I have five predictions of how Facebook will be maturing in the first year after its IPO:

1. Search

Facebook has become home base for users in many ways. But when it comes to search, Facebook makes you take a bus transfer at Google every time you want to leave the house.

And that’s a shame, because Google starts each search from a place of knowing almost nothing about me. When I’m taking a vacation to Bali, I’m far less interested in Google’s generic recommendations of things to do than I am in recommendations from my friends who have been there.

Facebook already knows which of my friends have been to Bali, and which restaurants and attractions they liked the best. It can even differentiate between the friend I trust for restaurant recs and the friend who always finds the best surfing spots.

There is a clear battle between Google and Facebook. But it’s not over “search vs. discovery,” as it is often framed. Rather, it’s “transaction vs. relationship” — which is why Facebook has the potential to disrupt search as we know it.

Prediction: Facebook will launch a purely social search by the end of 2012 (before tackling the whole hog in 2013).

2. Advertising

Despite the company’s fierce ethos of consumer experience first, business concerns second, an IPO will inevitably put upward pressure on the latter. With the numbers published quarterly and the prices reset every day, Facebook will be forced to support that share price (if not for its shareholders’ sake, then at least for its employees’!) by expanding its advertising revenues.

Facebook today brings in quarterly ad revenue of $872M — just a tiny fraction of Google’s $9B. But transactions are by nature pecuniary — and relationships are priceless. As a gatekeeper to nearly a billion consumer relationships, Facebook can roll out new advertising products that are far more valuable than AdWords.

The market for online brand advertising is already huge at $85B today. As soon as Facebook unlocks the potential of relationship-based advertising, the market will open up by tens of billions more.

Prediction: By Q2 2013, Facebook will have more than tripled ad revenues to $3B/quarter.

3. Open Graph

Occupy Facebook! Oh wait, we already do. Or does Facebook occupy us? Facebook currently occupies 1 in 7 minutes of all time spent online.

As the locus of consumer identity, attention, and relationships, Facebook has the potential to be the one true platform that links together every destination on the web.

But it’s not there yet. Open Graph was a start, but it lacks a complete and actionable vision for how publishers can connect, access data, and establish relationships. Publishers don’t want bits and pieces of data that they need to analyze themselves — they want a unified schema that bridges their audiences’ online worlds and real lives.

When I buy a chicken at Whole Foods using a Facebook app’s mobile grocery coupon, Facebook can match that incoming data point with the fact that I read Cooks Illustrated and that I’ve been on an Indian food kick lately (based on my restaurant check-ins). By the time that chicken is in my reusable bag and I’m hauling it out the door, there should be chicken curry recipe suggestions on my Facebook page.

Facebook has an opportunity to turn data from the long tail of Facebook apps into real inferences about you and me that publishers and other brands on the web can actually use.

Prediction: Facebook will completely redesign their analytics offering by Q2 2013 to provide not just data but real, integrated audience insights that will guide brands’ personalization efforts.

4. Commerce and Currency

Advertising won’t be the only revenue play Facebook makes in its first year as a public company.

Digital commerce (i.e. digital goods) already represents more than $16B in market size, and is projected to grow to $36B globally by 2014. E-commerce is another $680B on top of that. Both are currently conducted by arcane means: Visa card numbers and PayPal accounts.

Why have digital payments been so slow to evolve? Because even the most trusting of us only allow a few close associates to access to our most private details. Who knows me the best? My bank, my lawyer, my mother, and Facebook. In fact, no one owns my identity as well as Facebook these days (sorry, mom!). Just because Facebook doesn’t have access to my wallet yet doesn’t mean it’s not going to happen.

A host of companies today (Google, Apple, Square) are trying to become your digital wallet, but Facebook holds a valuable advantage: it is already the locus of your relationships with third-party websites through Open Graph. While the logistics will certainly be no piece of cake, commerce is right up Facebook’s alley.

Prediction: By Q2 2013, Facebook will be presiding over $2B in transactions.

5. Timeline

There’s nothing more core to Facebook than its user experience; and Facebook has since its birth shown a consistent healthy dissatisfaction with it no matter what the status quo.

The current timeline experience is a nice try, but it’s not quite right. Timeline solved one problem — the indigestible frequency and quantity of updates at all levels of priority — while creating several more. New Problem #1: Timeline’s intuition about what’s important is too frequently just plain wrong. And while it gives us a great retrospective on people, it does a surprisingly poor job of helping us stay up to date with them. New Problem #2: Timeline depends heavily on Open Graph widgets to summarize our lives.

The latter is both ambitious and troubling. We admire great biographers for their ability to identify and communicate the essence of a person. It’s an insult say that a Nike Fuel score algorithm can capture the “real me” in the same way.

Timeline is a v1 product. It will take significant and deep tuning over many versions to reach its full potential.

This may seem like it’s just a UI update, but it’s not. Timeline is the clearinghouse for everything that happens on Facebook. Getting Timeline right is probably the single most valuable thing Facebook can do to grow its effectiveness with users — and its revenues.

Prediction: Facebook will release the first major redesign of Timeline by the first half of 2013.

Will the precocious kid that Facebook is today grow into a smart, savvy adult? A boatload of investors and JP Morgan certainly seem to think so. Over the long term, it will depend on Facebook’s ability to leave its youthful single-minded focus on users behind and execute consistently against two metrics: great user experience and revenues to match.

This is a guest post by Ben Elowitz (@elowitz). Elowitz is the co-founder and CEO of next-generation media company Wetpaint, and the author of the Digital Quarters blog about the future of digital media. Prior to Wetpaint, Elowitz co-founded Blue Nile (NILE).

According to the latest metrics from Gartner — which measure sales of handsets to customers, not shipments into the channel — Samsung sold 86.6 million mobile phones in the first quarter, 25.9 percent more than it sold during the same period a year ago. That was enough to give it a 20.7 percent share of the market, and to seize the title of “world’s largest mobile handset vendor” from Nokia, which sold 83.2 million cellphones during the quarter, as its market share slipped to 19.8 percent from 25.1 percent a year ago.

Unfortunate news for Nokia, which had been the market’s leader since 1998, but inevitable given the company’s recent decline and, perhaps, its choice of Windows Phone as an OS for its newest handsets.

Because what’s driving Samsung’s growth is Android. According to Gartner’s sales data, Samsung was by far the largest Android smartphone vendor, claiming nearly 44 percent of Android-based smartphone sales. Interestingly, no other Android phone manufacturer captured more than 10 percent of the market.

So, if Samsung commandeered the handset market’s top spot in the first quarter, and Nokia its second, who claimed third? Apple, which sold enough iPhones to capture 7.9 percent of the total mobile phone market.

As for mobile OS market share, Android continues to rule the market — 56 percent of smartphones sold to end users globally in the first quarter of 2012 run the OS, far more than the 22.9 percent running Apple’s iOS.

While Facebook is slowly working out the kinks to bring more games to mobile, there’s a small company in Menlo Park, Calif., that has beat them to it.

ISwifter is announcing a new iPad app today called theWorx for Facebook, which gives users the full Facebook experience — social games and all.

That means users can check their crops, maintain their cities and feed their fish without having to boot up their computer.

A small company of 20 employees, iSwifter is almost entirely bootstrapped, having generated $10 million in revenue last year.

As my colleague Ina Fried wrote, the previous iPad app allowed users to access any Flash-based content on the Web by running a browsing session on its servers and streaming the results to the iPad. What iSwifter quickly realized was that “one of the major use cases is Facebook games,” said the company’s co-founder Rohan Relan.

TheWorx will work similarly to the old app, except that it is tailored specifically for Facebook. ISwifter will host the content on its servers and then stream the games to the user on the iPad, with little latency. By taking this approach, users will have access to all games on Facebook without developers having to lift a finger.

Additionally, all of the original ways to monetize the applications will be in place, including advertising and Facebook Credits. TheWorx will be free for a short trial period, and then users will pay for additional access. The app will come out later this month or in early June. At that time, Relan said, the company will figure out how much it will charge. The iSwifter app currently costs $5.

“Our plan is if we do everything that the Facebook app does, then we can charge for that functionality,” Relan said.

The biggest threat to iSwifter is if Facebook starts bringing more content to mobile. “That would be pretty devastating to us,” Relan admits. However, he said there’s not an easy way for all developers to bring their content to mobile. Currently, some of the largest game developers, like Zynga, have created content specifically for Facebook’s app, but it has been a slow process.

“Some of the big apps have made native versions, but it will take time for the Long Tail to migrate over,” he said.

Here’s how the app works:

Not at all.

“We’re very happy with it,” Hesse said of Sprint’s deal with Apple, during the company’s annual shareholders meeting Tuesday. “Carrying the iPhone will be quite profitable.”

But not for a few years, at least.

By its own admission, Sprint won’t profit from the device until 2015. But according to Hesse, who was reelected to Sprint’s board during Tuesday’s proceedings, that initial heavy upfront investment in the iPhone is worthwhile because it will slow subscriber turnover and create a new segment of higher-value subscribers.

“We believe in the long term,” Hesse said. “And over time we will make more money on iPhone customers than we will on other customers.”

And there, it would seem, Hesse does have a point. Sprint sold 1.5 million iPhones in its first quarter, with about 44 percent of them going to new customers. And those sales helped spike Sprint’s average revenue per user 6.9 percent, the largest year-over-year increase ever charted in that metric in the U.S.

Production is set to begin next month for the screens, which measure at least 4 inches diagonally compared with 3.5 inches on the iPhone 4S, the latest phone from Apple, the people said.

Read the rest of this post on the original site »

“China Mobile and Apple both have the will to strengthen cooperation,” Chairman Xi Guohua said, according to Bloomberg. “When there is more specific news, we will disclose it.”

The company reportedly indicated that it is unclear whether a deal will be reached this year. An Apple representative was not immediately available for comment.

However, sources have said that a meeting with China Mobile was among the stops CEO Tim Cook made during a China trip earlier this year.

With roughly two-thirds-of-a-billion users, China Mobile is the biggest carrier in the world, as measured by number of customers. The company’s current 3G network doesn’t work with today’s iPhone, but a next-generation iPhone could well work with China Mobile’s 4G network, which is currently in a few spots.

China Mobile has also applied to offer service in the U.S., Reuters said, but it is unclear how well that bid will be received.

The U.S. Supreme Court on Monday declined to review the Ninth Circuit’s rejection of the Mac clone maker’s claims that Apple violated antitrust law by refusing to license Mac OS X to third-party hardware manufacturers. In doing so, the court let stand an earlier ruling barring Psystar from peddling PCs with the Mac OS X operating system preinstalled, circumventing the technological measures Apple uses to prevent unauthorized copying of Mac OS X and assisting others in doing so.

Which means this is likely the last we’ll be hearing from Psystar, which was already bankrupt when it embarked on this little adventure, though the company’s legal counsel continues to put on a brave face.

“I’m sure that the Supreme Court will take a case on this important issue eventually,” K.A.D. Camara of Houston law firm Camara & Sibley, told CNET.

Somehow, I doubt that. Recall that Psystar was found to have violated Apple’s exclusive reproduction right, distribution right, and right to create derivative works by installing Mac OS X on its hackintoshes in violation of the Digital Millennium Copyright Act.

And on top of it all, it’s May 14 — Mark’s 28th birthday.

Aside from the intense scrutiny of the company by the tech and financial press leading up to the IPO, Zuckerberg is doing all right. Especially when stacked up against some of the biggest names in tech that came before him.

Consider Steve Jobs. He was zooming along just fine in his twenties. Until, that is, in his 28th year he recruited the man who would eventually become his — and Apple’s — undoing (temporarily, of course). That man was John Sculley, then CEO President of Pepsi-Cola, who traded the position to be the CEO of Apple Computer after intense courting from Jobs. Of course, Sculley would eventually play a part in Jobs’s ouster from Apple; Sculley would also oversee the company in what proved to be the darkest years in its 36-year history. Jobs was also in the process of launching the Lisa when he was 28, one of the biggest commercial computer hardware failures the company has ever released. In other words, 28 wasn’t the greatest year of Jobs’s career.

Amazon luminary Jeff Bezos’s best years were yet to come. At 28, he was still at his hedge fund gig, where he first saw the opportunity in the fast-growing Internet use around the country. Two years later, he would go off on his own to start Amazon.

Bill Gates, on one hand, had founded Microsoft in 1976 — then known as “Micro-Soft,” begun in a small Albuquerque office in partnership with Paul Allen — at the ripe age of 20. It’s the same age Zuck was when he officially founded Facebook in his Harvard dorm room. At 28, Gates was certainly upwardly mobile — the year before his 28th saw him begin to license MS-DOS — though his best years were yet to come: In two years, Gates would launch the first retail version of the Windows operating system.

Larry Page and Sergey Brin were still three years off from Google’s IPO when they turned 28 (Page in March of 2001, Brin in August). It was that year in which the two — who had run Google since they co-founded it in 1998 — decided to turn the reins over to Eric Schmidt, a learned executive well versed in leading technology companies. Unlike Zuckerberg, who retains full control over Facebook with his majority of voting rights, Page and Brin let a seasoned Valley veteran guide Google through its early days.

In all, it seems Zuck is doing just fine. Still two years off from the big 30, he’s number 35 on Forbes’ Billionaires List with an estimated net worth of $17.5 billion. Better still, he’s got a longtime live-in girlfriend and an adorable floor mop of a dog, “Beast.”

Happy birthday, Mr. Zuckerberg. And enjoy a quiet moment of reflection while you can; Friday isn’t too far off.

The U.S. Court of Appeals for the Federal Circuit ruled a California trial judge was too quick to deny Apple’s request to temporarily block the sales of Samsung tablets while Apple’s patent-infringement claims against its rival proceed in court.

Read the rest of this post on the original site »

The new features, expected to be announced at Apple’s world-wide developer conference beginning June 11, will allow iCloud users to share sets of photos with other iCloud users and to comment on them, these people said. Currently, users can only store one set of photos in iCloud through a feature called Photo Stream, which is designed to sync those photos to other Apple devices, not share them.

Read the rest of this post on the original site »

Image by Joy of Tech

The allegation, made earlier this month in a motion discovered by Network World, claims Samsung destroyed “vast quantities of relevant evidence in blatant disregard of its duty to preserve all such evidence.” Samsung, it seems, routinely purges emails from custodian computers and, according to Apple, has continued to do so despite its duty to preserve evidence to the case.

From Apple’s motion:

Samsung’s ad hoc, unmonitored email ‘preservation’ methods have resulted in the irretrievable loss of unknown volumes of relevant emails. … For example, Judge Grewal recently compelled the deposition of Won Pyo Hong, the head of Samsung’s Product Strategy Team, in part due to an email in which Dr.Hong ‘directly orders side-by-side comparisons of Apple and Samsung products for design presentations.’

Apple and the Court cannot possibly know how many more emails Dr. Hong sent or received that would have supported Apple’s claims that Samsung copied Apple products had they not been deleted.

Harsh allegations, and ones that Samsung has decried as baseless. That said, this isn’t the first time the company has been called out for meddling with a discovery order. Just last week it was sanctioned by a California judge for withholding evidence. This just two weeks after another sanction for another failure to provide internal documents on a timely basis. Apple, in its motion, notes other instances as well.

So, as I said: Messy, and getting messier by the day. Which doesn’t bode well for the companies’ upcoming court-ordered mediation talks on May 21 and 22.

(Image: Joy of Tech)

A 3-D view of San Francisco from C3 Technologies

Sources tell 9to5Mac that Apple will abandon Google’s mapping back-end in the next major iteration of iOS, replacing it with a brand-new mapping application powered by Apple technology. We’ve independently confirmed that this is indeed the case. Sources describe the new Maps app as a forthcoming tentpole feature of iOS that will, in the words of one, “blow your head off.” I’m not quite sure what that means, and the source in question declined to elaborate, but it’s likely a reference to the photorealistic 3-D mapping tech Apple acquired when it purchased C3 Technologies. C3 did use missile-targeting technology to develop its gorgeous 3-D models of major cities, so …

In any event, we’re almost certain to find out for sure at Apple’s WWDC conference, which runs June 11-15 in San Francisco. Sources say the current plan is to debut the new Maps app during the keynote. Caveat: Keynote plans often change, especially at Apple.

(Image courtesy of MacRumors)

That is, more people are watching Web stuff on Microsoft’s machine than on the iPad, iPhone or any Android machine, anywhere. And when it comes to home viewing, competitors like Apple TV, Google TV and Roku are so far behind they’re not even competitors.

This data comes from Freewheel, an online video ad company, and it comes with caveats. We’ll get to those below. But first, take a look:

Now the asterisks: Freewheel is only measuring “professional content” that runs with ads, because that’s how it makes its living. So that means it’s counting stuff from companies like NBC, CBS, ESPN and Vevo, but not YouTube cat videos. It’s also not measuring Netflix usage. On the other hand, this isn’t a poll or sample, but data compiled by the company’s own ad servers.

So it’s possible there’s some variance here with the larger Web video world, but it seems reasonable to assume that this is at least directionally correct. At the very least, it gives credence to Microsoft’s claim that Xbox users are spending more time watching videos on the machines than playing games, and that its deals with conventional TV programmers may be bearing fruit.

And it shows you how much ground Google will need to make up as it gets ready to relaunch its Google TV. Ditto for Apple, if and when it ever gets serious about transforming Apple TV into something other than a “hobby.”

Bowen Liu / Apple

At least that’s the word from Foxconn chief Terry Gou, who said as much during today’s groundbreaking ceremony for the company’s new Shanghai headquarters.

“We’ve discovered that [improving factory conditions] is not a cost. It is a competitive strength,” Gou told reporters today. “I believe Apple sees this as a competitive strength along with us, and so we will split the initial costs.”

Gou didn’t elaborate on the size of Apple’s financial commitment, or its terms. Nor did he explain if this investment is a new one, or simply part of the same deal that’s seen the two companies invite audits by the Fair Labor Association. But it’s clear that Apple is bolstering its efforts to improve labor conditions at factories where devices like the iPhone and iPad are built. And any forward movement there is welcome.

Apple declined comment on Gou’s remarks.

XtremIO makes storage arrays based on flash memory chips, and is a would-be rival to Violin Memory, the Silicon Valley start-up that’s revving its engine for an IPO later this year, following an $80 million Series D funding round which AllThingsD reported exclusively last month.

Another player in the all-flash storage array business is Pure Storage, which came out of stealth mode last August with a $30 million Series C led by Redpoint Ventures.

News of the deal gave shares of Fusion-IO a jolt. Fusion-IO rose 50 cents, more than 2 percent, to $21.63, just as the markets opened for trading in New York. As of yesterday’s close, Fusion shares have fallen by more than 6 percent since its IPO debut last June.

Fusion is a founding member of the Flash Madness Club. Its flash memory insert cards for servers are widely used in data centers of companies like Apple, Salesforce.com and Facebook, speeding up the ability of servers to process data by eliminating bottlenecks created by conventional hard drives. Its customers also include Hewlett-Packard, Dell and IBM among other server manufacturers.

The launch is not a surprise, since the Chicago daily deals company has been testing the technology in Philadelphia for the past few months.

Customers who opt in to Groupon Rewards will earn points when they spend money at a participating merchant using the same credit card or debit card they have on file at Groupon.com.

Once a customer spends a predetermined amount, a reward is unlocked to use during a future visit. All of the recording and accounting takes place behind the scenes, and doesn’t require customers to show receipts or check in on a mobile device.

Groupon says the program will also seamlessly tie in to a merchant’s point-of-sale system, and is available to any U.S. merchant, regardless of whether the business has previously run a Groupon deal.

Other companies are also working on similar loyalty solutions.

Earlier this week, I wrote about Belly raising $10 million to create a mobile-app-based loyalty program. And, Kirkland, Wash.-based Pirq also announced this week that it is giving Apple’s Bay Area employees access to daily deals.

iCloud is among the best products Microsoft has ever designed.

– Mike Monteiro, via Twitter

In yet another huge stride toward bolstering its app platform, the company announced plans for its own central app hub inside Facebook itself, making it easier for users to discover Facebook-integrated apps, as well as easier for developers to submit and feature their apps on Facebook itself.

Until now, users had a handful of ways of discovering apps through Facebook; the company touted “social discovery” as its strong suit, as users were encouraged to find apps through their news feed. The idea is, you’ll find the apps that are most relevant because they’re the ones your friends use. They’ll surface in your newsfeed, and you’ll pick the ones you like while ignoring the ones you don’t care about.

So this is somewhat different. To be clear, it’s not exactly a proper “App Store” competitor to take on the likes of Apple or Google’s respective hubs. It’s more of a centralized location so that everyone — users and developers alike — knows where to go to find Facebook apps. And that didn’t exist before.

But the social discovery part still plays a huge factor. The apps that show up when you visit the App Center will be those that Facebook finds most relevant to you — that is, ones your friends are using, or ones that are scoring particularly high on Facebook’s own internal ratings system that judges just what apps should show up.

“Success through the App Center is tied to the quality of an app,” wrote Facebook employee Aaron Brady in a blog post. “We use a variety of signals, such as user ratings and engagement, to determine if an app is listed in the App Center.”

This is a big deal for building out the future of the platform. Part of what will determine just how much time users spend inside Facebook is the amount of content they have to play around with, and the company relies on outside developers for that. The unveiling of the Open Graph at Facebook’s F8 developer conference last year was the first step in this direction, making it easier for third-party developers to fully integrate their applications into the Facebook ecosystem. Then came the different verbs with appropriate apps — like “Listening” with Spotify and “Watching” with Netflix — broadcasting user activities across Facebook, thereby upping the potential for others to try out those third-party apps.

But as Facebook seems to realize with Wednesday’s announcement, developers can’t rely entirely on social discovery for their apps to grow. Sure, you’ll get the occasional breakout successes like SocialCam, Viddy or Pinterest through organic growth, but users still need a home page to browse through apps.

What’s more, the new App Center will feature additional ways for developers to get paid. The only initial payment options for developers who actually wanted to earn money through Facebook apps were via in-app purchases. So for an app like Farmville — which relies on users buying virtual goods to make money — the original sort of system works well. Now Facebook will give the option for developers to offer paid apps. That makes it easier on developers’ apps for which in-app payments make little sense.

So if the App Center takes off, the impetus for an app to succeed isn’t dependent on a sudden burst of viral growth. In theory, a developer’s app can simmer inside the App Center and eventually bubble up to the forefront of users’ App Center dashboards.

It’s also another potential revenue stream insofar as splitting the cash on paid apps and in-app purchases. And more app use, of course, means more engagement within the Facebook platform. That means more ads. And with the wealth of new data Facebook will receive by looking at the apps its subscribers are using, it also means better targeted ads.

Now it’s up to developers to make apps worth downloading. And what’s good for developers is good for Facebook.

Nick DiCarlo, VP of product planning for Samsung Mobile, noted that the market has shown that, despite Apple’s pronouncements, there is a demand for a range of tablets, including smaller, 7-inch models. DiCarlo also noted that the company knows how to quickly come from behind. It wasn’t that long ago that his company had only a tiny part of the phone market and it is now a serious player. He said he sees the same thing happening in the tablet space.

“I think it is very, very early days,” DiCarlo said in a CTIA panel moderated by AllThingsD co-Executive Editor Walt Mossberg.

Taking aim at his main rival, Jamie Iannone, president of digital products for Barnes & Noble, said that the Nook Tablet clearly outshines the Kindle Fire in a head-to-head comparison.

Iannone noted that its color tablet is a second-generation product designed specifically for reading, while Amazon used another manufacturer’s design.

“As you know, the Fire was built off a reference-design product to get it out quickly,” Iannone said, adding that the product suffered as a result.

As for Apple, Iannone noted that many iPad owners also have one of its E-Ink Nook devices because the iPad isn’t ideal for long-form reading.

RELATED POSTS:

• With No Apple or Amazon at CTIA, iPad Rivals Free to Sling Arrows
• Sprint, Verizon, AT&T and T-Mobile CEOs Square Off in New Orleans
• Remember Carrier IQ? Well, It’s Still Around and Kicking.
• Sprint Product Exec: Launching LTE Devices Before Network Just Makes Sense
• FCC Chairman: Rejection of AT&T’s T-Mobile Deal Isn’t Causing Higher Prices
• Boingo Adds VPN and Crowdsource Hotspot Data to Its Wi-Fi Software
• T-Mobile CTO: Network Should be Ready for iPhone Users by Q4
• Interview: AT&T’s Glenn Lurie on Being the New Sheriff in Town
• Another Day, Another PayPal-esque Digital Wallet: Here’s MasterCard’s High-Tech Billfold
• CTIA Gets Down to Business in the Big Easy
• AT&T Aims to Break Into the Home-Security Business
• Interview: CTIA Boss Steve Largent Aims To Keep Conference From Being Lost in the Shuffle

From 16.8 percent to about 4 percent worldwide market share in a single quarter. That is a swift and ugly decline. What’s causing it?

Kindle Fire demand could be dropping off as customers postpone their purchases in anticipation of a new version of the device. Or it could be declining because the Fire was a really well-executed holiday play whose novelty has since worn off.

Or it could be that the iPad 2, which Apple continues to sell alongside the new iPad at a lower price, is winning over some of the same consumers that Amazon has been targeting with the Fire.

Or, because the number of units shipped isn’t the same as units sold, the dropoff in shipments in the Fire’s latest quarter could primarily be the result of a large inventory buildup in the product’s first months on the market.

At $399, the iPad 2 is still twice the price of the Fire. But it’s also $100 cheaper than the new iPad, and comes accompanied by the same vast app and content ecosystem, iCloud, Facetime and other slick features. And that may be discount enough to command the attention of budget-conscious consumers. Indeed, during Apple’s last earnings call, CEO Tim Cook said the iPad 2′s new lower price point was unlocking demand among price-sensitive customers.

If that’s the case, perhaps it’s unlocking demand among potential Kindle Fire buyers as well. It’s worth noting that during the same period, IDC claims that while the Fire’s share of the market fell to 4 percent from nearly 17 percent, the iPad’s share rose to 68 percent from 54.7 percent.

Could there be a correlation there?

Barclays analyst Ben Reitzes thinks there might be.

“The lower priced iPad 2 has seemed to offset some of the original threat of the lower priced Fire,” he says. “Many consumers seem willing to pay $399 for a feature packed tablet with a strong and developed ecosystem rather than $199 for a relatively underpowered tablet.”

Certainly plausible. Anecdotally, I know a few folks who had planned to buy the Fire, only to balk later and cough up the extra money for an iPad 2. Perhaps there are lots more of them out there. Your thoughts?

Judge Mark Pierce in the Superior Court of the State of California in Santa Clara County on May 4 approved Apple’s motion to dismiss the suit, which was first filed in February. The order wasn’t previously disclosed.

Read the rest of this post on the original site »