go live next year. And there is speculation that Apple might announce products that work on that network. Verizon also has its Open Development Program, which allows any device maker to quickly get devices certified for services that run on the Verizon Wireless network.

Updated at 5:21 p.m. to include a statement from Verizon to the E-Commerce Times, saying Verizon still intends to offer the Pre to its customers in January, and at 6:16 p.m. with confirmation from a source.

The Palm Pre may not be coming to Verizon Wireless after all.

According to a report from TheStreet.com, Verizon Wireless execs are reconsidering whether to begin offering Palm's touch screen smartphone in January as many have anticipated.

Palm Pre

(Credit: Sprint Nextel)

The Pre was announced at CES in January amid much fanfare. And after months of anticipation, Palm launched the device in June exclusively on Sprint Nextel's network. Shortly before the device was launched on Sprint's network, Verizon Wireless CEO Lowell McAdam said it would offer the Pre on the Verizon Wireless network within six months.

Sprint's CEO Dan Hesse said the device was exclusive to Sprint through 2009, which left many market watchers expecting a Verizon version to land sometime in January 2010. Hopes for a Verizon version of the Pre were bolstered recently when Palm's new CEO Jon Rubinstein said he expects the device to be offered on other networks very soon.

But now it looks like Verizon is having a change of heart. The Street.com said its sources have cited several reasons why Verizon execs may be getting cold feet. For one, the Palm Pre has had modest sales compared to sales of competing devices such as Apple's iPhone or Research In Motion's BlackBerry devices. According to story, Sprint has not sold more than a million Pre phones so far, which has spooked the Verizon execs.

Another issue is that Verizon supposedly wants its VCast application and download store to be featured on the phone. But this will compete directly with Palm's own app store. ... Read more

Apple now has the support of a USB industry standards group in its battle to keep the Palm Pre from using the iTunes music service.

The USB Implementers Forum (USB-IF) said in a statement Tuesday that Apple can block the Pre from connecting to iTunes. The group issued a letter to both companies warning Palm that further attempts to use iTunes would violate the group's policy.

The voice of the USB-IF is strong in this case since the group is responsible for issuing Apple the hardware vendor ID that lets its devices connect to iTunes via USB. Palm has used this process to its advantage by simulating the same ID for the Palm Pre, tricking iTunes into thinking the Pre is an Apple device.

That scheme worked until the recent release of iTunes 9, which broke the Pre's access, prompting Palm to complain to the USB-IF that the vendor ID blocks competitors.

But the group supported Apple's stance and cautioned Palm by letter that any further attempts to use the code would be a violation of its rules.

In its initial complaint, Palm told the USB-IF that the latest update of its WebOS would restore iTunes functionality to the Pre. In response, the USB-IF quoted policy and reminded Palm that it may use only its own issued vendor IDs, not those of any other company. The group asked Palm to clarify its intentions within seven days.

Palm and Apple were not immediately available for comment.

Even before the Palm Pre was released in June, people discovered that the device could connect to iTunes. Since then, Palm and Apple have fought a tug-of-war over iTunes access. Apple has issued various iTunes updates to block non-Apple devices, triggering Palm to find a way past them. Despite not-so-subtle warnings from Apple, Palm has remained persistent.

Updated at 2:55 p.m. PDT with information from the conference call.

Sales of the Pre helped boost Palm's smartphone sales in the company's fiscal first quarter of 2010 by about 134 percent compared to the preceding quarter, but Palm still reported its eighth consecutive quarter of loss, and sales dipped over 80 percent.

The Palm Pre.

(Credit: Corinne Schulze/CNET)

The Palm Pre, available exclusively through Sprint Nextel, is gaining traction. The company sold 823,000 smartphones in the fiscal first quarter. Many of those smartphones are believed to be the Pre.

But even though sales of the Pre were strong, Palm still ended up losing $164.5 million, or $1.17 per share in its fiscal first quarter. Still, the company's losses beat analyst expectations. Excluding items, the company posted a loss of 10 cents a share. Analysts had predicted a loss of 25 cents a share, according to Reuters.

Palm's sales declined to $68 million. But on a non-GAAP basis, revenue came in at $360.7 million. Wall Street analysts had predicted between $289 million and $297 million.

Palm has struggled to regain footing after losing market share over the last couple of years to companies like Apple with its iPhone and Research In Motion, maker of the BlackBerry devices. The Pre has been seen as the company's last hope at getting back in the game.

CEO Jon Rubinstein said on the company's conference call that Palm plans to focus exclusively on its Web OS software. This new operating system is the foundation of the Pre and Palm's latest device, the Pixi. While the company will continue to sell the current generation of Palm Treo products that use Microsoft Windows, it will focus its research and development on Web OS. And all its future products will be Web OS-based, Rubinstein said.

The move is not surprising given Palm's investment in Web OS, but nonetheless it is a blow to Microsoft, which has been struggling to maintain support for its Windows Mobile operating system. Microsoft made a big deal when it first landed Palm as a licensee back in 2005. Then Palm CEO Ed Colligan took the stage with Microsoft Chairman Bill Gates in San Francisco to tout the new alliance.

Palm executives also said the Pre will soon be available on other carrier networks. In Europe it will soon be available on Telefonica's network. And other carriers will soon follow.

The Pre faces stiff competition in the upcoming holiday season. In addition to the iPhone 3GS, which launched in June, there are several new phones coming to market, including several Android devices. T-Mobile is expected to push its HTC-made MyTouch.

Motorola is also launching new Android devices on T-Mobile's network. Pricing details and a launch date for the new Motorola Cliq haven't been announced. But the device is supposed to be on sale before Christmas. And Motorola is expected to announce another Android phone in the coming weeks.

RIM is also expected to launch a new BlackBerry Storm on Verizon's network in time for the holidays, too.

Still, Palm executives said they believe they have a strong lineup going into the holiday season with the launch of the new Pixi phone, a lower cost device than the Pre, which will also be available on Sprint's network.

Separately, Palm also said that it is planning to sell 16 million shares of common stock. Elevation Partners, which already owns a sizable stake in Palm, expects to buy $35 million worth of stock in the offering, Palm said.

Investors seemed pleased with Palm results, and the company stock, which closed at $14.44 on Thursday, was trading up in the after market.

(Credit: Corinne Schulze/CNET)

Earlier on Tuesday, Sprint published an enticing deal to customers of competing carriers by offering a $100 service credit to anyone who bought a Palm Pre and ported his or her old number to Sprint. Sounds like a great deal, right? Well, it would have been had it lasted.

Sprint has since pulled the offer, saying the promotion was posted in error and issuing this statement:

After further internal review today, the offer of a port-in service credit of $100 to new customers who buy the Palm Pre has been pulled because it was put into the system in error.

I'd hate to be the person who pressed the Go button on that, but Sprint told John Paczkowski at All Things Digital that it will honor the service to anyone who purchased the deal while the offer was live. Obviously, this doesn't look good on Sprint's part but it seems the carrier has been making strides as of late. Do you agree or disagree?

Two years ago, Palm's then CEO, Ed Colligan, rejected a proposal from Apple chief Steve Jobs to promise not to hire each other's employees, according to Bloomberg News.

According to Thursday's Bloomberg story, which cited unspecified "communications" between the two executives, Colligan in August 2007 said that Jobs' proposal was ill-considered. Jobs was worried about losing key Apple employees to Palm and said "we must do whatever we can to stop this," reported Bloomberg.

"Your proposal that we agree that neither company will hire the other's employees, regardless of the individual's desires, is not only wrong, it is likely illegal," Colligan told Jobs, according to the communications reviewed by Bloomberg.

A number of top figures at Palm once worked at Apple. Two months before the August 2007 communications cited by Bloomberg, Palm had announced that former Apple CFO Fred Anderson would be joining its board of directors and that Jon Rubenstein, who retired as head of Apple's iPod division in 2005, would join as executive chairman of the board.

In June of this year, Palm named Rubenstein as its CEO, replacing Colligan.

In August, former Apple staffer Jeff Zwerner became Palm's brand design chief. Other Apple execs who have jumped ship to Palm in recent months include Senior VP of Product Development Mike Bell and PR head Lynn Fox.

There's no love lost of late between the companies, with the Palm Pre a new up-and-comer for smartphone market share against the Apple iPhone. The two have most recently been squabbling over the Pre's compatibility with iTunes.

The Bloomberg story comes as the Justice Department is reportedly checking into possible hiring collusion among leading technology companies.

Tensions often run high between tech companies over executives moving between potential competitors. Apple last year got into a high-profile scrape with IBM over its hiring of Mark Papermaster from Big Blue.

Microsoft's efforts to regain lost ground in the mobile phone business will see the company offering two different versions of its operating system next year.

The company will continue to broadly sell Windows Mobile 6.5 to a large variety of handset makers, while working more closely with several handset makers to sell phones built on a new version of Windows Mobile that has been several years in the making, according to a source familiar with the company's plans.

While Windows Mobile 6.5 is a fairly interim update to the mobile operating system that Microsoft has been selling, Microsoft has also been working on more radical efforts to overhaul the operating system. Both its plans for Windows Mobile 7 and its long-running "Pink" project aim to match the kinds of experiences seen on the iPhone and Android, using more advanced voice and touch interfaces and higher-end hardware.

Microsoft demonstrated Windows Mobile 6.5 at the GSMA Mobile World Congress in Barcelona. That interim update to Windows Mobile will start arriving on phones this fall, while a more radical overhaul of Redmond's cell phone OS is due next year.

(Credit: Marguerite Reardon/CNET News)

A Digitimes report this week called the effort a "dual-platform" strategy, although I'm not sure I'd use that term to describe two versions of Windows Mobile being sold at the same time.

What is clear is that Microsoft needs to do something serious if it hopes to live up to its mobile ambitions. For years now, the company has made rather modest updates to the Windows Mobile operating system, which dates back to the days of code powered PDAs and other organizers that were neither phones nor, in some cases, even connected to the Internet.

In that same time, Palm has gone back to the drawing board and reinvented itself with the WebOS-based Pre, while the iPhone and Android have entered the market and even Research In Motion has arguably done more to capture consumer interest than has Microsoft.

Internally, Redmond has shifted a number of its people into the mobile unit. In addition to former server executive Andy Lees, who now runs the phone business, former Mac Business unit chief Roz Ho has been leading a top secret "premium mobile experiences" team responsible for some of the "Pink" work. The company purchased Danger, known for creating the teen-centered T-Mobile Sidekick, and Ho heads that unit as well.

The software maker has also tapped folks from its Tellme unit to help bring improved voice recognition capability into Windows Mobile.

Call waiting
Microsoft has been working on Windows Mobile 7 for what now seems like an eternity, especially in the mobile world. The product was supposed to be in phone makers' hands by early this year, but has suffered a number of delays.