Third-quarter chip sales totaled $61.9 billion, down 10.1 percent from the same quarter last year, but up nearly 20 percent from the second quarter of 2009. No doubt about it, the market for chips is improving (see chart below; click to enlarge).

“Global semiconductor sales in the third quarter were above expectations,” SIA President George Scalise said in a statement. “September sales were in line with historical patterns, reflecting increased demand from end-users as they began the build for the holiday season.”

“Amid signs that we are in the early stages of recovery in the global economy,” Scalise added, “semiconductor sales continue to reflect normal seasonal patterns. Sales are running well ahead of the worst-case scenarios projected early in the year, and we are optimistic that total sales for 2009 will be better than our mid-year forecast.”

Sales are running well ahead of the worst-case scenarios? Well, I suppose any reassurance is a good one when your industry is down 10 percent year-over-year.

Analyst Imran Khan says he talked to 20 ad buyers and planners, who control a collective $1.6 billion in ad spending, and they tell him that they’ll spend more in the second half of 2009 than they did in the first six months. But that’s not useful information, since ad spending is traditionally weighted that way.

More tellingly, Khan’s correspondents tell him they think spending will be “roughly flat to down” in the last six months of 2009, compared to 2008. And as we’ve discussed before, ad spending started plummeting in the second half of 2008. So if it isn’t improving now, that’s unpleasant news.

More pleasant: Things should get better next year:

2010 ad budgets are looking positive. 25% of respondents see upside of 5-9% in 2010 and an additional 25% see upside of 10-14% vs. 2009. Approximately 40% think that ad spend in 2010 will be roughly flat with 2009 levels.

Looking for more concrete data? Wait a week. Earnings season kicks into high gear Thursday, Oct. 15, when Google (GOOG) hands in its Q3 report card; in the following weeks we’ll also get updates from big media players, including Yahoo (YHOO) and Time Warner (TWX).

But here’s a very slight twist: The sales decline slowed in the most recent quarter. U.S. sales dropped 11.1 percent in Q3, compared to a 14.5 percent drop in Q2, according to Nielsen Soundscan.

That’s the good news. The bad news is that Michael Jackson isn’t going to pass away again–and that unless they finally do come to Apple’s (AAPL) iTunes, there probably isn’t another way to repackage the Beatles again. Billboard:

Renewed interest in the Beatles and Michael Jackson slowed the decline of U.S. album sales in the third quarter, although the industry is still on track to fall for the eighth time in nine years….

Music retailers are hoping that the continued performance of Jackson and Beatles albums and a strong fourth-quarter release schedule will continue to make up lost ground.

During the quarter, Jackson’s June 25 death fueled sales of about 5 million units, and the September 9 re-release of the Beatles catalog has sold 1.3 million units so far.

So far this year 11 albums have topped the 1 million-unit mark, the same number as in 2008. In 2008, the top seller was Lil Wayne’s “Tha Carter III,” at 2.5 million units; this year’s top seller is Jackson’s “Number Ones,” at 1.8 million units.

Never mind that it faces some particularly long, historic odds. That it has launched a new bet-the-company product in the worst economy we’ve seen in 50 years, for example. That with the Pre, it is challenging Apple’s (AAPL) iPhone, one of the most successful mobile phones in history. That it’s competing in a market crowded by the likes of Research in Motion (RIMM) and Nokia (NOK), which shipped an astonishing 468 million phones in calendar 2008.

Never mind all that. Because, according to RBC Capital Markets analyst Mike Abramsky, Palm (PALM) has the “special sauce”–the means of orchestrating a second act, perhaps even one of Jobsian proportions.

“Following a period of decline and facing oblivion, we believe Palm has the potential for a remarkable smartphone turnaround,” Abramsky writes in a lengthy research note on the wireless industry that I mentioned here yesterday as well. “With its new strategy, WebOS product line and under the direction of a new management team headed by ex-Apple executive Jon Rubinstein, Palm (like RIM and Apple) is, in our opinion, well-positioned for smartphone leadership.”

Abramsky sees a promising future: “Our outlook calls for Palm to quickly recover, growing from an estimated 1.3 percent data-centric smartphone shipment market share (0.2 percent TAM) or 2.2 million units in calendar 2009 to 3.6 percent share (1.3 percent of TAM) or 18.2 million units in calendar 2012. Targeting the PIM-centric segment of the Palm legacy, Palm in our view faces near-term risks, but has the ‘special sauce.’” (Click on table below to enlarge.)

And what, exactly, is that? The stuff that goes between the two all-beef patties and the lettuce and cheese?

Not quite. Abramsky’s idea of special sauce includes vertical integration, “controlling the end-to-end smartphone software and hardware platform, a ground-up developed smartphone OS platform with unique innovations like multitasking, Synergy (user data integration), developer-friendly SDK, and compelling and clever hardware/software designs [that] all combine to offer a unique, iconic smartphone experience, differentiated from incumbent vendors.”

A hell of an ingredient list. But it’s one that the Pre and Palm’s webOS largely deliver on–despite some drawbacks. And if Palm can improve on that list, the company should have little trouble wooing back disenfranchised users and winning new ones.

Abramsky, again: “The huge positive reception to the launch of Palm’s Pre, its first WebOS device–despite the already broad awareness of iPhone–illustrates pent-up demand for innovative, non-intimidating smartphone user experiences. The accolades for Pre also show Palm has the potential to provide that rare iconic smartphone experience, above competitors, some incumbents and in the company of RIM and Apple.”

Which is pretty much what Palm has set out to do, as CEO Jon Rubinstein noted in the company’s last earnings call. “There is room for three to five players in this space,” he said. “We don’t have to beat one another to prosper.”

You do have to execute, though. And execution hasn’t historically been one of Palm’s strong suits. Perhaps it will improve with the addition of that special sauce Abramsky’s talking about.

PREVIOUSLY:

• Palm: The Turnaround Story of the Year
• Pre Makes Palm a New Man in Only Minutes a Day
• Palm: Execution Is Everything

Never mind that it faces some particularly long, historic odds. That it has launched a new bet-the-company product in the worst economy we’ve seen in 50 years, for example. That with the Pre, it is challenging Apple’s (AAPL) iPhone, one of the most successful mobile phones in history. That it’s competing in a market crowded by the likes of Research in Motion (RIMM) and Nokia (NOK), which shipped an astonishing 468 million phones in calendar 2008.

Never mind all that. Because, according to RBC Capital Markets analyst Mike Abramsky, Palm (PALM) has the “special sauce”–the means of orchestrating a second act, perhaps even one of Jobsian proportions.

“Following a period of decline and facing oblivion, we believe Palm has the potential for a remarkable smartphone turnaround,” Abramsky writes in a lengthy research note on the wireless industry that I mentioned here yesterday as well. “With its new strategy, WebOS product line and under the direction of a new management team headed by ex-Apple executive Jon Rubinstein, Palm (like RIM and Apple) is, in our opinion, well-positioned for smartphone leadership.”

Abramsky sees a promising future: “Our outlook calls for Palm to quickly recover, growing from an estimated 1.3 percent data-centric smartphone shipment market share (0.2 percent TAM) or 2.2 million units in calendar 2009 to 3.6 percent share (1.3 percent of TAM) or 18.2 million units in calendar 2012. Targeting the PIM-centric segment of the Palm legacy, Palm in our view faces near-term risks, but has the ‘special sauce.’” (Click on table below to enlarge.)

And what, exactly, is that? The stuff that goes between the two all-beef patties and the lettuce and cheese?

Not quite. Abramsky’s idea of special sauce includes vertical integration, “controlling the end-to-end smartphone software and hardware platform, a ground-up developed smartphone OS platform with unique innovations like multitasking, Synergy (user data integration), developer-friendly SDK, and compelling and clever hardware/software designs [that] all combine to offer a unique, iconic smartphone experience, differentiated from incumbent vendors.”

A hell of an ingredient list. But it’s one that the Pre and Palm’s webOS largely deliver on–despite some drawbacks. And if Palm can improve on that list, the company should have little trouble wooing back disenfranchised users and winning new ones.

Abramsky, again: “The huge positive reception to the launch of Palm’s Pre, its first WebOS device–despite the already broad awareness of iPhone–illustrates pent-up demand for innovative, non-intimidating smartphone user experiences. The accolades for Pre also show Palm has the potential to provide that rare iconic smartphone experience, above competitors, some incumbents and in the company of RIM and Apple.”

Which is pretty much what Palm has set out to do, as CEO Jon Rubinstein noted in the company’s last earnings call. “There is room for three to five players in this space,” he said. “We don’t have to beat one another to prosper.”

You do have to execute, though. And execution hasn’t historically been one of Palm’s strong suits. Perhaps it will improve with the addition of that special sauce Abramsky’s talking about.

PREVIOUSLY:

• Palm: The Turnaround Story of the Year
• Pre Makes Palm a New Man in Only Minutes a Day
• Palm: Execution Is Everything

Twitter co-founder Biz Stone took the stage at Fortune magazine’s Brainstorm Tech conference late this afternoon and was greeted by that old chestnut: When is Twitter going to make some simoleons?

Fortune’s Adam Lashinsky, who interviewed Stone (the pair are pictured here) posted a poll about that and a few other topics (the audience preferred Facebook to Twitter by about three to one, for example), and then asked a question he said was on the minds of many in Silicon Valley:

“Why the hell aren’t you guys making money?”

“I think that’s a legitimate concern,” said Stone. “We need to focus on value before we focus on profit.”

But, he added that the San Francisco-based Twitter was ready to show some commitment to revenue this year.

Oh dear, what will BoomTown have to gripe about at Twitter now?

Because–aside from the lack of a business model–I must confess I like Twitter an awful lot and find it extremely useful!

Earlier, Stone made the salient point that Twitter was just in the first innings.

“We have a lot of growing to do,” he said. “In general, we feel we are about one percent into the growing of Twitter.”

One more important issue than money-making, he noted correctly, was that the level of engagement at Twitter is not as high as the level of awareness.

“We just have to position our product better,” said Stone.

Of course, Lashinsky had to ask about the recently stolen documents that a hacker nabbed from some Twitter employees’ personal accounts.

Stone said that there are “unpolished notes,” which only “give you an idea of scope we are thinking of…the idea is that we are thinking big.”

Lashinsky asked if Twitter would sue either TechCrunch, which published some of the stolen documents, or the hacker who stole them.

(My first thought: Let’s all pray that TechCrunch will avoid touting that navel-gazing nonstory into the weekend.)

“I don’t know,” said Stone diplomatically, since TechCrunch’s Michael Arrington was sitting right in the room. “In general, we have a responsibility to look into these things and see what makes sense.”

Then, it was pretty much back to business models, and Stone seemed open to a lot of them, as long as they were not forced on the innovative digital darling.

“We want to develop a revenue model that is baked-in…and is not something that is tacked on,” he said.

Some ideas: Advertising, of course, as well as commercial accounts and verifying brands.

“We spent a lot of 2008 trying to get ahead technically of the unexpected popularity,” said Stone. “The very, very high level [of what Twitter needs to be doing] is to add more value to users.”

That means more focus on adding new features, such as a reputation system, better discovery and more explanation–for David Letterman, for example–of exactly how Twitter can be used.

And yes, making money. Stone noted that Twitter wanted to change the world too, and the best way to do that was to make “tons of money.”

“What we don’t want is to become that child actor that grew up all freaky,” he said, noting a Ron Howard development cycle was Twitter’s goal.

All hail Opie Twitter, oops, Taylor!

[Photo credit: Brad Markel for Fortune]

iLaunch day 2009 was one for the record books, as AT&T customers scrambled to get their hands on the fastest, most powerful iPhone yet.

Here’s a look at some of the milestones we achieved:

• Best-ever sales day in our retail stores
• Second-largest traffic day in our retail stores
• Most transactions processed via our IT systems in a single day
• Most upgrade eligibility checks in a single day
• Largest order day in att.com history
• Largest features sales day in att.com history

On this year’s launch day, iPhone sales exceeded sales recorded on 2008′s iPhone launch day, Black Friday 2008 and Dec. 26, 2008–all heavy-volume sales days. In fact, this year we surpassed 2008′s launch day sales at about noon Central time, and sustained our previous peak hour record, also set in 2008, for 11 straight hours.

[Image credit: Gizmodo]

iLaunch day 2009 was one for the record books, as AT&T customers scrambled to get their hands on the fastest, most powerful iPhone yet.

Here’s a look at some of the milestones we achieved:

• Best-ever sales day in our retail stores
• Second-largest traffic day in our retail stores
• Most transactions processed via our IT systems in a single day
• Most upgrade eligibility checks in a single day
• Largest order day in att.com history
• Largest features sales day in att.com history

On this year’s launch day, iPhone sales exceeded sales recorded on 2008′s iPhone launch day, Black Friday 2008 and Dec. 26, 2008–all heavy-volume sales days. In fact, this year we surpassed 2008′s launch day sales at about noon Central time, and sustained our previous peak hour record, also set in 2008, for 11 straight hours.

[Image credit: Gizmodo]

In your review of the new iPhone 3GS, you said that AT&T had changed its upgrade policy so some buyers of the previous model could get the new-customer price earlier than planned. Can you explain this in more detail?

Almost all cellphones in the U.S. are subsidized by the carriers to bring down prices. Typically, existing customers—who have already benefited from a subsidy—can’t upgrade at the lower new-customer price (in this case $199) until they reach a point in their contracts where this subsidy has been recovered. These dates vary, based on a formula that takes into account things like the customer’s monthly spending rate.

When some early adopters of the 2008 iPhone model, the 3G, discovered they wouldn’t immediately qualify for this $199 “standard upgrade” price—the same as the new-customer price—they got angry. So AT&T made a concession, but only a partial one. It declared that any customer who had been told he or she couldn’t get the $199 price until sometime in July, August or September of 2009 would in fact now be able to qualify for that lower price starting on the first day of availability.

This concession doesn’t apply at all to owners of the original 2007 iPhone, or even every owner of the 2008 3G model. And it isn’t based on when you bought your 3G, but when the system told you that you could buy the new model at the “standard” upgrade price of $199. You can check the price AT&T or Apple will charge you for an upgrade by going to www.att.com/iPhone and clicking on “Check upgrade eligibility.”

I’ve recently heard that the new Palm Pre smart phone is unable to import data from the old Palm Desktop program. In other words, if you have Palm Desktop filled with data from a previous Palm model, you’ll be unable to get that data into your new Palm Pre. Is this true?

No. While the Pre isn’t designed to repeatedly sync with the old Palm Desktop software, Palm does offer a program, for Windows and Mac, that will perform a one-time import of your old data from Palm Desktop. It can also do a one-time import of data from certain other desktop programs as well, including Microsoft Outlook on Windows, and iCal and Address Book on the Mac. This program will help you move your data to one of the online services, such as Google, with which the Pre is designed to sync continuously. The software is called the Palm Data Transfer Assistant and is free at http://bit.ly/3lIaZ.

I am contemplating purchasing the 17” MacBook Pro rather than the 13” or 15” models because the antiglare matte screen is offered only with the 17”. How bad is the glare on the smaller screens and how cumbersome do you find the larger 17” MacBook Pro?

For a laptop of its size, the 17” MacBook Pro is remarkably thin and light. But I did find it cumbersome to use in coach seats on airplanes and to cram into small briefcases. As for the glossy screens, which are now the most common option on many laptops, they bothered me at first, but I don’t notice the glare now. However, both of these are personal issues. So my suggestion is to go to a store and see for yourself.

You can find Mossberg’s Mailbox, and my other columns, online for free at the All Things Digital Web site, http://walt.allthingsd.com.

ComScore says Twitter logged 30.1 million search queries in May, more than Time Warner Cable (TWC), but not even on the same playing field as search also-rans like Ask.com.

But what if comScore is dramatically undercounting Twitter’s search–not just the standard undercounting that Web publishers always complain about, but something more significant?

It’s a given that comScore is undercounting. I know this because the research outfit told me so: The company confirmed today that it only measures searches executed at Twitter.com. But at least half of Twitter’s users are accessing the service without visiting the site, via third-party clients like Tweetdeck. And within that group of users is the power-user set, which is far more likely to be executing searches, many times a day in some cases, than Oprah fans who just joined the service last month.

So it’s easy enough to conclude that the majority of Twitter’s searches are going uncounted by comScore (SCOR). But how big is the gap? I’ve asked Twitter to share its search numbers, but I’m not holding my breath on that one. (UPDATE: See bottom of post)

In the meantime, let’s do some guesstimating.

Start with this year-old post by John Borthwick of Betaworks, who at the time was an investor in Summize, a Twitter search engine at the time (Twitter later bought Summize outright).

Borthwick reports seeing a huge number of search queries on Twitter on the opening day of Apple’s (AAPL) 2008 developer conference, topping out at an average of 190 queries per second. Tease that out over a full day, and you get 16.4 million searches in 24 hours.

For argument’s sake, let’s say that most of those searches occurred in an eight-hour stretch before, during and after Steve Jobs’s pronouncements that day, and knock that total down by two-thirds, to something like 5.5 million queries.

Steve Jobs pronouncements are rare things so it would be wrong to assume that Twitter sees similar usage patterns every day. But then again, Twitter has had an insane growth spurt in the last year: The most recent comScore traffic numbers peg monthly visitors at 32 million world-wide, up from a couple million a year ago.

See where this is going? Again, for argument’s sake, let’s say that Twitter’s peak traffic a year ago is now close to daily traffic today, and extrapolate that 5.5 million query guesstimate out for a month: You get something closer to 165 million queries.

Want to tweak any of my assumptions above? Be my guest. But no matter how you cut it, I’m sure that Twitter’s real search numbers are going to be several times higher than comScore’s number, at the very least.

Again, this matters in the end because Twitter’s most compelling investment thesis is that it can provide real-time search. And for that to mean something, the company is going to have to start registering as an actual search competitor at some point, not just to Time Warner Cable but to Yahoo (YHOO), Microsoft (MSFT) or even Google (GOOG). So how close, or far away, is that from happening?

UPDATE: Twitter cofounder Biz Stone responds, but declines to hand out any numbers. No surprise. I am a bit surprised to see him play down the importance of search at Twitter. I wonder if his investors are also surprised.

We don’t share absolute data such as total requests or queries per day but we do look at the whole ecosystem when we measure these things (not just Twitter.com).

Also, we are focused on the sharing and discovery of tweets so comparing Twitter to web search is interesting but not necessarily how we would measure success.