More Apple & Verizon News: Two New Devices

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In my previous post, I discussed the rumors from USA Today that Apple was in talks with Verizon about making either a CDMA or a 4G iPhone with them. Today, the news has continued, but this time the source is Businessweek.

The rumors seem to have taken on a life of their own with multiple reports that the companies are planning to work together as early as 2010. Businessweek provides the most intriguing report yet with claims that Apple could be working on releasing two different devices with Verizon: an iPhone Lite and a Media Pad.

One device is a smaller, less expensive calling device described by a person who has seen it as an "iPhone lite." The other is a media pad that would let users listen to music, view photos, and watch high-definition videos, the person says. It would place calls over a Wi-Fi connection. One of these devices may be introduced as early as this summer, one person says.

BusinessWeek was able to confirm with Verizon Wireless CEO Lowell McAdam that Verzion had been in talks with Apple but could not get any details from McAdam.

Instead, the magazine cites "two people familiar with the subject" as the source for these two possible Apple devices. The Apple media pad is said to be smaller than Amazon's Kindle ebook reader but its touchscreen is bigger than the Kindle's. The source predicts that this new product will be a category defining breakthrough device:

"The media pad category might go to Verizon," said the person who has seen the device. "We are talking about a device where people will say, 'Damn, why didn't we do this?' Apple is probably going to define the damn category."

Meanwhile, the iPhone Lite is said to be thinner, smaller, and cheaper than the current iPhone. Most of the cost savings are said to come from a new system-on-chip that has reduced costs.

The Businessweek Article in its entirety:

New Gear from Apple and Verizon Wireless?

The companies are in talks to develop two iPhone-like handhelds that could be unveiled as soon as this year

By Spencer E. Ante and Arik Hesseldahl

Verizon Wireless is warming to the idea of an Apple (AAPL) partnership. Verizon Wireless is in talks with Apple to distribute two new iPhone-like devices, BusinessWeek has learned. Apple has created prototypes of the devices, and discussions reaching back a half-year have involved Apple CEO Steve Jobs, according to two people familiar with the matter.

One device is a smaller, less expensive calling device described by a person who has seen it as an "iPhone lite." The other is a media pad that would let users listen to music, view photos, and watch high-definition videos, the person says. It would place calls over a Wi-Fi connection. One of these devices may be introduced as early as this summer, one person says.

Until now, AT&T (T) has been the only carrier of Apple's iPhone in the U.S., adding more than 7 million subscribers as a result of the arrangement; the company has said it's in talks with Apple to extend the partnership, due to end as soon as next year. An agreement to distribute Apple communication devices via Verizon Wireless may cost AT&T some of the business it has gained as the sole Apple carrier. Even if Verizon Wireless and Apple fail to strike a deal, talks between them increase pressure on AT&T to accept partnership terms favorable to Apple.

A Turnabout for Verizon Wireless

In a recent interview with BusinessWeek, Verizon Wireless CEO Lowell McAdam confirmed that the company has spoken with Apple executives. "In the last six months, I have talked to Steve Jobs," McAdam says. Although McAdam would not say what the two companies discussed, two people familiar with the subject said talks covered the new smaller iPhone-like device under development. Representatives of Verizon Wireless and Apple declined to comment. AT&T spokesman Mark Siegel says: "We are delighted with the iPhone and our partnership with Apple." The company declined to make an executive available.

The recent round of talks marks a turnabout for Verizon Wireless, which initially balked at becoming the exclusive U.S. distributor of the iPhone. Verizon Wireless, a joint venture of Verizon Communications (VZ) and Vodafone (VOD), chafed at Apple's request early on to take a cut of the phone's monthly service fees and its desire to choose which retailers could sell the phone. Despite the failure of that deal, McAdam says "there is no animosity" between the two companies.

While talks between Verizon Wireless and Apple have heated up recently, no deal is imminent. It's possible both sides may disagree over financial terms, such as how big a subsidy Verizon Wireless might pay for each device or whether to share monthly service revenue with Apple. Another deal breaker could be disagreements over distribution of wireless software applications. Apple is the exclusive provider and distributor of apps for the AT&T iPhone. If Apple requests a similar deal on newer devices, Verizon Wireless may balk.

Whatever the outcome of Apple's discussions with Verizon Wireless, they at least could be used as a bargaining chip to help win concessions from AT&T. Apple may want AT&T to absorb an even larger portion of the costs of manufacturing the phone. Plus, it may seek to obtain promises from AT&T to beef up investments in its network and customer service operations. Many iPhone customers have complained about the quality of AT&T's wireless network. AT&T's success is so tied to the iPhone that it may have little choice but to accede to Apple's demands. Still, during Apple's quarterly earnings call on Apr. 22, Apple Chief Operating Officer Tim Cook said: "We're very happy with the relationship that we have [with AT&T] and do not have a plan to change it."

Potent Threat

Apple could also use the prospect of an iPhone-esque device as leverage to prevent Verizon Wireless from introducing the Palm (PALM) Pre, or at least delay the introduction of the smartphone on Verizon's network. Sprint Nextel (S) is due to release the widely anticipated phone in June. Selling the Pre through Sprint, with 35.5 million subscribers, is less a threat to Apple's iPhone than if Verizon Wireless, with 86.6 million subscribers and a reputation for a superior network, were to begin distributing the device.

USA Today reported on Apr. 27 that Verizon Wireless and Apple are discussing the development of a current version of the iPhone for Verizon Wireless. That would mark the first time Apple has produced a version of the iPhone for a CDMA wireless network, which is different from AT&T's GSM technology.

But analysts say such a deal is unlikely because it would mean Apple would have to develop two versions of the same phone, which would increase the company's costs. "We believe such a deal is unlikely due to the technology hurdles involved in building and supporting its first CDMA iPhone," Gene Munster, a senior analyst at Piper Jaffray (PJC), wrote in a research note. Re-engineering the existing iPhone would also prove challenging from a design point of view, says Richard Doherty, research director of the Envisioneering Group. "You would be throwing away dollars," he says. "Part of the miracle of the iPhone is they have big volumes with the same design."

Terms of the Apple-AT&T agreement haven't been made public, but they very likely impose strict limits on Apple's ability to introduce an iPhone on a rival network. Many analysts speculate Apple and AT&T will extend their agreement in some fashion.

Smaller Media Pad

The new Apple devices under development, if introduced, hold the potential to shake up the tech industry. The media pad is smaller than an Amazon (AMZN) Kindle electronic reader, but its touchscreen is bigger than the Kindle's, says the person who has seen it. Carriers such as Verizon and AT&T are keen on striking deals to supply wireless Internet access to these new small computing devices, such as netbooks, which represent revenue growth opportunities. Phone carriers also fear being cut out of their core markets for supplying land-line and wireless voice services.

"The media pad category might go to Verizon," said the person who has seen the device. "We are talking about a device where people will say, 'Damn, why didn't we do this?' Apple is probably going to define the damn category."

The new iPhone-like device is slightly thinner and smaller than the existing iPhone, people say. The reason the device is much cheaper than existing iPhones is that it relies on a so-called system on a chip, which incorporates many types of chips and drives down the cost of silicon in such devices, says one source familiar with the design. This new chip could also potentially be used in the media pad. "It will have a much lower cost that will blow away the margins on the BlackBerry and the iPhone," the person says.

Apple and Verizon In Possible Talks for CDMA iPhone

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According to Leslie Cauley of the USA Today, Apple and Verizon have been in talks for a few months from back when, "...when CEO Steve Jobs was overseeing day-to-day business, these sources say". Jobs went on his leave of absence earlier this year so it appears that they've been negotiating, or perhaps even already agreed upon & are now working on, a new iPhone for Verizon. Now, USA Today was the orginal source, back in early 2007, that AT&T had a 5 year exclusivity contract with AT&T for the iPhone for 5 years. They revised that in June of 2008 by saying that the deal was for 3 years, not 5 and reconfirmed that earlier this year. This would mean AT&T's contract runs out in June of 2010. The source in this new article coraborates this fact.

The article claims that this would be a CDMA product, but given that Verizon boss Ivan Seidenberg himself ruled out a CDMA iPhone and opened the door for an LTE one, I'm inclined to believe that the carrier would like to see this product help roll out the first slivers of its commercial 4G network in 2010. Since AT&T (along with the rest of the world) is moving toward LTE, and an LTE-powered iPhone is a forgone conclusion,  it's really just a question of when Apple will make it happen and whether Verizon will be able to come to an agreement with them.

Perhaps now we know why it’s been reported recently that AT&T was pushing hard to get Apple to extend its exclusive deal another year, into 2011. Verizon is AT&T’s main rival in the US, and is actually larger. That being said,  Verizon lacks the one device that people are switching networks just to get. In announcing its most recent earnings, AT&T said that as many as 40% of all customers who sign up for iPhone contracts are new to AT&T which translates into the fact that having the iPhone to themselves is gravy.

Now, any skilled negociator will tell you that the first thing to do in a situation like this is to play one off of the other, and of course that may be what Apple is doing but I sure hope not. I really hope Verizon can make this happen, if the rumors are true.

Wiretap Recorded Rep. Harman Promising to Intervene for AIPAC

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Wow. Just, wow... From Talking Points Memo:

Must Read

04.19.09 -- 11:57PM By Josh Marshall

This story is so radioactive it's hard to know which of fifty different directions to go with it. In brief, Jeff Stein at CQ has a much, much more detailed account of that story, first reported in 2006, of Rep. Jane Harman getting caught on a wiretapped phone call allegedly discussing a quid pro quo with "a suspected Israeli."

There are a lot of hairy details on this one. But the gist is that an NSA wiretap recorded Harman in a conversation with a "suspected Israeli agent" in which Harman allegedly agreed to use her influence with the DOJ to get them to drop the AIPAC spy case in exchange for help lobbying then-Speaker-in-waiting Nancy Pelosi to make Harman chair of the House Intelligence Committee -- a position she ended up not getting.

(Remember, this was back when Rep. Alcee Hastings was the next person in line in terms of seniority. But there was intense opposition to his appointment because Congress had earlier impeached and removed him from a federal judgeship over bribery allegations. Pelosi eventually gave the nod to Silvestre Reyes rather than Harman.)

The story suggests that the tapes show Harman crossed the line. And the gears were in motion to open a full blown investigation. But then Alberto Gonzales intervened and shutdown the whole thing.

Why? Here's where it gets into the realm of bad novel writing: because Gonzales (and the White House) needed Harman to go to bat for them on the warrantless wiretaping story that the New York Times was then on the brink of publishing.

It's late. And we'll dig more into this tomorrow. But definitely give it a look yourself. Among the many questions the story raises are some that Harman should probably answer, but not all. High on my list would be finding out more about the circumstances under which a member of Congress ended up having her phone conversations recorded by the NSA. The article suggests it was a by-the-books wiretap -- part of a highly-classified probe of Israeli agents in the US, which led to the indictments of two AIPAC employees -- and not one of the 'warrantless' ones. But we've seen so much funny business on that front that I'm not sure that's enough information.

Next, is it possible Harman knew these tapes existed and was compromised vis a vis the administration? That's purely speculation on my part. Nothing in the article suggests that. But hearing it alleged that Gonzales protected her because he knew she'd be so helpful -- that really makes me wonder.

This raises lots and lots of questions -- not least of which is why this is coming out right now. Any particular reason people in the intel community would want to start talking to the press right now?

XKCD Gets A Book Deal

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From the New York Times:

Randall Munroe, creator of the popular Internet comic strip xkcd, plans to venture forth from his playpen filled with plastic balls to publish an actual book.

When Pixels Find New Life on Real Paper

By NOAM COHEN

IT’S not exactly Quentin Tarantino directing Ibsen, or Jeff Gordon racing go-carts, but the idea that Randall Munroe, creator of the online comic strip xkcd — wildly popular among techies the world over for its witty use of programming code in its gags — would for the first time publish a book is still something of a head scratcher.

Not a book for Kindle, I should add. A print book — you know, dead trees, ink, no text search, nonadjustable font size. The plan is for an initial press run of 10,000 copies sometime around June. And judging by the enthusiasm of the strip’s fans, who frequently act out the concepts in the strip in real life, those copies should sell quickly.

So, are we seeing an all-too-rare example of the triumph of print books over digital content? Does even an online legend like the 24-year-old Mr. Munroe crave the respectability of print? (Mr. Munroe once before climbed the respectability ladder when in October he competed against the illustrator Farley Katz of The New Yorker in a “cartoon-off.” No winner was declared.)

In fact, the xkcd story previews the much more likely future of books in which they are prized as artifacts, not as mechanisms for delivering written material to readers. This is print book as vinyl record — admired for its look and feel, its cover art, and relative permanence — but not so much for convenience.

The print xkcd book is not being published through a traditional company but rather by breadpig — which was created by Alexis Ohanian, one of the founders of the social-news Web site reddit. The site has sold high-concept merchandise like refrigerator magnets or T-shirts, but never a book. (Its profits go to the charity Room to Read.)

“We never made any projection — 10,000 seems like a good run,” Mr. Ohanian said, adding that this lack of research “is laughable from the perspective of anyone who knows the book industry. It’s what makes sense.”

The book — with the working title “xkcd,” though Mr. Ohanian says it may carry a subtitle like “a book of romance, sarcasm, math and language” — will not initially be sold in bookstores, and probably never in the big chains. Instead, it will be sold through the xkcd Web site.

“It doesn’t need to be in bookstores,” Mr. Munroe said. “I don’t have hard numbers about this, but the impression I get is that the amount of eyeballs you get from being on the humor shelf at Barnes & Noble — it is almost insignificant.”

Mr. Munroe said he had been contacted by large publishers, particularly those that specialize in comics and graphic novels. “The traditional model is they send us a royalty, and they handle getting it sold,” he said. “We figure that most of our audience is people who know us from the Internet — normal publishers weren’t as interested.”

Naturally, without an established publisher and with a devoted fan base online, the book will not be promoted through traditional publicity. Rather, the plan is to rely on word-of-keyboard.

Such online recommendations, Mr. Ohanian said, were how he discovered xkcd. “The first time xkcd showed up on reddit — it was just good,” he said. “The Internet really facilitates good stuff being read.”

Will there be review copies sent to newspapers and magazines? Good question, Mr. Ohanian said. There’s no reason why not, he quickly concluded.

While Mr. Munroe conceded a nostalgic love of books, remembering how he devoured books of a favorite comic strip, Calvin & Hobbes, he said he is now a committed Kindle 2 user, preferring it to print. Still, he said: “I have this urge. You want to print them out and put them up on places. There is something good about collecting them together.”

Publishing a book is an extension of the selling of items like T-shirts and posters, which pays the bills, he said, to a “free culture” mind-set about the cartoons themselves. “We have been encouraging people to share things, saying that it is a good business decision,” he said. “Instead of trying to convince people, why not make a bunch of money?”

The book will have 150 to 200 of strips out of more than 500 so far published online and is expected to sell for $19. The selection was made by a fan who is also doing the layout for breadpig. “I took a few off and added a few others,” he said.

The book will include a foreward from Mr. Munroe as well as red-ink commentary from him on the most popular strips. One trick in transferring the material from online to print has been how to recreate the “title text” that comments on the strip when your cursor hovers over it.

“It’s not supposed to be a punch line, but hopefully if you didn’t laugh, you’ll laugh at this,” he said. The title text will appear where the tiny copyright notice would appear on a traditional strip.

Does that mean that the book won’t carry a traditional copyright and instead take its lead from the online comic strip itself, which Mr. Munroe licenses under Creative Commons, allowing noncommercial re-use as long as credit is given?

“To anyone who wants to photocopy, bind, and give a copy of the book to their loved one — more power to them,” he said. “He/She will likely be disappointed that you’re so cheap, though.”