Nestled within that amount was $350 million to draw a map showing a detailed, block-by-block inventory of the existing broadband infrastructure in the U.S. It took two years, but the results were unveiled by the National Telecommunications and Information Administration today on the Web site Broadbandmap.gov.

This is far from the first time someone has tried to tackle the problem of mapping existing broadband pipes in order to show where service is lacking. But prior attempts have generally been haphazard because service providers tend to carefully guard the precise maps of their physical plant as competitively sensitive. And prior federal efforts fell short because the maps were based on ZIP codes. If one person in some geographically large but sparsely populated rural ZIP code had access to service, prior federal maps showed that area as “served,” even if the majority of the population didn’t have access. The new map uses the far more granular census tracts.

The map shows some new data that shouldn’t come as a surprise to anyone who’s been following the saga of broadband in America: Anywhere from 5 to 10 percent of Americans lack access to broadband at acceptable speeds. Recall that the Federal Communications Commission last July set a benchmark of 4 megabits per second downstream and 1 MBPS upstream as what it considers acceptable.

Another key finding is that so-called “community anchor institutions” are going without adequate access to broadband. These are schools, libraries and hospitals, where different kinds of services are needed. As a rule of thumb, a school needs about 50 to 100 MBPS for every 1,000 students, and most of the schools surveyed had speeds of 25 MBPS or less, and precious few libraries reported speeds approaching that.

When residential service isn’t available, these are the institutions that people turn to when they need to use the Internet. A few years ago I visited a rural county in Tennessee where the local library had broadband and provided free wireless. If you watched the parking lot after the library was closed you’d often see people pull their cars up with laptops and use the Wi-Fi to work on homework assignments with the kids. Even the local sheriff’s deputies would pull up and use it to check their email.

There was some good news. Alongside the map, the NTIA released a separate report on broadband adoption. It found that 68 percent of households have access to a cable modem, a DSL line or a home fiber connection, up from less than 64 percent a year ago. The usual demographic disparities remain: People living on low incomes or with disabilities, along with seniors, minorities and those with low educational attainment, tend to lag behind other groups in home access. The city-country divide remains as well: 70 percent of city dwellers, versus 60 percent of rural residents, access broadband at home.

But here’s a stat that should surprise you: 28.3 percent of all the people in the nation do not use the Internet, period. That’s down about two percentage points from a year ago, but still means that out of every 25 Americans, seven don’t use the Internet at all. I don’t know about you, but that surprises me.

That’s the theory put forth today by Bernstein analyst Toni Sacconaghi, who believes Apple’s market-share aspirations for the iPhone are a lot like those for its iPod business. Sacconaghi sees an iPhone Nano or Mini as an inevitability, one that would dramatically expand Apple’s addressable market.

“We are surprised that Apple hasn’t moved sooner to introduce a lower priced offering that could help secure a more dominant installed base,” Sacconaghi said in a note to clients today. “After all, the smartphone world is a platform war, where first mover advantage and scale matters. The dual facts that (1) iPhone has not been available at several very important global carriers and that (2) it carries a very high price point have contributed to creating an opportunity for Android that has been successfully exploited. Particularly with Android now outselling iOS, the imperative for Apple to expand its installed base has never been higher.”

A scaled-down version of the iPhone with a cheaper data plan–or one that required no data plan at all–is one very obvious way of doing that. Roll out a device like that with a street price that falls somewhere between $149 and $199, says Sacconaghi, bring it those carriers that don’t yet offer the iPhone, and mass-market adoption will follow. Serious mass-market adoption.

“It is difficult to estimate the size of a market for a product that we don’t yet know the form-factor or timing for. But as a rough guide, we estimate that at an end-user price of $150-$200 and no data plan contract, Apple could address potentially all of the remaining smartphone segment, the non-smartphone postpaid segment, and about 15 percent of the non-smartphone prepaid segment. This would amount to an incremental 700M+ units and $90 billion in revenue in terms of market opportunity; even if Apple succeeded in capturing just 5 percent of these incremental units, it would add $12+ billion in revenues and $4.50+ in EPS.”

In fact, Caris & Co. analyst Sandeep Aggarwal says he expects Kinect to generate about $2 billion in gross revenue for the Xbox ecosystem. Beyond sales of Kinect itself, the controller is also driving sales of most everything else Xbox related. In Aggarwal’s view, Kinect offers four distinct benefits to Microsoft:

1. Better material attach rate for the 45 million Xbox installed base
2. Higher adoption and market share gain for the console itself
3. An uptick from the sale of new titles
4. Lower attrition and higher gross new subscriber growth for Xbox Live users

“As expected, the launch of Kinect increased noticeably the overall buzz around Xbox and helped improve the adoption of the console,” he concludes. “Just before the launch, Microsoft increased its forecast for worldwide sales from 3 million to 5 million by the end of the year. This forecast seems conservative now, given the strong reception.”

That’s according to Chitika, which has been tracking iPad adoption rates on its ad network (three billion ads served monthly across more than 100,000 sites) for some time now.

As of this month, the iPad accounts for 0.83 percent of all traffic on Chitika’s network, research director Daniel Ruby tells me. And at current growth rates, which have been steady since the device’s launch, it should hit 2.3 percent by the end of next year. To get that metric, Ruby took the past two months’ data trends for iPad growth relative to the full network’s traffic and, after accounting for spikes and dips, built out a growth line for the next twelve months. And while Chitika has taken some flak in the past for inaccuracies with its iPad sales counter, Ruby says he’s confident about this particular projection because he’s predicting a metric Chitika can directly measure.

Said Ruby, “For the sake of perspective, the iPad is already on par with Linux in terms of Internet usage market share [in North America] and is on pace to more than double its presence by the end of 2011.”

[Image credit: Gizmodo commenter ModestMouse]

Will lousy brand awareness be Palm’s Waterloo? With weaker than expected launches of the Pre and Pixi at new carrier partner Verizon, it’s beginning to look like it.

Certainly, Palm’s leadership appears to believe that insufficient carrier support is largely to blame for its current woes. In an all-hands memo to employees yesterday (full text below), Palm CEO Jon Rubinstein said the company is taking some extraordinary measures to address unexpectedly weak sales for its handset lineup. To drive demand at Verizon and raise its customers’ apparently limited awareness of webOS, Palm (PALM) has initiated Project JumpStart, a sort of product evangelism outreach program.

“To accelerate sales, we initiated Project JumpStart nearly three weeks ago. Since then, nearly two hundred Palm Brand Ambassadors, supplemented by Palm employees from Sunnyvale, have been training Verizon (VZ) sales reps across the U.S. on our products. Early results from the stores have already shown improvement on product knowledge and sales week over week. You may have also seen a growing number of Palm ads on billboards, bus shelters, buses, and subway stations–all getting the word out about Palm.”

A wise move, particularly given reports that Verizon sales reps unfamiliar with Palm’s smartphones often opt to pitch more familiar devices like Motorola’s (MOT) Droid and RIM’s Blackberry to new customers. Additional in-store training should help drive sales volume, assuming Palm’s offerings are compelling and differentiated enough to withstand comparison with rival devices.

The question, of course: Are they? And while initial reviews of the Pre and webOS operating system suggested they were, it’s hard not to look at Palm’s current situation and conclude that they really might not be–particularly with new and impressive Android and Windows Phone 7 devices headed to market and Apple (AAPL) and Research in Motion (RIMM) both presumably working on refreshes of their iconic devices.

“Given the sizable discounts now prevalent on the Pixi, it now suggests that the real problems for the Pixi and the Pre go beyond insufficient carrier support and unfocused TV advertising campaigns,” CL King analyst Lawrence Harris observed in a research note to clients this morning. “Rather, consumers are not finding the Pixi a compelling product in an increasingly competitive smartphone market.”

If that’s truly the case, these Palm Brand Ambassadors the company is sending to Verizon (VZ) have their work cut out for them, at least at the moment. Sources close to Palm tell me the company plans to introduce at least one new smartphone this year. Perhaps that will be the device that drives demand and pushes the company back to profitability.

Team,

This morning we announced preliminary results for our 2010 third quarter. Since the quarter has not yet closed, it is too soon to offer exact numbers, but we stated that we expect to report revenues for Q3 between $300 and $320 million. We also announced that we expect our revenue for this fiscal year to fall below the guidance we gave to Wall Street, which ranged from $1.6 to $1.8 billion. As we mentioned in our press release, our softer than expected performance is due to slower than expected customer adoption of our products, which in turn has prompted our U.S. carrier partners to put additional orders on hold for the time being. On a positive note, we expect to exit the quarter with over $500 million in cash on our balance sheet. We’re scheduled to announce our full financial results in March.

I realize this news is difficult to swallow. We made this announcement today to prevent a surprise for Wall Street when we announce quarterly earnings in March. In the meantime, the entire executive team has been working extremely hard to improve product performance, and have implemented a number of initiatives to increase awareness and drive sales.

Dave Whalen and I just returned from a very successful meeting with Verizon Wireless, where they acknowledged that their execution of our launch was below expectations and recommitted to working with us to improve sales. To accelerate sales, we initiated Project JumpStart nearly three weeks ago. Since then, nearly two hundred Palm Brand Ambassadors, supplemented by Palm employees from Sunnyvale, have been training Verizon sales reps across the U.S. on our products. Early results from the stores have already shown improvement on product knowledge and sales week over week. You may have also seen a growing number of Palm ads on billboards, bus shelters, buses, and subway stations–all getting the word out about Palm.

All of these efforts are examples of how we are working to accelerate adoption and grow distribution of webOS. In the next few weeks, your management will work with you to make sure your priorities are laser-focused, primarily on helping to increase sales, improve product quality and differentiate the Palm product experience.

Our goals are taking longer than expected to achieve, but I am still confident that our talented team has what it takes to get the job done.

We’ll schedule an all-hands meeting after our earnings announcement in March, and I’ll be happy to answer your questions.

Go team!!!

jon

Why? Do they expect the tablet to be Wi-Fi-only like the iPod touch? That would certainly make things a lot easier for the carriers.

No. Most analysts I spoke to said the probability that Apple’s new offering will support mobile broadband is quite high. “I can’t imagine it not having it,” Piper Jaffray analyst Gene Munster told me.

There are other good reasons not to fear the tablet as a bandwidth hog. First, the device will presumably rely heavily on Wi-Fi to off-load wireless traffic onto the wireline network, the assumption being that it will be used most often in locations with Wi-Fi access–homes, schools, libraries, cafes and whatnot. Moreover, a mobile broadband plan will likely be optional.

Second, despite all the hype and hoopla, initial unit sales of an Apple (AAPL) tablet are likely to be too low to have much of an impact.

As Munster told me: “…turn the clock back and look at the iPhone and the first year Apple sold 5.5 million units in the US and the ASP was $475. At that time there were no issues with AT&T’s network. The issues began occurring last year, right around the time we saw the hockey stick in iPhone adoption.”

Regarding the tablet, Munster says, “If this device is $800-$1000, I think adoption is going to be much lower than the hype would lead you to believe. So the bottom like is this: on a per-unit basis it might put a lot of stress on the network, but there will be too few of them on the street to collectively have a real negative impact.”

Presumably, that will give the carrier, whatever company that may be, time to build out in anticipation of increased adoption. A good thing, since a tablet may well pose unique network challenges, particularly if it is used as a streaming video viewer, says Sanford C. Bernstein analyst Craig Moffett.

“Streaming video is uniquely demanding traffic, as it is both bandwidth intensive AND latency sensitive,” Moffett explained. “That’s a recipe for disaster. For that reason, it’s unlikely that carriers would invite that type of usage. A large screen tablet would likely rely heavily on download-to-watch-later to sidestep the latency problem, and would almost certainly provide incentives to shift the most bandwidth-intensive applications to the wired network via Wi-Fi.”

But that’s a future scenario. “I don’t see this as a device that will in the next 12 months inspire people to save their money to buy it, the way they have with the iPhone,” says Munster, who sees Apple selling about 1.4 million tablets in calendar year 2010, assuming it ships in March.

“Certainly, it will take off in due time–this is the future of publishing,” Munster concludes, “but it takes 2-3 years for these things to really get going.”

PREVIOUSLY:

• Apple Announces Jan. 27 Special Event: “Come See Our Latest Creation”
• Major Apple Product Announcement Set for Wednesday, Jan. 27
• Apple Pitching Tablet to Publishing Industry; Spring Launch Expected
• Time (Finally) for the Tablet? Apple Developers Supersizing Their Apps for January Event.
• The Apple Tablet Is Delayed? So What?
• $1.9 Billion in Capex? What’s Apple Planning?
• Apple’s Tablet: Read Different?
• Imaginary Demand for Mythical Apple Tablet Exceeds All Estimates
• Apple Tablet Coming to AT&T?
• New From Piper Jaffray Analyst Gene Munster: The Apple iPad
• Rumored Apple Netbook Actually an E-Book?
• iTablet: Apple’s Killer App for Higher Ed
• iFugly

For brevity’s sake, we’ve also embedded the trailer:

According to NPD Group’s latest Mobile Phone Track study, price cuts on devices like Apple’s (AAPL) iPhone and RIM’s (RIMM) Blackberry Curve inspired a three percent decline in the average price for all cellphones in the third quarter of 2009. The overall average purchase price for mobile phones in the U.S. for the period: $85. A year ago it was $88.

An interesting trend given the fast-advancing feature sets and presumably high development costs of the new state-of-the-art smartphones we’re carrying around these days. For while these lower prices mean more sales for smartphone manufacturers and more subscribers for their carrier partners in the short term, they may well be undermining the smartphone’s price potential in the long term. It’s hard not to see the $299.99 Palm (PALM) Pixi for $24.99 on Amazon (AMZN) or the $499.99 Droid Eris for $49.99 on Overstock (OSTK) as having some deflationary impact once those retailers are done with them.

“That impact will continue,” NPD analyst Ross Rubin told me. “The iPhone 3G at $99 has created a benchmark that competitors are responding to with handsets such as the Droid Eris and Palm. Even where a handset is competing closer to the $200 mark, carriers and retailers are using buy-one-get-one promotions (that help lock in family plans). And retailers are discounting even value-priced smartphones further to drive store traffic and accessory sales.”

Rubin’s conclusion: “We will soon reach the point where the handset is a minor expense consideration and the required monthly data fees become the limiting factor in smartphone adoption.”

As ChangeWave research director Paul Carton notes, “as we approach the 1st quarter, the ball has shifted back into BlackBerry’s court.” And that would seem to be the case. Sadly for RIM, middling customer satisfaction ratings for the Storm may undermine its broader adoption.

“The overall satisfaction rating given by new owners of the Blackberry Storm can, at best, be characterized as lukewarm,” says Carton. “One in three Storm owners (33 percent) said they were Very Satisfied with their new model, well below the 52 percent Very Satisfied rating given by all current owners of BlackBerry smart phones.” And that’s worth noting, because the first-generation iPhone’s Very Satisfied rating–77 percent–was more than double the Storm’s. Furthermore, the Storm’s Unsatisfied rating (14 percent) is three times that of the iPhone (five percent). So while the Storm would seem to have quite a bit of near-term potential, it’s long-term success could be hamstrung by poor reviews and unsatisfied customers.

Wu contends that there is still room for significant growth in both the Mac and iPhone businesses, where its market share is relatively small given the size of the PC and cellphone markets. “While continued difficult global macroeconomic headwinds and their impact on technology and consumer spending concern us, we believe the Apple adoption story is still intact and believe the company is positioned to weather the storm better than most,” he writes.

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