An analyst describes the smartphone innovations he expects from Apple in 2010

Photo: Apple Inc.

In a note to clients issued Wednesday, Piper Jaffray's Gene Munster suggests three ways Apple (AAPL) can stay ahead of the coming wave of smartphones powered by Google's (GOOG) Android OS.

• Build an iPhone for Verizon. Munster continues to believe there's a 70% chance Verizon (VZ) will get an iPhone before the end of 2010. The value of more than doubling the phone's addressable market — i.e. adding Verizon's 89 million U.S. subscribers to AT&T's (T) 82 million — would more than justify the cost of manufacturing a CDMA iPhone, according to Munster.
• Give the iPhone a battery that lasts longer than one day. "Apple has introduced advanced battery technology with its portable Macs," he writes, "and we expect the company to dramatically improve the iPhone battery life with the next several hardware launches."
• Turn the iPhone into a digital wallet. Munster predicts that future iPhones will have built-in RFID (radio-frequency identification) technology, allowing them to make retail payments with a single swipe.

"We've just scratched the surface" in terms of apps and accessories, says Munster, who has an interesting take on Apple's continued resistance to Adobe (ADBE) Flash. He sees it as a slightly Machiavellian move with strategic implications.

"Apple has built a moat around their apps," he writes, "in part by excluding Flash, preventing app developers from building apps in Flash and porting them to all mobile platforms."

UPDATE: On Twitter late Thursday, Eldar Murtazin, the Moscow-based editor of Mobile Review, posted this cryptic note: "Foxconn received order for next generation iphone." Foxconn is the trade name of Hon Hai Precision Industries, which manufacturers most of Apple's products.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

Yes, you can create new products and services without betting the farm

By Ilana Westerman, CEO, Create with Context

Westerman: Innovation doesn't have to be risky. Photo: Create with Context

Many companies remain shell-shocked from the past 18 months of economic disaster.  As such, innovation – despite its potential rewards – is not exactly in fashion right now.

Though gurus like Jim Collins and others extol the virtues of using the downturn to capitalize on market opportunities or a competitor’s weakness, companies today are more likely to take a wait-and-see approach to innovation:  “Look for the quick bucks and the low-hanging fruit,” you might say to your management team.

But wait a minute: why not invest in innovation? And I'm not talking about focus groups and customer feedback surveys and Friday afternoon brainstorming sessions.

Economic indicators suggest that we are slowly pulling out of this global economic downturn. Despite the uncertainties ahead, this is the optimal time to think about innovation in a different light: what new groundbreaking product or service would truly resonate with your customers? It's probably something they can't articulate themselves. But it's worthwhile to take the time to discern what motivates your customers and how you could meet a need they don't even realize they have. In our work with clients, we call this calculated innovation.

When executives think about innovation, what often comes to mind is not far from the truth: engineers and marketing chiefs sit around a table and pontificate on the next big idea. This is fuzzy and abstract, and often not grounded in reality. Where do these ideas come from and how can you measure your risk?

No wonder innovation is scary for many companies. It could be a huge waste of money and time. Calculated innovation, on the other hand, is a process founded upon research to determine customers’ beliefs, motivations, and needs. That customer view is then mapped against the world in which your customers live: the cultural context and larger societal trends.

We have an alternative energy client, Mariah Power, a young company that manufactures wind turbines for businesses and residential use. The company came to us because they wanted to develop better awareness about the power of wind, which to many people is pretty abstract. While a potential customer could go to the company's website to learn all about the Windspire turbines and how much wind was required to run one, the context was missing. What's wind power going to do for me?

Research first, innovate later

To help find a solution to the problem, we started with in-depth ethnographic research. This involved in-home observation of consumers in three different states related to "green" behaviors such as recycling and environmentally-friendly products. The resulting research helped us define two different customer groups: one that goes the extra mile to be green, and another that needs an easy way to go green.

Using that research, we came up with a design for an application for Apple’s (AAPL) iPhone  called Windspire Me, that allows a user to simply hold the phone's microphone up in the air to gain a reasonably accurate measure of the wind speed in their location.

The app gives the user a sample wind speed, with contextual information: this will power your microwave and toaster for a year, for example. For green enthusiasts, we included a button on the app that allows them to share their readings with friends. As more readings are shared, users can then see maps of wind speeds across their community to inspire grass roots lobbying for local green power. The app has just been submitted to the App Store, yet Mariah Power is already seeing some benefits.

“All we can say now is that interest has been really high,” the company’s spokesperson Amy Berry told me. “And for us, awareness is a big objective.”

Innovation is in the details

What we've also uncovered over the years is that calculated innovation is not just about the big picture but also the fine details. Execution is everything. During user testing for the Windspire Me app, we noticed that people were obstructing the microphone with their fingers when trying to measure the wind speed. As a result, we included a design change to show a visual in the app instructing people how to use it correctly. This iterative process of design is what makes a product in the end successful and valuable for users.

The point here is that innovation takes a thoughtful process. It takes macro-thinking and micro details. Most of all, it requires a deep, contextually-rooted understanding of your target customer groups.

We worked with Adobe (ADBE) Software on a several-month research project to determine how young people below the age of 18 use technology. The research uncovered many factors that defy conventional wisdom about software: the emerging generation could care less about a product with 20 new features but what they absolutely need is collaboration.

The next generation also sometimes wants to buy a piece of a product based on a specific need, versus the whole package. Adobe didn't request the research to merely influence its next software versions– but to help shape the course of products over the next 10 years.

Surely, the company’s design strategy will change repeatedly in the next decade, but this long view of innovation is what will set companies apart from their competitors.

If you spend more time thinking about the future and researching what your customers will be doing and needing, you'll have the proof to back up your plans for innovation, and that mitigates both the fear and the risk. This is the power of calculated innovation. What are your thoughts?

Westerman is co-founder and CEO at digital products consulting firm Create with Context, based in Santa Clara, CA.  The company helps clients develop and design products based on customer behavior, context, and technology.

Josh James' Omniture can tell you how many people click on your Web site, and how long they stay.  But is his company worth $1.8 billion?

Sweat beaded up behind his Gucci glasses as he thought back a dozen years to his company's early days, when he and his co-founder maxed out on student loans and hawked wedding gifts to buy computers. He remembered the time in 2000 when he agreed to a sale that fell through – and his trip to the Nasdaq Stock Exchange six years later to ring the bell when the company finally went public.

Read the rest of the story here.

Company wants to make its Flash technology available everywhere — and that means penetrating mobile devices.

Flash is coming to most mobile phones - except the one that starts with "i." Image: Adobe

Flash is finally coming to your smartphone—and so is Adobe (ADBE). With today's launch of the newest version its software, Adobe Flash Player 10.1, the San Jose-based company is making an aggressive push to get its product onto any gadget that allows for web browsing–Blackberry devices, netbooks, increasingly even TVs.

Crucially, Adobe has signed on a number of key launch partners for the product including Google (GOOG) and Research in Motion (RIMM). By the first half of next year, consumers can expect Flash on nearly every smartphone operating system including Google’s Android, Nokia’s (NOK) Symbian, Palm’s (PALM) webOS and Microsoft’s (MSFT) Windows Mobile.

This is great for developers, who have long had to use different software to make their applications work on different devices. And it’s even better for consumers, for whom web browsing will get faster and more consistent regardless of the device.

Flash is the graphics-rich software responsible for many of our most alluring web experiences. Three-quarters of online videos are delivered in Flash. Nearly as many of the web games we play are created using it. And it’s also responsible for some of the best graphics online. One tech analyst who enjoys the Washington Redskins is constantly annoyed that he can’t read Washington Post coverage of the team on his ‘berry because parts of the paper's online version, washingtonpost.com, are delivered in Flash.

Until now, Adobe has offered separate products for the personal computers and mobiles. Developers had to rely on Adobe Lite, a dumbed down version that didn’t allow for the rich experience of the web.

The new version of Flash has been in the works since Adobe launched its Open Screen Project in May 2008. Started with 25 partners, the project now has more than 50 that include everyone from chipmakers like Qualcomm (QCOM) to content providers like MTV networks.

With this move, Adobe hopes to transform Flash from a simple developer’s tool to a platform in and of itself. “Instead of writing for tv or phone or computer, developers can write in Flash across multiple screens and locations,” says Michael Gartenberg, an analyst with market research firm Interpret.

But just because an application will run on any device doesn’t mean it will be optimized for every device. There is still much work to be done before developers can truly create and deliver one application for any platform. And there is one Flash holdout, a company that has managed to deliver great video experiences and superb graphics on its phones so far without Adobe’s help: Apple. (AAPL)

snowleopard.wikidot.com

One day before the scheduled launch of Mac OS X Snow Leopard — the latest update of Apple's (AAPL) flagship operating system — developers are still scrambling to make sure their applications will work with the new version.

Of the Macintosh apps than have been tested on the gold master of OS X v.10.6 as of Wednesday morning, more than 60 either don't work or have major problems, according to snowleopard.wikidot.com, a collaborative project that is collating independent test results.

Most of the major productivity apps — Microsoft (MSFT) Office 2008, Adobe (ADBE) CS4 Suite and QuarkXPress — are OK.

But there are some big exceptions, including Adobe Photoshop Elements (No. 6 on Amazon's Mac bestseller list) and Google Gears, a Web browser extension that allows offline access to a number of popular online applications.

And users of early versions of some important programs — Parallels version 3.0, for example, or Adobe CS2 — will find they need to update their software.

Snow Leopard: The reviews are in

Among the apps on our hard drive known to have problems with Snow Leopard are Boxee, Reunion, Times Reader and Vuze. Many more, including TurboTax and SlingPlayer, are not listed as tested.

If you're worried about your computer, you can search for your key apps on the wikidot page here (be patient, the server may be busy). Or you can follow the first rule in computer software: wait until the kinks have been worked out before installing a new OS.

UPDATE: The snowleopard.wikidot.com page is working again and has been updated. Among other changes, SlingPlayer has been tested (it works) and there's a version of Reunion (6.0a) in development that is said to be Snow Leopard ready.

UPDATE 2: Apple has posted a support page that includes a partial list of software known not to work with Snow Leopard. Click here.

It's Mobile World Congress week in Barcelona, where the city's famous pickpockets have dozens of new gadgets to choose from, and the shadow of Apple's (AAPL) iPhone once again looms large.

Last year, rival cellphone manufacturers used the event to announce their own touchscreen smartphones.

This year, what's getting the love is the iTunes App Store, with its 20,000-plus applications and half a billion downloads.

Among the announcements making headlines this week:

• Nokia's Ovi Store. An online app and media portal that comes "pre-integrated" on Nokia's (NOK) new N97 (right), but will be available for download on a slew of existing Nokia phones come May. (link)
• Windows Marketplace. Along with a new version of Windows Mobile, Microsoft (MSFT) announced Monday that it will open a new Windows Marketplace offering — you guessed it — 20,000 apps, some of which actually run on mobile devices. (link)
• App Store for Symbian. PocketGear, which had previously built its own Palm App Store and an App Store for Windows Mobile, unveiled an App Store for Symbian, the operating system that runs Nokia's smartphones. How it will compete with the Ovi Store remains to be seen. (link)
• Android Market. Google (GOOG) opened an application marketplace for the Android platform last October, but so far it has only accepted free apps. Look for an announcement from Google this week about how that's going to change.
• BlackBerry Applications Center. Research in Motion (RIMM) invited developers to submit programs to its forthcoming Applications Center in October. We may be hearing more this week about when that will open for business.
• Palm Software Store. This one went live in December with 2,000 apps and 1,000 free games available for download to both Palm (PALM) OS devices and Windows Mobile.

Also making news in Barcelona is Adobe (ADBE), which announced Sunday that it expects to ship a full-fledged version of its Flash player in 2010 that will run on Windows Mobile, Google's Android, Nokia's Symbian and the new Palm OS. Steve Jobs had complained that Flash Lite wasn't good enough for his iPhone. Last we heard, Adobe and Apple were working together to get Flash up to speed, but apparently they're not there yet.

"We would love to see it on the iPhone, too," said Adobe's Anup Murarka, according to a report on CNET.com. "But it's Apple's decision on when and how they support any new technology. So we will continue to work on it." (link)

For comprehensive — if somewhat breathless — coverage of Mobile World Congress 2009, check out Engadget here.

UPDATE: We weren't kidding about Barcelona's pickpockets. On Thursday, the London Telegraph reported that Microsoft execs were "in a panic" after a cellphone loaded with a top-secret copy of Windows Media 6.5 was lifted from the pocket of an Australian telecommunications executive. See here.

Adobe has tipped its hand, and it now seems clear that it needs Apple's iPhone more than Apple (AAPL) needs Adobe's Flash. But it's not at all clear that Adobe (ADBE) will get the foothold on the device it seems to want so badly.

Two weeks ago Adobe turned the other cheek when Steve Jobs' publicly slighted Flash and Flash Lite, describing the first as "too slow to be useful" on the iPhone and the second as "not capable of being used with the Web." See here.

Nonetheless on Tuesday, during Adobe's quarterly conference call, CEO Shantanu Narayen announced that his company has begun development of a version of Flash specifically for the iPhone — surprising even his PR staff.

"We believe Flash is synonymous with the Internet experience, and we are committed to bringing Flash to the iPhone," he said. "We have evaluated (the software developer tools) and we think we can develop an iPhone Flash player ourselves." (link)

Presumably Adobe intends this version to fit what Jobs described as "missing product in the middle" between Flash and Flash Lite.

But there are other ways to deliver rich-media applications to the iPhone. Sun Microsystems (JAVA) has announced that it is developing a version of Java for the iPhone, for example, and Apple has some home-grown solutions of its own. (See Kontra's Runtime Wars (1) and (2) for a summary of Apple's options.)

And it's not clear that even this new version of Adobe Flash will thrive in the iPhone ecosystem unless Apple decides to allow it.

Daniel Eran Dilger at Roughly Drafted Magazine has already expressed his skepticism, arguing that it's no more in Apple's interest to become dependent on Adobe than it would be to become dependent on, say, Microsoft (see here).

Daring Fireball's John Gruber is even more dismissive. "Adobe Smoking Same Dope as Sun," was the headline of his post on the subject. He points out that the iPhone SDK explicitly states that no "interpreted code" can be downloaded and used in an application except those that are run by Apple's published program interfaces (APIs).

"Without approval from Apple (including APIs beyond those in the current third-party SDK)," Gruber writes, "they can distribute it in the same alternate universe as Sun’s supposedly-in-the-works Java port." (link)

UPDATE: Gruber is right about that, as Adobe acknowledged in the clarifying statement it issued on Wednesday:

Adobe has evaluated the iPhone SDK and can now start to develop a way to bring Flash Player to the iPhone. However, to bring the full capabilities of Flash to the iPhone Web-browsing experience we do need to work with Apple beyond and above what is available through the SDK and the current license around it. (link)

What does Microsoft see in Adobe Flash that Apple doesn't?

Two weeks after Steve Jobs signaled that Apple (AAPL) would not be building Flash support into the iPhone, Microsoft (MSFT) on Monday took the opposite stance — signing a licensing agreement with Adobe (ADBE) for both Flash Lite and Reader LE in its competing Windows Mobile platform. (link)

This despite the fact that Microsoft is working on a product — Silverlight for Mobile — that is expected to compete directly with Flash Lite.

What's going on here?

First a bit of background. Flash (short for FutureSplash, one of its early incarnations) is a set of multimedia technologies widely used by advertisers, game companies and Web developers to integrate video and other rich media into Web pages. Flash Lite is a subset of Flash used to deliver multimedia content on many Internet-ready cellphones, but not the iPhone.

Asked at the March 4 shareholders meeting when Apple planned to bring Flash to its mobile Web browsers, Jobs said that the PC version of Flash "performs too slow to be useful," and that Flash Lite "is not capable of being used with the Web." (see here and here and here)

That's not quite right. Adobe points out that there are more than 500 million Flash-equipped mobile handsets shipped worldwide, a number that it expects to grow to 1 billion by 2010. (link)

But not if Jobs can help it.

What does he really have against Flash? According to Daniel Eran Dilger at Roughly Drafted Magazine, it has less to do with performance and everything to do with proprietary standards.

Flash video is encoded using a proprietary codec licensed from On2 and served on the web via a Flash-based controller. … By pushing alternatives to Flash, Apple gets a shot at knocking out the headlights of Verizon and all of the hardware rivals lined up behind Adobe’s Flash Lite, including LG, NTT DoCoMo and Sony Ericsson, all of whom hope to use Flash Lite to provide their Symbian phones with a consistent graphical interface.

Were Flash Lite to gain momentum, it might make Adobe the Microsoft of mobiles, and Flash Lite the new Windows. That also makes it obvious why Apple wants to choke Flash to death before it falls into position as the new lowest common denominator in proprietary platforms on a new crop of mobile devices.

Adobe likes the idea of establishing Flash Lite as a banal yet good enough layer of uninspired user interface technology to act as a glue to bond together the fractured Symbian platform. Cutting a deal to stir Flash Lite into the toxic BREW of Verizon also made for a good press release suggesting wide adoption of Flash Lite.

Add in Adobe’s AIR/Apollo system for developing “rich Internet applications” that depend upon Flash, and you have the makings of a Windows-wannabe strategy, giddy to send the increasingly open, cross platform web back into a proprietary prison with Adobe, not Microsoft, holding the key. (link)

Microsoft, of course, would much prefer that it and not Adobe hold that key. But if it comes down to a question of open technologies versus proprietary, guess where Redmond will take its stand?

Apple, of course, is no stranger to proprietary platforms. It just prefers them to be its own.