• In Brief: Alabama Woman Sues Over Alleged iPhone 3G Defects
• In Brief: Amended Complaint Filed in Alabama iPhone Case
• A Possible Hurdle for the Alabama 3G iPhone Suit

Since that time, on October 10, 2008, Apple moved to Dismiss Plaintiffs’ Amended Complaint for Failure to State a Claim. Basically, Apple alleges that the Plaintiffs failed to comply with a necessary condition precedent to bringing a lawsuit on the alleged grounds under Alabama law: they failed to contact Apple to allow Apple the chance to repair or replace the iPhones if necessary. Apple also alleges that a case for unjust enrichment is barred under the terms of its One Year Warranty.

The Plaintiffs responded on October 21, 2008, relying heavily on the much-publicized problems that some users were having with their devices resulting in Apple already providing multiple corrective updates and that Apple and/or its distributors leaked information that additional corrective updates were forthcoming which would remedy the problems in full. Thus, they claim that Apple had sufficient notice to satisfy the spirit of the Alabama requirement. They further claim that they cannot be denied unjust enrichment relief as they were unaware of the One Year Warranty and its terms.

On October 24, 2008, the Court noted that the parties are in dispute as to the existence and/or knowledge of this warranty and gave the parties seven days to attempt to come to an agreement on that issue. If the parties could not agree, the Court stated that it would rule upon Apple’s Motion without assuming the existence and/or delivery of the alleged warranty.

On November 4, 2008, the Court issued its Opinion and Order as two separate filings. The Court’s Opinion noted that the existence and/or delivery of the warranty remains a contested issue. The Court granted Apple’s Motion to Dismiss as to the warranty claims and denied the Motion as to the unjust enrichment claim. While this may seem confusing, the granted portion was based not upon the existence of the disputed warranty issued by Apple but upon the Alabama Commercial Code which legislates that providing actual notice is an absolute condition precedent to any claim of breach of warranty. The Court noted that the Code provides that the seller must be notified within a reasonable amount of time after discovery of the problem or else be barred from any remedy. [emphasis in original] The Court rejected the Plaintiffs’ argument of general notice and opined in some detail as to its reasoning that notice was required as to these specific devices purchased by these specific people.

In its separate Order of the same date, Counts I and II of the Plaintiff’s complaints were officially dismissed with prejudice (meaning that they are adjudicated in finality, unless appealed, if possible) and that the Plaintiffs’ claim of unjust enrichment remained as there were factual disputes between the parties as to the existence and/or delivery of the alleged One Year Warranty provided by Apple. The Court noted that this dismissal with prejudice does not affect the rights of any members of the putative class.

On November 19, 2008, Apple responded to the remaining claim and various factual allegations in the Plaintiffs’ Amended Complaint. The crux of Apple’s Answer is its denial that the iPhone 3G is defective. As far as the request for class-action status, Apple denied that class treatment is warranted in this instance and that any members of this purported class have not been damaged or entitled to relief. Apple repeated its assertion of the existence of its One Year Warranty which would bar the claim of unjust enrichment. Apple also asserted nineteen affirmative defenses. At first, I was going to repeat them all here but decided to wait for reader input as I am learning that not all tech geeks are also legal geeks who like to read court filings for fun. Let me know if those additional details are something you would be interested in.

The last filing was entered on November 20, 2008 and comprised an Order from Judge Acker reminding the parties of certain local rules and asking for notification if this case should be evaluated for ADR (alternative dispute resolution).

I will post additional updates regarding this case as they become available.

In his research Munster noted that Apple was offering discounts on seven products and those discounts averaged 8%. Mac Sales averaged 13 sales per hour, up from 2 per hour earlier in November. iPhone sales averaged 3.4 per hour up from 1.3 earlier in the month.

Munster concluded that Macs are selling better than expected and iPhones are in line with expectations.

Also in his report Munster explains how he can maintain a target on AAPL of $250 a share. Munster writes that his target is based on 20 times earnings and is using Apple’s non-GAAP earnings which included revenue from the iPhone.

iPhone 3G is a lot of amazing things — a revolutionary phone, widescreen iPod, breakthrough Internet device, and home for thousands of applications. And with an iPhone 3G Gift Card, it’s also the perfect gift. Give one in any amount starting at $25 toward the cost of a new iPhone.

The advert which shows an iPhone 3G accessing information on the internet “really fast” received 17 complaints from the public who stated that the “ad was misleading, because they believed it exaggerated the speed of the iPhone 3G.”

In a response Apple claims that the “opening line of the voice-over stated “So what’s great about 3G?”. They believed that the claim clearly positioned the content of the ad as a comparison of the new 3G iPhone with its 2G predecessor.”

Adding that “the implication that the 3G iPhone allowed downloads and internet access that was ‘really fast’ by comparison to the previous generation was not misleading.”

In addition to Apple’s response Clearcast also defended the ad saying that “they received supporting evidence for the claim and were satisfied that the 3G iPhone could achieve speeds that, when compared to the rest of the market, were reasonably fast.”

The ASA ruled that the ad “must not appear again in its current form” after deciding that the ads “repeated use of the claim “really fast”, were likely to lead viewers to believe that the device actually operated at or near to the speeds shown in the ad.”

• Enhancements to Maps
  - Google Street View
  - public transit and walking diretions
  - display address of dropped pins
  - share location via email

• Enhancements to Mail
  - resolved isolated issues with scheduled fetching of email
  - improved formatting of wide HTML email

• Improved stability and performance of Safari
• Podcasts are now available for download in iTunes application (over Wi-Fi and cellular)
• Decrease in call set-up failures and call drops
• Improved sound quality of visual voicemail messages
• Pressing the Home button from any Home screen takes you to the first Home screen
• Preferences to turn on/off auto-correction in Keyboard settings

Although not listed Emoji icons are included and Apple has issued a technote on Emoji and troubleshooting Emoji.

The iPhone ships with the ability to send and receive SMS only which has caused some people to become aggravated that even very basic phones on the market can send and receive MMS messages but the iPhone can’t.

MMS messages allow for the transfer of images, audio, video and rich text.

In the report it is said that Telia will be pushing the MMS application to users in Sweden in the next couple of months, there is no word whether other carriers will also be creating similar applications.

[Update] It has been revealed that Mobispine is the provider of the MMS solution for Telia in Sweden. The company has released a press release about its MMS application for the iPhone (PDF).

Mobispine AB (MOBS) the market leader in delivering
mobile solutions to operators announced the availability of the world’s first true Multimedia
Messaging (MMS) for iPhone. Mobispine is now offering a “white label” MMS service for iPhone
to global operators. This new and innovative service will increase revenue per user (ARPU) and
generate profits for operators.

Joswiak states that over 1,500 games are already available on the App Store for the iPod touch and iPhone and added that there is no need to buy discs or cartridges.

When asked if Apple could compete with the Nintendo DS and Sony PSP Joswiak explained that Apple had “tremendous strengths” and considers Apple to be a “big competitor in this market.”

“The displacement of the RAZR by the iPhone 3G represents a watershed shift in handset design from fashion to fashionable functionality,” said Ross Rubin, director of industry analysis for NPD. “Four of the five best-selling handsets in the third quarter were optimized for messaging and other advanced Internet features.”

The top handset models in rank order, based on unit sales in Q3, were as follows:
1. Apple iPhone 3G
2. Motorola RAZR V3 (all models)
3. RIM Blackberry Curve (all models)
4. LG Rumor
5. LG enV2

AppleInsider is also noting that an iPhone 3G owner had sent an email to Steve Jobs in the past calling it “ludicrous” that “such an advanced device” can’t tether with a computer.

Jobs reportedly wrote back saying, “We agree, and are discussing it with AT&T.”

Mr. von Tetzchner said that Opera’s engineers have developed a version of Opera Mini that can run on an Apple iPhone, but Apple won’t let the company release it because it competes with Apple’s own Safari browser.

It is speculated that the decision has been made by Apple because the company doesn’t want applications available that compete with the pre-loaded apps.

- Activate Wi-Fi from the settings icon on your iPhone
- Select “attwifi” from the list of available networks
- Enter your 10-digit mobile number and check the box to agree to the Acceptable Use Policy. Tap ‘continue’
- You will receive a text message from AT&T with a secure link to the AT&T Wi-Fi hotspot. You will not be charged for the text message.
- The SMS link will only be valid for 24 hours at the location it was requested. Another request must be submitted when using another hotspot location.
- Open the text message and tap on the link for 24-hour access to the AT&T Wi-Fi hotspot

The accompanying notes also state that line-in audio accessories are now supported.

iPhoneYap has posted a selection of screenshots from iPhone OS 2.2 beta 2.

The new NDA continues to protect “Apple Confidential Information” including “any Apple pre-release software (including related documentation and materials) and any information disclosed by Apple to you in connection with Apple Events or Paid Content.” Paid content is defined as “certain proprietary content (including, without limitation, video presentations and audio recordings) that Apple may make available to you from time to time for a separate fee.” But the NDA now allows developers to collaborate with each other and conduct training and offer books and online guides on using the iPhone SDK.

On a related note Apple has also opened the official iPhone developer forums.

Apple will continue giving out GAAP (Generally Accepted Accounting Principles) results, these will include subscription based accounting for iPhones and the Apple TV. In addition Apple will offer a new set of numbers in the form of non-GAAP results which show Apple’s fiscal figures if they weren’t using subscription based accounting.

In the press release on Tuesday Apple wrote the following:

During fiscal 2007, the Company began selling the iPhone and Apple TV. Because the Company may provide unspecified features and additional software products to iPhone and Apple TV customers in the future free of charge, in accordance with GAAP the Company recognizes revenue and cost of goods sold for these products on a straight-line basis over their economic lives, with any loss recognized at the time of sale. Currently, the economic lives of these products are estimated to be 24 months. This accounting treatment, referred to as subscription accounting, results in the deferral of almost all of the revenue and cost of goods during the quarter in which the products are sold to the customer. Other costs related to these products, including costs for engineering, sales, marketing and warranty, are expensed as incurred. Further, the costs to develop any future unspecified features and additional software products that may eventually be provided to customers also are expensed as incurred. In contrast, the Company generally recognizes revenue and cost of goods sold for its other products, such as Macs and iPods, at the time of sale, as the Company does not provide future unspecified features or additional software products to those customers free of charge.

The biggest issue with subscription accounting is that investors, analysts and shareholders struggle to determine just how much revenue and profit is being generated by the sale of a particular unit until long after that unit has been sold.

Apple is now effectively looking at the iPhone in the same way it looks at the Mac, in that respect the iPhone would have recorded an additional $3.8 billion in revenue and an additional $1.3 billion in net income during the company’s fourth fiscal quarter.

Total iPhone revenue of $4.6 billion would have represented 39 percent of Apple’s adjusted overall revenue of $11.7 billion.

The US iPhone carrier reported a 5.5 percent rise in profits to $3.23 billion and EPS of $0.55. AT&T also noted that it gained an added 2 million subscribers to its network to end the quarter with 74.9 million.

Growth was driven by the activation of 2.4 million iPhone 3Gs, 40 percent of which were new to the network.

“I am particularly pleased with the customer response to the iPhone 3G,” said AT&T CEO Randall Stephenson. “The new customers we’re winning are high-value, with attractive revenue and churn profiles.”

Apple announced on Tuesday that it had sold 6.9 million iPhones worldwide in its previous fiscal quarter.

BGR notes that an announcement is expected on Saturday, November 15, the blog also goes onto write that it is uncertain whether Radio Shack is still in the running to sell the iPhone.

Wal-Mart is one of the worlds largest distributors of iPods in the world with over 3500 locations in the United States.

“We put the NDA in place because the iPhone OS includes many Apple inventions and innovations that we would like to protect, so that others don’t steal our work. It has happened before,” reads a company statement.

“While we have filed for hundreds of patents on iPhone technology, the NDA added yet another level of protection. We put it in place as one more way to help protect the iPhone from being ripped off by others.”

Within the statement Apple admits that the NDA caused “too much of a burden on developers, authors and others interested in helping further the iPhone’s success, so we are dropping it for released software.”

Apple also announced that it is currently drafting a new agreement without an NDA covering released software that developers will have to sign later this month.

Image courtesy of Wired.com

iPhone OS 2.2 which was released to developers late this week reportedly includes some changes to the layout of MobileSafari. As seen in the screenshot (old MobileSafari on left, new on right) Apple has moved the refresh button into the address bar and given Google search its own box.

[Image courtesy of Wired.com]

The online tool allows a would-be iPhone purchaser to:

• 1. Enter your billing information.
• 2. Review eligibility and pricing.
• 3. Select your AT&T rate plan.

Once complete the purchaser would simply head over to an Apple store to complete the iPhone purchase. Despite rumours, an iPhone continues to require in-store activation and cannot be activated at home.

Apple has received reports of detached prongs involving a very small percentage of the adapters sold, but no injuries have been reported.

• US
• Japan
• Canada
• Mexico
• Colombia
• Ecuador
• El Salvador
• Guatemala
• Honduras
• Peru

Countries where ultracompact USB power adapters were sold only as a standalone accessory:

• Argentina
• Chile
• Costa Rica
• Panama

Apple USB power adapters supplied with original iPhones or supplied with iPhone 3G units sold in other countries are not affected.

Users with ultracompact power adapters should immediately stop using them until they exchange them for a new, redesigned ultracompact adapter.

In the meantime, they should charge their iPhone 3G by connecting it to their computer with the USB cable that came with their iPhone or by using a standard-sized Apple USB Power Adapter (with fold up prongs) or with a third party adapter designed to work with the iPhone, such as a car charger.

Apple adds that replacement adapters which will not be available until October 10th will have a green dot on them to make identification easier.

Affected users may order a replacement adapter via Apple’s web-based form or in person at an Apple retail store beginning October 10th.

While I enjoy the updates, editing of playlists is not implemented as well as it could be. For example, deleting songs from a playlist must be done one at a time, which is reminiscent of deleting mail prior to the 2.0 update. Adding songs allows you to select multiple songs at once, but neglects to allow you to deselect them if you change your mind. In the end, however, it is nice to be able to have more control via the Remote app and I welcome the update with open arms. Head on over to the App Store to download or update to Remote 1.1 (iTunes link)

The iPhone 2.1 contains the following updates as listed by Apple:

• decrease in call set-up failures and call drops
• significantly improve battery life for most users
• dramatically reduced time to backup to iTunes
• improve email reliability, notable fetching email from POP and Exchange accounts
• faster installation of 3rd party applications
• fixed bugs causing hangs and crashes if you have lots of 3rd party applications
• improved performance of text messaging
• faster loading and searching of contacts
• improved accuracy of the 3G signal strength display
• repeat alert up to two additional times for incoming text messages
• option to wipe data after ten failed passcode attempts
• Genius playlist creation

According to Apple, the update will address:

• Battery life issues
• Dropped calls
• Lots of Bug fixes
• Backing up to iTunes
• App crashes

O2 has announced that the unsubsidised iPhone 3G will be available for £350 ($630) and £400 ($720) for the 8GB and 16GB models.

Although once signed up users won’t be forced into a contract, they will be obliged to top-up an amount each month to receive a certain amount of benefits.

Paying between £10 and £14 each month will see users receiving a bonus 500 minutes of call time to any UK home phone or O2 mobile; paying between £15 and £29 adds 1,000 minutes under the same terms, while £30 or more provides unlimited calls.

Unlimited Internet access within the UK, including 3G and O2 Wi-Fi, is free for the first year of service but will cost £10 per month afterwards. Text messages aren’t included and cost 10p each.

The iPhone 3G will be available on pay-as-you-go from O2 starting September 16th.

During the advert (viewed here) the voiceover read “all the parts of the internet are on the iPhone”.

But today the ASA said that the iPhone does not support Flash or Java so the advert “gave a misleading impression of the internet capabilities of the iPhone”.

Apple had argued its claim referred to availability of webpages, rather than their specific appearance.

The ASA has stated that the ad cannot be aired again in its current form.

“Because the iPhone doesn’t support Flash or Java, you couldn’t really see the internet in its full glory,” said Olivia Campbell, a spokesperson for the ASA.

“They made a very general claim that you can see the internet in its entirety, and actually that’s not quite true - so we’ve upheld.”

On another Orange note, Orange in France has admitted that it was throttling its smartphone data speeds at 384 Kb/s. They have promised to raise this limit to 1 Mbits/s beginning September 15, 2008. [via HardMac]

The sad thing about both situations is that Apple’s reputation is affected negativity even though they had nothing to do with the first false rumour or Orange’s surreptitious throttling.

AT&T has announced several international data plans for frequent travelers for an additional monthly fee of $119.99 (100MB per month) and $199.99 (200MB per month). These plans would be in effect for data use in 67 countries and would replace the current pay-per-use international data roaming charges that were currently the only option in those countries.

As we had discussed here and here, the iTunes store went down in China early last week and was restored over the weekend. As it turns out, while the service is restored, Chinese authorities have apparently discovered a way to selectively block the offending album, “Songs for Tibet”.

How is this a favour for Apple? There were in a no-win situation. If they stood their ground and refused to pull the album as a condition for iTunes stores availability in China, they might win cheers from humanitarian groups while losing a potentially lucrative iPhone market which may not have been in the best interest of its stockholders. If they caved and pulled the album, they would be painted by some as giving in to a totalitarian regime which goes completely against American sensibilities (America being the most relevant as Apple is based in California).

So thank you, China…? I guess…

Michael Wohl, executive director of the New York City-based group, said he believed the album was the reason for the iTunes interruption, though he had no proof. “We issued a release saying that over 40 (Olympic) athletes downloaded the album in an act of solidarity, and that’s what triggered it. Then everything got blocked,” Wohl said by phone.

“We are aware of the log-on problems but we have no comment at the moment,” said Huang Yuna, an Apple spokeswoman in Beijing. She declined to say how many customers were believed to be affected.

Computerword blogger Seth Weintraub notes that blockages may simply be caused by increased internet traffic due to the Olympic games.

If it is true that the problems are attributable to government intervention spurred by the release of Songs for Tibet, Apple may find itself in an awkward position of having to decide between business and politics. The Chinese iPhone market is a huge potential source of future profit for the company, yet if certain material is selectively removed to appease an oppressive government, Apple’s reputation in the court of public opinion could be substantially scarred. Both Seth Weintraub (link above) and TheDigitalLifestyle.tv have interesting perspectives on this issue.

iPhone Talks is also reporting on the unconfirmed story but is only mentioning Mobile TeleSystems who is taking their cue from Apple’s playbook by declining to confirm or deny.

Via AppleInsider, one of their readers received the following response from Jobs:

“This is a known iPhone bug that is being fixed in the next software update in September”

And while the latest firmware update (2.0.2) was supposed to correct the 3G performance issues, there are still some users claiming that it had absolutely no beneficial effect.

Apple needs to fix these problems soon or the hoped-for halo effect will turn into a sinkhole.

Many analysts expect Apple (AAPL) to sell around 11 million iPhone 3Gs in 2008 and another 25 million in 2009. But perhaps the most optimistic forecast is from Piper Jaffray (PJC) analyst Gene Munster, who expects the company to sell 13 million this year and 45 million next year.

Further a source identified only as “someone familiar with the company’s plan” has told BusinessWeek that Apple is intending to manufacture between 40 million and 45 million iPhones in the next twelve months.

I don’t envy the MobileMe development team one bit for it is upon their shoulders to ensure that this epic win doesn’t turn into an epic fail.

A comment on the MacRumors thread laments that “[o]nce this spreads into the blogosphere she will be fired.” I certainly hope not, but at the same time fear that iPhones will start to come with flashy marketing-designed photo shoots already in the picture gallery. [MacRumors via Boing Boing Gadgets]

From IBN Live:

The Apple iPhone 3G (third generation) was launched across India by telecom majors Bharti Airtel and Vodafone.. . .

Aditya Malik whooped with excitement after he bought his iPhone. “I’m excited because I have got an Apple iPhone. I am not bothered about the price. Good things come at a price,” Malik said. “I have been waiting for a year to buy one. Last year I missed buying the iPhone 2G, which was launched June 5, as I left for the US on June 3. Now I am very happy to have got the latest one,” he said.. . .

Twenty-two-year-old Nishant Arya, a businessman, was equally happy though he has the earlier versions of the iPhone. “I already have five iPhones. This is the sixth. I bought it because my family wanted it. The earlier phones were 2G, this is 3G.“. . .

“More than 30,000 iPhones (2G) are running on the Airtel network alone,” Sanjay Kapoor. president of the mobility division of Airtel said.

[emphases added]

2G? Well gee, this is confusing. You see the 1G wasn’t any G, but the 3G is really the 2G, and the 4G (which is really the 3G) may not be 3G. Or perhaps the G1 isn’t the 1G, but the G2 is the 3G. Whew! For the few who don’t know what I am on about (such as apparently the entire country of India and the editorial staff of IBN Live), many Apple products are affectionately called by their generation number. For example there are first generation iPod nanos and second generation iPod nanos. Older iMacs are often distinguished as a G4 or G5 (meaning fourth generation and fifth generation respectively). However, worlds have collided now that cellular technology and Apple have been fused, and like the ottoman, no one knows what to do with the G.

Psst Aditya, I whooped too. Seriously. I did the Apple store employee happy dance.

UPDATE: A helpful reader noted that I was imprecise in my terminology, caving in to the popular use. The “generation” of the machines refer to the processors inside the machines rather than the actual machine line itself. I was trying to keep things as simple as possible in a subject that is already confusing the heck out of India.