Let’s assume that some of you are interested in taking your old DVDs to Walmart, and paying up to $5 a disc so you can access the movies on them from Vudu, Walmart’s cloud-based service. Fair enough — different strokes and all of that.

But we’re going to have to shrink the size of this theoretical group a bit. Because Walmart’s new “disc to digital service” won’t work for:

• People who want to watch Disney or Pixar movies. Disney is working on its own cloud service, and isn’t joining the five other major studios on this one.
• People who want to download the movies to iPhones and iPads. Users of iOS can stream Vudu movies to their devices, but can’t keep them on their machines.
• People who want to stream or download their movies on Android phones or tablets. I’m sure there’s a good biz-dev reason that Vudu doesn’t support Google’s OS, because I can’t think of a technical one.

You can download and stream movies to Windows or Mac PCs. Walmart says Vudu will work on “more than 300” devices, but I only count 211 on the service’s Web site, and most of those are Internet-connected TVs and Blu-ray players.

I guess there are some people who would rather go to Walmart and upload their movies instead of ripping them directly from their DVDs to their PCs, even though it’s very easy. Maybe they are very, very interested in obeying the law, because — weirdly — it’s technically illegal to copy a movie you own, even for personal use.

But I can’t figure out who’s going to use disc-to-digital to watch movies on their TVs, since it’s very likely they already have a machine that plays discs sitting right next to their TVs. (Based on the promotional video Walmart has rolled out, it can’t either. As you can see at the bottom of this post, it’s playing up disc-to-digital’s mobile advantages.)

I’m also pretty skeptical that anyone who doesn’t have kids will have much interest in making digital copies of movies they already own. The reason that Hollywood is working on schemes like this to promote movie ownership is that most people have figured out they’d rather rent. Not because they’re constrained by device compatibility, but because they only want to watch a movie once or twice.

Kids’ movies are the big exception here. I think lots of people would jump through lots of hoops to get copies of kids’ movies on as many devices as possible. But the absence of all those Disney movies, and all those Pixar movies, sure looks like a problem for that pitch.

But I don’t want to end the evening on a negative note! So take a look at Walmart’s video. It’s pleasant enough. And perhaps at some point, Walmart figures out how to rope Disney in, add more devices to its lineup, and actually deliver on the promise sketched out below:

Nielsen said in a blog post that its research found that 93 percent of people who have downloaded an app within the past 30 days were willing to pay for the games they play. The second most popular category people were willing to pay for was entertainment, at 87 percent.

A few other interesting stats:

• A person plays games for an average of 7.8 hours a month.
• iPhone owners play games for roughly 14.7 hours a month, while Android owners play around 9.3 hours a month.
• Fewer games are downloaded on BlackBerry devices than on feature phones, with a majority of BlackBerry owners playing preloaded games. (Best guess: Brickbreaker!)

The data was gleaned from two Nielsen surveys, one of which is conducted annually with 300,000 consumers; the other is conducted twice a year with 4,000 consumers.

Now, apps can offer access to content purchased outside of Apple’s walls, as long as the app doesn’t have a “buy” button that connects consumers directly to an external store. That is: Apple won’t make it easy for users to buy in-app content without going through Apple’s store, but it won’t outlaw it, either.

The changes to Apple’s App Store Review Guidelines, published today and first noted by MacRumor’s Jordan Golson, don’t address Apple’s control of credit card information.

Which means that some print publishers, including the Financial Times and The Wall Street Journal, may still not be willing to adopt Apple’s subscription rules, which kick in at the end of the month. (The Wall Street Journal is owned by News Corp., as is this Web site). But if those publishers are willing to forgo selling subscriptions through Apple, which just announced it has billing relationships with 225 million customers, it shouldn’t be a problem.

And for many other content companies, including Netflix and music services like Rhapsody, the bigger issue has always been the 30 percent revenue cut that Apple was going to extract every month for all in-app subscriptions.

Many of them appeared ready to accept Apple’s rules anyway, and simply try to persuade most customers to sign up outside of Apple’s walls, so they could keep 100 percent of their revenue. Now, as long as they’re willing to give up access to Apple’s marketing might, they don’t have to worry about it.

And as PaidContent notes, Apple also appears to be offering developers another option — raise prices on content they sell through iTunes so that Apple’s 30 percent cut doesn’t eat into their revenue.

Apple previously required developers who sold content within its apps to do so “at the same price or less than it is offered outside the app” — that is, the Apple price couldn’t be higher than anywhere else. Now that language has disappeared from Apple’s rules.

But Apple’s rules still appear to pose a problem for book sellers like Amazon. You can’t purchase books directly from Amazon’s Kindle app, but the software does have a “Kindle Store” button that takes buyers to Amazon’s Web store. But Apple’s new rules look designed to ban exactly that sort of thing.

Here is the language governing subscriptions that Apple introduced back in February:

11.13 Apps can read or play approved content (magazines, newspapers, books, audio, music, video) that is sold outside of the app, for which Apple will not receive any portion of the revenues, provided that the same content is also offered in the app using IAP at the same price or less than it is offered outside the app. This applies to both purchased content and subscriptions.

And here are the new rules:

11.13 Apps that link to external mechanisms for purchases or subscriptions to be used in the app, such as a “buy” button that goes to a web site to purchase a digital book, will be rejected.
11.14 Apps can read or play approved content (specifically magazines, newspapers, books, audio, music, and video) that is subscribed to or purchased outside of the app, as long as there is no button or external link in the app to purchase the approved content. Apple will not receive any portion of the revenues for approved content that is subscribed to or purchased outside of the app.

It will be interesting to see now if some companies that had said they’d start selling subscriptions via iTunes change course. Conde Nast and Hearst have recently begun selling monthly and yearly subscriptions to some of their magazines via iTunes.

And the New York Times has made a point of saying it would “comply” with Apple’s rules once they kicked in, but so far the publisher has only been selling digital subscriptions from its Web site.

It will also be interesting to see what happens to app companies that don’t adopt Apple’s rules but continue to offer their stuff through iTunes anyway: Will Apple forcibly remove them from the store, and/or disable their apps? Or will the company take less drastic measures, like refusing to approve new updates to their apps? We may see within a few weeks.

Worth about $7.8 billion, the deal is believed to include liquid-crystal display panels for the next iteration of the iPad, as well as mobile application processors and NAND flash memory chips used for the U.S. company’s iPhones and iPads.

One unknown: Whether the displays reportedly included in this deal are the rumored Super PLS panels that offer not just a wider viewing angle, but superior visibility outdoors. Another: Whether this deal is somehow related to the $3.9 billion component supplies and capacity contract Apple COO Tim Cook mentioned during Apple’s first-quarter earnings call.

“In the past several quarters we’ve identified another area and come to some recent agreements that [CFO Peter Oppenheimer] talked about in his opening comments, in that these payments consist of prepayments and capital for process equipment and tooling,” Cook said back in January. “And similar to the flash agreements, they’re focused in that area we feel is very strategic. And so I’d prefer not to go into more detail about what specific area it’s in, but it’s the same kind of thinking that led us to those deals that led us to the flash deal.”

PREVIOUSLY: Apple Using Cash to Secure Cache of Components

The carrier will partner with the OpenFeint video game network, a social gaming community that allows users to play each other across different operating systems. The OpenFeint community allows users to post high scores, have multi player competition and chat while playing games. It also provides a platform for game developers to create content.

The company says it has 65 million registered users and 4,500 games, including the popular Fruit Ninja, available on Android phones and the iPhone. The company also said it has a community of 15,000 developers working to create new games through the platform.

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Look instead on the market’s margins, where a new set of tech companies is racing to attract public investors before the warm, buzzy feeling wears off.

That’s where a curious document was released Friday afternoon: The initial-public-offering papers for a company called Skullcandy, Inc., issued by top-tier underwriters at Bank of America-Merrill Lynch and Morgan Stanley.

You probably try to avoid things called Skullcandy. Your kids think otherwise. Lately, they may have been pestering you for a pair of Skullcandy headphones for their iPhones. These headphones are typically stamped with bright colors and large skulls, presumably to enhance parental annoyance.

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But Japan’s KDDI Corp. is embracing Skype nonetheless. By teaming up with Luxemburg-based Skype Technologies S.A., Japan’s second largest mobile carrier plans to make the Skype software available on many of its handsets released from now on, starting with its smartphones.

So how does a Skype partnership make sense?

For one thing, Japanese people are no longer making many calls on mobile handsets. To offset lower voice traffic, carriers are seeking ways to boost revenue from data traffic. If Skype can get people to buy smartphones and sign up for expensive data service plans, that could more than compensate for dwindling revenue from traditional phone calls.

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Here’s another small data point to back that up. A very small one: Mobile ad network Millennial Media says that last month Android phones on its network generated more ad revenue than Apple’s iPhones did.

That’s the sum total of the information Millennial provides–there are no dollar signs attached, and no numbers of any kind.

So it’s hard to make that much of it. And if you want to raise your eyebrow even higher, you can look at this seemingly contradictory chart from Millennial that shows Apple phones generated significantly more ad impressions than Android phones. (Click to enlarge.)

Again, this is just about ad dollars that Millennial touches. So it has nothing to do with Google’s search ads or Apple’s iAds, or anything else. And recall that Apple has sent mixed messages about non-Apple ads on its platform, period. So you really don’t want to read too deeply into this.

But if you came away from the data thinking that Apple and Google are in a very competitive fight for the smartphone market, that would be okay.

The Street won’t like guidance, though: Apple is predicting Q1 EPS of $4.80, below the $5.04 analysts were looking for. They will also sputter a bit on this number: Apple sold 4.19 million iPads, and the consensus was 4.7 million.

And then on the other hand, Apple sold 14.1 million iPhones last quarter, well above both the official 11 million consensus and the 13 million “what we’re really looking for” number.

Ominous/hopeful Steve Jobs quote: “We still have a few surprises left for the remainder of this calendar year.”

UPDATE: Live earnings call coverage here.

Other numbers you care about:

Macs sold: 3.89 million.

iPods sold: 9.05 million.

Press release text:

Apple Reports Fourth Quarter Results
Record Mac, iPhone and iPad Sales
Highest Revenue and Earnings Ever

CUPERTINO, California—October 18, 2010—Apple® today announced financial results for its fiscal 2010 fourth quarter ended September 25, 2010. The Company posted record revenue of $20.34 billion and net quarterly profit of $4.31 billion, or $4.64 per diluted share. These results compare to revenue of $12.21 billion and net quarterly profit of $2.53 billion, or $2.77 per diluted share, in the year-ago quarter. Gross margin was 36.9 percent compared to 41.8 percent in the year-ago quarter. International sales accounted for 57 percent of the quarter’s revenue.
Apple sold 3.89 million Macs during the quarter, a 27 percent unit increase over the year-ago quarter. The Company sold 14.1 million iPhones in the quarter, representing 91 percent unit growth over the year-ago quarter. Apple sold 9.05 million iPods during the quarter, representing an 11 percent unit decline from the year-ago quarter. The Company also sold 4.19 million iPads during the quarter.
“We are blown away to report over $20 billion in revenue and over $4 billion in after-tax earnings—both all-time records for Apple,” said Steve Jobs, Apple’s CEO. “iPhone sales of 14.1 million were up 91 percent year-over-year, handily beating the 12.1 million phones RIM sold in their most recent quarter. We still have a few surprises left for the remainder of this calendar year.”
“We’re thrilled with the performance and strength of our business, generating almost $5.7 billion in cash flow from operations during the quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the first fiscal quarter of 2011, we expect revenue of about $23 billion and we expect diluted earnings per share of about $4.80.”

The company’s tablet-style device seems to be sidestepping the resistance that the iPhone and other consumer-oriented devices have faced in the corporate environment. Indeed, many businesses have raced to snap up iPads.

One example is the Chicago law firm Sonnenschein Nath & Rosenthal LLP, which banned the iPhone when it first came out yet preordered 10 iPads in the run up to the tablet’s release in April.

“We made sure that we knew as much about these devices as possible,” said Michael Barnas, the firm’s director of application services. The technology department now offers access to its internal systems for more than 50 iPad-toting attorneys, and anticipates issuing iPads as an alternative to laptops as soon as next year.

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Despite renewed worries about the global economy, the technology industry is riding a recovery that underscores the evolution of the Internet.

More proof of the industry’s improved health is likely to arrive this week in quarterly financial results. Chip giant Intel Corp. (INTC) is expected to get the ball rolling Tuesday with its fifth- straight upbeat earnings report. Solid growth is expected from other tech bellwethers, including Google Inc. (GOOG) on Thursday and Apple on July 20.

So far, the upswing doesn’t begin to match the tech booms of the late 1990s and the middle years of this decade. And the stock prices of many technology companies have been under pressure since the spring, reflecting fears that the recovery’s momentum can’t continue.

But anecdotal evidence points to continued consumer demand for smartphones, laptop computers, software and other products, while some businesses are beginning to step up spending on servers, storage systems and networking equipment.

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Cardboard cutouts resembling iPhones were sent on fire by labor activists near the Hon Hai office in Hong Kong on Tuesday.
An employee of Hon Hai died after falling from a building at the firm’s plant in southern China Tuesday, following several others this year, China’s state media Xinhua news agency reported. Most have been ruled suicides, although the most recent death and several others have not been classified.

The cause of the spate in suicides among workers at Hon Hai, which also is known by its trade name Foxconn, is hard to pinpoint. Statistically, the rate of suicides isn’t exceptional given the size of the company’s staff–it has 800,000 workers in China, about half of those in Shenzhen–and it’s unclear to what degree the wave of incidents is a result of copycat behavior as found in suicide clusters elsewhere or if there are other factors.

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“We believe various news articles and competitor notes calling for a build delay were just false alarms,” he writes. The company, of course, has now set an April 3 launch for Wi-Fi versions of the iPad, with 3G versions to ship toward the end of April. Berger, who tracks the chip industry, thinks many iPhone component suppliers will also sell into the iPad, including Infineon (IFX), Skyworks (SKWS), Triquint (TQNT), Broadcom (BRCM) and Texas Instruments (TXN). Production in the 4-5 million unit range would “drive some material revenues” for these companies, he says, “particularly BRCM.”

Meanwhiile, Berger has revised his estimates on iPod, iPhone, notebook and desktop builds.

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Armed with advanced devices like BlackBerrys, iPhones and Apple Inc.’s (AAPL) coming iPad, more customers are using cellular networks to surf the Web, watch video clips and run apps. While the data traffic means a new and growing source of revenue, managing that rapid growth has been challenging.

“The networks weren’t designed with this in mind,” says Fabricio Martinez, a director at telecommunications consultancy Aircom International Ltd.

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To its credit, Google (GOOG) has never said otherwise. But Citigroup’s Mark Mahaney takes a stab at guesstimating exactly how many new phones the search giant will sell and what that means for its earnings. Answers: Not a lot and not much.

Specifically, Mahaney thinks Google might ship one million to three million phones in the first year, which could generate up to $1.6 billion in additional revenue, and perhaps another 55 cents in earnings per share. That’s about half the estimate from Douglas Anmuth of Barclays (BCS) earlier this month. Mahaney cites both Flurry’s modest first-week sales estimates as well as internal Citigroup (C) research, to support his numbers.

He also provides some interesting context via this table, which compares the first-year sales for Apple’s (AAPL) various iPhones, Palm’s (PALM) Pre and Pixi models, and Motorola’s (MOT) Droid, which of course uses Google’s Android OS, just like the Nexus One. Click to enlarge:

One sort-of throwaway point: Mahaney notes that any benefit the Nexus One generates for Google this year may end up balancing out the money it could lose if it leaves China.

Palo Alto, Calif.-based Duck Duck Moose is one such company. Caroline Hu Flexer founded it with her husband, a software engineer, and a friend, a designer, a little over a year ago, after seeing how much her oldest daughter was interested in the device.

“As a mom, I was always carrying around a bagful of crayons. I thought it would be great to have something that was high quality and educational for my child,” she says.

The company decided to try to turn the idea of pop-up books into an app. The first one, Wheels on the Bus, plays the popular song while children can touch the bus on the screen to swish the wipers, open and close the door or spin the wheels. Flexer’s husband, who is a cellist, recorded the music with a pianist and a violinist, while their daughter, who was three years old at the time, recorded a gibberish track that proved to be a hit.

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The proposed service by the maker of iPhones and iPod music players could, in at least some scenarios, offer access to some TV shows from a selection of major U.S. television networks for a monthly fee, according to people familiar with the discussions. Apple is pushing to complete licensing deals and hopes to introduce the service in 2010, some of those people said. It is unclear whether any networks have signed on yet.

Spokespeople for Apple, CBS and Disney declined to comment.

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The company joins China Mobile Ltd. in offering BlackBerry devices. The agreement also could help China Telecom gain ground against China Unicom (Hong Kong) Ltd., which offers Apple Inc.’s (AAPL) iPhones.

China Telecom spokesman Jacky Yung said Monday the company is working out the practical arrangements with RIM. It doesn’t have a timetable yet for when it will start offering the BlackBerry devices.

He also said the company is still in talks with Palm Inc. (PALM) to offer Palm’s handsets in the mainland.

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