Apple

Consumer demand for smartphones seems to be unstoppable.

In the third quarter, vendors shipped a record 43.3 million devices, up 4.2 percent from last year's third quarter and up 3.2 percent from this year's second quarter, says a report released Thursday by market researcher IDC.

(Credit: IDC)

Among smartphone vendors, Nokia still enjoys the greatest market share, according to IDC, with a 37.9 percent slice for the third quarter. ... Read more

Nokia is suing Apple over 10 patents the Finnish phone maker says it owns related to wireless handsets.

The largest handset maker in the world is suing the maker of one of the most popular, the iPhone, because, according to a statement released by Nokia on Thursday, Apple has refused to license any of the patents in question. All iPhone models dating back to the original introduced in 2007 are infringing, according to Nokia. Nokia is asking the U.S. District Court in Delaware for an injunction (PDF) on sales of iPhones and for unspecified damages.

"The basic principle in the mobile industry is that those companies who contribute in technology development to establish standards create intellectual property, which others then need to compensate for," said Ilkka Rahnasto, vice president, legal and intellectual property at Nokia. "Apple is also expected to follow this principle. By refusing to agree to appropriate terms for Nokia's intellectual property, Apple is attempting to get a free ride on the back of Nokia's innovation."

Nokia has already reached licensing agreement on the patents in question with 40 other companies, including "most of the major device makers," according to Nokia spokesman Mark Durrant. Apple has thus far refused to cooperate, and filing the lawsuit was a "last resort." The two companies have been in negotiations for "some time," he added.

Nokia says it has spent more than $60 billion (40 billion euros) on R&D related to wireless technology. The 10 patents it accuses Apple of violating are related to making phones able to run on GSM, 3G, and Wi-Fi networks. They include patents on wireless data, speech coding, security, and encryption, according to Nokia.

Apple did not respond immediately to a request for comment.

For every kind of technology you can think of (USB, wall plugs, video game controllers) there's an agreed upon standard. It's arrived at by companies making products that use the technology in question in the context of a standards-setting organization. They'll gather, debate over whose patented technology is best, and also agree in advance that every other company in the standard group will be able to license their patent at a reasonable rate.

Apple is one of a few companies--Nokia wouldn't expand on who the others might be--that is not licensing Nokia's 10 patents. Nokia says that for any phone to run on a GSM, 3G, or Wi-Fi network, it would have to license one of its patents.

Though it is asking the court to halt sales of the iPhone, the general consensus by legal observers and those who follow Nokia, is that it's not actually trying to pull the iPhone off the market permanently--injunctions are always used as leverage in these cases--but rather that it wants Apple to pay its fair share.

"There are companies that are patent trolls, that don't participate in the creation of technology, or they secretly acquire them. Nokia's not one of these companies. They're pretty up front about the patents they own," noted Jason Schultz, director of the Samuelson Law, Technology & Public Policy Clinic at the UC Berkeley School of Law. "They're probably not trying to put Apple out of business...but force Apple to play the same game that every other phone company has to play."

Apple analyst Gene Munster thinks Nokia is looking to extract a royalty payment of 1 percent to 2 percent of every iPhone sold from Apple, which would be about $6 to $12 per phone. With 34 million iPhones sold to date, that would be $204 million to $408 million in back payments Apple would have to pay if Nokia were successful in court. There's also the added risk of something called "willful infringement." Basically, if Apple were to be found in violation it'd have to pay three times the amount of whatever the judgment won by Nokia.

Apple could settle out of court, or it could try to show that Nokia either doesn't own the patents or that they're not valid in this case, both of which would be difficult, said Schultz.

"Invalidating 10 patents is a lot, that's like running the Boston Marathon. It's really hard to do. You might get one, two or even five," he said. "But 10 is a lot."

If it does go to court, strap in for a long ride. This kind of case could take up to two or three years of litigation.

This post was updated throughout at 12:35 p.m. PDT.

It was a good second quarter for Apple's iPhone as the company maintained third place in global sales among smartphone companies, according to a new report from market research firm Gartner.

(Credit: Apple)

In fact, Apple had the largest gains in the smartphone market, selling more than 5.4 million iPhones in the second quarter of 2009 compared to 892,000 in the second quarter of 2008, according to Gartner. First reported by AppleInsider, the increase in sales boosted Apple's market share for the category to 13.3 percent from 2.8 percent in the same period in 2008.

Gartner cited Apple's lowering the price on the 8GB iPhone 3G and its expanding into more countries as having a "clear effect on sales volumes." To put the iPhone numbers in perspective, Apple sold more iPhones during the launch weekend in June for the iPhone 3GS than it sold for the entire second quarter of 2008. (Apple released the iPhone 3G in the third quarter of last year.)

The top company in the market is Nokia, which sold 18.4 million devices for a 45 percent market share. That share is down, however, from a 47.4 percent share in the second quarter of 2008. Research In Motion, maker of the BlackBerry, sold 7.6 million devices, finishing out the quarter with 18.7 percent of the market, up from a 17.3 percent share during the same period last year.

Worldwide, mobile phone sales totaled 268.1 million for the second quarter, down 6.1 percent over the same period last year. However, the smartphone category increased 27 percent year over year, with 40 million devices sold.

It appears that Apple's good fortunes will continue. Roberta Cozza, principal analyst at Gartner, said that since the iPhone was released late in the quarter, "its full potential will only start to show in the sales figures in the second half of 2009."

If there was any doubt about the popularity of Apple's iPhone, a quick look at the latest market share figures from research firm Gartner should put them to rest.

Released on Wednesday, the newest data from Gartner shows that Apple's share of worldwide smartphone sales grew from 5.3 percent in the first quarter of 2008 to 10.8 percent in the first quarter of 2009. In terms of unit sales, Apple jumped from 1.7 million in the first quarter of 2008 to 3.9 million during the same period in 2009.

While the quarter's iPhone adoption metrics may be impressive, Apple wasn't the only smartphone maker with big gains. Research In Motion saw its BlackBerry market share rise from 13.3 percent in first quarter of 2008 to 19.9 percent in 2009. The company's unit sales grew from 4.3 million to 7.2 million over the same period.

Nokia saw its market share drop almost 4 percent, from 45.1 percent in first quarter of 2008 to 41.2 percent in 2009. Despite the decline, Nokia remains the world's No. 1 smartphone maker, followed by Research In Motion and Apple.

Gartner analyst Roberta Cozza said growth in the smartphone category was driven by touch-screen products such as the iPhone and BlackBerry Storm, and credited "tighter integration with applications and services around music, mobile e-mail, and Internet browsing," as key factors to growth.

Although traditional mobile-phone sales still dominate the market, a clear shift is under way. Mobile-phone sales for the first quarter of 2009 totaled 269.1 million, a drop of 9.4 percent over the same period last year.

Smartphone sales for the first quarter of 2009 were 36.4 million, representing a 12.7 percent increase over the first quarter of 2008.

iPhone users in the United Kingdom heavily rely on their device for accessing e-mail and Web content, compared with owners of other smartphones in the country, according to a report released Thursday by market researcher ComScore.

During a three-month period concluding in January, ComScore found that 79.7 percent of U.K. iPhone users accessed news and other Web information with their iPhone. Contrast that to 48 percent for users of all smartphones.

And e-mail also has struck a chord, with 75.4 percent of iPhone users relying on the device for checking their in-boxes and sending messages, compared to 35.4 percent for users of all smartphones.

(Credit: ComScore)

While U.S. smartphone users may assume that surfing the Web is the only reason for getting a smartphone in the first place, apparently, that is not the case in the United Kingdom.

"Over the past several quarters, the U.K. smartphone market has been dominated by the N95, which lacks a QWERTY keyboard. As a result, we see smartphone users favor using their device for music and photo messaging, two activities for which these Nokia devices are particularly well-suited, more than e-mail," Alistair Hill, a ComScore analyst, said in a statement.

Currently, iPhone users represent only 2 percent of the U.K.'s mobile-phone market, ComScore noted. The number of U.K. iPhones reached 1 million in February, according to figures from Spanish telecommunications carrier Telefonica Europe.

The iPhone was the story in the worldwide smartphone market last quarter.

(Credit: Apple)

Apple's blowout quarter for iPhone 3G sales lifted it into second place among all smartphone vendors worldwide.

Canalys released market share stats on Thursday showing strong growth for the smartphone market even as the worldwide economic situation takes a turn for the worse. A total of 39.9 million smartphones were shipped during the third calendar quarter of the year, a 28 percent increase over last year's totals.

Nokia is still the leading vendor by a comfortable margin, holding 38.9 percent of the market. But shipments declined slightly, and market share fell 12.5 percent, compared to last year, as Nokia goes through a transition from older models to newer devices that are just getting out into the market, according to Canalys.

Apple was the big story in the smartphone market during the quarter, vaulting over Research In Motion to take second place, with 6.9 million shipments, or 17.3 percent of the market. And RIM had an excellent quarter, increasing BlackBerry shipments by 83 percent and picking up five points of market share.

Canalys thinks that RIM is in good shape to regain the second-place spot with the pending release of several new BlackBerry models, including the Bold, Storm, and clamshell Pearl. It's unclear whether Apple will be able to sustain that level of iPhone 3G shipments during the fourth quarter, given how new the company is to this market.

When the numbers were sorted by operating system, a similar picture emerged. Symbian is the market leader, due to its close association with Nokia, but Apple and RIM are the second- and third-place vendors, respectively. Symbian lost market share during the quarter that was snapped up by Apple, RIM, and Microsoft.

Despite the Apple juggernaut, Microsoft also posted solid gains during the quarter, increasing the number of Windows Mobile handsets shipped by 42 percent. However, Apple shipped more iPhones during the quarter than all the Windows Mobile devices shipped worldwide by Microsoft's partners, according to Canalys.

We're about to see what full-blown competition for the future of the computing industry looks like when multiple players get a shot to make an impact.

The next great operating systems wars are about to be fought, as traditional computing companies collide with teams representing the mobile phone industry. Nokia's decision Tuesday to unify, then open-source, the Symbian operating system for smartphones clarifies how today's most-widely used handset operating system will evolve to match the open-source initiatives headed by Google and the LiMo Foundation and competition from companies like Microsoft, Research in Motion, and Apple.

Forget RIM and Apple for a moment, since those companies are taking a different tack than the rest of the industry by building the entire widget themselves: both hardware and software. The Symbian Foundation's goal is by 2010 to develop a royalty-free open-source operating system based on Symbian's existing software that phone makers will license to use on their phones.

Nokia's N95 smartphone, which runs Symbian's operating system and the S60 user interface.

(Credit: CNET Networks)

Unless RIM and Apple change their strategy to start licensing their operating systems, Nokia and Symbian will be competing for the affections of phone makers and carriers with Microsoft's Windows Mobile, Google's Android, and Linux-based mobile operating systems from the likes of the LiMo Foundation and others.

"(Symbian) is transitioning from a profit making licensor of the leading mobile device operating system, to an open source provider of a mobile OS that anyone can use on a royalty free basis," wrote Jack Gold, principal analyst at J.Gold Associates in a research note distributed Tuesday. "This is a direct challenge to Google's Android initiative, although somewhat belated."

The opportunity is clear: the smartphone market is growing by leaps and bounds as people start to realize what is possible with an Internet connection and a powerful operating system in the palm of their hand. But despite the fact that Symbian's operating system is used by 60 percent of the world's smartphones--most of which were sold by Nokia--upstarts like Apple and Google have pushed the established smartphone industry to evolve their software with the times.

As Om Malik puts it, and as I've written before, phone makers can't get by on flashy hardware anymore. "Indeed, the mobile industry's old guard is experiencing the business equivalent of heartburn as players like Apple prove that software platforms, and the innovation they foster, are the only way to withstand the whiplash-inducing forces of commoditization," Malik wrote Tuesday.

Prior to Tuesday's announcement, Nokia owned 47.9 percent of Symbian. That close relationship with Nokia--the world's largest handset vendor--ensured its software would appear on a large number of devices sold throughout the world. But application development for Symbian phones was somewhat confusing in that there were several different user interfaces in use, depending on the phone vendor. Nokia's phones used the S60 interface. Motorola's Symbian-based phones used the UIQ interface. Symbian phones that ran on NTT DoCoMo's network used the MOAP interface.

The Symbian Foundation will unify those user interfaces, which will likely make application development easier and more consistent across a wide range of phones. This is exactly what Google wants to do with Android: unify the mobile Linux community behind a consistent interface that's compatible across a wide variety of phones and available under an open-source license.

Nokia, Symbian, and their main partners--Sony-Ericsson, Motorola, and DoCoMo--have all agreed to contribute their user-interface technology under the open-source Eclipse license to any company that wishes to join the Symbian Foundation. Those components will start to become available in 2009, when the Symbian Foundation is formally established, and will be available as open-source projects up until the point when the first formal Symbian Foundation operating system is released in the first half of 2010, the companies said Tuesday.

The Symbian Foundation will also match Android and the LiMo Foundation in a key way: the operating system and its components will be available to phone makers royalty-free. One of the main attractions of mobile Linux was the low cost of getting a mobile Linux operating system up and running, as opposed to paying Symbian or Microsoft royalties or licensing fees for the software. This could cause major problems for Microsoft, who is expected to continue its pay-for-play mobile operating system business, Gold wrote in his report.

Scott Rockfeld, group product manager for mobile communications at Microsoft, said that putting together a modern mobile phone represents a significant investment of time and money even if you choose a royalty-free path, and that Windows Mobile demonstrates enough value in getting that system up and running quickly that certain phone makers will continue to pay for it.

Gold wasn't so sure. "It may be difficult for Microsoft to continue to justify its relatively high license fees for an OS that competes with a fully featured one that is offered for free. While I do not expect Windows Mobile to simply fade away, I do expect that ultimately Microsoft will have to be more competitive (i.e., free or close to free) if it wants to remain a major factor in the wider mobile device platform marketplace. It will have to make its revenues on applications and services instead," he wrote.

It's not immediately clear how the Symbian Foundation will affect the LiMo Foundation, which actually has phones out in the market using a Linux-based operating system developed by a consortium of industry players. Morgan Gillis, executive director of the LiMo Foundation, called Nokia's move a "strong endorsement of the philosophical underpinnings" of the LiMo Foundation, although the LiMo Foundation focuses more on the plumbing of the operating system rather than the user interface.

But is LiMo now caught between two giants, Nokia and Google? Motorola and DoCoMo were founding members of the LiMo Foundation, but have chosen to hedge their bets by participating in both the Symbian Foundation and the Open Handset Alliance.

Google's Android phone software, scheduled to arrive later this year.

(Credit: Stephen Shankland/CNET News.com)

Gillis recognizes that by the time the Symbian Foundation releases an operating system in 2010, some of today's current players may have fallen by the wayside. "The question is really what is the right number of platforms from the industry. Major players say there has to be rationalizations down to some number, but the right number is not bigger than four. ...It's much more efficient to have a small number," he said.

Right now, with Symbian, Microsoft, LiMo, Android, Apple, RIM, Palm, and other Linux consortia all fighting for a place at the table, somebody's going to have to lose. Malik thinks that LiMo, Symbian, and Apple have the best chance of "winning big," with Android and Microsoft fighting for that remaining spot at the table.

The next two years will be fascinating ones for the smartphone industry as processing power increases, software grows more sophisticated, and wireless networks become faster and more prevalent. This evolution of computing will not follow the PC industry's lead and coalesce around a dominant player anytime soon, and there's no better spur for innovation than competition.

The evolution of the mobile operating system is being defined by traditional players like Microsoft and Apple, the younger establishment represented by RIM, Nokia/Symbian, and the Linux consortia, and the 800-pound gorilla of the 21st century: Google. They are raising the bar with features and design while attempting to make sure developers have a chance to participate, and the results of this competition should delight the smartphone buyers of the next decade.

This is Nokia's answer to the iPhone, and it's expected later this year.

(Credit: Symbian-Freak.com)

More details about Nokia's upcoming Tube phone have surfaced, days after its existence leaked out at a developer conference.

Nokia's apparent answer to the iPhone will arrive in the second half of this year, according to Symbian Freak. A Nokia spokesman confirmed the timing to Computerworld but didn't offer any further details other than the obvious notion that the "Tube" will use Symbian's S60 operating system. Nokia owns a large stake in Symbian.

According to Symbian Freak, the Tube (real name TBD) will come with 3G, Wi-Fi, and GPS chips and use a screen sized between 3 inches and 3.5 inches. The site's report compared the size of the Tube to a Nokia N73, but perhaps a bit wider. There's a built-in camera that can also support geotagging of photos taken with the camera, the report says.

The iPhone will probably be available in a 3G version by the time the Tube makes an appearance. It's not totally clear what type of touch-screen interface Nokia will be using for this phone. The report says that the Tube won't use "multitouch," but will have "tactility feedback."

The world's largest handset maker is starting to talk about its response to Apple's iPhone, almost 10 months since the iPhone made its debut.

Nokia showed off the Nokia Tube in a presentation slide noticed by Infoworld at a software development conference in California Monday. The Tube, like the iPhone, is a touch-screen phone that can be manipulated using your fingers, and is Nokia's "first touch device," according to Tom Libretto of Forum Nokia.

It's fair to say the iPhone forced just about every handset maker to take a second look at their product development lineup. HTC and LG have shown off their iPhone-lookalikes already, and more will probably start to appear over the rest of the year.

Nokia didn't provide a time frame for the launch of the Tube. Several Web sites have put up a grainy picture of a phone that purports to be the Tube, but I can't figure out who took the original image, so I'm not putting it here until we figure out if it's real, or if proper credit can be assigned. I can, however, show you what all the fuss is about through the magic of hyperlinking.