Apple's iPhone 3G hits shelves; Extras Store also Opened

Apple's international launch of iPhone 3G began in New Zealand and Japan on Friday, as a freshly-opened ‘App Store’ tempted fans with independently created mini-programs for the coveted devices.

New Zealanders were the first to be able to buy the much-hyped iPhone 3G when three stores opened just after midnight, and Tokyo followed shortly afterward.

Sales of iPhone 3G models begin later in the day in 21 other countries.

On the eve of the iPhone 3G launch, Apple opened an App Store stocked with hip, fun or functional programs crafted by third-party developers.

The shop, accessible through Apple's online iTunes store, opened with more than 500 mini-programs, many of them free.

Mini-applications include games, photo-sharing and mobile versions of Twitter, Facebook, MySpace and eBay.

"Facebook is even cooler on the iPhone 3G, with the ability to discover friends nearby, or to effortlessly take pictures and upload them instantly to Facebook," said the social-networking website's founder Mark Zuckerberg.

Game makers are capitalising on touch-screen and motion-sensing technology in iPhones.

"The touch and tilt controls are natural and easy to learn, making gaming even more inviting, creative and rewarding," said Sega product development vice president David Cobb.

A version of the Japanese company's "Super Monkey Ball" tailored for iPhones is in the App Store.

"Apple's iPhone and iPod Touch open up the world of games to an entirely new audience," Cobb said.

Applications crafted for iPhones will also work on iPod Touch models, which are basically iPhones without the telephone capabilities.

Brian Greenstone, president of computer game maker Pangea Software, called the iPhone platform "truly ground-breaking."

Software creators are allowed to set their own prices, as long as figures end with 99 cents. Apple keeps 30 percent of sales prices to pay for operating the store.

Apple senior vice president of world-wide product marketing Philip Schiller said the iPhone "represents a new software platform for developers, combining the most advanced mobile operating system, sophisticated developer tools and a breakthrough way for developers to wirelessly sell and distribute their applications."

Apple released an iPhone kit to outside developers in March in an effort to make the hot devices even more popular and wrest market share from smart phone market powerhouse Blackberry.

The kit lets programmers customize programs for the touch-screen mobile devices combining telephone, video, music, and Internet connectivity.

Apple vets software creations before making them available exclusively at the App Store.

Apple will sell iPhone 3G models in the United States for 199 dollars and 299 dollars, depending on memory capacity. The original eight-gigabyte iPhone was priced at 600 dollars when it debuted in June last year.

IPhone 3G prices in some countries will be as low as one euro (1.57 dollars) provided customers purchase multi-year service plans that translate into lucrative long-term revenue streams for carriers.

Apple is continuing its strategy of locking iPhones exclusively to one telecom carrier per country.

Apple and numerous technology websites have posted online tips on how to navigate Friday's anticipated buying frenzy.

Auckland student Jonny Gladwell, 22, had been first in line outside the Auckland store since Tuesday after being dared by friends who promised to pay for his phone if he lasted the distance in the queue.

"I'm going to go home, put this on charge, have a play with it and have a nice big sleep," Gladwell told Television New Zealand after securing one of the first iPhones sold in the world

iPhone moves a step closer to getting IM

A recent patent filing indicates that Apple is getting closer to adding its own instant messaging client to the iPhone.
he filing is titled "Portable Electronic Device for Instant Messaging," and covers methods for sending, receiving, and viewing ongoing conversations. The proposed GUI is similar to Apple's current interface for SMS.

Built-in support for IM has been missing from the iPhone, to the dismay of many users. The patent filing shows Apple has IM on its mind.

At the recent launch of the iPhone SDK, AOL demonstrated an AOL Instant Messenger client, but it isn't allowed to run in the background, which normal IM applications rely on.

Support for IM is quickly becoming a must on mobile phones. Users want the same thing on their mobile phone as they have on their computers including IM, according to Leif-Olof Wallin, research vice president at Gartner.

"It will be a blockbuster in two, three years," said Wallin.

But instant messaging is also a threat to the massive amounts mobile carriers make from SMS messaging, which the iPhone currently supports.

"They can charge much more for SMS compared to IM," said Wallin.

Pressure from its carrier partners is a possible explanation for why Apple has taken a hands-off approach to a feature many users want, according to Wallin.

"At the same time it can't afford to be left behind" he said.

Nokia signs Sony BMG for free music offering

Nokia will offer free 12-month access to music from artists of Sony BMG, the world's second-biggest label, to buyers of its particular music phones, the world's top cellphone maker said on Tuesday.
ast December, Nokia unveiled a similar deal for its "Comes With Music" phones with the top record label Universal.

"Comes With Music is expected to launch in the second half of 2008 on a range of Nokia devices in selected markets," Nokia said in a statement.

Nokia gave no financial details.

Sony BMG, home to artists including Beyonce, Bruce Springsteen and Celine Dion, is jointly owned by Sony Corp and German media group Bertelsmann AG.

The new music offering from Nokia -- the first cellphone maker to push heavily into content -- would differ from any other package on the market as users can keep all the music they have downloaded during the 12 months.

Such unlimited download models could offer a shot in the arm to the music industry, which is struggling to find ways to make up for falling CD sales.

Nokia said it expects all top labels to sign up for "Comes With Music" offering.

"We are quite confident that we will have all the labels at the table for Comes With Music. We are progressing in those negotiations," said Liz Schimel, head of Nokia's music business.

Apple to Offer 3G iPhone From This Year

Reports that Apple is cutting production orders on current iPhone models support rumors that a 3G version of the cutting-edge device is in the works for midyear, analysts say.

Last week, Craig Berger of FBR Research reported to clients that Apple has been accelerating production cuts for the iPhone and iPod Touch. "For both iPods and iPhones, we believe Apple was previously targeting a roughly 50 percent quarter-over-quarter decline for first-quarter units, whereas we now think the firm is targeting a 60 percent quarter-over-quarter unit decline for first-quarter units," Berger said.

In a research note Monday, analyst Richard Gardner of Citigroup cited the falling production numbers as an indicator that Apple is gearing up for a new model, The Washington Post reported. In Europe, iPhone sales have been underwhelming. "We believe that lack of 3G has been a significant headwind for iPhone in Europe, where 3G is already pervasive," Gardner said.

Not If, But When

Apple told Citigroup analysts that it plans to enter Asia and more European countries by the end of the year. Apple and AT&T, the exclusive U.S. carrier, have separately indicated that a 3G iPhone will be released this year.

"You'll have it next year," AT&T CEO Randall Stephenson told an audience in November when asked about a 3G iPhone. That comment suggested AT&T would be building out a 3G network this year, and the company recently made good on that promise, announcing plans to roll out 3G in 350 U.S. markets, including all of the largest 100 cities.

Tim Bajarin, principal analyst with Creative Strategies, said that while 3G is definitely in Apple's future, "the timing of this is still in question." Whenever it happens, the development will "help Apple get even more attention for the iPhone in the U.S. and abroad in markets where it is legal."

Apple has yet to officially roll out the iPhone in Asia, where "3G networks are the norm," Bajarin said. If a 3G iPhone is close to completion, Asian consumers might see carriers offer the new version this year. Such a move would "help them sell a lot of these phones through telecom partnerships in key Asian markets," Bajarin said.

The lack of a 3G iPhone hasn't stopped Asians -- and people in about 100 countries where the iPhone isn't officially sold -- from snapping up Apple's trendy phone. A Business Week investigation reported this week that between 800,000 and 1 million iPhones are illegally unlocked for use with carriers other than Apple's official partners.

Thriving Gray Market

The Business Week article described a worldwide pattern of visitors to the U.S. buying as many iPhones as they can -- the limit is five from Apple and three from AT&T. Research from Gene Munster, an Apple analyst with Piper Jaffray, described busloads of Asian tourists descending on Apple Stores, with each person buying the maximum.

It's not just individuals buying up phones and unlocking them, though. Gray-market entrepreneurs are developing a entire economy around buying iPhones, unlocking them and reselling them.

Business Week reported that workers in Chinese factories may be providing iPhones to resellers. One distributor said its supplier recently gave him an internal Apple document -- likely stolen -- showing the schematics and repair instructions for the original iPhone, pure gold for the iPhone-unlocking businessman.

With all the hunger for iPhones around the world, carriers not blessed by Apple are not exactly trying to stop customers with unlocked phones from using them on their networks, according to one aftermarket reseller. Nathan Walberg, who sells an altered SIM card for the iPhone for $44, says he gets calls not only from customers around the world but also from carriers.

"I don't know if [these carriers] can legally encourage unlocking, but they're not going to discourage it," Walberg told Business Week. "This market will go on forever, because I don't think there's a way for Apple to stop us."