The partnerships are important because it makes rolling out PayPal’s in-store payments technology to retailers much easier.

PayPal is hosting an event at its San Jose headquarters later this morning to announce the next batch of retailers that are adopting the company’s in-store payments solution. AllThingsD’s Liz Gannes will be there to cover the announcements live, starting at 10 am PT.

To date, PayPal has deployed its service to all 2,000 Home Depots, but it has a long way to go in meeting its goal of having 20 major retailers by the end of the year.

One reason why PayPal is able to deploy its services to retailers so quickly is because it only requires sending out a software update to the retailers’ terminals — in other words, retailers won’t have to purchase all new hardware. This morning, PayPal confirmed it has signed up VeriFone and Equinox Payments, the largest and third-largest providers, respectively, which will handle those software updates. PayPal already had a relationship with Ingenico, the second-largest provider.

The relationships inked today are focused on solving back-end integration problems for merchants. But the front-end experience is all about the consumer.

At participating stores, consumers will be able to pay with PayPal by either using a PayPal-issued credit card or by entering a mobile phone number and PIN code into the terminal. Down the road, PayPal could also support near field communication technology.

All told, the three terminal providers manage about roughly 40 million terminals worldwide, representing a large majority of the terminals in existence.

Unlike other stores that flinch when consumers pull out their phones, fearing that they are scanning bar codes to compare prices, the beauty supply company is embracing the practice.

“The reality is there’s not a lot of price differentiation in our world, and most of our users are loyalty card holders, so it doesn’t worry us,” said Julie Bornstein, SVP of Sephora Direct. “It makes the experience better if you like to shop that way.”

The Sephora app allows consumers to track what products they’ve purchased in the past, find out how many reward points they have, and look up the ingredients of a particular soap, lotion or eye shadow. So far, the app has been downloaded two million times, and the retailer says that shopping from mobile devices grew by 300 percent last year.

Besides, how could Sephora fear mobile, when all 304 stores have iPods and 20 stores have iPads?

Increasingly, retailers are rolling out mobile devices in their stores, especially iDevices, to empower workers to know more about products or even shorten the checkout lines.

Bornstein says Sephora employees walk the store floors with souped-up iPods that have a credit card scanner, so they can ring up a customer after helping him or her find a particular product. The employees also carry around mini-printers, in case the customer wants a paper receipt. But the iPads are not used for checking out; rather, they are a way for customers to access more information about a product, including different kinds of looks that can be created with makeup.

Bornstein says the intention is not to replace the cash register with a mobile device. “We haven’t made any decisions to walk away from registers in stores,” she said. “It’s nice to have a hub.”

As part of the company’s digital makeover, it also has fully integrated with Pinterest, so that users can “pin” any of the 14,000 products on Sephora.com to the bulletin-board service. Bornstein said that of the Web site’s social media traffic drivers, Pinterest is already second only to Facebook.

Apple’s App Store is on pace to exceed 10 billion downloads this year alone, which is twice the number it recorded over the three previous years combined.

The Android Market is also setting records. Over the past seven months, it has achieved more than 7 billion downloads, which more than triples its life-to-date downloads of 3 billion reached in May 2011.

At those rates, both operating systems are generating roughly one billion downloads a month, or the equivalent of 33 million a day.

The data was reported by Flurry Analytics, which creates tools that thousands of developers use to track usage of their mobile applications.

Christmas Day was one of the big catalysts for achieving huge end-of-the-year records.

Flurry found that application downloads more than doubled on Christmas compared to the average number of downloads occurring during the first 20 days of December.

On Dec. 25, it registered 242 million app downloads, jumping more than 125 percent over an average day.

In addition, because of its insight into application usage, Flurry is also able to see the number of new devices activated. Phones and tablets are always a hot Christmas item and this year was no exception.

On the average day in December, 1.5 million phones were activated, but on Christmas, 6.8 million were activated, representing a 353 percent spike. Last year, Christmas held the previous single-day record with 2.8 million device activations.

To do so, subscribers enter their phone number and a PIN code at checkout, rather than entering a 16-digit credit card number. The service will work for shopping on any Internet-connected device, including a PC, phone or tablet.

Subscribers will also have to sign up for a Serve account through American Express, which is very similar to a PayPal account and can be funded by a bank account or a credit card.

While the system is designed to make checking out more simple, it could take awhile for consumers and merchants to adopt it. Not only will Verizon subscribers be required to have a Serve account, but online retailers will also have had to integrate Serve as a payment mechanism.

“Yes, they have to be Verizon and a Serve customer, but we are preloading a number of devices — smartphones or tablets — with the Serve app, and when you preload there’s a much greater uptake,” said Dan Schulman, group president, Enterprise Growth, American Express. “They’ll be able to simply or easily transact for any size good, whether it’s a virtual good or hard good.”

Schulman declined to say how many customers have signed up for Serve since it launched in April, but said that the deal with Verizon Wireless is not exclusive, meaning it could partner with other carriers in the future.

Despite these hurdles, this may be a logical intermediary before we see people using their phones to pay for items in the store using near field communication. A number of companies are scrambling to become a player in the digital wallet space, including Google, PayPal, Square and the credit card and payment providers, so this will be one of many options consumers will be able to choose from.

Verizon Wireless has also formed a joint venture called ISIS with AT&T and T-Mobile USA that will launch a near field communication trial next year.

A number of companies have also pursued carrier billing as an option, but convincing carriers to allow large payments on the bill for physical goods has proven difficult. Companies that fall into this bucket include BOKU, BilltoMobile and Zong, which was just acquired by PayPal.

Up until now, the items most often charged to a carrier bill are ringtones, or virtual goods that are purchased inside online games.

Greg Haller, Verizon’s president of enterprise and government, said its partnership with American Express is not designed to compete with carrier billing or its ISIS joint venture. “We’ll still allow virtual goods to go on the bill, but the real opportunity now going forward is that a customer won’t have to go in a shopping cart and enter a 16-digit number. This really turns it into a one-click process. The benefit is the simplicity for the customer, who can now buy it on their phone, by entering their mobile number.”

Over time, additional services will be added, such as coupons and loyalty programs. One partner is vente-privee.com, a French-owned flash sales site that partnered with American Express to enter the U.S.

“We are pleased and we are deploying with more and more functionality all the time,” Schulman said. “We’ve announced a number of partnerships, all of which are being integrated, this being the largest and most strategic that we have. We’ll start to integrate and be in market [with Verizon Wireless] by the end of the year, and we have high hopes for it spurring mobile commerce.”

American Express and Verizon Wireless are also working with Payfone, a New York-based company that the two companies backed financially in the spring. Payfone is running all the authentication in the background to ensure that the phone number entered is valid and corresponds with the correct account.

Aghast at the U.S. International Trade Commission’s ruling on its first complaint against Apple, Nokia has filed a second, accusing Apple of infringing its patents “in virtually all of its mobile phones, portable music players, tablets, and computers.”

At issue in the complaint are seven patents that Nokia argues “are now being used by Apple to create key features in its products in the areas of multi-tasking operating systems, data synchronization, positioning, call quality and the use of Bluetooth accessories.” Taken together with the IP cited in Nokia’s previous ITC complaint and related cases in the U.S., U.K., Germany and The Netherlands, the company has nearly four dozen patents in play in its suit against Apple.

“Our latest ITC filing means we now have 46 Nokia patents in suit against Apple, many filed more than 10 years before Apple made its first iPhone,” Paul Melin, Nokia’s VP of intellectual property said in a statement. “Nokia is a leading innovator in technologies needed to build great mobile products and Apple must stop building its products using Nokia’s proprietary innovation.”

Almost sounds like Nokia’s saying it invented the iPhone, doesn’t it? Which is ironic, considering the company is on the record professing its fondness for Apple’s handset.

Asked once about the striking similarities between a touchscreen device it was designing and the iPhone, Anssi Vanjoki, Nokia’s head of multimedia devices at the time, replied, “If there is something good in the world then we copy with pride.”

PREVIOUSLY:

• Nokia Sues Apple
• Did Nokia Sue Apple Before Apple Could Sue Nokia?
• Nokia’s New Focus Is Mobile Services? Sure It’s Not Lawsuits Against Apple?
• Apple Countersues Nokia for Copying iPhone (Plus Disputed Patents and Full Text of Counterclaim)
• ITC Investigating Nokia Over Apple Patent Complaints and Vice Versa
• Nokia Accuses Apple of “Legal Alchemy.” Stops Short of “Chymistry” and “Heresy.”
• Apple Vs. Nokia: The Battle of Britain
• Apple Vs. Nokia: The Battle of Britain II
• ITC: Apple Did Not Infringe Nokia Patents

Bubble Motion, which is funded by Sequoia Capital and others, is now launching Bubbly in the Philippines, after releases in India, Indonesia and Japan (chosen because of their deep mobile phone penetration). Its launch partner in the Philippines is Globe Telecom.

By the midway point of this year, Bubbly will be rolled out to all major carriers in those four countries, for a total potential audience of 800 million.

Bubbly allows users to send each other voice-based status updates. People who follow a user receive an SMS each time a new status message is posted, and pay to listen to the status message with a fee added to their regular phone bill. This can be used both for communicating with friends and family and for subscribing to updates from celebrities.

Users pay either a monthly subscription fee for celebrities in India and Indonesia, or per message in the Philippines and Japan, following the carrier billing styles in each country. The average user gets one to two messages per day.

Celebrities on Bubbly often have two to three times as many followers as they have on Twitter, bragged Bubble Motion CEO Tom Clayton on a phone interview on Wednesday. And that’s despite the fact that Bubbly costs money and Twitter is free.

Part of the reason is Bubbly has more reach than Twitter in the four countries it has launched in, Clayton said, given it is a mobile service and Twitter is often accessed over the Internet.

But grooming a stable of stars might not be defensible in the long term, given Twitter is ramping up its mobile efforts and celebrities may want to have a broader reach than they can achieve with local phone carriers and voice updates. Clayton said another edge his company has is the infrastructure it has built to deliver voice files–250 million of them since Bubbly was first launched–without overloading carrier networks.

Clayton said Bubble Motion, which has raised about $30 million in funding, is not profitable yet but is growing revenue with a direct correlation to its traffic, which is to say, doubling every quarter.

Within a few minutes, I’d paid Square’s COO Keith Rabois $2 after he swiped my credit card through a small plastic dongle attached to his iPhone. I signed the screen with the tip of my finger and received a receipt by email to confirm the purchase.

(They did not repeat this transaction more than 10 million times to recently raise $27.5 million, they promised).

For small-business owners, like an artist at a farmer’s market or even a family at a Saturday morning yard sale, this could make the difference in closing a sale, especially as our society moves away from cash and more to plastic.

Rabois says 50,000 to 60,000 new users are signing up a month, and Square is processing millions of dollars a week.

It is also convenience–at a price.

Square charges 2.75 percent plus 15 cents for swiped transactions, and slightly more if you type in a credit card number. For $100, that translates to a $2.90 service charge.

The model doesn’t replace the need for Visa and MasterCard, but does compete head-on with services being built by those financial incumbents, as well as others like Intuit, PayPal and the wireless carriers.

On the merchant side, it’s easy, too. Download the app to either an iPhone, iPad or Android device, create an account and receive a Square accessory in the mail. On the user side, your card will be swiped by a small proprietary reader, and you will be emailed a receipt.

Dorsey, who slowed down long enough to talk to us for a few minutes, is the visionary behind the operation, which sees way more applications for what it is building–from redefining the receipt to getting rid of the register.

EMoney: Last month, Square raised $27.5 million in fresh capital. What’s the plan for 2011?

Dorsey: The plan includes growing the team, both in engineering and design, and increasing the awareness of Square, which means expanding the user base to the plumber, the piano teacher and the dog walker. As for product innovation, we will do a lot with the receipt. “Let’s make it interactive instead of something we throw away.”

How can the receipt experience improve?

Dorsey: Making payments “has never been treated as a product. It’s a burden, and yet it’s such a common human activity.” At the heart of it, the receipt process is a publishing platform, he said. “We can dramatically improve what you take away.” Currently, a Square receipt includes a picture of the merchant, a description of what you purchased, the amount and a map of where you bought it. When buying a cup of coffee, why not include information about the coffee beans, and link to an article in Wikipedia? A more advanced version would eliminate the need to carry around 20 coffee cards and be intelligent enough to give you a 10th cup free.

Do you think you can replace the register?

Dorsey: “Yes. They are terrible.”

How?

Dorsey: “It’s a pain, and it takes forever.” Long lines are created in cafés, and waiters must come back with the check. “We aren’t just accepting credit cards–we are simplifying the friction from the payment system. No one has done this.” Square is looking at making an all-in-one payment and point-of-sale device that could be as simple as an iPad. And, with one swipe of the card, a patron could broadcast his or her location on Twitter and receive loyalty points.

What about innovation on the merchant side?

Dorsey: “There’s a lot of attention on the payers, but not the merchants….Every Silicon Valley company has a dashboard–it’s called Google Analytics–but a lot of small- to medium-size businesses have no access to data at all.” A point-of-sale system could cost $15,000, and still it would not track how many lattes were sold vs. blueberry muffins. But what if a system could be built that could track this and show whether to draw correlations between the two? “Data simplifies everything,” he said.

The increase comes amid speculation that AT&T’s (T) iPhone-exclusivity deal with Apple (AAPL) is nearing its end. But a company representative tells me it has “nothing to do with the iPhone or any other device.”

$325. That’s a pretty steep increase from $175. Though to be fair, it’s not quite as bad as the one already implemented by rival Verizon (VZ). Last November, that carrier doubled its smartphone ETF from $175 to $350, a move AT&T was quick to cite as partial justification for its own decision.

And, indeed, the company is following in Verizon’s footsteps here. Like its rival’s ETF, AT&T’s drops $10 per month for each month of a two-year contract. Which means that at the 23rd month of a two year contract, AT&T subscribers must pay $95 to leave the carrier. The contract is nearly over, yet subscribers are obligated to pay nearly a third of the full ETF if they break it at that time.

Now it’s true that ETF’s were created as a means of recovering legitimate costs associated with subsidizing mobile phones. If AT&T is paying a $325 subsidy for the iPhone, the company should be able to recoup that money when customers break their contracts. But does it really stand to lose $95 if they do so in the 23rd month? Doesn’t seem likely if those customers can walk away just a month later without consequence, taking their handsets with them.

Needham & Company analyst Charlie Wolf thinks the latter is more likely. In a lengthy investor note this week, Wolf writes that while Nokia (NOK) may long hold on to its commanding lead in the feature phone market, its fate in the smartphone market is uncertain at best.

Why is that? The company’s Symbian OS is simply far too dusty to stand up to competing operating systems, and that’s having an ugly effect on its share of the smartphone market (click chart to enlarge).

“Nokia’s problem is that the Symbian operating system, the platform on which Nokia phones run, is a generation behind the iPhone and Android smartphone operating systems,” Wolf writes. “With Nokia’s heritage in low cost, volume manufacturing, not software development, it’s unlikely the company will ever catch up with the companies that are redefining this market.”

A reasonable point, given complaints about Symbian 3 failing to match Apple’s (AAPL) iPhone and Google’s (GOOG) Android operating systems. That said, there’s still a chance that the MeeGo OS Nokia has been developing with Intel (INTC) will succeed where Symbian has stumbled. But will it be enough to reinvent the company’s fading smartphone line? Wolf isn’t so sure.

“In our opinion, it’s an open question whether Nokia’s efforts will be successful in meeting the ‘modern’ operating system challenge,” Wolf writes. “Where the company has fallen behind is in building a compelling third-party applications portfolio presumably because its software development tools are difficult to use. As the iPhone has demonstrated, a diverse and deep catalog of applications is becoming an increasingly important consideration in smartphone purchasing decisions.”

And the trend here is self-evident. In the last six months of 2009, the number of households with no landline but at least one cell rose 4.3 percent year-over-year. It’s no wonder the telecom industry is seeing ugly and continued losses in traditional landline service revenue.

Clearly, the mobile phone is increasingly viewed as a necessity and the landline a luxury. As well they should be: The former let’s you make and receive calls to and from almost anywhere, check e-mail and take pictures; the latter allows you to make and receive calls–nothing more. Given that, why bother with a landline? And given the obvious answer to that question, how long will it be before the landline goes the way of the rotary dial phone?

Phil, the most widely known Groundhog Day mascot, is set to emerge from his burrow in the early hours of the morning. According to the Groundhog Day legend, if he sees his shadow, there will be six more weeks of winter. If he doesn’t, there will be an early spring. Eager Phil followers can sign up to receive the news by texting “Groundhog” to 247365 ahead of time.

“Punxsutawney Phil holds the fate of winter close to the vest and in his stump until daybreak on Feb. 2, but the moment he emerges you can be among the first to learn of the forecast on your mobile phone,” the Pennsylvania tourism office said in a press release.

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