Laughter and applause greet a dig at the iPhone on Saturday Night Live

SNL's Seth Meyers. Image: NBC

You know you've got a public relations problem when you're a punchline on SNL's Weekend Update.

The host, Seth Meyers, doesn't make a lot of Google (GOOG), Apple (AAPL) and AT&T (T) jokes, but this one worked.

"It was reported this week that Google would soon launch its own cellphone as a challenge to the iPhone. Also a challenge to the iPhone? Making phone calls."

The audience — presumably the usual mix of tourists and enough reception-challenged New Yorkers to appreciate the humor — laughed and applauded.

Video clip below the fold.

UPDATE: The clip has been removed from YouTube by NBC Universal. But you can watch the whole episode below or on hulu.com. The joke begins at 37:20.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

Ma Bell's wireless network is still standing after Friday's grassroots iPhone attack

The appointed hour — Friday, from 12 noon to 1 p.m. PST — came and went and AT&T's (T) 3G cellular network had not been brought to its knees, despite the best efforts of thousands of Apple (AAPL) iPhone users.

"As far as I can tell, there’s been no impact at all," wrote Dan Lyons in The Secret Diary of Steve Jobs at 12:19 p.m. "My iPhone is working just the same as ever. "

It was Lyons, writing as Fake Steve Jobs, who on Monday had encouraged iPhone owners to overwhelm AT&T's network by turning on a data-intensive app and running it for an hour. Operation Chokehold, as he dubbed it, was intended as a protest against AT&T's threatened imposition of data usage fees.

By Wednesday, after the FCC's chief of homeland security issued a stern warning, Lyons began to have second thoughts. But by then the protest had taken on a life of its own. See here.

Although there were scattered reports of slowdowns Friday on the Operation Chokehold Facebook page, AT&T's 3G network seemed to be holding up just fine.

"We don't know of any instances in which AT&T's service was degraded or brought offline," says John Rust, one of the "Three Musketeers" who managed Operation Chokehold's official website. "Yet at the same time, we consider the operation to be successful: we proved to AT&T that we believe that 'unlimited' should be 'unlimited,' and that it's not their job to redefine it."

In Brooklyn, where we were monitoring the network's performance, upload and download speeds actually increased during the first quarter hour. See the chart below.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

See also:

• Can the kids bring AT&T to its knees?

A smartphone protest begun as blogger's joke catches fire in the high schools of America

Image: Facebook

The most interesting thing about Operation Chokehold — a grassroots denial of service attack against AT&T's (T) data network scheduled for Friday at 12 noon PST (3 p.m. EST) — may be who has signed on to take part.

You can see their shining faces on Facebook's official Operation Chokehold page, which by Friday morning had attracted more than 4,000 fans.

Scroll down the members list for affiliations and you'll see a few companies, a bunch of colleges and a whole lot of high schools: Carlmont High, Las Lomas High, Casa Grande High, Galileo High, Triton High, Roseburg High, Rancho Buena Vista High, Shadow Mountain High, Henry M. Gunn High, West Allegheny Senior High, Connellsville Area Senior High and so on.

That a satirical call to action has turned into a cellular children's crusade may say more about the sorry state of activism in the U.S. than the true level of consumer rage. But if AT&T's network crashes on Friday, it will be kids with Apple (AAPL) iPhones who have done it.

The whole thing started as a publicity stunt.

Last Friday Dan Lyons, a Newsweek writer better known as the pseudonymous Fake Steve Jobs, posted a blistering 1,900 word rant — framed as a  "not-so-brief chat" with AT&T CEO Randall Stephenson — that may be the best thing he's written since his identity was revealed two years ago. The post was Lyons' response to hints that AT&T might impose "incentives" to encourage iPhone users to stop overtaxing its network, and in the days that followed it was picked up by dozens of bloggers, twitterers and mainstream media outlets.

Encouraged by the attention, Lyons followed up Monday with a second Fake Steve Jobs post, this one built around what he claimed was a memo being circulated among the engineers at Apple:

Subject: Operation Chokehold
On Friday, December 18, at noon Pacific time, we will attempt to overwhelm the AT&T data network and bring it to its knees. The goal is to have every iPhone user (or as many as we can) turn on a data intensive app and run that app for one solid hour. Send the message to AT&T that we are sick of their substandard network and sick of their abusive comments. THe idea is we’ll create a digital flash mob. We’re calling it in Operation Chokehold. Join us and speak truth to power! (link)

The idea was dismissed as a silly stunt when it seemed that only a few hundred people might take up the cause. But when it became clear that thousands had signed on, things got serious.

On Tuesday, an AT&T spokesman told the Cult of Mac's Leander Kahney that "there is nothing amusing about advocating that customers attempt to deliberately degrade service on a network that provides critical communications services for more than 80 million customers."

Network World's John Cox went further, asking Lyons what he planned to tell the parents of toddlers who die on Friday because a call to 911 couldn't get through.

Even the FCC weighed in. ""Threats of this nature are serious," Jamie Barnett, chief of the agency's public safety and homeland security bureau, said in a statement. "To purposely try to disrupt or negatively impact a network with ill-intent is irresponsible and presents a significant public safety concern."

By Wednesday afternoon, Lyons seemed to be getting cold feet. "For the record," he wrote, "this is all just a joke that has spun out of control and gained a life of its own." Now Fake Steve is talking about cutting the protest back from one hour to 15 minutes. Or shutting off iPhones rather than using them to flood the network. Or asking the kids to duct tape their mouths and gather in flash mobs outside AT&T stores.

But judging from the comments on Facebook and elsewhere, it's too late for that. "This is no time to go wobbly, Fake Steve," wrote one poster. Added another: "The momentum this has created is beyond your control, and be prepared to accept the repercussions — good or bad."

UPDATE: Not content with commentary from AT&T and the FCC, Lyons spent Thursday knocking out fake messages of support (or opposition) from Osama Bin Laden, Hugo Chavez, Rachel Uchitel, Sarah Palin and Glenn Beck. See here.

See also:

• Operation Chokehold countdown clock
• Local TV News coverage on CBS-5

[Follow Philip Elmer-DeWitt on Twitter @philiped]

Sorry, Google. The apps (and by that we mean appetizers) won out.

At long last there is proof of Google’s (GOOG)  long-anticipated smartphone. Late last week, the online advertising giant started handing out an Android-powered phone to employees. While refusing to detail the specs, the official Google mobile blog refers to it as a “mobile lab.”

The Googley vagueness continues on the blog, where it is described as, “A device that combines innovative hardware from a partner with software that runs on Android to experiment with new mobile features and capabilities.”

Of course, the gadget-obsessed immediately ran to the Federal Communications Commission to get those specs, and photos have been popping up all over. So, we now (mostly) know that it is a sleek-looking touch-screen phone made by HTC, powered by a high-end Qualcomm (QCOM) processor and featuring the latest Android 2.1 OS. From the looks of things, this GSM phone could operate on any number of networks abroad, but seems destined at least for T-Mobile in the United States.

With all the Googlers eager to show off their new gizmos, and this, the calendric peak of the holiday party season, it was inevitable that in the Bay Area at least, the two would combine.  Sure enough, a friend attending a holiday party over the weekend in San Francisco with a number of Google folks making merry was presented with the new phone. “Mostly, I wanted to see the photo of the engagement ring that was on it,” she says, requesting anonymity. “It wasn’t an iPhone, and besides, there were pigs-in-a-blanket and these really good mini-cheeseburgers, and I was hungry, so I didn’t pay too much attention. “ So there you have it.

Table stakes: iPhone quality hardware

Discounting for a moment that this occurred in gadget-jaded Silicon Valley (and that the mini-cheeseburgers were really good), it does offer a point worth examining. Great hardware is the minimum starting point in the smartphone market these days, and it doesn’t get anyone’s blood racing by itself. As a piece of hardware, the Google phone, dubbed the Nexus One according to employees, had better be on par with an iPhone. If not, as we have seen time and again with would-be competitors, it will be a non-starter.

Let’s assume Google’s phone is tip-top in the hardware department. What sells smartphones these days has as much to do with the software running the phone and the applications available as the hardware. Again, Apple (AAPL) leads the pack by a wide margin with its mobile apps store.

Google’s open-source mobile OS Android has been getting mostly good reviews, especially in its latest incarnation running on Motorola’s (MOT) Droid phone. What Google needs to do, however, is get more Android phones out there to attract more developers and get the critical application mass it needs.

What has everyone most excited at the moment is the (rumored) prospect that Google will sell its Nexus One as an unlocked, carrier-agnostic piece of gear starting in January. Fine, as long as the phone is still relatively cheap. If Google comes out with a $500 unlocked phone, it will fade as quickly as all of Nokia’s similar unlocked and pricey efforts.

But if Google sells its phone contract-free for the same $199 the iPhone sells for (with a two-year AT&T (T) contract) it will have a monster on its hands. How could that happen? Google, rather than a carrier could subsidize the phone, and make up the cost via mobile advertising (it just bought AdMob), or maybe just take a hit to build a market. Google can certainly afford it. Either way, Android gets very huge, very fast, and that is what Google really wants.

Would that upset Google’s roster of current Android customers, including Motorola, Samsung and some of the wireless carriers? Sure it would, but this isn’t about the old-school wireless ecosystem, it’s about the mobile Web and Google’s designs to own it. If Google wants it, it needs to step up. If not? Those pigs-in-a-blanket sure look good.

Their battles on air and in court somehow managed to lift both their reputations

Click to enlarge. Source: You Gov's BrandIndex

In politics, mudslinging tends to sully both the slinger and slimed. But according to a YouGov BrandIndex survey released Monday, the ad wars this fall between Verizon (VZ) and AT&T (T) had the opposite effect.

As you may recall, Verizon went after AT&T and Apple's (AAPL) iPhone with a series of high-profile "There's a Map for That" ads that cut so close to the bone AT&T asked a federal court in Atlanta to issue a restraining order. (The court declined and the suits were ultimately withdrawn.)

Rather than diminishing the companies in the eyes of consumers, however, the contretemps actually raised awareness of both brands, Verizon somewhat more than AT&T.

On Nov. 2, according to the BrandIndex survey, 37.1% of all adults 18 to 34 had heard something about the Verizon Wireless brand; by Dec. 7, that number was 62.2%. For AT&T the numbers went from 41.2% in early November to 54.5% last week.

Verizon Wireless' awareness passed AT&T's in the last week of November.

BrandIndex says it interviews 5,000 people each weekday from an online panel of more than 1.5 million Americans. Their scores range from -100 to 100 and are calculated by subtracting negative feedback from positive. The margin of error is +/- 2%.

See also:

• Verizon to AT&T: The truth hurts
• Verizon vs. AT&T: There's a map for that

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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]

Tech's top vendors see small companies as a big opportunity.

Software giant Microsoft (MSFT) tops a new ranking of technology companies effectively serving small businesses online by providing a rich, educational web experience for small companies.

Compass Intelligence, a Scottsdale, Ariz.-based consulting firm, analyzes the websites of dozens of tech companies – and interviews small business owners and executives – to come up with its rankings, which it publishes twice each year.

Microsoft leaped to the No. 1 ranking from No. 6 in the first quarter of 2009, essentially switching places with computer maker Dell (DELL) which slipped to No. 6 from the top spot in the first quarter. (Remember, the Compass rankings look at just one part of the tech company's small-business strategy: online reach. All these companies also work through resellers, local affiliates and even have direct sales folks marketing to and servicing small entities.)

That said, the top ten, in order, are:

1. Microsoft
2. AT&T
3. Cisco
4. HP
5. IBM
6. Dell
7. Verizon
8. Sprint Nextel
9. Nortel
10. Symantec

"All these companies are commited and focused on the [small-to-medium sized business market](in different ways)," Kneko Burney, chief strategist for Compass, writes in an e-mail. " They all 'get' small business."

And that may prove to be smart business. Compass estimates that U.S. small businesses – companies with 20 to 100 employees – will spend more than $230 billion on technology in 2009. And a separate new report suggests smaller companies are loosening their purse strings on tech spending even as large enterprises remain cautious.

The Global Technology Distribution Council, a consortium of technology distributors such as Arrow Electronics (ARW) and Avnet (AVT), last week said its members' U.S. sales in the third quarter rose 10.7% over the second quarter.

Large companies "have cut back tech spending, and they're still hunkered down," observes consortium CEO Tim Curran. "SMB (small to medium business) in this instance seems to be a leading indicator of companies starting to invest."

Curran said his members, which serve value-added resellers and other "channels" that, in turn, directly sell to smaller firms, have been seeing particular interest in investing in security solutions and cloud computing services that deliver business software and other applications over the Internet.

Even tech executives who deal primarily with the very largest global companies are talking about their companies' ability to serve small-business clients.

"We have a porfolio that fully meets what small businesses need," says Ann Livermore, executive vice president of HP (HP) Enterprise, a $54 billion-a-year unit that includes consulting, hardware and software sales to businewsses of all sizes. Adds Livermore: "You'll see us being very focused" on the segment.

Entrepreneurs also rely heavily on mobile technology to run their companies. Today there are hundreds of mobile applications that enabling small biz executives to operate while on the go (everything from an application for sending and tracking FedEx (FDX) packages to an app that turns an Apple (AAPL)  iPhone into a voice recorder).

No wonder a Yankee Group study released in September found 28% of small businesses said "smartphone implementation" — the deployment and upgrade of Internet-enabled mobile devices – was their top tech priority in the next 12 months.

Small businesses reliance on mobile means wireless operators have an opportunity to expand their relationship with small businesses, perhaps acting as a distributor for other tech companies' hardware and software or even offering integration and other services in competition with companies such as HP and Dell.

In many ways, the telcos are already seizing the small-business opportunity. AT&T (T) is the No. 2 company on the Compass Intelligence report. "What I love about AT&T is that they are very aggressive in rolling out new "cloud" services tailored just for this market," Burney writes.  "They are focused on providing a suite of services to enable these customers using the power of the network. That's definitely the future."

Apple underscores one of the strengths of AT&T's cellular network

Image: Apple Inc.

Scheduled to air on primetime TV Monday night are a pair of Apple (AAPL) iPhone advertisements that highlight one of the few things AT&T's (T) network can do that Verizon's (VZ) can't: surf the Web in the middle of a phone conversation.

(AT&T's GSM network allows simultaneous voice and data connections; Verizon's CDMA network does not.)

The spots — posted below the fold — follow a series of high-profile Verizon ads attacking both AT&T and, by association, the iPhone, for the shortcomings of the carrier's 3G network.

Apple's response — showing users a feature that they may not have been aware of  — is considerably more subtle than AT&T's, which accused Verizon of false advertising and sought relief from its ad campaign in the courts, so far without success.

The ads are scheduled to run during House, Dancing With the Stars, How I Met Your Mother, One Tree Hill, Big Bang Theory, CSI: Miami, The Daily Show, and the late-night talk shows (Conan, Kimmel, Fallon, Craig Ferguson).

Below the fold: the new ads.

See also:

• Verizon to AT&T: The truth hurts
• Verizon vs. AT&T: There's a map for that

[Follow Philip Elmer-DeWitt on Twitter @philiped]

Its Cinderella contract with Apple for the iPhone runs out in seven months, says one analyst

Brian Marshall. Image: Bloomberg

Broadpoint AmTech's Brian Marshall, who has replaced Piper Jaffray's Gene Munster as the most bullish of the mainstream Apple analysts, made several assertions of fact in an Bloomberg TV interview Friday that — if true — struck me as newsworthy. Chief among them:

• The contract that gives AT&T (T) exclusive access in the U.S. to Apple's (AAPL) iPhone expires in June 2010.
• Apple is now getting a $450 subsidy from AT&T for each iPhone it sells; after June, that subsidy will be reduced to $300 for all carriers, domestic and international.
• The 4% of AT&T subscribers who use the iPhone consume roughly 40% of the network's bandwidth.

Here and in a research note issued last late month, Marshall has been lobbying heavily for Apple to start selling the iPhone through Verizon (VZ). It turns out he may have personal reasons for doing so. He told Bloomberg's Pimm Fox that whenever he travels to New York or San Francisco with his iPhone he gets dropped calls "all the time."

"A very frustrating experience," he said, "but I'm not going to move away because Apple has their hooks into me"

You can hear all this, plus what Marshall has to say about the Chinese iPhone market, Windows 7's effect on Mac sales and Apple's 2010 earnings, in the interview posted below the fold.

UPDATE: Financial Alchemist's Turley Muller takes issue virtually everything Marshall says in this interview. See here.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

See also:

• Rumors: A Verizon iPhone in 2010
• Apple earnings: How the analysts got it so wrong

The No. 2 telco responds defiantly to AT&T's claims that its ads are false and misleading

"AT&T did not file this lawsuit because Verizon’s 'There’s A Map For That' advertisements are untrue; AT&T sued because Verizon’s ads are true and the truth hurts."

So begins Verizon's (VZ) legal reply to a pair of lawsuits filed earlier this month by AT&T (T) demanding that Verizon pull five disputed ads from the air. The issue: a pair of 3G coverage maps that AT&T claims are "false" and "misleading" and are causing it "irreparable harm" as the two companies enter the holiday selling season.

The 53-page filing lays the factual basis for the ads and concludes its introduction with a  paragraph that gets to the heart of AT&T's problem: its failure to prepare for the success of Apple's (AAPL) iPhone, for which it is the only authorized U.S. carrier.

"In the final analysis," the introduction concludes, "AT&T seeks emergency relief because Verizon’s side- by-side, apples-to-apples comparison of its own 3G coverage with AT&T’s confirms what the marketplace has been saying for months: AT&T failed to invest adequately in the necessary infrastructure to expand its 3G coverage to support its growth in smartphone business, and the usefulness of its service to smartphone users has suffered accordingly. AT&T may not like the message that the ads send, but this Court should reject its efforts to silence the messenger."

The document is available as a PDF here.

See also:

• The iPhone wars: AT&T vs. Verizon
• Verizon vs. AT&T: There's a map for that
• Rumors: A Verizon iPhone in 2010
• AT&T Mobility is nipping at Verizon's heels

[Follow Philip Elmer-DeWitt on Twitter @philiped]