MacRumors

Betanews reports (via The Loop) that according to market research firm NPD, Apple claimed 91% of the revenue market share for computers costing $1,000 or more in June. While NPD's sales numbers are limited to brick-and-mortar retail stores, the data shows a remarkable continuation of a trend that has been in place for several years now. While Apple's overall unit market share remains below 10%, the combination of Apple's growing market share over the past several years, refusal to compete in the low-end market, and declining Windows PC prices have led to Apple's domination of the "premium" price segment.

According to NPD, in June, average selling prices for all PCs sold at US retail was $701, or $690 for desktops and $703 for notebooks. But the ASPs get more interesting when comparing Macs to Windows PCs. For all Windows PCs, ASP was $515 in June. For Macs: $1,400. Desktop Windows PC ASP: $489. Mac desktops: $1,398. Windows notebook ASP was $520, or $569 when removing all those nasty, margin-sucking netbooks. Mac laptops: $1,400.

Mac ASPs have been higher for a long time, because Apple chooses not to compete at lower prices. The real entry price for Apple computers is $999 for the white MacBook and $1,199 for either the low-end iMac or MacBook Pro. By comparison, Windows netbooks sell for as little as $199, unsubsidized, and even some fuller-sized laptops don't cost much more. For example, HP laptops start at $349.99 after rebate.

With Apple's outstanding performance in the PC market in which it plays, the question becomes whether it can continue to find ways to expand its market and drive continued growth. Given Apple's reluctance to participate in the low-end market, the key to continued Mac growth appears to be Apple's ability to draw consumers into the higher-end market through the perceived value of its offerings. Recent price cuts across its notebook line are clearly one method Apple has chosen in order to entice would-be customers to consider Macs.

Based on data from NPD and other analysts, including Piper Jaffray's Gene Munster, Apple's price cuts at the high end significantly boosted Mac sales, which at US retail were up 16 percent year over year in June. Rather than aim low, Apple chose to make the high lower, in a segment where Macs already commanded overwhelming market share.

Apple today released updates to its professional video and audio editing applications: Final Cut Studio, Final Cut Server, and Logic Studio.

The revised Final Cut Studio brings over 100 new features to the application suite including new versions of nearly every component application and is priced at $999, a $300 discount over the previous version.

Apple today announced a significant update to Final Cut Studio with more than 100 new features and new versions of Final Cut Pro, Motion, Soundtrack Pro, Color and Compressor. Final Cut Studio features Final Cut Pro 7 which expands Apple's ProRes codec family to support virtually any workflow and includes Easy Export for one step output to a variety of formats and iChat Theater support for real-time collaboration. Motion 4 includes enhanced tools such as 3D shadows, reflections and depth of field for stunning motion graphics and visual effects, and Soundtrack Pro 3 features new multitrack audio tools to streamline audio post production. Color 1.5 includes better Final Cut Pro integration and support for full color resolution, and Compressor 3.5 adds new features that make it easy to set up and customize your export options. At $999, the new Final Cut Studio is $300 less than the previous release and is also available as an upgrade for just $299.

Apple also introduced Final Cut Server 1.5, offering a number of new features for Apple's media management companion to Final Cut Pro. The new version includes unlimited licenses for $999, and existing Final Cut Server users can upgrade for $299.

The updated Logic Studio package brings significant revisions to Apple's flagship audio application suite, bringing major changes to Logic Pro and MainStage and incorporating over 200 new features.

Apple today unveiled the next version of Logic Studio with major upgrades to Logic Pro and MainStage and more than 200 new features that simplify complex tasks. Logic Pro 9 features new Amp Designer and Pedalboard plug-ins that provide realistic virtual guitar amps and stompbox effects to create amazing custom guitar rigs. A new set of Flex Time tools allow Logic users to manipulate the timing and tempo of audio quickly and easily. MainStage 2, Apple's live performance application, includes the new Playback and Loopback plug-ins to provide backing tracks and creative, real-time loop recording for performing on stage. Logic Studio also includes the new Soundtrack Pro 3, with new multitrack audio tools for video production, and Compressor 3.5 for encoding in a variety of formats.

Logic Studio is priced at $499, and existing users can upgrade for $199. Apple will also be releasing an updated version of Logic Express, a slimmed-down version of Logic targeted at GarageBand users looking for additional tools, in August for $199.

Amy Clancy of KIRO 7 TV in Seattle reports on her investigation of complaints of iPods overheating, smoldering and catching fire. The complaints, made to the U.S. Consumer Product Safety Commission, amount to over 800 pages of documentation covering 15 incidents that Apple's lawyers repeatedly tried to prevent Clancy from accessing under a Freedom of Information Act request.

It took more than 7-months for KIRO 7 Consumer Investigator Amy Clancy to get her hands on documents concerning Apple's iPods from the Consumer Product Safety Commission because Apple's lawyers filed exemption after exemption. In the end, the CPSC released more than 800 pages which reveal, for the very first time, a comprehensive look that shows, on a number of occasions, iPods have suddenly burst into flames, started to smoke, and even burned their owners.

The complaints cover a broad array of iPod models over the years and include incidents that occurred while the devices were charging and not.

Analysis of the incidents suggests that the lithium-ion batteries used in the iPods are responsible for the overheating. Apple last summer acknowledged that in some cases batteries in the first-generation iPod nano could overheat, leading the company to request that concerned users contact Apple to discuss possible replacement. Apple's replacement policy gained renewed attention earlier this month when South Korean media initially suggested that Apple had issued a full recall of the first-generation iPod nano, although Apple quickly denied that there had been any change in its procedures for the affected devices.

While the Consumer Product Safety Commission has not taken action against Apple regarding the overheating iPods, the agency is requesting that Apple continue to keep it abreast of the situation. The agency also notes that Apple has addressed these specific concerns in recent model releases by having changed its battery technology, although similar reports regarding Apple's newer iPod touch models have begun to surface.

One of the reasons the CPSC gives for not taking action now is because "the current generation of iPods uses a battery which has not been shown to have similar problems." When asked by Clancy, when this "current generation" of batteries started being used, and what type of battery it is, Apple would not comment. But earlier this year a lawsuit against Apple was filed in Cincinnati because, the lawyer claims, an iPod Touch, one of Apple's newest edition of iPods, also powered by a lithium ion battery, exploded and caught fire while in a teenagers pocket. The suit claims the boy suffered second-degree burns to his leg, and that the iPod was off at the time. This incident is not included in the CPSC's file.

The Street's Scott Moritz reports that Apple is planning to release its long-rumored tablet computer "in time for the holidays" later this year. While Apple is reportedly still deciding on a sales model for the new device, Moritz's source reports that initial plans include subsidies from Verizon in order to lock in users for multi-year wireless data contracts while bringing down the upfront cost to consumers for the device, which is expected to carry a premium price tag.

An initial version of the long-anticipated Apple tablet will be subsidized by Verizon, but Apple and Verizon "won't be as tightly integrated" as Apple's iPhone exclusivity deal with AT&T, says one source familiar with the companies, who asked not to be named.

Moritz's report of a premium price tag echoes comments made as recently as yesterday by Apple executives claiming that Apple can not deliver a netbook or low-end notebook at the $399 or $499 price point currently offered by others that still maintains a satisfactory user experience. Apple's tablet has been seen by many as Apple's revolutionary answer to those usability issues, and the Verizon subsidy is seen as a mechanism to address the upfront cost issue. The subsidy would almost certainly have to be considerably smaller than those seen for smartphones, however, as data-only wireless plans do not command the same monthly fees as the combined voice-and-data plans used on the iPhone.

AT&T, for example, collects about $100 a month from an average iPhone customer. The voice portion of that is $68.40 a month, or about two-thirds of the bill, says Michael Cote a wireless strategy advisor with the Cote Collaborative. A subsidy on a data plan device, would by necessity be smaller than one that comes with a phone, says Cote.

Verizon, the largest wireless provider in the U.S., has been the subject of a great deal of rumors regarding partnerships with Apple. Aside from continued rumors of the iPhone making an appearance on its network, Verizon has been mentioned as a partner for two rumored devices from Apple: an "iPhone Lite" and a "Media Pad" that corresponds in many respects to Apple's rumored tablet device.

Moritz has had a spotty record in the past with a number of inaccurate claims, although he was the first to correctly report last year that AT&T would provide subsidies for the iPhone 3G to bring the entry-level price point down to $199.

German GPS firm Navigon has finally released MobileNavigator North America [App Store, $69.99 through August 15th and $99.99 thereafter], one of the first full-featured turn-by-turn GPS navigation applications for the iPhone. While several subscription-based GPS applications, including AT&T's own service have appeared since the release of iPhone OS 3.0, MobileNavigator represents the first full-featured GPS application bearing a single upfront cost to reach North America, beating out the much-anticipated hardware/software combination coming from TomTom. Navigon released a European version of MobileNavigator late last month.

The new North American package contains maps for the United States (including Puerto Rico and the Virgin Islands) and Canada from NAVTEQ. Features include:

- Reality View Pro displays photo-realistic 3D views with actual road signs and lane guidance for virtually every highway interchange and exit drivers will encounter.
- Lane Assistant Pro helps drivers prepare to make an upcoming exit or turn by providing a lane map complete with arrows and actual road geometry.
- Speed Assistant with adjustable audio-visual warning.
- Day & Night Mode for map display.
- Direct Access allows navigation to contacts saved in the iPhone's address book.
- Branded POIs and POIs along the route
- 2D and 3D map view.
- Automatic switch between portrait and landscape format.
- Intelligent address entry.
- Real signpost display.

Navigon promises a free update coming soon to add such features as multiple-destination routing, additional view options, integration of points of interest entries with the iPhone's phone and address book features, and optimized volume control when using iPod functionality. Navigon has also released a video preview the new North American application.

Apple has concluded their financial results conference call which detailed Apple's financial results for this past quarter. The conference call included the usual mix of questions about Apple's future performance as well as hopeful questions about Apple's future plans.

Given Apple's recent decision to drop prices on their portable line, several analysts asked Apple if they had reconsidered entering the netbook/low-end market. Apple's response was the same as always, indicating that they felt the $399 and $499 netbook market held sub-standard products with poor user satisfaction. Apple insisted again that they would only enter the market if they felt they could offer a product they were proud of.

The most revealing tidbit coming out of Apple, however, was the fact they revealed they were "working on" different App categorizations in response to a question about the "race to the bottom" pricing found in the App Store. At the moment, Apple's Top 100 ranks offers the highest profile marketing channel for iPhone and iPod touch applications.

These Top 100 ranks are based on unit sales rather than revenue and are therefore skewed towards lower priced applications. As a result, apps have had to compete with lower prices in order to try to boost their exposure on these lists. Critics of this system have argued that this encourages a "$0.99 economy" which will prevent companies from investing in higher quality titles for the iPhone and iPod Touch.

Apple revealed that they are "looking for ways to categorize apps differently" and that there was "opportunity for further improvement and [they] are working on that".

CrunchGear reports that developer Till Schadde has discovered a security flaw that allows AIM instant messages sent to certain unlocked and jailbroken iPhones to be misrouted to unintended recipients.

Till tested the service by sending an AIM from the OS X desktop using iChat to his iPhone. He then received a reply back from a random recipient. It is clear that this is a Push problem in the message addressing - each iPhone is assigned its own identifier and receives messages from a central server operated by Apple - although this may change.

Schadde reports that AOL is investigating the issue, although he suggests that AOL says that the issue is not the result of anything happening in their systems. Initial indications are that the bug appears to be related to a hack being developed to skirt Apple's blocking of Push Notifications to unlocked iPhones, with the hack possibly somehow causing device identifiers to be mis-assigned through Apple's servers. It is not yet clear how widespread the problem is and to how many devices misrouted messages are being sent.

Apple today announced financial results for the third quarter of fiscal 2009. Apple posted revenue of $8.34 billion and net quarterly profit of $1.23 billion, or $1.35 per diluted share, compared to revenue of $7.46 billion and net quarterly profit of $1.07 billion, or $1.19 per diluted share, in the year-ago quarter. Gross margin was 36.3 percent, compared to 34.8 percent in the year-ago quarter, and international sales accounted for 44 percent of the quarter's revenue. The numbers represent the best non-holiday quarterly revenue and earnings in Apple history.

Using non-GAAP data, which eliminates subscription-based accounting for the iPhone and Apple TV, Apple would have had $9.74 billion revenue and $1.94 billion of net income. The subscription-based accounting used for Apple's official results parcels out income from iPhone and Apple TV sales over a 24-month period from the date of sale, whereas the non-GAAP results count the entire revenue from these sales in the quarter they were made.

Apple shipped 2.6 million Macintosh computers during the quarter, a unit increase of 4 percent over the year-ago quarter. The company also sold 10.2 million Pods during the quarter, representing 7 percent unit decline over the year-ago quarter. Quarterly iPhone unit sales reached 5.2 million, up 626 percent from the year-ago quarter.

"We're making our most innovative products ever and our customers are responding," said Steve Jobs, Apple's CEO. "We're thrilled to have sold over 5.2 million iPhones during the quarter and users have downloaded more than 1.5 billion applications from our App Store in its first year."

Apple's guidance for the fourth quarter of fiscal 2009 includes expected revenue of $8.7 billion to $8.9 billion and earnings per diluted share of $1.18 to $1.23.

Apple will provide live streaming of its Q3 2009 financial results conference call at 2:00 PM Pacific, and MacRumors will update this story with coverage of the conference call highlights.Conference Call Updates

- Customer response to the portable line has been favorable after the refresh
- Sold 10.2 million iPods. Reasons for decline: reduced channel inventory, and sell through decline
- 3 categories: traditional MP3, iPod Touch, iPhone
- For Traditional MP3: year-over-year decline which they predicted
- Expect Traditional MP3 sales to decline further over time
- Believe we have a great business that will grow over time
- 50% of recent traditional iPod purchases are buying their first iPod
- iPod Touch did extremely well in the quarter. Enhanced by App Store.
- over 70% of U.S. marketshare with iPod
- Over 5.2 million iPhones in the June quarter. Response to the new iPhone 3GS has been tremendous.
- Unable to make iPhone 3GSs to meet demand
- iPhone OS 3.0 release well received. App Store is key strategic differentiator.
- iTunes Store - strong sales of music, video and apps.
- Over 8 billion songs downloaded from iTunes Store
- Retail Stores: 492,000 Macs sold this quarter. 1/2 Macs sold to customers who never owned a Mac before. 258 stores total.
- First store in France during holiday quarter.
- Margins better than predicted. Component cost did increase but not to the level expected, spent less in warranty and manufacturing, efficiently ramped products this quarter.
- Cash: $31.1 billion at end of quarter. Investment priority is preservation of capital. Comfortable with investment portfolio
- $500m pre-payment to Toshiba for NAND Flash made.

Q&A

- Any plans on extending carrier relationships to other products beyond iPhone? Nothing to announce.
- Consumer market performed relatively better than the K12 performance this last quarter
- Pro business also affected more by the economy than the consumer business.
- Units grew faster than our revenue in part due to price cuts on portables.
- Some idea of how the $99 iPhone is doing? As we made the changes for the 3GS and price drop. We saw a significant acceleration of sales overall, but can't give out breakdown. The 3GS is currently constrained, so demand has been robust.
- Progress in large enterprise? iPhone doing well with small business and large businesses that allow purchase iPhones in individual use. Multiple corporations who have sold in excess of 25,000. Feel good about how we are doing. Most recent study has ranked iPhone highest in overall satisfaction for business customers.
- Factors looking into future from Apple: For many key components, costs are rising. We will continue to focus on state of the art products at prices our competitors can't match. And ever improving value to our customers.
- Given response on the price cuts, can you give us thoughts about the elasticity of the Mac market? Mac sales did accelerate after the announcement at WWDC, and we feel great about how they are selling. As we expected there are some number of people who are buying up. We're not thinking fundamentally different than it was before. Goal is to build the best computers in the world. If we can do that at lower prices, then we will but we won't put it on a product that doesn't live up to Apple's name.
- Any thoughts about Snow Leopard and $29 price point? Snow Leopard includes a lot of core improvements. Priced it very aggressively so that all of our users can upgrade to it. We're hoping they'll do that. As we announced at WWDC, we continue to expect to ship it later this quarter.
- Competitors with Media Stores, Can you talk about how to out-innovate competitors? I don't want to talk too much about what we are planning in the future, but we just shipped the next major version of iPhone OS and the App Store reaches over 45 million customers. App Store has been an unprecedented success with over 1.5 billion apps downloaded. The 65,000 apps compares favorably to the other stores. We have substantial advantages over the competitors. Feel extremely good about our competitive position.
- Do you still feel the lower price PC business model is still not attractive? Our goal is not to build the most computers, but to build the best. We don't see a way to build a great product for this $399, $499 - this kind of price point unit and as I've said before and I think this is playing out in several areas. Some customers get disappointed or disenchanted with these products.
- Is there a market for a larger portable device? Never want to discount anything in the future, but the point I'm making right now is that most people who buy a portable want a full featured notebook and we know from our research that our customers are very happy with us. Many of the netbooks being delivered are very slow and old software technology. Not a robust computing experience. Small displays and small keyboards. That kind of thing many people will not be happy with. We're only going to play in things where we can deliver something that we're very proud of.
- Question regarding "race to the bottom" of App Store pricing. Is this a concern? Any Steps? We're always looking for ways to categories apps differently and we have some ideas. We do it by type of apps and top selling apps, and we realize there is opportunity for further improvement and we are working on that. As for price, it's up to the developers to choose where to set the price. I would think as the installed base grows, it makes sense to have lower prices but that's totally up to the developer.

VentureBeat pieces together reports coming out of China regarding the recent apparent suicide of a Foxconn employee after he lost track of an iPhone prototype in his possession. The suicide of 25 year-old Sun Danyong, who was responsible for shipping prototypes to Apple, reportedly occurred in the wake of a potentially illegal search of the his home and possible physical intimidation against him by members of Foxconn's security department investigating the prototype's disappearance.

On Thursday, July 9th, Sun got 16 prototype phones from the assembly line at a local Foxconn factory. At some point in the next few days, he discovered that one of the phones was missing. He suspected that it had been left at the factory, but couldn't find it. On Monday, July 13, he reported the missing phone to his boss. Then, that Wednesday, three Foxconn employees searched his apartment -- illegally, according to Chinese law. Accusations are flying that Sun was detained and physically abused during the investigation, although this has not been substantiated (possible evidence: there's this somewhat garbled and potentially faked instant message exchange from Sun shortly before his death).

What is known: On Thursday -- a little after 3 a.m. according to surveillance videos in the apartment building -- he jumped out of a window in his apartment building to his death.

In a statement (Google translation), Foxconn management expressed its condolences to the employee's family over the tragic incident and announced that it has placed the security personnel involved in the visit to the employee's residence on unpaid leave pending investigation and is taking steps to offer resources to assist its employees with mental health issues.

Update: CNET reports that Apple has released a statement regarding the incident:

"We are saddened by the tragic loss of this young employee and we are awaiting results of the investigations into his death," Apple spokeswoman Kristin Huguet told CNET on Tuesday. "We require our suppliers to treat all workers with dignity and respect."

Apple declined any further comment on the events or the missing prototype.

TechFlash reports that Microsoft has recruited former Apple real estate chief George Blankenship as a consultant for its new retail initiative. Blankenship, who previously worked at Gap, is said to be an expert at securing prime retail locations.

A Microsoft representative confirmed that he's now working on real estate with Microsoft -- but as a consultant, not as a full-time employee. The company declined to go into any detail on his role, but his experience stands to be a big benefit as Microsoft pushes into the retail market.

ifoAppleStore explains the significance of the choice of retail locations in Apple's growth of their retail stores. Conventional wisdom at the time located retail computer stores on inexpensive stand-alone retail locations. Apple's plan focused on high-profile retail locations in the heart of high-traffic shopping centers:

In a 2006 speech to an investment group, Johnson recalled the early planning: "If you want to enrich their lives, you can't be in a parking lot, off a highway. You gotta be where they live their life. You gotta be right where they work, where they play, where they live, where they shop. The only way to enrich their life is to be part of their life. They've got to walk 10 feet to your store, not drive the car 10 miles. That's what enriching lives would take."

This plan, of course, has been a success despite early predictions by both analysts and press that Apple's move into retail was a bad idea at the time. Microsoft's move into storefronts is said to be more of a "showcase" of their products than pure retail outlets.

Wired.com claims that the next generation iPod touch will contain both a video camera as well as a built-in microphone:

A well-connected source tells us those rumors are on the money, and that Apple's factories in China are already manufacturing iPod Touch models with integrated cameras and microphones. An Apple spokesman declined to comment when reached by phone.

In retrospect, the inclusion of a built-in microphone is obvious if the reports of the inclusion of a video camera are to be believed. It has been rumored that the next generation iPod touch will incorporate a video camera when it is updated later this year.

The inclusion of a built-in microphone would make it much easier to take advantage of voice-over-IP applications for the iPod touch. This would allow the iPod touch to essentially become a Wi-Fi mobile phone, allowing you to make voice phone calls over the Internet when in range of a hotspot. While the currently shipping iPod touch does support microphones, in order to take advantage of it, an external accessory is required. Apple typically refreshes the iPod touch in September each year.

Universal Studios Home Entertainment today announced (via iLounge) that it will begin offering iPhone-enabled features on some of its future Blu-ray video releases. Universal's initial launch for the concept will take place with the release of a special Blu-ray edition of Fast & Furious on July 28th. Utilizing an Internet-connected Blu-ray player and a free companion iPhone application to be released to the App Store, viewers will be able to use their iPhone or iPod touch to view and interact with a "Virtual Car Garage" highlighting the cars used in the film.

Powered by BD-Live, the 2-Disc Special Edition Blu-ray release of Fast & Furious will utilize this interactive technology tied to its "Virtual Car Garage" bonus feature. With iPhone or iPod touch in-hand, Blu-ray viewers can use their devices' touch screens to control 360-degree views of the movie's supercharged street-racers and instantly punch up exclusive technical specs for the film's high-tech cars.

Universal also plans to extend the iPhone application concept in future releases, introducing additional iPhone-formatted content, "virtual remote" applications, and social networking features.

Later this year on select Universal releases, consumers will also be able to access bonus content found on their Blu-ray disc and download it into their iPhone or iPod touch to watch features on-the-go; use the devices as a virtual remote to control their Blu-ray disc features; and/or access additional detailed information about the film, its cast and more while watching the movie. Releases will also integrate with social network applications or sites such as Facebook and Twitter to allow users to update their friends about movie-related activities.

Microsoft today announced that it will be releasing Microsoft Office 2008 for Mac Service Pack 2 later today, a free update bringing speed enhancements and other new features to the application suite. The update is scheduled to launch at 10:00 AM Pacific Time and will be available on Microsoft's Mac download page and through the Microsoft AutoUpdate application.

Microsoft Corp.'s Macintosh Business Unit (MacBU) released Microsoft Office 2008 for Mac Service Pack 2 (SP2) today -- a midcycle free update that is designed to improve the Office 2008 experience where it matters most to customers: speed, stability and compatibility. SP2 delivers highly requested features throughout the suite as well as a new tool, Document Connection for Mac, that helps improve access and browsing to documents on SharePoint Products and Technologies and Microsoft Office Live Workspace.

The new update reportedly brings significant speed increases to Word (app launching and scrolling) and Excel (calculation performance). Updates to PowerPoint will also allow users to set default themes for new presentations, as well as offer a new Custom Path Animation tool to allow users to create their own motion-path animations.

Office 2008 for Mac SP2 will also bring new tools for document sharing and collaboration via Document Connection for Mac, which will allow users to save and open Word, Excel, and PowerPoint documents to Microsoft Office Live Workspace directly from Microsoft Office applications. Microsoft Office Live Workspace is also now compatible with Safari 4 in addition to the existing support for Firefox 2.0. Finally, Document Connection improves access to collaboration tools for Mac users via integration with Microsoft's SharePoint solution for server-based content management.

Update: Microsoft Office 2008 for Mac Service Pack 2 (12.2.0) is now available for download. The update weighs in at 297 MB.

Microsoft also released Open XML File Format Converter for Mac 1.1 (45 MB), an updated version of Microsoft's utility that allows Office 2004 and v.X to open files in the default Open XML format used by Office 2008.

The Wall Street Journal reports (subscription required) on research from Deutsche Bank analyst Brian Modoff showing that Apple and Research in Motion together accounted for approximately 35% of the cellphone industry's total operating profit in 2008 while only representing 3% of total unit sales. Apple's share of industry profits clocked in at approximately 20% while holding only just over 1% of the unit market share.

The two companies' outsize share of profits underlines the shift in the wireless industry toward feature-rich devices accenting easy-to-use software and away from an emphasis on hardware. Smart phones account for only about 13% of total cellphone sales globally, but the segment is growing, despite a drop in the broader cellphone market. Apple and RIM had about 32% of the smart-phone market between them in the first quarter, estimates IDC.

Moreover, Modoff estimates that Apple and Research in Motion will reach a combined 5% of unit sales for 2009, raking in roughly 58% of the total industry profit between them.

The report notes that wireless carrier subsidies provide the driving force behind such large profits for leading smartphones such as Apple's iPhone and Research in Motion's BlackBerry lines. Apple reportedly receives about $400 in carrier subsidy for each iPhone, while BlackBerry sees about $200 and the typical basic cellphone about $100. Among manufacturers dominating the basic cellphone market, only market leader Nokia is able to leverage its economies of scale to pull in a greater share of industry profits (55%) than its corresponding unit market share (46%). But even Nokia has seen its unit market share and profits slip as customers increasingly adopt more sophisticated smartphone models from smaller competitors.

Speaking to attendees of the MobileBeat 2009 conference in San Francisco yesterday, Google Engineering vice president Vic Gundotra predicted that the Web would prevail as the dominant mobile application development platform despite the huge success of Apple's App Store (via Financial Times). According to Gundotra the harsh economics of maintaining multiple platform-specific copies of applications is pushing development to the Web.

"We believe the web has won and over the next several years, the browser, for economic reasons almost, will become the platform that matters and certainly thats where Google is investing."

At least partially supporting Gundotra's viewpoint were fellow panelists from Palm and Nokia.

Readers will remember that Apple initially only officially allowed developers to create web-based applications for the iPhone and iPod touch, but extended access to native applications a year later with iPhone OS 2.0 and the launch of the App Store.

For technical support of his claims, Mr. Gundotra points to HTML5, which is allowing for CSS animations as well as the use of geolocation and accelerometers. Of course, such technologies currently do not address the needs of more complex games that require access to mobile-based 3D services such as OpenGL ES.

Interestingly, both Google (Chrome OS) and Palm (WebOS), and previously even Nokia, have taken advantage of Apple-backed WebKit as the basis of their latest Web-centric operating systems.