MacRumors

AT&T today announced its financial results for the first quarter of 2012, revealing that it activated 4.3 million iPhones during the quarter. The number marks a substantial drop from the 7.6 million iPhones activated last quarter for the launch of the iPhone 4S, but still easily tops Verizon's 3.2 million iPhones sold during the first quarter.

Both Android and iPhone device sales remain strong. iPhone sales were helped by AT&T's 4G network, which lets iPhone 4S download three-times faster than other U.S. carriers' networks. In the quarter, the company activated 4.3 million iPhones, with 21 percent new to AT&T.

While AT&T's activations and sales can not quite be directly compared because activations includes used devices being reactivated on new accounts, AT&T has told us that this is a small difference. Consequently, AT&T's 4.3 million iPhone activations likely corresponds to approximately 75% of its total smartphone sales of 5.5 million units for the quarter.

Even more impressively, the continued trend toward smartphone adoption means that the iPhone is representing a growing proportion of total phone sales (smartphone and non-smartphone) at AT&T. The carrier notes that smartphones represented more than 78% of its total phone sales to postpaid customers, meaning that the iPhone accounted for roughly 60% of AT&T's total phone sales to those customers during the quarter.

The significant drop in iPhone activations for AT&T combined with the significant drop at Verizon are weighing on Apple's stock this morning, with the already-weakened share price down another $10 as trading opens for the day. But while investors appear nervous about Apple's iPhone sales numbers for the quarter, the primary driver will be international sales as Apple increased distribution during the quarter. China is by far the largest component to that equation, with the iPhone 4S not only having launched on China Unicom early in the quarter but also having been added by China Telecom in early March.

Apple will report its quarterly financial results after the close of trading today, at approximately 4:30 PM Eastern Time.

Earlier this month, the U.S. Department of Justice, a number of U.S. states, and authorities in several other countries announced that they were filing lawsuits against Apple and six book publishers, alleging anticompetitive behavior in shifting to an Apple-backed agency model in which publishers set retail pricing and retailers such as Apple receive a 30% commission on the sales price.

Rather than settling the case as several of the publishers have opted to do, Apple has stood firm in its stance that the move did not represent collusion and price fixing but instead served as a way to give publishers control over pricing and break up Amazon's near-monopoly in the e-book market.

Former Wall Street Journal publisher and Press+ founder Gordon Crovitz published a column over the weekend outlining how Apple's plan for a 30% commission on publishers' sales is merely its standard business practice, not any sort of collusion to fix prices in the market.

'I don't think you understand. We can't treat newspapers or magazines any differently than we treat FarmVille."

With those words, senior Apple executive Eddy Cue stuck to his take-it-or-leave-it business model of a 30% revenue share payable for transactions through the iTunes service. Despite my arguments to Mr. Cue in Apple's Cupertino, Calif., offices last year on behalf of news publishers seeking different terms, to him there was no difference between a newspaper and an online game.

It was a sobering reminder that traditional media brands have no preferred place in the new digital world. It also should be the defense's Exhibit A in the Justice Department's antitrust case against Apple and book publishers: The 30% revenue-share model is Apple's standard practice, not, as alleged by the government, the product of a conspiracy.

Crovitz goes on to outline how the U.S. government's case against Apple and the publishers is misguided, with the agency model having been validated in numerous other industries by federal courts. And with the model looking exactly like that used for apps and other iTunes Store content, it suggests that Apple is not trying to accomplish anything special to gain control of the e-book market.

In fact, Crovitz notes that the e-book market has become significantly healthier since Apple's agency model was adopted by the major publishers.

Over the past couple of years, thanks to the agency model, the Kindle's market share has fallen to 60% [from 90% previously] thanks to competition from iPads and Barnes & Noble Nooks, and there is more variation in consumer prices, typically ranging from $5.95 to $14.95.

Pricing flexibility for publishers is necessary to allow innovation. Why shouldn't some e-books cost 99 cents and others that come with video and hardcover editions be $49.95? Why not give people the option to pay 10% more to access an e-book on all e-readers? Consumers should decide, not Amazon or the Antitrust Division.

With settlements already looking at unwinding the agency model to allow Amazon to once again begin controlling the e-book market by leveraging its consistent $9.99 pricing to drive competitors out of business, investors have become increasingly skittish about Barnes & Noble and other retailers trying to stake out their positions in the market. Consequently, there are real fears among authors, publishers, and retailers that the federal government's efforts are working quickly to restore an Amazon monopoly capable of bringing down its competitors.

Update: As noted by Chris Martucci and others, Crovitz fails to address the issue of the "most favored nation" clauses included in Apple's contracts with the publishers. These clauses prohibited the publishers from offering their content to any other retailer at lower prices than they offered through Apple. When combined with the apparent coordination among the publishers to break Amazon's near monopoly by shifting to the agency model, a case for anti-competitive behavior is more easily made.

But while simply removing the most favored nation clauses from Apple's contracts with the publishers would bring them more in line with the relationship between Apple and app developers, that move alone would not appear to satisfy the Department of Justice.

The government's settlements with several of the publishers have gone beyond the issue of most favored nation clauses and have required that the publishers essentially abandon the agency model as it currently exists. While the settlements would allow a modified form of the agency model to exist, they would require that retailers remain some control over the setting of retail prices.

As noticed by Apple Bitch, Chinese parts vendor TVC-Mall has begun offering "iPhone 5" home buttons for sale in both black and white. But what the report doesn't mention is that the buttons are indeed slightly different from the round home buttons seen on iOS devices to date.

The new home buttons appear to have a rounded square shape much like iOS app icons, but retain the round depression for the button as seen in existing devices. TVC-Mall notes the distinction in its product description:

Different from iPhone 4S 4, the iPhone 5 home button is round in the centre and square outside as the pictures show. The two parts are indivisible.

It is, however, unclear from the product images whether the design change will be noticeable to users. Specifically, it is not clear whether the rounded square portion of the button would be flush with the surface of the device with the round portion depressed slightly or if the rounded square portion might simply be below the surface of the device and invisible to the user as with the small edges and "wings" of the current iPhone home button design.

We suspect that that the rounded square portion of the new home button will lie below the surface of the iPhone, serving to hold the button in place while remaining invisible to the user. In this scenario, only the standard round home button portion would protrude through the surface of the device to be accessed by the user.

In either case, it appears that rumors of Apple removing the home button entirely or replacing it with a touch-senstive button with a larger gesture area are once again unfounded. Such rumors have become common in the months leading up to the launch of each new iOS device, but Apple has maintained the contestant iconic presence of the home button introduced on the original iPhone through each new product release.

TVC-Mall has a history of leaking minor genuine iOS device parts well ahead of the products' official introductions, yielding hope that parts for the next-generation iPhone are beginning to surface from Apple's supply chain. If the parts are genuine, they may suggest that Apple is looking toward ramping production of the device, although these leaks sometimes come many months ahead of production.

Update: The home buttons are also listed for sale in both black and white at TrueSupplier, and images posted there more clearly show that the rounded square will lie behind the front of the device and serve to hold the home button in place.

1Password is a popular password service which offers apps and browser plug-ins for a number of platforms, including Mac, Windows, iOS and Android. The service automatically generates strong, unique passwords whenever a login is needed, keeping them in a keychain under a master password. Once authorized, 1Password can then automatically fill in user names and passwords when needed without the user having to know the often complex passwords created for maximum security.

But with Apple continuing to push out developer betas of OS X Mountain Lion and Safari 5.2, it is now becoming apparent that the company is looking to bake similar functionality directly into Safari.

One of the more visible changes in the Safari 5.2 developer builds has been a new "Passwords" pane in the application's preferences, offering a way for users to access stored user names and passwords for various sites and services. As currently deployed, the pane is essentially a more convenient way to view passwords already stored and accessible through the dedicated Keychain Access application.

But text strings associated with the last several builds of Safari 5.2 point to more extensive password functionality for Safari, including an ability to suggest unique passwords rather than simply storing user-created ones. Specifically, one of those strings which is present in Safari 5.2 but not currently used in a public-facing context reads:

Safari can automatically suggest and remember unique, secure passwords for websites you choose.

With Mountain Lion's focus on taking greater advantage of iCloud services to keep data synced across devices, it seems reasonable to speculate that Apple has plans to roll this password functionality out to iCloud and iOS as well. The move would allow "unique, secure passwords" created on one device to be automatically available for use on another device without having to manually record or insecurely copy and paste password information for transfer.

Apple has already revealed its plans to use iCloud to integrate browser activity across devices, as evidenced by Safari tab syncing making its way into test builds. And interestingly, Apple previously offered keychain syncing across devices with .Mac and MobileMe, but discontinued the feature with the transition to iCloud. It now appears that the functionality was removed while Apple worked to revamp and expand it to increase its functionality.

Apple has also signaled its intention to broaden the browser syncing features of Safari with the iCloud preference pane in System Preferences under Mountain Lion. While the Safari section has been titled "Bookmarks" under Lion, with the addition of browser tab syncing and perhaps new user name and password syncing the section has now simply been retitled "Safari".

But while Apple certainly seems to have all of the pieces in place for higher security unique password generation and syncing across platforms via iCloud, the feature has not yet been introduced for testing in developer builds of OS X Mountain Lion. The feature has also not been seen in iOS builds, although the company has yet to begin developer testing on either iOS 6 or an interim iOS 5.2 update.

In line with the rumored April 23 launch date, BBC News reports that Intel has officially introduced the first batch of its next-generation Ivy Bridge processors. The processors are Intel's first to use a 22-nm manufacturing process and "Tri-Gate" technology of 3D transistors to reduce power and increase efficiency.

The initial launch consists of 13 quad-core processors, primarily focused on the desktop market, although several mobile processors that would be appropriate for revised 15-inch and 17-inch MacBook Pro models are also included in the launch. Dual-core chips appropriate for smaller notebooks will follow "later this spring", with previous rumors having pegged that launch date as June 3.

The firm has already built three factories to fabricate the new chips and a fourth will come online later this year.

"This is Intel's fastest ramp ever," [Intel executive Kirk] Skaugen added.

"There will be 50% more supply than we had early in the product cycle of our last generation, Sandy Bridge, a year ago. And we're still constrained based on the amount of demand we're seeing in the marketplace."

In addition to the power and efficiency gains made possible with the Tri-Gate technology, Ivy Bridge will also benefit from significantly enhanced integrated graphics performance compared to Sandy Bridge, which will help with supporting higher-resolution hardware and content, as well as improving transcoding rates. Ivy Bridge also brings new hardware security features and native support for USB 3.0.

The launch of Ivy Bridge processors opens the door for a massive set of upgrades encompassing nearly all of Apple's Mac product line with the exception of the Mac Pro, which is itself long past its usual refresh interval and could see upgrades to new Sandy Bridge E server chips.

Update: Intel has now published its press release announcing the launch of Ivy Bridge, which is officially referred to as the company's 3rd Generation Core family.

Research analyst Ming-Chi Kuo, who has in the past offered accurate information on Apple's Mac product roadmap, recently took on a new position with KGI Securities and has published a new report today indicating that Apple may be preparing to drop the 17-inch MacBook Pro from its lineup due to weak sales.

Kuo's prediction comes as Apple is expected to introduce new notebooks that serve as a hybrid between the current MacBook Air and MacBook Pro models, offering greater power than the Air but greater portability than the Pro. Kuo believes that Apple will elect to drop the 17-inch size as part of this revamp in order to streamline the company's product offerings.

Apple’s Mac business in 2Q12 will be boosted by several factors. Three of which are: (1) Mountain Lion, which integrates iOS features with Mac OS, Apple TV’s interaction function, will be launched in June; (2) upgrading to Ivy Bridge; and (3) back-to-school demand. We forecast Apple will sell 5.32mn units of the Mac series (up 28.5% QoQ and 35.2% YoY) in 2Q12, making it the main growth driver.

We also predict Apple will roll out a fully new MacBook model in early 3Q12, boasting strong performance and easy carryability by combining the advantages of MacBook Air and MacBook Pro.

While adding new products, Apple is likely to stop making the 17” MacBook Pro this year due to falling shipments, in order to maintain a lean product line strategy.

According to Kuo's estimates for the first calendar quarter of 2012, Apple sold roughly 3.1 million notebooks, with nearly half of them being the 13-inch MacBook Pro, far and away the company's best-selling Mac product. But while Kuo predicts sales of nearly 1.5 million units of the 13-inch MacBook Pro, he sees much lower sales of roughly 500,000 15-inch models and only 50,000 17-inch models.

Kuo estimates Apple's first quarter MacBook Air sales at roughly 1.1 million, split nearly equally between 11-inch and 13-inch models. He believes that the MacBook Air is only meeting Apple's expectations and not exceeding them, in large part because solid-state drives are not yet available in large enough capacities to satisfy consumers. But the trend of abandoning optical and traditional hard disk drives from notebooks will continue, and solid-state drives will continue to become more cost competitive over time.

Following last week's rumor that Apple is looking to adopt thinner in-cell touch technology for the display of the next-generation iPhone, analyst Ming-Chi Kuo, who recently took on a new position with KGI Securities, has issued a report looking at how that change could help Apple reduce the thickness of the iPhone from the current 9.3 mm of the iPhone 4S to under 8 mm. The move would help Apple to compete against its Android-based challengers, which have continued to see reductions in their thickness over time.

Since Apple’s smartphone competitors have generally slimmed down their high-end offerings to 7-8mm, Apple needs to make a leap forward from 4S’ 9.3mm thickness. We believe Apple will aim at 8mm or below (at least 1.4mm slimmer) for iPhone 5, in a bid to ensure brisk sales through 2014, while peers will also continue to introduce increasingly slim models next year.

As such, all iPhone 4S components that account for thickness must be slimmer, specifically, touch panel, battery and casing. Moreover, a marginal amount of space is required between the three parts for the sakes of assembly tolerance and thermal expansion of components.

Kuo calculates that shifting to in-cell touch technology in the next iPhone will yield Apple just shy of 0.5 mm in terms of a reduction in thickness. Kuo envisions a similar reduction coming from the battery, which he predicts Apple will be able to broaden somewhat inside the casing, allowing for a roughly 10% reduction in battery thickness.

A final 0.5 mm reduction in thickness could come from the use of a metal back case, which could come in at half the thickness of the glass back used in the current iPhone. Altogether, Apple could shave 1.4 mm from the iPhone's thickness to bring the next-generation model in at just 7.9 mm thick.

In yet another argument for the adoption of in-cell touch technology for the display in the next-generation iPhone, Kuo notes that display production would be greatly simplified, with fewer steps in the manufacturing process and fewer vendors being involved resulting in an estimated reduction in production time from 12-16 days to just 3-5 days.

While the initial yield on in-cell touch displays is currently lower than for glass-on-glass manufacturing techniques such as those used for the iPhone 4S, that deficiency can be compensated for by re-bonding in-cell panels and cover glass units with the optically clear resin (OCR) used in the bonding process. The optically clear adhesive (OCA) used in the current manufacturing process can not be re-bonded if the initial bonding fails.

Adobe today officially announced the launch of Creative Suite 6, the next major update to the company's bundles of popular design applications. The release sees new versions of 14 separate applications, including the flagship Photoshop CS6 that has been offered as a free public beta for the past month.

“Creatives get a ton of innovation across CS6, with milestone releases of all our flagship products,” said David Wadhwani, senior vice president, Digital Media Business, Adobe. “With CS6 and Creative Cloud, we’re also introducing new products, new mobile workflows and advanced publishing capabilities that show we are laser-focused on ensuring design, Web and video pros have everything they need for the delivery of high-impact content and apps.”

As with previous editions of Creative Suite, Adobe is offering the CS6 applications individually, as well as in several different bundles targeting print, web, and video design professionals.

Bundle pricing begins at $1299 for the Design Standard collection, which includes Photoshop, InDesign, Illustrator, and Acrobat X Pro. At an $1899 price point, Adobe offers either the Design & Web Premium collection, which includes Photoshop Extended, Illustrator, InDesign, Flash Professional, Fireworks, Dreamweaver, and Acrobat X Pro, or the Production Premium collection, which includes Premiere Pro, After Effects, Audition, Flash Professional, Illustrator, Photoshop Extended, Prelude, and SpeedGrade. Finally, Adobe's Master Collection containing all of the CS6 applications is available for $2599.

Adobe today also officially introduced Creative Cloud, a subscription service offering access to all CS6 applications as well as other cloud services to facilitate the integration of desktop Adobe software with the company's growing stable of tablet and smartphone applications.

Creative Cloud is priced at $49.99 per month for an annual membership, or $74.99 per month on a month-to-month basis. The service is also being offered at a special introductory rate of $29.99 per month for current users of Adobe's CS3, CS4, CS5 and CS5.5 software.

All Creative Suite 6 products are available for pre-order now and will begin shipping within 30 days. Adobe will be hosting a streaming launch event at 10:00 AM Pacific Time, highlighting the new developments included in Creative Suite 6 and Creative Cloud.

Associated Press reports that Apple has reached a deal with local governments to finalize its plans for a new data center in Prineville, Oregon. According to the report, Apple has agreed to invest $250 million in facilities on its 160-acre property, and will offer an annual $150,000 "project fee" in lieu of property taxes over the next fifteen years. The company has also guaranteed to bring at least 35 jobs to the center at 150% of the average wage in the county.

The $150,000 project fee in part of an agreement with Apple that was made public this week. Prineville City Manager Steve Forrester called it a common arrangement.

The Oregonian reports that the value of the tax break will depend on how much Apple winds up investing. Similar tax breaks on Google's $1.3 billion data center in The Dalles are worth more than $24 million to the company annually, the newspaper said.

Apple paid $5.6 million for the project site back in February, and has already begun installation of a modular data center in order to build out some capacity ahead of construction on the main facility. Apple noted earlier this week in response to a Greenpeace report on data centers being powered by coal-derived energy that it intends for its Prineville data center to run on "100% renewable energy".

Apple just recently opened another data center in Maiden, North Carolina, where the company has indicated that it plans to spend $1 billion. The company is building a 20-megawatt solar farm and a 5-megawatt fuel cell facility at the data center, two of the largest privately-owned renewable energy projects of their kind in the country.

There have been few updates in the "iPad" trademark dispute between Apple and Proview over the past couple of months, but IDG News now reports that the two companies are engaged in settlement talks with an eye toward resolving the issue.

Ma Dongxiao, a lawyer representing the Chinese company Proview, said on Friday the talks were happening, but declined to offer details.

The legal dispute between Apple and Proview is still being deliberated by the Higher People's Court of Guangdong Province. But earlier this week, the court recommended that both Apple and Proview find a way to mediate the dispute, according to a court spokesman.

Apple claims that it used a dummy corporation to purchase the Chinese rights to the iPad trademark in late 2009 as part of a broad deal with Proview's Taiwanese arm covering several markets and carrying a $55,000 purchase price. But Proview has argued that the Chinese rights were controlled by its Chinese arm and that the Taiwanese unit had no ability to sell them to Apple, despite the fact that corporate officers common to both units were involved in the deal.

Proview has since filed several suits against Apple, with reports of damage claims ranging up to $2 billion. For its part, Apple has been playing up a Hong Kong court ruling that found Proview and its subsidiaries had conspired to extort millions of dollars from Apple once it was discovered that Apple was behind the trademark purchase. Chinese courts have, however, yet to rule on the issue.

It is unclear whether the new settlement talks between Apple and Proview are likely to be successful, with each side undoubtedly weighing their chances of winning in court as they decide how far to compromise in the talks.

As announced earlier this week, Apple today began selling the new iPad in twelve new countries: Brunei, Croatia, Cyprus, Dominican Republic, El Salvador, Guatemala, Malaysia, Panama, South Korea, Saint Maarten, Uruguay and Venezuela. An additional nine countries will see the new iPad launch a week from today.

Just as Apple expands availability of the device yet again, the company is also reducing shipping estimates in a number of markets, now citing 5-7 business days for new orders instead of the 1-2 week estimate that has been in place for the past month. The new 5-7 business day estimates appear to be in effect in Apple's North American and Asia/Pacific distribution channels, but have not yet made their way to the company's European channel, where estimates remain at 1-2 weeks.

Update: Fortune posts a video of the new iPad going on sale at an Apple reseller in South Korea.

Taiwan's Central News Agency reports on comments from DisplaySearch analyst David Hsieh, who believes that Apple is planning to use new "in-cell" display technology from Japanese manufacturers in the next-generation iPhone. The move would benefit suppliers such as Sony, Sharp, and Toshiba, which currently lead the industry in the technology.

Compared with on-cell technology, touch panels that use in-cell technology can be made thinner because the touch sensors are actually placed inside the color filters rather than on top of them, he explained.

At present, Taiwan's TPK Holding Co. and Wintek Corp., which supply touch panels to Apple, use mainly on-cell technology in their products, according to the two companies.

The occasionally-reliable Digitimes is reporting similar claims based on "sources in Apple's supply chain", indicating that improvements in yield rates for the in-cell panels have made it feasible for Apple to use the technology in its products. According to the report, Sharp and Toshiba will be ramping up their production of in-cell panels this quarter.

RTÉ reports that Apple is making plans to add 500 more jobs at its European headquarters in Cork, Ireland, bringing the total headcount at the site to 3,300 as the company works to continue expansion of its business in the region.

The company plans to construct a three-storey office block next to its existing plant in the city to cater for the expansion of its business in Europe, the Middle East, India and Africa.

Apple has been in Cork for 30 years and currently employs 2,800 people in the city.

Apple expects to add the new jobs over the next 18 months, and the move appears to be on top of plans for 350 jobs in downtown Cork announced less than a year ago.

The company's main campus in Cork was in the news earlier this week after Greenpeace activists scaled a building to protest Apple's use of coal-derived power at its data centers.

Apple of course continues to expand its workforce at and around its corporate headquarters in Cupertino, California, with the company snapping up a number of leases in the area to support the growth as it works toward building a new campus for up to 13,000 workers. The company is also expanding at its other primary employment hubs, currently working with governmental authorities on a plan to add 3,600 at its administrative and support center in Austin, Texas, doubling the size of its workforce there.

Apple CEO Tim Cook didn't visit Valve headquarters according to company co-founder Gabe Newell. The rumor, originally reported by AppleInsider, was squashed by Newell in a podcast interview.

Video game website Kotaku had a preview of the podcast from Seven Day Cooldown that included this quote:

We actually, we all sent mail to each other, going, "Who's Tim Cook meeting with? Is he meeting with you? I'm not meeting with Tim Cook." So we're... it's one of those rumors that was stated so factually that we were actually confused.

No one here was meeting with Tim Cook or with anybody at Apple that day. I wish we were! We have a long list of things we'd love to see Apple do to support games and gaming better. But no, we didn't meet with Tim Cook. He seems like a smart guy, but I've never actually met him.

The report of the meeting between Cook and Valve executives set off a torrent of speculation about partnerships between the companies, including rumors of Valve's Steam service integrating with the App Store or an Apple television.

9to5Mac claims Apple's marketing chief Phil Schiller told a fan that the uber-popular photography app Instagram "jumped the shark" after it launched an Android version.

Schiller recently deleted his Instagram account and a 9to5Mac reader noticed this and asked why he had deleted it.

In a direct message, Schiller reportedly replied:

It "jumped the shark" when it went to Android

Instagram's Android app launched two weeks ago and the app was previously picked as the iPhone App of the Year in 2011. Instagram was just purchased by Facebook for $1 billion.

Update: As noted in an update to the original post, one individual was able to contact Schiller about his comment and received a response clarifying his feelings on Instagram's evolution.

Instagram is a great app and community. That hasn't changed.

But one of the things I really liked about Instagram was that it was a small community of early adopters sharing their photographs.

Now that it has [grown] much larger the signal to noise ratio is different.

That isn't necessarily good or bad, it's just not what I originally had fun with.