While Bill Gates looked on, Microsoft shareholders asked CEO Steve Ballmer about Apple at their annual meeting this morning. Steve's CEO-speak responses illustrate the larger problem.

Portfolio reports that one investor asked about the company's reputation with young customers:

"I'm just wondering why your marketing group can't do something to try to rein in this next generation, because you've got a real bad image out there."

He also said that Apple's ads make Microsoft look like "a buffoon." That's when the CEO-speak began.

"There's certainly always opportunities for improvement," Ballmer said. "[There is] ... a group of people with whom our market share is less."

When you hear "opportunity for improvement," you're screwed. Euphemistic language clouds meaning and hides the truth. Think "economic downturn" and "previously enjoyed" instead of "depression" and "used." Or "opportunity for improvement" instead of "problem."

Remember the Windows Mojave ads, in which producers tricked customers into thinking Vista was an unreleased version of Windows, only to then throw open the curtain and essentially say, "See? It's really Vista! You DO like it! There's nothing wrong here!"

Instead of telling people what they like, sanitizing language, insisting that the only reason the iPhone has 75,000 apps available is to make it usable on the Internet and denying your kids iPods, just say, "Our reputation with young people is poor and here's what we'll do about it." That's when you'll get something done.

[Via MacDailyNews]

Every time I walk through Warehouse Stationery (New Zealand's equivalent to Office Depot) or Dick Smith's Electronics (pretty much Best Buy), I'm struck by how probably half the products in each store are pretty much useless to me since I've got an iPhone.

Thanks to the apps that come pre-packaged with the iPhone and the more than 100,000 third-party offerings now available in the iTunes Store, the iPhone has gained functionality that might have seemed hard to fathom under three years ago when Steve Jobs first announced the device.

"A widescreen iPod with touch controls... a revolutionary mobile phone... a breakthrough internet communications device... these are not three separate devices. This is one device." So Steve Jobs told us all back at Macworld Expo 2007. But since then, the iPhone has grown to be much more than just those three concepts.

What follows is a sort of anti-buyer's guide, a list of products and devices that you may never need or even want to buy again (or receive as a gift) if you have an iPhone. Some of these are certainly open for debate, but more than a few of them are products that, for all intents and purposes, are completely unnecessary if you have an iPhone. (Items in bold also apply to the iPod touch).

This sounds an awful lot like sour grapes to me: Ray Ozzie, Microsoft's chief software engineer, told a Professional Developers' Conference earlier this week that it wasn't the apps that would make or break the smartphone platforms. Of course, that's what most press and blog outlets seem to be focusing on (maybe because we all already know what the hardware is like -- apps change every day if not every minute, and the hardware only changes occasionally), but Ozzie says customers won't buy a phone for the apps. The biggest apps, he says, will eventually be available on every platform. To put it in as few words as possible, you'll be able to tweet from everything in the future.

And he's got part of a good point there: it's true, the major functionality of "killer apps" will be available across platforms. But Ozzie forgets (or is just ignoring) that that's already the case on desktops. While yes, you could claim that porting to the various smartphones is easier than porting to the various PC platforms, that doesn't avoid the fact that I can tweet, IM, email, browse, edit photos and movies, and do whatever else I want on both platforms as well. And for some reason (ahem, the hardware and the way both software and hardware are designed), I'd rather do them on the Mac. People love their iPhones not just for the apps but for the way it fits in their hand, and how just plain slick it is.

That's not to say that the smartphone platform war is over -- no way, it's only beginning, and we consumers will take innovative ideas wherever we can get them. But Ozzie saying the apps don't count (and echoing his fellow Microsofters in trying to separate Apple from their software strategy) seems to mean that even he thinks he's already lost that race -- they certainly do play a large part in which platform consumers eventually choose.

Well, most of us here at TUAW are pretty sure this is a fake. A compelling fake, mind you, but an utter fabrication. Why?

First reason -- Apple almost never discounts their products, other than selling refurbished equipment on the cheap. That's part of the reason that the company is so successful and has the highest margins in the personal electronics and computing world. Discounts of "up to 25% on all Macs" are an Apple fanboy's most exciting dream (next to the iTablet, of course), but we doubt if the Cupertino Kids would discount anything more than 5%.

Reason two -- Apple Stores are, for the most part, hugely popular anyway. Apple doesn't need to drag in customers on Black Friday by enticing them with wicked discounts. Let's face it, most of the Apple Stores are going to be packed on November 27th, so why would Apple want to create traffic jams and general hysteria by doing something like this? Hell, most of the Apple retail employees would probably quit during Black Friday, leaving the company in the lurch for the rest of the holiday season.

Number three -- Historical precedence shows that Apple usually provides discounts on Black Friday, but not as big as BGR is indicating. In 2006, Apple provided free shipping to shoppers at the online store. Last year, Best Buy discounted up to US$150 on Macs and Apple matched that, but there was no steenkin' 25% discount.

And finally, reason number four -- Apple's probably not going to send out anything with that much blank space at the top of it. They're too picky about design. They don't want someone to have to scroll down through an email to read the discounts, even if there is an Apple logo floating around at the top of the email.

How sure are we that this isn't going to happen? Well, if it actually happens the way Boy Genius Report says it will, I'll wear a Boy Genius Report baseball cap (provided by BGR, of course) for four hours at Macworld Expo 2010 and give you guys some free advertising. TUAW readers -- what do you think about the discounts? Are they going to happen or not?

It doesn't happen so much anymore, but not too long ago you'd hear about a new offering arriving in the App Store that would stir up a little controversy (the NetShare tethering app springs to mind). They'd enjoy some fanfare and a ton of purchases for a few days before being summarily removed, never to return and often without a thorough explanation from Apple. A relatively small number of users would retain possession of the app and would take a bit of pride in knowing that they were in the right place at just the right time to snag a copy of the app before it was yanked.

When I got the email from our very own Mike Rose regarding the release of GV Mobile, I was pretty excited. I'd been wanting to more fully adopt the Google Voice service, but had wanted a more iPhone-ish experience in doing so and GV Mobile seemed to have just what I was jonesing for. I paid the three bucks right then and, like The Giving Tree, was happy.

My adoption plan for Google Voice didn't pan out quite like I'd hoped for a while after that. I'd use it occasionally, but I had trouble moving it from the number I gave to sales people to the number I gave to my mother-in-law. But, despite the absence of the app in the App Store, I still had a perfectly working copy of it on my iPhone, ready when I was - or so I thought.

A couple of weeks ago, I had decided that it was time to make Google Voice a more central part of my communication workflow. Having not launched GV Mobile in a while, I fired it up to reacquaint myself with the interface, capabilities, etc. Trouble is, I couldn't authenticate with Google. I triple-checked my credentials but the app would just throw an error on launch and that was that. A couple of people on Twitter had mentioned having the same issue and a quick Google search informed me that, sure enough, the app no longer worked. Apparently, Google had modified the Voice API such that authentication now worked differently than it did when GV Mobile was written. Because the app no longer had Apple's seal of approval, I had little recourse because there obviously weren't going to be any updates to the app anytime soon.

Which raised the broader question - how heavily should we rely on "orphaned" apps? If they're self-contained (which is to say, they don't rely on any web sites or services to function properly), it probably isn't a big deal, but if you're a heavy Google Voice user and GV Mobile is how you got your work done, is it really a good idea to hang your hopes on an app that will likely never see any type of upgrade or bugfix release?

I can confidently say that this little hiccup has seriously cramped my plans for more completely adopting Google Voice. Is the same true for you? Have you experienced this type of dilemma with any other now-missing App Store purchases? Tell us about it in the comments!

Apple naysayers are a dime a dozen these days. I keep a few in my garage just so I can laugh at them when I wave my iPhone in their general direction and they all cry in unison, "The Zune phone is so totally going to be an iPhone killer. You know, if and when it comes out. Just wait and see."

Rarely do Apple naysayers come with more unintentional hilarity than Joe Wilcox from Betanews, who, alone among reporters everywhere, uncovered a media conspiracy on a scale not seen in recent memory. Namely, contrary to what literally everyone else has reported, Apple was in fact NOT more profitable with the iPhone compared to all of Nokia's cellphone business during the recent financial quarter.

John Gruber from Daring Fireball saw Joe's post, and with his response laid the smackdown on Joe's analysis.

Gruber's post boils down to castigating Wilcox for ignoring Apple's statement of non-GAAP earnings. Basically, Apple's subscription-based accounting for the iPhone spreads its revenues out over several quarters, which it expresses in GAAP (Generally Accepted Accounting Principles) earnings. These are the earnings Wilcox looked at and said, "Wait a minute! Apple didn't make that much money at all! Murder most foul!" If you want a real idea of what Apple actually made with the iPhone over the quarter, you have to look at the non-GAAP earnings. This is something I figured out back when I edited earnings press releases for PR Newswire, and something anyone who reports on financial matters really ought to double-check before protesting to one and all that something foul is afoot.

Wilcox updated his post after Gruber's response, but his rationale is almost as funny as his initial post:

I chose to use the GAAP figures because a) Again, that's what Apple is supposed to report; b) It made for a simpler analysis; c) Apple recognizes previously deferred revenue with the quarterly results; d) According to Apple SEC filings, deferred revenue is for more than just iPhone and Apple TV. The last two points are paramount.
In other words, a) It's the SEC's fault, not mine; b) like Gruber said, I didn't bother reading past the first paragraph of the press release; c) I also didn't bother parsing through the reams of financial tables that come with every quarterly financial press release; d) Gruber is wrong and Apple TV is totally selling like hotcakes.

I showed Wilcox's post to the Apple naysayers I keep chained up in my garage, and they just kind of turned away scratching their heads awkwardly. I don't think that's a good sign for the supposed "misreporting" of Apple's iPhone profits that Wilcox thinks he's uncovered.

Dear Auntie Barrister TUAW,

I've been following your coverage of the Psystar case and I'm a little confused by the discussion on your last post. I've always thought the original case to be one of fact and an appellate case one of law. This, to me, would mean that in the appellate process they would not argue the case again at all. It would all be based on if the legal decision in the original case was rendered improperly.

So all the sturm and drang would be gone, No?

With love & kisses,

David

Read on for Barrister TUAW, esq's response

Sonos, best known for wireless music systems that link to your iTunes library and internet services like Pandora, Rhapsody and Napster, is offering a one piece, 5 speaker system that can be placed in any room. It's called the Zone Player S5 and it's US $399 direct from Sonos or dealers around the country.

Sonos shipped me a review system to try for 30 days, and I thought the sound was great. I already had a mutli-room Sonos system so adding the new portable player was just a matter of plugging it into AC power and pressing two buttons on the S5.

If you don't already have a Sonos system, you have to plug your unit into a router to connect to your music library and the internet. If that doesn't work in your home layout, you can buy what Sonos calls a Zone Bridge (US $99) that plugs into your router and lets the S5 make a wireless connection. Once that basic pairing is made, you can add as many other Sonos music systems as you like, all connecting over a wireless mesh network.

The system sounds quite good, given the limits of the small desktop-friendly size (8.5 x 14.4 x 4.8 inches). There are 5 speakers, two tweeters, two 3" mid-range drivers, and one 3.5" woofer all driven by individual amplifiers. The woofer is a ducted port design and the rear port serves double duty as a carrying handle.

Yesterday, Judge William Alsup, United States District Judge for the Northern District of California, dealt Psystar a crushing blow in its ongoing litigation with Apple over whether or not Psystar could market and sell non-Apple computers running modified copies of Apple's operating system. If you're not familiar with the circus case, I refer you to, well...grab a coffee and click here. The two companies, embroiled in litigation since early last year, recently completed pre-trial discovery and each filed cross motions for summary judgment.

Judge Alsup put the ultimate hurt on Psystar when it granted Apple's motion for summary judgment and denied Psystar's motion for the same. In a sweeping order (courtesy Groklaw), the court agreed with Apple's take on the case and dismissed all of Psystar's defenses, both on the merits and for having waived and failed to properly plead.

The end result was a dramatic and startling court order in an ongoing series of dramatic legal squabbles between the two companies. And at least one of Psystar's attorneys saw this coming. The litigation doesn't end here; various issues still remain for trial such as breach of contract and trademark infringement, but Psystar has been gutted. The court is clearly unsympathetic to Psystar's core position and while damages on the copyright issues falling in Apple's favor in the order have not been ruled upon, it would probably behoove Psystar to start looking under the couch cushions for spare change.

A hearing is scheduled for December 14 on the remaining issues and for damages.

Read on for a more detailed analysis of the court's order....

I've already reported on the updated Navigon iPhone app, [iTunes link] and noted that live traffic info was now included as an in-app purchase. I've spent the last 2 days driving around town testing it, and it works as advertised -- but perhaps in not as many places as I would have hoped.

Here in Southern Arizona, there were very few traffic updates, so I set a destination for Phoenix and had lots of information. Clearly, Navigon is not always sourcing information from smaller U.S. cities.

As a comparison, I tried the traffic info built into my car nav system, and it displayed 9 nearby traffic incidents, some as close as 4 miles away. At the same time, the nearest traffic incident I got from Navigon was 94 miles away in the Phoenix metro area.

It was odd, because both systems source a lot of the same places (like Clear Channel Radio) for information. On the other hand, the traffic info from Navigon was more detailed, with nice close-up maps of the trouble areas.

I like everything about the Navigon app. The graphics are first rate. It automatically changes to night view, the text to speech voice is very clear in a noisy car, and the map doesn't lag from my actual position.

The traffic option is US$19.99 as a one time payment, and not overpriced in my view. My only caution is you may not get much information if you are not in the large metro areas, and it would be nice if Navigon posted where good traffic information is available.

For those in the bigger cities, it's a nice addition at a reasonable price.

It would have been nice for the App Store's public relations team if the biggest news in the past few days was the introduction of a more transparent progress report for applications under review, giving developers some of the feedback they need to see where their apps are in the pathway towards approval and release. Unfortunately, that minor but tangible step toward a more open approval process is overshadowed by a story of frustration and disaffection from one of the platform's rising stars: Joe Hewitt, the man behind Facebook's popular iPhone app, is mad as hell and he's not going to take it anymore.

Hewitt's frustration with the app review process isn't new, but in the same August blog post where he called for the elimination of review, he promised "I will not stop developing for Apple's platforms or using Apple's products as long as they continue to produce the best stuff on the market." A few months later, he's announced that he's handing off the Facebook app to another developer, and he's reached the point where his frustration has overcome his willingness to continue working on the iPhone. [Commenter 'Gak' points out that Hewitt's open-sourced Three20 library for iPhone devs has been flagged for use of private frameworks, which may have been one of the final straws.]

Hewitt spoke to TechCrunch earlier today, and his attitude is clear:

"My decision to stop iPhone development has had everything to do with Apple's policies. I respect their right to manage their platform however they want, however I am philosophically opposed to the existence of their review process. I am very concerned that they are setting a horrible precedent for other software platforms, and soon gatekeepers will start infesting the lives of every software developer."

Losing the talent behind the top social networking app in the store is bad for users and bad for the platform, but I don't imagine that Apple is going to give up the lockdown of review anytime soon. Is there a way around this logjam that will let developers innovate at Internet speed while still giving Apple some semblance of control? Here's one idea...

Our friends at Cult of Mac commented on the possibility, floated on CNBC, that Apple will eventually overthrow Microsoft as the most valuable company in the technological world. If you think about it, Apple's stock was worth an unstable $25 dollars a share at this time 10 years ago -- today, it's worth $202 a share and shows no signs of decline. CNBC reports that Microsoft isn't really growing, but Apple continues to gain value and market share every day. From that, you could logically deduce that Apple will surpass Microsoft... but there are still a few points to make.

Apple has a long way to go before they're really ahead of Microsoft by most metrics. I suppose it's possible that the company's worth could surpass Microsoft within the 2 years that CNBC predicts, but as far as actual market share... I hope not. Here's why:

If Apple grows that quickly, we're going to see the effects of gravity bring them back down a bit. That kind of growth would be great for the brand but not necessarily the customer. We're already seeing record highs at the Genius Bars and not enough experienced staff to handle the demand. Calling AppleCare is usually a chore, not a pleasure.

Then again, any tech support call isn't fun, but long wait times make it even more frustrating. Using the example of Microsoft, getting too big too fast degrades your ability to offer quality service. It doesn't mean that their products are horrible, it means that you have to bring in more people to fill the gap -- people who aren't necessarily the most qualified to help. Will this sort of thing happen with Apple? I hope not. If their growth continues at its current rate, they better have a very good plan to avoid the Microsoft effect.

In my opinion, Apple does well as the underdog: they constantly have to adapt to the changing markets and make themselves more appealing than the competitor. If you look at Apple's top-dog aspects (iPod and iPhone), we begin to see things that aren't so awesome: the lack of a subscription service, the restrictive iPhone platform, not to mention the App Store approval process. In some ways, they get to the top of the mountain and then stop trying. Apple doesn't figure out where to go after they reach the summit, they simply find a different mountain and start climbing. They spent a couple years with the iPod, then a couple years with the iPhone... now we're gonna be seeing a couple years of the iTablet (or iSlate or iPad, you get the point).

If I'm not mistaken, it's really been a while since they've done anything innovative with the computer. Sure, the iTablet could bring innovation, but that's another mountain -- as were the iPod and iPhone. I'd love to see the company get back to the personal computer and do something that would change how we look at Apple. When I mention Apple at the moment, I hear the response, "Oh, they make the iPhone, right?" 4 years ago, that was the iPod. Soon enough, it will be a new piece of sexy hardware that Jonathan Ive designed.

Maybe two mountains will collide with the iTablet. Maybe it will really be the computer innovation that we've been missing. Maybe it will put Apple ahead of Microsoft in value, but let's hope that the Apple brand continues its reputation for great products, service and innovation.

With the latest jailbreaking code, blacksn0w, now available for Geohot's blackra1n utility, iPhone owners who want to free their favorite smartphone from the constraints of the App Store and the AT&T network may do so. But a recent report by PCWorld / Network World indicates that Apple is hiring a new "sheriff" to lock up the iPhone platform for good. Is this true? Maybe not.

According to the post by Network World blogger John Cox, an Apple corporate website is showing a job posting for an iPhone platform security manager. The manager would lead a team aimed at creating methods for secure booting and installation of the iPhone OS, strengthening the platform's cryptographic services, partitioning and hardening internal security domains, and providing risk analysis of security threats.

The post goes on to breathlessly state that this job posting (which is noted as filling an existing position, not creating a new one) is indicative of Apple's concern that enterprise users might jailbreak and unlock their iPhones. The jailbroken phones would let enterprise users load apps that could "threaten corporate data or back-end Exchange servers," and "unlocking the phone... makes it hard to track, monitor and optimize wireless costs and could open the enterprise to legal problems."

Why is it so important for Apple to crack down on jailbreaking and unlocking? Well, the post says that many enterprises are adopting the iPhone "despite the fact that Apple provides virtually no security or management infrastructure..." That last statement is a bit ridiculous, considering that Apple even provides a series of white papers on exactly how to implement secure, managed iPhone deployments in enterprises.

Perhaps the author has been out the enterprise world for a while, since alterations like jailbreaking and unlocking are forbidden by policy in almost all big businesses that provide their employees with phones. As Mike Rose put it succinctly, "What enterprise user is jailbreaking their phone to use T-Mobile when that means they won't get reimbursed for their cell costs? What enterprise user wants to risk getting cut off from Exchange access?" And what enterprise employee is going to risk his or her good graces with the corporate security team for the sake of being able to run SplatCam or Cycorder on the iPhone?

The post tries to tie the rather innocuous task of filling an open job posting to an attempt by Apple to try to shut off the jailbreak world -- which, if it is doing, isn't necessarily about covering corporate requirements. As long as there are people who want to jailbreak their phones or unlock and move them to a different GSM carrier, hackers will find a way to do it. To us, it appears that Apple is just trying to maintain and improve security for the iPhone platform, something that will benefit all iPhone owners.

For some Magic Mouse users, the streamlined human interface device is not only a dog, but a dog that pees on the carpet, smells bad, and barks continuously. Apple support boards are beginning to fill up with complaints about tracking issues and Bluetooth disconnects. There are also complaints about the lack of a third mouse button, and some all-too-early hardware failures.

I liked the Magic Mouse when I saw it at my local Apple Store, so I took one home for my Mac Pro. It seemed to work for awhile, but now it is very erratic at tracking and speed, even when MouseZoom is installed. Its Bluetooth connection has dropped several times, and it either comes back after a long wait or simply fails to connect again.

When I moved back to my wired Apple mouse, I found that I had actually preferred the form factor of the Magic Mouse, and I missed the button-less scroll wheel.

The Magic Mouse seems to be working fine for many users, but there are some hints that the little rodents are having trouble with some older hardware. My 2006 Intel-based Mac Pro may be one of the computers at issue.

Apple will hopefully issue a software update, if that is the problem. In my case, the only magic I'm going to see from the Magic Mouse is when it disappears from my desktop.

How is it going for you?

Several readers have urged me to try the Gokivo Navigator for the iPhone [iTunes link], so today is the day. The app is U.S. $4.99, but that only provides you with GPS navigation for 30 days. After that, the app costs $4.99 monthly or you can purchase a year of service for $39.99. That's quite a bit less that the AT&T nav solution [iTunes link], and makes the Gokivo app quite competitive. The app includes a Traffic Tracking Center, text to speech so street names are announced as you drive, and it has iPod controls so you don't have to leave the app to change your music.

Like the AT&T app, if you are out of range of the data network, you won't get maps. And like most of the competition, Gokivo gives you an estimated time of arrival, distance to your destination, and your current speed.

The map doesn't work in landscape view, which I consider a strong negative. It's easy to navigate to your addresses in your Contacts app, and the feature is nicely integrated.