Next week, next iPhone? (Apple Talk Weekly)

Next week the rumors, the speculation, and the curiosity come to an end. Or at least that's the hope.

Apple on Tuesday is holding an event at its campus with the tag line "Let's talk iPhone." It's been more than a year since the last iPhone came out, and the event is expected to bring a full unveiling of its successor.

Along with the iPhone, next week's event should give us full details, if not the formal release, of iOS 5 as well as iCloud, the latter being the company's backup and synchronization service. Both got their debut in June during WWDC with the promise of a release this fall.

We'll be there to cover the news live, as it happens. Look for more details on how to view our live coverage in the coming days. Now, as usual, here's a wrap up of some of this week's big Apple news and rumors to get you all caught up.

News of the week

Apple sets Oct. 4 as date for iPhone event

As mentioned above, Apple sent out its invites to select press bright and early Tuesday morning, a week from when the event is being held. The invite features a cluster of four iOS icons and the tag line "Let's talk iPhone" (see above). The move is a departure to last year, when Apple took the wraps off a new iPhone at its annual developers conference in San Francisco. This time around, the event is being held at its Cupertino, Calif., headquarters.

iPod click wheel games disappear from the iTunes Store 

You might remember that not too long before the App Store, Apple began selling games through iTunes for its click wheel iPods. Even since the popularity of Apple's touch-screen iPods and the iPhone and iPad, those games have remained. But as noted by AppleInsider, Apple quietly removed them from the iTunes Store earlier this week, prompting speculation that the click wheel sporting iPod Classic is well and truly on its way out.

Apple denied Multi-Touch Trademark

A filing picked up on this week by MacRumors shows that the United States Patent and Trademark Office denied Apple's application to trademark the term "Multi-Touch," the technology that registers multiple touches at once on touch-screen devices. The filing says the mark was denied for simply describing the feature and not backing up the application with proof that consumers associate the term with Apple. The application itself goes back to when Apple first introduced the iPhone in 2007, which made use of multi-touch in apps like viewing photos and navigating through maps.

New European countries get iTunes Stores

Apple's iTunes Store expanded into new territory this week. As noted by MacRumors on Wednesday, Apple's iTunes Music Store launched in a number of new countries, including Bulgaria, the Czech Republic, Estonia, Hungary, Poland, and Romania.

Court sides with Apple in Mac clone case

An appeals court this week sided with Apple against Mac clone maker Psystar for infringing on its copyrights. You might remember that as the company that began offering custom-built PCs running Apple's Mac OS X. Apple filed a copyright infringement lawsuit against Psystar for doing that in 2008, winning in a ruling a year later. Apple was also awarded a permanent injunction against Psystar, keeping the company from selling any hardware.

Rumors of the week

Next iPhone to sport 1GB RAM, voice assistant

A new rumor roundup of sorts from 9to5mac this week claimed Apple's next iPhone will sport 1GB of RAM as well as a substantially more complex voice-recognition control system that lets users navigate about the phone as well as launch apps with their voice. Apple has long been rumored to be working on such efforts given its pick-up of Siri and its voice-activated assistant application last year. Macrumors piled on, providing mock-ups of what the system is said to look like, as well as a video of how it works.

New iPhones, iPods in Apple's inventory system

Citing new information from "Mr. X," a frequent leaker of Apple product numbers, 9to5mac this week reported that two new iPhones have appeared in the company's inventory system alongside three new iPod Touch models. Before getting too excited, the blog suggests the iPods could just be white versions of existing models, with the iPhones being a low capacity model of the iPhone 4 aimed at budget-conscious buyers.

iPad shipments cut 25 percent? Not so fast

A report from a J.P. Morgan Chase analyst made waves at the beginning of the week, suggesting that Apple cut fourth-quarter iPad shipments by 25 percent, a signal sales of the device might be slowing. Piper Jaffray analyst Gene Munster disputed the idea, suggesting any drop in Apple's iPad production in Asia could be due to a ramp up in iPad production in Brazil.

A lost Foxconn iPhone 5 prototype the cause for case designs?

What's up with that bevy of iPhone 5 cases that have popped up in the last few months? Well, according to a new report, you can blame that on a prototype of the device that went missing earlier this year. Blog M.I.C. Gadget said that while visiting Shenzhen, China, last week, it heard from an "iPhone accessories supplier" that a prototype of the device had gone missing from Foxconn's factory in that area. The tipster alleged that the device had then been sold to case makers who were eager to get a head start on production.

iPod Classic and Shuffle to be discontinued?

The non-touch based version of the iPod's taken a back seat to the iPhone for years now, but people are still snapping up millions of them each quarter. Nonetheless, that number's long been in decline. A new report from TUAW this week suggested Apple plans to trim some of the fat by shelving its two non-touch-screen based iPods: the Classic and the Shuffle. Following the quiet removal of iPod click wheel games from iTunes this week, this rumor certainly becomes a whole lot more interesting.

See also my colleague Donald Bell's take on why it might not be a bad time to kill off the product that helped turn Apple into a consumer tech giant.

Patent of the week

A 2010 application published this week points to some interesting video stabilization technology Apple is seeking to patent.

The filing, picked up by Patently Apple, is for "accelerometer/gyro-facilitated video stabilization." In short, it details a system for making use of the accelerometer and/or gyroscope to track when shaking is happening during video recordings. The patent then describes a system for selectively running that data stream through any stabilization process to smooth out just the bits that register with lots of shakes.

Apple already offers stabilization in its video editing software, including both iMovie and Final Cut Pro X. The first Apple portable hardware to ship with both an accelerometer and a gyro was last year's iPhone 4, though the patent suggests the system could be used in other portable devices like handheld video cameras and portable computers.

Successor Faces Tough Job at Apple(Photos)

Steve Jobs is legendary for a relentless, driving style that has helped him disrupt more industries than any other chief executive of his generation.

The question now: Is his successor, Tim Cook, aggressive enough to muscle Apple into new turf like TV and publishing where the company hasn't yet established a dominant foothold?

The real test for Mr. Cook will come when he is no longer benefiting from Mr. Jobs's triumphs and must conquer new markets on his own. Executives in media companies, for instance, are reluctant to give up control of their products and fear Apple will end up eating away at their profits. Mr. Cook must win them over.

Investors are standing by Apple's new management for now—its stock fell just 0.65% Thursday while the broader Nasdaq dropped nearly 2%.

An Apple spokeswoman declined to comment.

An immediate challenge for Mr. Cook will be to advance Apple's plans in what is expected to be a key market for growth: digital video. Apple is working on new technology to deliver video to televisions, and has been discussing whether to try to launch a subscription TV service, according to people familiar with the matter. Unlike the iPod and music, where Apple has a commanding position, the battle to rule online video remains wide open and the company faces fierce competition.

Apple's digital-book, magazine and newspaper services are in their early days.

Even if Mr. Cook is willing to take the kind of risks that Mr. Jobs did, the company's board will likely scrutinize his moves more carefully, said Forrester Research Chief Executive George Colony. "It will be very reasoned and logical, but Apple will not take the leaps that it took when you had Steve in that chair," he said.

Then there's the bully factor. One of the biggest advantages that Apple will lose without Mr. Jobs at the helm, said an Apple business partner, is the "fear that Steve instilled."

For instance, Mr. Jobs famously browbeat some music industry executives to agree to his terms when he launched the iTunes music store that eventually upended the music industry.

"Steve can be pretty unvarnished, he's never understated about his beliefs," said Time Warner Inc. CEO Jeff Bewkes, whose company had to negotiate with Apple over iTunes. "If he thinks that you're not doing something right, he will tell you why in pretty colorful terms, which I have always appreciated."

At times, Mr. Jobs used his power of persuasion to convince companies that they had to work with Apple, even if it meant giving up some control. "It all stems from Steve's animal drive to not let anyone control him or his company," said Jean-Louis Gassee, a venture capitalist and former Apple executive.

Compared with Mr. Jobs's fiery style, Mr. Cook's management approach is more measured and analytical, people who know him say.

In a letter to employees on Thursday, Mr. Cook said Apple wouldn't change. "Steve built a culture that is unlike any other in the world and we are going to stay true to that—it is in our DNA."

Mr. Jobs will go down in the annals of business as one of the greatest disrupters. His Apple II helped launch the PC revolution. His Macintosh and publishing software took printing out of commercial printing shops and put it on anyone's desktop. His iPod grabbed dominance of the portable music player—a market pioneered by Sony Corp.'s transistor radios in the 1950s and its Walkman in the 1970s—from traditional consumer-electronic giants. He then used the iPod to help launch iTunes and wrest control of music sales from record stores, helping spell the demise of retailers like Tower Records.

Mr. Jobs's iPhone shook up the mobile-phone world, and his iPad ushered in a whole new category of mobile gadgets that consumers didn't even know they wanted.

Mr. Jobs often forced competitors to react to Apple. Last week, Google Inc. acquired Motorola Inc. in large part to shore up its patents so it can continue to offer a smartphone-operating system that competes with Apple. Hewlett-Packard Co. recently said it was spinning off its computer business and shutting down the business that it acquired from Palm Inc. as it was unable to compete in the mobile-device world that Apple now dominates.

Mr. Jobs's success in reaching deals with partners often gave Apple a huge competitive advantage. When Apple signed an exclusive deal with AT&T Inc. for the iPhone, it persuaded the carrier to give it complete control over the branding and marketing of the device, a concession that no other mobile phone maker has been able to get.

When Apple ran into a problem with AT&T, Mr. Jobs made the phone call that triggered prompt action. When iPhone sales started accelerating after the debut of the iPhone 3GS in 2009 and AT&T had trouble handling the network capacity from iPhone users, Mr. Jobs called Glenn Lurie, then AT&T's point man on its relationship with Apple, and chewed him out for poor service that damaged Apple's brand, according to people familiar with the matter. The following year, the carrier rolled out a major commitment to boost spending on its network.

When record companies were initially balking at the idea of the iTunes music store in 2003, Mr. Jobs made a plea directly with the rock group the Eagles to persuade them, and its label, AOL Time Warner Inc.'s Warner Music to sign. He even offered to personally demo the service for Eagles singer Don Henley.

Mr. Jobs won media chiefs over by convincing them that they lacked successful digital strategies and needed to be saved, several media executives said. "He tells you you are a nematode," said one senior media executive. He makes you feel that "if you listen to him, you have a chance."

More recently, Apple has made headway in striking deals for digital delivery of newspapers and magazines, after Mr. Jobs disparaged publishers' print products, people familiar with the matter said. Big names like Condé Nast and Hearst Corp. have come around, beginning to sell subscriptions to their titles through iTunes, even as Apple has restricted how they can sell their content and gather data. Media executives have often said they have no choice but to do business with Apple as few other digital distribution alternatives exist.

When talks between Apple and some of the major magazine publishers were hung up on the terms under which publishers could sell their iPad editions, Mr. Jobs offered to step in and "break any ties," one industry executive said. Ultimately, however, the two sides worked out their differences, rendering his intervention unnecessary.

As for the future under Mr. Cook, this executive said, "The question is going to be if a whole new version of this needs to be invented, I don't know enough about [Cook's] background to know if he's going to spur the innovation to create breakout products," he said. "But I can say they have a big bench."

Mr. Jobs often criticizes, in public and private, the experience of watching TV as clumsy and bad for consumers. But he has said the existing system, where consumers get content from different cable and satellite providers that use different technologies, makes it difficult to innovate.

Both he and Mr. Cook have called Apple TV, a box that allows consumers to watch media from iTunes and a few other online video services, like Netflix Inc., on TVs, "a hobby."

But the area is shaping up to be a big priority for a wide range of companies, from cable and satellite providers to its Internet rivals like Google Inc. And to crack it, Apple needs to try to redefine not only the experience of watching TV but the business model of how consumers pay for it once again, analysts say. While iTunes popularized buying individual TV shows or movies, consumers already are flocking to new subscription services like Netflix that offer unlimited access for a low monthly fee.

In 2009, Apple tried rounding up media companies to offer a bundle of TV shows for a monthly fee through iTunes, according to people familiar with the discussions. But it tabled the talks after few showed interest.

"They just don't have the deals yet," said Richard Doherty, an analyst at the Envisioneering Group. Mr. Doherty likens Apple's attempt to change the TV business model to "pushing this giant marshmallow uphill." TV, with myriad rights holders and cable and satellite companies to reckon with, is "light years" tougher to transform than the music industry, he said.

People who have worked with Mr. Cook at Apple say that he often arrives at the same conclusion as Mr. Jobs, albeit with a lower-key approach. Suppliers who have dealt with Mr. Cook's team say he is a formidable negotiator, and his team haggles down the price of parts to the half a penny.

E-Book report: Nook is up, iPad still catching up

As the publishing industry wrapped up four days of digital talk at its annual national convention, Amazon.com's Kindle was seen as the clear, if not dominant, player in the growing e-market; Barnes & Noble's Nook was considered a pleasant surprise and Apple's iPad an underachiever. "They had a respectable launch, but we think Apple can do better," Penguin Group (USA) CEO David Shanks said this week during BookExpo America, which ended Thursday at the Jacob Javits Center.

"They still haven't moved their e-books into their iTunes store, and they can have a much better search capability in their iBookstore." "The iPad offers so many audio visual applications that reading is not given as much priority as it is in dedicated (reading only) devices like the Nook and Kindle," says literary agent Richard Curtis. More than 20 million iPads and iPad 2s have been sold over the past year, and the iBookstore is also available on more than 160 million additional devices through the iPhone and iPod. But publishers and agents say Apple is not yet the balance to Amazon.com for which they had hoped. They estimate that Apple sales are around 10 percent of the e-market, far behind the believed 60 percent to 65 percent for Amazon. Publishers and agents say e-books are at least 15 percent to 20 percent of overall sales, more than double from just a year ago. Apple spokesman Jason Roth declined to comment on any specific criticisms, but did say that the iBookstore had over 150,000 titles — an Amazon spokesman says the the Kindle store has more than 950,000 — and that more than 100 million books had been downloaded worldwide through the iBookstore. He would not say how many were downloads of free books. Selections at the iBookstore were greatly improved this year when Random House Inc., publisher of Stieg Larsson and John Grisham among others, agreed to sell through Apple after resolving differences over pricing. Brian Murray, CEO of HarperCollins Publishers, said iBookstore sales were "a little smaller than expected," but he praised the iPad as a multimedia breakthrough that enabled publishers to sell e-picture books and "enhanced" e-books that include video and sound. "There are certainly areas for improvement, as there are with every book retailer and device," he said. "But the promise of having another platform where books can be discovered is still true today. The potential is enormous." A strong No. 2 to Amazon has emerged, but it's Barnes & Noble, which launched the Nook late in 2009 to skepticism about everything from the name "Nook" to the design. David Pogue in The New York Times had mocked the Nook's "half-baked software" and called the device "an anesthetized slug." But Barnes & Noble has worked to improve the Nook and to offer different types, including a touch screen version announced this week. The company promoted the Nook relentlessly through its superstores and now has around 25 percent of e-sales, publishers say. David Young, CEO of the Hachette Book Group, said the Nook's success had "frankly astounded" him. Random House CEO Markus Dohle acknowledged he was initially "worried a bit" about the Nook, but praised Barnes & Noble for its "extraordinary accomplishment." Even the American Booksellers Association, the trade group representing independent sellers, was congratulating its longtime rival. "They've married the physical location to the e-book device in a way that is profound," says Len Vlahos, the association's chief operating officer. BookExpo America is a combination of trade show, seminar, soapbox and family reunion, with agents, authors, booksellers and publishers assembled under the Javits roof and in and out of the center's erratic Wi-Fi. The convention is also a testament to the endless and surprising variety of publishers, where a booth this week for the Lebanese Ministry of Culture stood across the aisle from a display of American Girl products. Among the "buzz" books were the novels "The Art of Fielding" by Chad Harbach and Erin Morgenstern's "The Night Circus." Buzz words included "petting zoo," meaning an in-store selection of e-book devices that customers are allowed to handle; and "showroom," the latest pitch for the value of a physical, "bricks and mortar" store. Membership in the booksellers association has increased for two straight years after decades of decline, and independents are encouraged by the Nook because they think it demonstrates that old-fashioned bookstores, "showrooms," remain the best way to promote books. With Borders closing stores and Barnes & Noble committing more space to the Nook, publishers are looking to independents to ensure the tradition of spontaneous discovery, a passer-by spotting a new release in the window or a browser finding an old paperback on a shelf. "Independents are going to be OK, I genuinely feel," says David Young of Hachette. "We care about the all physical stores, and that includes the chains, because they're our showrooms. It's a good term and one at the moment you can't replicate online." Independents are not ignoring e-books. Around 250 have signed with Google and its e-book store, which opened last December and which Vlahos of the booksellers association praised as a valuable addition. Synonymous with Internet searching, Google has positioned itself as a bridge between different kinds of devices and retailers, a peacemaker on the e-battlefield. Some publishers and booksellers would like more noise, though. Brian Murray of HarperCollins says he's disappointed with Google sales, which even Google acknowledges have been small so far. At an information session hosted by Google, booksellers questioned the company's aversion to advertising. Google's director of strategic partnerships, Tom Turvey, says that spending "lots and lots" of money on ads was unlikely. But he noted that the store was relatively new and was confident that sales would increase as more readers learned about it, whether online, through an e-book device or through the bookstores promoting it. Michael Norris of Simba criticized Google for not having "thought out their e-book strategy all the way through." But Turvey said the Google store was evolving as planned. "My entire team comes from the book business," says Turvey, a former director of online sales and marketing at HarperCollins. "We understand the issues extremely well."