MacRumors

Last month, we reported on an investigation by U.S. regulators into inside information on Apple and other companies' product plans being transmitted to research analysts in the form of "channel checks". At the time, the investigation had just yielded its first arrest, an analyst for a research firm known as Primary Global Research, although the analyst did not appear to have a connection to Apple.

The Wall Street Journal now reports that four additional corporate managers who worked with Primary Global Research on the side have also been charged in connection with the investigation. One of those managers, Walter Shimoon, worked for Apple supplier Flextronics and is alleged to have distributed information on the then-unreleased iPhone 4 and iPad.

In their most significant move yet in a sweeping insider-trading investigation, federal prosecutors charged four corporate managers with peddling financial details about prominent technology companies and with leaking secrets about popular consumer products such as Apple Inc.'s iPhone in exchange for cash.

"The information trafficked by the four 'consultants' went way beyond permissible market research," said Janice Fedarcyk, a Federal Bureau of Investigation assistant director in charge. "It was insider information."

Fortune summarizes the key information divulged by Shimoon to a "cooperating witness" for the federal government known as "CW-2".

During this conversation, secretly taped by the FBI and now entered into evidence, Shimoon allegedly gave CW-2 actual third quarter iPhone sales figures -- numbers that wouldn't be publicly released for another two and a half weeks and could, in theory, move the stock.

Then he dropped his two bombshells:

- Apple, he is heard telling CW-2, was "coming out next year" with a new iPhone that's "gonna have two cameras ... It'll be a neat phone because it's gonna have a five-megapixel auto-focus camera and it will have a VGA forward-facing videoconferencing camera." Apple announced the iPhone 4 -- with its two cameras -- eight months later.

- Then he is heard telling CW-2 that "they [Apple] have a code name for something new ... It's ... It's totally ... It's a new category altogether... It doesn't have a camera, what I figured out. So I speculated that it's probably a reader. ... Something like that. Um, let me tell you, it's a very secretive program ... It's called K, K48. That's the internal name. So, you can get, at Apple you can get fired for saying K48." The iPad -- code named K48 -- was unveiled four months later.

According to reports, Shimoon had signed a non-disclosure agreement with respect to his work with Apple through Flextronics, but revealed the information to Primary Global Research, which paid him more than $22,000 for his role as a "consultant" to the firm.

Other corporate managers arrested in conjunction with the information have been alleged to have shared inside information on a number of other companies including Dell, AMD, Seagate, and Western Digital. Federal regulators appear to still be working hard on the case, reportedly working to build cases against even larger Wall Street players including major hedge funds investing in the companies that saw their insider information leaked to outsiders.

In what seems like a rerun of Monday's news, a report has surfaced in the Japanese newspaper Nikkei claiming that Apple and Sharp are partnering to build a 100 billion yen ($1.2 billion) plant in China to produce LCD displays for the iPhone.

Sharp Corp (6753.T) will spend about 100 billion yen to build production lines for small and midsize LCDs, with Apple Inc (AAPL.O) slated to purchase bulk of the output for its iPhone, the Nikkei business daily said.

Apple will shoulder a large portion of the 100 billion yen investment and buy most of the panels produced by Sharp, which has supplied LCD panels for Apple's iPod touch music player, the paper reported.

Mass production at the factory would not begin until the second half of 2012.

Monday's report in the same newspaper had claimed that Apple and Toshiba were partnering on a $1.2 billion plant to produce iPhone LCDs and set to come online in the second half of 2011. Toshiba responded to the report, denying any investment by Apple or even a commitment to build a new plant.

With the new report being remarkably similar to the one from earlier this week, it is unclear whether the newspaper is claiming that both companies are pursuing $1.2 billion plants to produce iPhone LCDs with the assistance of Apple or if perhaps the original report pointed to the wrong company, which would obviously represent a significant error.

Last week, DigiTimes reported that suppliers for the backlight unit on the next-generation iPad had been named, quashing rumors that Apple might finally turn to OLED technology for its portable devices.

In a brief commentary on the the overall OLED industry published today, DigiTimes specifically points to supply constraints as one of the primary reasons Apple has yet to shift to the technology.

With backlight unit (BLU) makers set to be suppliers for the second generation of iPad, AMOLED will still be unable to enter Apple's supply chain. Panel makers have noted that a major reason for Apple to overlook AMOLED for iPads is insufficient supplies.

A major challenge for OLED vendors is that manufacturing capacity isn't the only factor holding them back from producing panels for an OLED-based iPad, as the current technology isn't even appropriate for mass production of panels in that size, particularly at competitive price points.

Moreover, the current AMOLED technology is not suitable for volume production of 7- to 11-inch tablet PC panels, and the mass production cost will not be able to compete with TFT-LCD panels.

DigiTimes has been one of the most prominent sources suggesting that Apple has been looking at OLED technology, reporting that sources indicated Apple was considering an OLED display for the second-generation iPad even as it questioned the economic feasibility of the rumor, and also claiming that Apple had investigated using an OLED screen on the iPhone 4.

The Wall Street Journal takes a look at the digital music download market, demonstrating how Amazon's strategy of deep discounts on certain content has been unable to dent Apple's massive market share held through its iTunes Store. Rather than Amazon taking share from Apple, the two companies appear to be consolidating their leads over smaller competitors.

Amazon's share of the paid digital-download market rose to 13.3% in the third quarter, from 11% the year earlier, according to estimates from research firm NPD Group. Meanwhile, iTunes' share rose to 66.2%, from 63.2%.

Distribution executives at record labels say the disparity between the two may be even steeper, with Amazon commanding just 6% to 10% of the market in any given week, and Apple closer to 90%.

The report points to Amazon's strategy of specific deep discounts, such as offering a new Kid Rock album for only $3.99, as examples of successful promotions run by Amazon to entice customers, but on a day-to-day basis iTunes continues to serve as the place customers turn to for their digital music.

Amazon's deep discounts tend to come in two forms: bargain basement deals such as monthly promotions of $5 albums that generally involve the music industry cutting wholesale prices for Amazon in order to support the pricing, and "Daily Deals" such as the Kid Rock offer in which Amazon pays normal wholesale prices typically in the $7-8 range but charges customers only $3.99, taking a loss in hopes of drawing customers in for additional purchases. Amazon had partnered with certain labels for one-day exclusives on some Daily Deal content, but earlier this year Apple reportedly pressured the labels into reducing their participation in the program and Amazon backtracked on the exclusive offerings. In response, federal investigators launched an antitrust inquiry into the digital music industry, including an examination of Apple's efforts to keep labels from participating in Amazon's program.

Overall, the market for digital download tracks appears to be stagnating, with Billboard seeing only 0.3% growth so far in 2010 with over 1 billion tracks sold. Digital album sales, however, continue to boom, growing 13% this year as sales of physical CD albums have declined 20%.

Last night, QuestVisual has released an eye-catching iOS app called Word Lens. Word Lens is an augmented reality app for the iPhone and iPod Touch (with video camera) which offers real time translation of text. You simply point your device's video camera at a sign and the program translates and superimposes the translated text onto the video in real time. The demo video shows it in action:

Word Lens is a free download to prove its real-time word detection algorithms. In the free version, users can reverse or blank-out text in real time. Meanwhile language packs for Spanish to English and English to Spanish are available for $4.99 each. More language packs are in the works. Translations are done on a word-by-word basis, so context is not taken into account. The translation is also done on-app, so no network connection is required.

Augmented Reality has been a much hyped possibility. Apple introduced the ability for developers to do this real-time video manipulation back in iOS 3.1.

Sony today announced that it is preparing to launch an official PlayStation application for the iPhone and iPod touch. The app will be free and will only be available in the UK, France, Germany, Spain, Italy, and The Netherlands in its first iteration.

The app will offer the following features:

- Check out your PlayStation Network trophies and keep up to date with your friends' games and online --- status.
- Discover all the latest games, news and hardware for your PlayStation 3, PSP and PlayStation 2.
- Read all the announcements on the European PlayStation.Blog.
- Share your favourite products or news with your friends on Facebook, Twitter or via e-mail.

The app will require iOS 4 or higher. A version for the Android OS will also be released. Sony's entry into the iOS App Market is interesting given the increasing competition between Sony and Apple in the mobile gaming space. Earlier this year, Sony produced ads specifically dismissing iOS/smart phone games.

Nokia today announced that it has filed four new suits against Apple in the United Kingdom, Germany, and the Netherlands, alleging infringement of an additional 13 Nokia-held patents beyond the 24 cited in existing complaints filed in the United States.

"These actions add 13 further Nokia patents to the 24 already asserted against Apple in the US International Trade Commission and the Delaware and Wisconsin Federal courts," said Paul Melin, vice president, Intellectual Property at Nokia. "The Nokia inventions protected by these patents include several which enable compelling user experiences. For example, using a wiping gesture on a touch screen to navigate content, or enabling access to constantly changing services with an on-device app store, both filed more than ten years before the launch of the iPhone."

Nokia specifically cites the iPhone, iPad, and iPod touch as violating its patents.

Nokia filed its first complaint against Apple in October 2009, and the dispute has escalated in the months since then with the two companies filing multiple new claims against each other.

Last night, a number of highly anticipated games made its way out into the App Store ahead of the holiday rush. Among them was Crescent Moon Games's role-playing game Aralon: Sword and Shadow HD. Aralon is an epic open world western RPG that is more comparable to the PC/console game The Elder Scrolls III: Morrowind than anything else available on the App Store. In fact, the game's art was even done in part by Mark Jones, a contributing artist to Morrowind and other Elder Scrolls RPG's. Aralon features over 30 hours of gameplay, a character creation and customization that is unrivaled by anything else on the platform, mounts to ride, crafting systems, and much more. Our sister site TouchArcade calls it a "masterpiece of an iOS game" in its review:

[Some things] can only be experienced firsthand, like the first time the sun sets and gives way to a breathtaking night sky overlooking the vast land before you. I used to look at my iOS device as a small window into new worlds and fun experiences, and with Aralon I feel like I actually have a fully realized living and breathing universe sitting snugly in my pocket. ... I don't only suggest Aralon for fans of Western RPGs or expansive open-world action games, but I think every iOS gamer needs to pick up this title just to experience what is possible on this constantly expanding mobile platform.

Aralon: Sword and Shadow HD, priced at $6.99, is a universal app optimized for the third- and fourth-generation iPod touch, iPhone 3GS and iPhone 4, and iPad. Other notable releases include:

World of Goo for iPad. A highly rated PC/Mac game that has been ported to the iPad.

Dungeon Defenders: First Wave - The second game on the App Store based on Epic's Unreal Engine.

Real Racing 2 - A sequel to the highly rated Real Racing for iPhone. This time the game comes with 16 licensed cars and online multi-player.

Foss Patents reports that a joint venture company involving Apple, Microsoft, Oracle, and EMC has acquired 882 patents from Novell for a sum of $450 million. Novell is undergoing a transition as it has been acquired by software company Attachmate, and the patent sale is part of the acquisition deal.

Breaking news: Twitter user @VM_gville just pointed me to the website of the German federal antitrust authority ("Bundeskartellamt"), which discloses a merger (or more precisely, joint venture) notification filed a week ago (on 09 December 2010), according to which the four companies behind CPTN Holdings LLC -- the acquirer of 882 Novell patents -- are Microsoft, Apple, EMC, and Oracle. The product market in which the newly formed company plans to operate is defined as "patents".

Three weeks ago I already commented on the recent announcement of Attachmate acquiring Novell and the sale of 882 Novell patents, in exchange for $450 million, to CPTN Holdings LLC. At the time, the full list of CPTN Holdings LLC partners was not known. The entity was described as a "consortium organized by Microsoft."

Apple, which boasts an extensive patent portfolio of its own, has been looking to bolster its arsenal even further as several large blocks of intellectual property have come available in an increasingly litigious technology industry that has seen Apple rank as the most-sued tech company over the last several years. Apple is said to be one of a number of big players bidding to acquire Nortel patents estimated to be worth over $1 billion in total.

Apple yesterday released LED Cinema Display Firmware Update 1.0, addressing audio problems with the company's latest standalone display.

This Firmware Update addresses intermittent audio issues some users have experienced while using the 27-inch LED Cinema Display.

The updater application will be installed in the /Applications/Utilities folder and will be launched automatically. Please follow the instructions in the updater application to complete the update process.

Details of the issue are included in an associated support document:

You may notice that sound from an LED Cinema Display (27-inch) connected to a Mac intermittently becomes inaudible. In some circumstances, you may need to unplug the display and reconnect it or restart the Mac before the sound becomes audible again.

The update weighs in at 957 KB and requires either Mac OS X 10.6.4 plus the LED Cinema Display Software Update 1.0 or Mac OS X 10.6.5 or later.

Apple today announced that the Mac App Store will open on Thursday, January 6th, launching in 90 countries and offering free and paid applications.

"The App Store revolutionized mobile apps," said Steve Jobs, Apple's CEO. "We hope to do the same for PC apps with the Mac App Store by making finding and buying PC apps easy and fun. We can't wait to get started on January 6."

As with the iOS App Store, developers of paid applications will receive 70% of revenue, while Apple keeps 30%.

Apple announced the Mac App Store at its "Back to the Mac" event in October, saying the store would launch for Mac OS X Snow Leopard users within 90 days. The January 6th opening date meets that schedule with two weeks to spare.

Digitimes reports that in anticipation of a high volume of orders for the next generation iPad, Apple is securing two additional touch panel makers, Chimei Innolux and Cando. According to Digitimes' sources, Apple's iPad 2 orders are expected to top 6 million units per month. In contrast, current iPad orders are only at 4 million units per quarter.

Apple has been widely rumored to be working on the next generation iPad for launch in early 2011. Several rumors have suggested the new iPad will have a better display and include at a front facing camera for FaceTime.

Digitimes claims that in addition to a new iPad revision, Apple is also planning on upgrading both the MacBook Pro and iMac in the first half of 2011.

The sources noted that Apple plans to launch at least four upgraded MacBook Pros as well as an iMac that features a new panel size and a price point for the mainstream market.

The Macbook Pro was last updated in April of 2010, so a first-half 2011 revision seems likely. Digitimes' sources believe that four new MacBook Pro models will arrive at that time.

Meanwhile, the iMac was more recently updated in July 2010, and the new claims describe a "new panel size" and "price point".

ChangeWave Research reports on the results of a new survey conducted last month regarding corporate usage of tablet devices such as Apple's iPad. With new tablet offerings such as the HP Slate 500 and the Dell Streak now becoming available, the survey finds that businesses are still overwhelming supporting the iPad as tablet adoption increases at a rapid rate.

In terms of current usage, 7% of corporate respondents now say their company provides employees with Tablet devices - up 1-pt since our previous survey in August.

The Apple iPad (82%) remains by far the most popular Tablet for business purposes. H-P (e.g., Slate; 11%) and Dell (e.g., Streak; 7%) are also showing some traction among corporate users - but both remain far behind Apple's overwhelming share of the market.

Usage is expected to continue to surge, with the number of surveyed companies planning to be utilizing tablets in the first quarter of 2011 registering at 14%, double the current number. Those companies planning to begin using tablets early next year are also overwhelming planning to adopt the iPad, with 78% opting for Apple's tablet device.

Among those companies that have already begun using tablets, the iPad registers highest in satisfaction, with 69% of corporate users saying they are "very satisfied" with the device, compared to only 23% of HP tablet users and 12% of Dell tablet users.

Finally, the survey finds that corporate users are more broadly using the iPad for such functions as Internet access, corporate email, and on-the-road work when compared to the firm's August survey.

Apple today released iTunes 10.1.1, addressing a number of performance issues.

This release provides a number of important bug fixes, including:

- Addresses an issue where some music videos may not play on Macs equipped with NVIDIA GeForce 9400 or 9600 graphics.
- Resolves an issue where iTunes may unexpectedly quit when deleting a playlist that has the iTunes Sidebar showing.
- Fixes a problem where iTunes may unexpectedly quit when connecting an iPod to a Mac equipped with a PowerPC processor.
- Addresses an issue where some music videos may not sync to an iPod, iPhone, or iPad.

The update is available via Software Update or Apple's iTunes download page.

iTunes 10.1 was released in mid-November ahead of the iOS 4.2 launch.

Apple today updated its iBooks application [App Store], adding a number of new features including enhanced support for illustrated books, a new "Collections" feature for organizing books into categories, and AirPrint compatibility for printing PDFs and notes.

- Experience fully illustrated books, from children's picture books to beautifully designed art books, available for download in the iBookstore.
- Organize your books and PDFs into personal Collections. Swipe left or right to jump between Collections.
- Print PDF documents and notes you've written in iBooks using AirPrint.
- iBooks now fits more words per page by automatically hyphenating text, available only on iOS 4.2 or later.

The focus on illustrated books had been pre-announced by The New York Times, which earlier today noted in an article on the ability for color readers to display enhanced image content in e-books that Apple would be rolling out a major push into illustrated books today with over 100 new titles in children's books, photography books, and cookbooks.

The release comes just after the Canadian government granted approval for Apple to begin operating its iBookstore in the country.

Adobe's John Nack notes on his blog that the company's Flash Player 10.2, currently in beta testing, can offer up to a ten-fold improvement in CPU usage under certain circumstances by taking advantage of new "Stage Video" functionality to more fully utilize hardware acceleration, particularly for SWF files in which other elements have been overlaid on top of video.

Nack points to a demo from last month's Adobe MAX conference showing off how Flash Player 10.2 and Stage Video can reduce CPU load. The demo shows a standard Flash video playing on Apple's new 11-inch MacBook Air checking in at about 80% CPU usage, and when vector images are overlaid on the video, CPU usage spikes to over 120%. The same video using the new Stage Video API demonstrates CPU utilization of about 10% with and without vector images overlaid.

The Stage Video implementation requires that Flash developers update their video players to support the feature, but some major developers such as YouTube have already updated their players, with others expected to do so in the near future.