UPDATE: Apple’s stock is being punished because of concerns about Steve Jobs’ health, plus the company’s cautious guidance about Q4. Jobs didn’t participate in the earnings call, leading analysts to ask whether he is OK. Apple CFO, Peter Oppenheimer dodged the question. As Wired.com reports: “Andy Hargreaves, consumer electronics analyst at Pacific Crest Securities, said the lack of response from Oppenheimer regarding Jobs’ health only adds to investors’ doubt. “Not addressing Steve Jobs’ health perpetuates the fear that it’s a real problem,” Hargreaves said.”

Well, Apple just had another record quarter, with earnings jumping by 31 percent and revenue by 38 percent. The company sold more Macs in the third quarter than it has at any point in company history. It is performing better as a company than it ever has, and in a down economy.

So how does Wall Street respond? By knocking the stock price down by more than 10 points. Why? Because Apple’s guidance, or “made-up numbers to please whiny Wall Street analysts,” is below where the analysts believe it should be. Now, this might seem like rational behavior. If Apple is below Street consensus, the company must be headed for unanticipated trouble, right?

No. Not at all. Apple always sets expectations low and then jumps way beyond them. Take this quarter. Apple set earnings guidance at $1 per share. Analysts pegged it at $1.10 per share. Instead, they managed $1.19 per share. And the same thing keeps happening as far back as you can look. As Andy Zaky notes, Apple does this all the time, and they always beat their own guidance and the Street consensus, too. It’s just how they roll.

So why is it obvious to everyone except Wall Street traders that Apple always understates its guidance? Power is one hell of a drug, I imagine.

Picture via Imageshack

Steve Jobs at WWDC 2008. Photo by MacsimumNews

During Apple’s earnings call, a question was asked about Steve Jobs’ health.

Answer: “Jobs has no plans to leave Apple. Steve’s health is a private matter.”

Apple just announced its best June quarter ever for revenue and earnings in Apple’s history.

Highlights include:

• Almost 2.5 million Macs shipped — 41 percent growth. Highest Mac shipments ever. The Mac is back!
• 11 million iPods sold — 12 percent growth
• $7.46 billion revenue
• $1.07 billion profit

(Last year: $5.41 billion and $818 million profit)

And this is without recording any iPhone revenues, which are being deferred until the fourth quarter.

Webcast of the analyst conference call.
Highlights from the analyst call:

• App store: 900 apps; 25 million apps downloaded; 20 percent free; 90 percent below $10.
• iPhone 3G: 22 Countries. 1 million sold in first 3 days after launch. 20 more countries on Aug 22nd
• Future Product transition: Q4. “Can’t discuss today.”

Apple opened the first of two planned retail stores in Beijing, China over the weekend, at the Sanlitun retail complex. Enjoy our gallery of photos by several fine photographers. All images courtesy of Creative Commons or copyright the individual photographers.

Via Gizmodo

The iPhone Dev Team released its Pwnage jailbreak tool for iPhone over the weekend. Despite the tool’s inability to unlock iPhones for use with unapproved phone carriers and decreased demand for “illegal” apps in the light of Apple’s own AppStore, enough curious parties overwhelmed Dev Team servers and forced mirror sites into service to satisfy iPhone’s teeming masses still yearning to break free.

The tool jailbreaks and unlocks older iPhones, and jailbreaks iPhone 3Gs and iPod Touches but “We only support the 2.0 firmwares,” according to the Dev Team’s blog.

An upskirt warning poster in a subway station outside Tokyo. Photo by Jeff Epp.

The iPhone 3G in Japan has a special feature unique to that country: The camera always makes a conspicuous “shutter” sound when a picture is taken, even when the phone is set to “silent” mode.

The loud shutter sound is supposed to deter voyeurs from taking sneaky pictures up women’s’ skirts — or down their tops.

In Japan, upskirt and downblouse shots have become increasingly popular with the advent of high-resolution camera phones.

As a result, all cell phones sold in Japan make a conspicuous shutter sound, or say the word “cheese” when a snap is taken, according to Nobuyuki Hayashi, a tech reporter based in Tokyo.

On almost all new cell phones, the camera shutter sound can not be muted, Hayashi says.

“Some manufacturers have even put louder shutter sound,” he reports.

The shutter on the first iPhone sold in Japan could be muted in silent mode; an anomaly that many wondered whether Apple would correct in the iPhone 3G, Hayashi says.

Apple did: The shutter sound cannot be turned off, even in silent mode, Hayashi says.

Apple, Inc. is expected to report strong second quarter earnings after US markets close on Monday and the company will do so without recognizing a single iPhone sale, according to a Bloomberg report. Instead of including sales of first generation iPhones that came at the end of the second quarter before the release of the wildly successful iPhone 3G, the company will report an increase in earnings on rising sales of Macintosh computers and iPod media players alone.

“The Mac is the primary reason we own Apple shares,” said Michael Obuchowski, a portfolio manager at New York-based Altanes Investments LLC, which began buying Apple shares in 2006. “For several quarters, we’ve seen an incredible acceleration in Apple’s PC business.”

There could be even more good news ahead for Apple shareholders, who will undoubtedly receive another boost next quarter, when Apple tells the story of its hugely successful iPhone 3G release, which has nearly completely sold out in the United States, Germany and other worldwide locations in its first 10 days on the market.

Software engineer Satoshi Nakajima, the lead architect of Microsoft’s Windows 95, picked up a Mac for the first time two years ago.

He was so impressed, he says he’ll never touch a PC again.

Satoshi loves Apple products so much, he started a company in April, Big Canvas, to develop for Apple’s iPhone platform full-time.

“We have chosen iPhone as the platform to release our first product (for) several reasons,” explains his company’s website. “We love Apple products… You need love to be creative.”

Based in Bellevue, WA — right next to Microsoft’s home turf of Redmond — Satoshi spent nearly 14 years at Microsoft, serving as the software architect of Windows 95 and 98. He also oversaw the development of Internet Explorer 3.0 and 4.0. While at Microsoft, he developed the third largest portfolio of intellectual property of any employee at the company, according to his bio.

Last week, Satoshi released his company’s first iPhone application, Photoshare, a free, social networking app for sharing pictures with the iPhone.

Photoshare is like Flickr for iPhone photographers. The downloadable Photoshare app allows users to upload pictures to Photoshare’s website, and then share those pictures publicly or privately — without any required registration or the need for a computer.

We spoke with Satoshi about the pleasures of writing software for the iPhone SDK and got some of his thoughts about Apple’s UI, its distribution model for iPhone apps and the future of handheld communications.

The interview continues after the jump.

• CG: Sega bloke claims iPhone is as powerful as the Dreamcast. We await iPhone Crazy Taxi with bated breath. https://tinyurl.com/5j9kbz #

UPDATED: See comment below.

The very last iPhone 3G at the Stonestown store in south San Francisco was just sold to a guy in a Microsoft shirt!

I’m currently at the Apple store in the Stonestown mall, posting from an in-store computer.

I came down to pick up an iPhone 3G, but the last phone was just sold to this guy in a Microsoft shirt. WTF!

The guy, who is very nice, asked me not to use his name in case he gets into trouble at work. He is a trainer for Microsoft Microsoft trainer who works for a third party company.

Staff here at the Apple store say they have no idea when — or even if — they will get new stock of the iPhone 3G.

The concierge is sending people upstairs to a new AT&T store that is apparently taking preorders. The concierge says there’s likely a 21 day wait however.

I phoned other nearby stores in Sand Francisco and Burlingame, but they are sold out also.

As Lonnie reports below, iPhones are available at only one in four stores, and Piper analyst Gene Munster thinks it will take Apple a month to restock.

Via BoingBoing

Perhaps AT&T employees in New York were so overwhelmed by the amount of business they did this week, they went time out of mind, or began speaking in tongues.

Check back last week for more iPhones.

Piper Jaffray analyst Gene Munster says because Apple “knocked it out of the park on the first weekend” supply chain shortages could force iPhone 3G customers to scramble to find a phone or delay their purchase into August, when beefed up orders should replenish supply.

Apple’s iPhone availability tool indicated yesterday just over 25% of the compnay’s 188 US retail stores had any models of the iPhone 3G in stock, with the most-hard-to-find 16GB model in black available in only 18 stores countrywide. Only 13 stores reported all three models on hand, while the apparently least-popular 16GB model in white could still be found in 46 stores.

AT&T company spokesman Wes Warnock said Tuesday their 1,200 retail stores are also nearly out of the iPhone. “As we’re able to start restocking our stores, we will do so as fast as we can.”

Via Macworld

Intego has announced a free upgrade for users of its VirusBarrier X5 security software to eradicate malware from the iPhone and iPod touch. The company has been at the center of news regarding the rise of “trojan horse” malware targeting OS X since at least 2004, the subject of ongoing debate among computer security experts about the risks of malicious software and computer viruses infecting Apple systems.

Earlier this month reports of Apple’s having neglected its mobile platform in releasing security patches to fix exploits discovered in the OS X desktop caused some to wonder whether the opening of the AppStore might also open the door to software that could harm an iPhone or iPod touch. Apple has promised to use its gatekeeping role to screen malware from the AppStore, though, as Intego’s press release mentions, users “jailbreaking” (unlocking) an iPhone or iPod touch can install applications not pre-certified by Apple, increasing the risk of stumbling into harm’s way.

Thus far, the only harmful scripts or programs identified targeting OS X have required the inordinately reckless cooperation of users to open their systems and invite an attack, so the real risks are yet minimal. But as Macs begin to surpass double digits in desktop market share and Apple’s mobile OS continues to advance among handheld users, the prize for black-hat software developers grows ever larger. Perhaps Intego, makers of what MacWorld calls the “gold standard” of Macintosh anti-virus software, will one day rival Norton.

• CG: Ars Technica reports that Apple’s knocked apps with names trying to leapfrog the queue back into touch. Ha! https://tinyurl.com/6nwecr #

deleted

Via Flickr

If you see someone whipping out an iPhone at the next table or across the room at your next social gathering, chances are you’re looking at a member of the modern leisure class. When the iPhone made its debut last summer, people camped out in front of Apple stores across the United States to be among the first to experience Apple’s groundbreaking communication device. When Apple updated the phone and released its next gen gadget in more than 20 countries last Friday, again Apple retail stores and cellular provider outlets around the world received hordes of customers clamoring for the new phone — and Apple sold a paper million of them in three days.

Five days into the launch, all models of the phone were sold out in 21 states in the US and people were still lined up, waiting upwards of three hours to buy a phone in markets where they were still available. Steve Jobs called public reception of the new iPhone “stunning.”

Who are these people? A technology analyst for Piper Jaffray, Gene Munster  put out a report this week estimating numbers and interests of the early adopters of iPhone 3G based on a survey done with 280 people waiting in line to buy the phone in New York. Earlier this year, another trends analyst, M Metrics published a report saying iPhone users tend to do more entertaining things on their devices such as watch video and visit social networks than those who own other smartphones. AdMob similarly confirmed that, at the time, iPhone users were still a relatively small part of the overall mobile phone market in the US, though, according to Munster’s research the percentage of iPhone users is growing.

A look at what’s popular on Apple’s iTunes AppStore sheds more light on the pursuits of iPhone users: every single one of the top ten free and paid applications downloaded from the AppStore in its first week in business — more than 10 million, according to Apple — is a game or entertainment/social networking application. That is, except for the free Weather Bug coming in at #8, which, I’ll surmise people may be looking to for confirmation of their plan to spend the day at the beach or somewhere equally leisurely.

Apple has big plans to storm the beachead of Microsoft’s hold on the Enterprise market and sure enough, the Mac moved past Acer into 3rd place among PC makers in the US market during the 2nd quarter of this year. But Apple’s share of the desktop market remains below 10% and the iPhone’s initial integration efforts with Exchange have run into significant headwinds at the Enterprise level.

For now, it seems pretty obvious the iPhone is a darling of those with time to spare.

Just the other day, Boy Genius Report discovered that it had been visited by a few folks whose web browsers identified them as users of a yet-unreleased iPhone OS 2.0.1. Given the timing, it looks pretty clear that Apple will soon push out the update, which should mainly address bugs. Thank heavens — the OS needs it.

It appears that the iPhone software has some big issues to resolve. In addition to the boneheaded syncing scheme Lonnie highlighted a few minutes ago, every one I know who has installed the new OS onto their existing iPhone or iPod touch has noticed significant downgrades in performance and stability. I don’t have a 3G, and all my associates have the previous version or a touch, so I don’t know if these issues plague the new phone or not.

The worst of these problems is that the iPhone now fairly frequently won’t allow users to answer the phone when the screen is locked. When you get a call, the familiar “slide to answer” graphic pops up. But when you actually slide your finger to the right, the button gets stuck, and the phone locks up completely. At that point, the home button does nothing, the Hold button does nothing, and you basically need to perform a hard reset.

And that’s bad. Any time you have a phone that works well at everything but making phone calls? You need to take care of that problem NOW. Anyone else experiencing stability issues?

Via BGR.

Image courtesy Mushroom

The backup/synch process for iPhones takes a really long time and may turn out to be worthless for restoring a bricked device, according to emerging reports.

Blogger Erica Sadun wrote the other day about her frustrations with Apple’s synch and backup protocols in the iPhone 2.0 firmware and wondered why on earth she has to wait for entire applications to backup every time she synchs her phone with iTunes, instead of having iTunes backup only changed Document and Library data.

Writer Rob Griffiths also complains, “I can connect my phone, let it run a full backup and sync, disconnect it, let it sit on the desk for three minutes, then connect it again”¦and get hit with another hour-long backup cycle.”

And what’s worst is the local backup may be useless for restoring an iPhone to its as-configured state after crashing due to application instability or glitches in the 2.0 firmware. If this is a real problem, Apple’s millions of iPhone customers juggling their tens of millions of AppStore downloads will be letting us know quite soon, but as Griffiths writes, “the current implementation of backup in iPhone 2.0 seems very broken.”

In case you missed Pete’s snippet from yesterday, the iPhone’s Mobile Safari web browser looks very capable of bringing the full web on to the iPhone, outranking some popular desktop browsers in critical standards support testing.

In tests devised by the Web Standards Project to help developers ensure their work can reach as wide an audience as possible, Mobile Safari blew IE7 out of the water on compliance with support for CSS and even scored higher than Firefox 3 in testing for components vital to “Web 2.0″³ functionality.

Looks like those faster 3G download speeds could be worth something after all.

Via Paul Beesley

• CG: In light of Apple suing Psystar, Leigh’s “Missing Macintosh” article from April seems more relevant than ever: https://tinyurl.com/5eselw #
• CG: MacRumors reports that Apple has provided MobileMe users with a 30-day extension and an apology. https://tinyurl.com/65osh2 #
• CG: Shiny Development releases Speakapedia, to convert Wikipedia articles to spoken text in iTunes: https://shinydevelopment.com/ #
• PM: Mobile Safari outscores Firefox 3 in Acid 3 test: https://tiny.cc/Bvg4K #

Given that Loopt, the location-based social networking service, was among the blessed few companies allowed to show its iPhone apps at the introduction of the iPhone 3G, a whole lot of iPhone users downloaded the program after the launch last week. And many got upset with its default privacy settings.

But that doesn’t really matter — YouTube user Incruentum has put together a dance mix to “Caramelldansen” that allows us to revel in the spectacle of CEO Sam Altman’s shirt, instead.

Thanks, Antony!

Apple is extending the subscriptions of its current MobileMe customers for 30 days at no charge, according to an email sent by the company today.

“The .Mac to MobileMe transition was a lot rockier than we had hoped but everything is now up and running,” Apple spokesman, Bill Evans, told Macworld. “We want to apologize to our loyal customers and express our appreciation for their patience by giving all current subscribers an automatic 30-day extension to their MobileMe subscription free of charge.”

MobileMe customers should see the extension reflected in their accounts “within the next few weeks,” according to Apple’s email.

Enterprise customers remain largely unimpressed with Apple’s efforts to promote the iPhone as a tool for business. While hordes of consumers worldwide are willing to stand in line for hours to buy one of the touch screen gadgets, business customers are proving a more wary audience. The disconnect could be a crucial indicator to the company’s future direction.

The shortcomings of Apple’s first generation configuration tool for the iPhone bear all the hallmarks of Apple’s long-standing lack of understanding for the needs of enterprise customers, according to eWeek. Problems with security and application delivery call into question the company’s ability to create an effective solution in-house that can serve the needs of its largest customers. As it stands, the iPhone might be effectively integrated into small business environments, but the tools as currently structured lack the security and remote reach large deployments require.

Apple is rumored to be coming out already – possibly this week – with fixes for Exchange support, which has been declared by some a complete mess. A whole host of features Windows Mobile users are used to seem to be missing or inadequate, according to a review in Mobility Today, and even Apple itself has backed away from its original claim that “”Push happens automatically, instantly, and continuously” via MobileMe, which Apple promotes as “Exchange for the rest of us.”

Apple’s simultaneous worldwide release of new hardware, a major firmware update, a complete overhaul of its web services product and a significant effort toward enterprise configuration must be applauded as a swing for the fences. And the fact that everything has not gone smoothly should come as no surprise. As ever, it will be interesting to watch where the company goes from here.

One of the AppStore’s hottest downloads has more than 500 reviews and a 1.5 star average rating, which has to be bad news for someone.

We got a press release yesterday from uLocate Communications touting the succes of its GPS navigation app for the iPhone, WHERE, free software downloaded more than 125,000 times in its first weekend. A quick check on the WHERE product page in iTunes tells a different side of the story.

“Doesn’t work,” Worthless” and “Just keeps crashing” are the kinds of reviews that get a developer working on an update right away, though other users seem to be having no problems and love the application, with one fan reporting, “I feel that I’ve missed too much in life already because Where wasn’t available before.”

As we reported Monday, some developers are pointing the finger at Apple, claiming the 2.0 firmware is unstable and causing their apps to crash. Apple, of course, has little to say on the matter thus far and seems content to let the waves of elation and frustration that have accompanied the AppStore’s big splash settle out on their own.

The good news for users of software such as WHERE, is that at a cost of “free” deciding it’s not worth the hassle costs no more than a little wasted time, something Apple’s early adopters seem to have in abundance.

• CG: Jackass iPhone devs line-cut by exploiting naming conventions. Gizmodo: https://tinyurl.com/6p99yw (via Daring Fireball) #
• CG: Apple on iPhone cut and paste, GPS turn-by-turn and the lack of an iPhone office suite: https://tinyurl.com/67bgph (ExtremeTech) #
• CG: MacRumors reports that Psystar is indeed likely to get a butt-kicking over its Hackintoshes: https://tinyurl.com/5a69qq #