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A new patent-infringment lawsuit claims Apple's iPhone browser violates a patent on mobile Web surfing.

Apple has been hit with a patent-infringement suit from an inventor who claims to have patented
iPhone-like mobile Web surfing.

EMG Technology, which appears to be a holding company for the interests of inventor Elliot Gottfurcht, filed suit against Apple on Monday in the 21st century rocket docket, the U.S. District Court for the Eastern District of Texas in the Tyler Division. EMG was awarded U.S. Patent number 7,441,196 in October after filing its patent application in March 2006, and thinks Apple’s iPhone has run afoul of the claims in the patent.

(Credit:
CNET)

In a basic sense, the patent supposedly covers the ability of a Web site to reformat itself to the size of the screen trying to access that site. “The ‘196 patent claims cover the display of Internet content reformatted from HTML to XML on mobile devices–the industry standard currently displayed by the iPhone,” EMG adviser Stanley Gibson said in a press release announcing the lawsuit.

It’s not clear why EMG is going after Apple, given that many companies have similar technology in the market, although EMG says the patent also covers “the technology for manipulating a region of the screen for zooming and scrolling.” An Apple representative said the company does not comment on pending litigation.

With lots of cash in the bank and strong profit margins, Apple is in excellent shape to weather a couple of disappointing quarters that could cause far more problems for the rest of the industry. But after the numbers are revealed, expect the financial community to ask Apple executives Tim Cook and Peter Oppenheimer–the usual conference call participants–to comment on Jobs’ health and the company’s long-term plans around succession.

The last three months were not kind to computer and consumer electronics companies, but Apple is expected to have weathered the storm better than others. Analysts are predicting the company will report revenue and earnings per share at the high end of the guidance it provided in October, with expectations of $9.76 billion in revenue and earnings per share of $1.38.

Cook, who is running the company during Jobs’ absence, is unlikely to say too much more about Jobs than the company did in last week’s media advisory. But analysts could use this opportunity to focus on calling for Apple to make its long-term succession plan clear to the public, something the company has resisted doing until this point.

(Credit:
James Martin/CNET News)

When it comes to the other two legs of Apple’s business, however, the prognosis is less clear.
iPod shipments, usually the crown jewel of Apple’s first fiscal quarter, are expected to decline from last year’s 22 million shipments to around 19 million. But there could be a silver lining for Apple if the momentum toward higher-priced iPods like the iPod Touch continues, allowing the company to offset a volume decline in sales with an increase in revenue obtained per iPod.

Measured against a U.S. PC market that fell 3.5 percent compared with last year, Apple’s shipments grew 7.5 percent. That suggests that Apple is still enjoying momentum in its Mac division, which no doubt got a boost from the introduction of new notebooks in October.

The three-month period between October and December is usually one of Apple’s best quarters of the calendar year, but this was anything but a typical holiday season. Overall retail sales fell 2.7 percent in December as compared with November, as the full emotional impact of the late-2008 stock market swoon took hold.

And going forward into an uncertain economic climate, Apple is expected to provide its usual conservative guidance. In past quarters, the guidance number has been one of the most anticipated aspects of the earnings reports, but this year it seems investors and analysts are more interested in Apple’s performance during a holiday season that has caused no small degree of problems for its competition.

After a week spent worrying about the health of CEO Steve Jobs, Apple will look forward to getting back to business Wednesday when it reports its fiscal first-quarter earnings.

Financial analysts seem to expect around 5 million iPhones to have been sold during the quarter, which would be a steep decline from the company’s fourth quarter but a 116 percent increase over last year’s first-fiscal quarter iPhone sales.

Still, the economic climate is having some sort of impact on the Mac, which is almost exactly what analysts felt would happen going into this quarter. Most analysts seem to be expecting Apple to have sold around 2.6 million Macs during the quarter, representing decent year-over-year growth at around 13 percent but slower than Apple had been reporting over the last several quarters.

Predicting the
iPhone shipment totals is even less of a science, since Apple’s history in this market is too short to have established seasonal patterns. The company sold way more iPhones last quarter than anyone had expected, shipping 6.9 million units. That has dampened expectations for the current quarter, since many of those sales were used by Apple’s carrier partners to build inventory ahead of the pent-up demand for the July iPhone 3G launch.

The sales performance of Apple's new MacBooks, such as this MacBook Air, will be one of the key factors in Apple's first-quarter results.

Apple’s first official response to rumors about Jobs’ health came on an earnings call in July, when the company declared his health was a private matter. Things have changed quite a bit since then, with Apple revealing last week that its CEO is taking a six-month medical leave of absence to recuperate from health problems that have caused him to lose a great deal of weight.

We got a bit of an earnings preview last week, when IDC and Gartner reported their PC market share estimates for the fourth calendar quarter. Apple’s
Mac shipment growth slowed from the strong pace it set throughout 2008, but the company is still growing faster than the market itself.

Consumers are benefiting from competition between phone companies and cable operators when it comes to broadband pricing, but the same can’t be said for pricing on TV services.

Of course, consumers could look for alternatives. As more Americans are hit by the economic downturn, some are turning toward the Internet and over-the-air TV as free alternatives. But broadband providers may soon put a kibosh on these free alternatives, as they impose service limitations like bandwidth caps and overage charges.

A report published by market research firm Pike & Fischer earlier this month notes that cable broadband prices have remained steady even though operators have been increasing speeds. The firm attributes this trend to more competition from Verizon’s all-fiber network, Fios, which offers superfast broadband at competitive prices.

A Time Warner spokeswoman told the Times Herald-Record, a newspaper serving New York’s Hudson Valley, that the price hikes were due to rising programming and operating costs. Cablevision will also be raising its cable television prices by an average of 3.5 percent, the Times Herald-Record also reported.

“As Verizon has rolled out Fios Internet and TV services in more and more communities, the market has seen an increasing variety of prices and data rates, as cable operators respond to FiOS launches (and to a lesser extent similar services from AT&T and Qwest Communications) on an increasingly market-by-market basis,” Mitchell Shapiro, a contributing analyst for Pike & Fischer said in a statement.

AT&T and Verizon, which offer TV service in some areas to compete with cable, have also been increasing rates and are expected to raise them again in early 2009. In October, AT&T increased the price for three new high-definition channels by $5 a month. And now some customers are receiving e-mails informing them that beginning February 1, 2009, the monthly rates for a few services will be increased, according to Engadget. For example, non-DVR set top boxes will cost $7 per month instead of $5 per month. And the price of the Movie Package will increase from $15 to $20 a month. And the Paquete Espanol package will increase from $10 to $15 a month.

Average prices for cable modem service have remained steady at about $40 to $45 a month, the firm said. That’s even as standard cable modem speeds have climbed from an average of 3 megabits per second in 2004 to between 10 Mbps and 15 Mbps today. Some markets are even able to get 50 Mbps.

Verizon’s plans for rate hikes haven’t been announced, but they’re likely coming. Last February, Verizon raised the price of its Fios TV Premier tier by 12 percent. And word on the street is that the company will likely raise rates again in early 2009.

The Federal Communications Commission has been looking into the rising price of cable services for some time. But nothing has been done to curb the price hikes.

Meanwhile, consumers don’t appear to be getting the same pricing benefits from competition when it comes to their TV service. Cable TV prices continue to rise. For example, Time Warner plans to increase its Triple Play Starter Pak to $116.95 from $114.95, while its standard service will go from $43.25 to $46.30 in most areas, according to a rate card distributed to customers. Some promotional prices are lower for new customers.

Kliavkoff, who has one of the best track records for building digital media services from the ground up, will become the executive vice president and deputy group head of Hearst Entertainment & Syndication. He will report to the unit’s president, Scott Sassa, the former CEO of Friendster and Uber.com.

“It’s also particularly great in this economic climate to be doing this kind of investment,” Kliavkoff said, “and building in a private media company, which has the benefit of having a long-term perspective on growth, as opposed to having to worry as much on a quarter-by-quarter basis.”

Founded by William Randolph Hearst in 1887, a media tycoon that created a vast newspaper and magazine empire, the Hearst Corporation today is a huge communications conglomerate. In addition to more than 70 newspapers and 200 magazines, the privately held company also owns more than 25 TV stations, two radio stations, and significant stakes in cable channels.

George Kliavkoff is headed to the Hearst Corporation to oversee the media company's digital investments.

George Kliavkoff, the former NBC Universal exec who helped conceive of Hulu, is joining the Hearst Corporation, the century-old company known more for newspapers than digital media.

The news was first reported by Peter Kafka at All Things Digital.

Hiring the marquee name in digital entertainment is another sign that Hearst is serious about the Web. Upon his departure from NBC in November, Kliavkoff said “this is a best time to start, run, or invest in digital companies.” He said then that he wanted to oversee this kind of investment but that it was getting harder for public companies to make those kinds of bets.

Besides helping draw the blueprint for Hulu, Kliavkoff, 41, oversaw NBC’s online distribution of last year’s Olympic games. Before NBC, he helped make Major League Baseball Advanced Media, the digital arm of professional baseball, the most successful subscription video site on the Web.

At the same time Hearst tries to safely navigate the collapse of the newspaper sector (Hearst has said 2009 may see the closure of the Seattle Post-Intelligencer and flagship paper the San Francisco Chronicle), the company is also looking for a way to profit from the Web. After all, the Internet is a communications medium and for a 121-year-old communications company, this should be in its wheelhouse.

But the company’s record in digital investments have been mixed. Some of the companies it has an interest in are Pandora, Brightcove, Meta TV, MobiTV, and XM Satellite Radio. In the past several months, Hearst has announced the company would make a foray into electronics by building an electronic book reader. The device, which may launch this year, would be designed to boost the number of digital outlets for Hearst’s print content. Managers also said they plan to start charging readers for some newspaper content.

Kliavkoff says Hearst wants to invest in both start-ups and also create companies on its own, which is what he did with Hulu, the popular video site.

According to estimates, Hearst generated more than $4.3 billion in revenues in 2007 and employs more than 17,000 workers. The company is controlled by Hearst’s descendants. When asked whether the conglomerate has the assets to make significant investments, Kliavkoff said he couldn’t discuss specifics but said the company was profitable.

A good bet is that Kliavkoff, who started in digital media at RealNetworks, will look for ways to help Hearst use its video content to cash in on the Web.

Kliavkoff said in November, when he announced his departure from NBC, that he was ready for a new challenge. He certainly found one in Hearst.

The unit Kliavkoff joins is responsible for managing the company’s ownership stakes in cable companies, such as A&E Television Networks, the History Channel, and ESPN. The division also operates a television product unit, a newspaper syndication business, and a merchandise licensing unit. In addition to helping Sassa run those businesses, Kliavkoff told CNET News that that he will also oversee Hearst’s “building, buying, and operating of new digital businesses.”

(Credit:
NBC Universal)

For the Dow, after its wild ride, it closed down 128 points, or 1.49 percent, to 8,451.19.

The CNET Tech Index also ended up for the day, climbing 19.05 points, or 1.67 percent, to close at 1158.14. The tech-heavy Nasdaq squeaked by with a nominal gain of 4.39 points, or 0.27 percent, to end the day at 1,649.51.

Dow Jones Industrial Average intraday trading

eBay intraday trading

Apple closed up 9.08 percent from Thursday, ending the day at $96.80 a share. It gained most of its traction in the final hour of the trading session and was one of the most actively traded stocks on the Nasdaq.

Market watchers attributed the Dow’s wild swings in the final hours of trading to a meeting of the Group of Seven nations (G7), which met in Washington to attempt to develop a solution to the credit crunch, according to a report in MarketWatch.

The S&P 500 also closed down for the day, with a 10.70 point drop, or 1.18 percent, to 899.22.

As the Dow whiplashed investors with its swings that ranged more than 1,000 points during the day, Apple and eBay took investors on an upward path.

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Yahoo Finance)

eBay, meanwhile, initially struggled to stay in positive territory, but succeeded and ended the day up 4.82 percent to close at $16.73 a share. The online auction giant was also one of the most actively traded stocks on the Nasdaq.

Apple and eBay were two notable stocks to swim against the tide Friday, staying in positive territory throughout the mid-morning through the market’s close. Meanwhile investors watched the Dow Jones Industrial Average take one of its most harrowing rides ever.

(Credit:
Susan Dove/ CNET News)

Apple intraday trading

(Credit:
Yahoo Finance)

(Credit:
Yahoo Finance)

In the meantime, however, Google’s advertising business held up remarkably well in the fourth quarter, all things considered. Even though the economy headed south, Google’s paid clicks increased 18 percent in the fourth quarter compared with the same period a year earlier.

The rap against Google is that it’s just a glorified one-trick pony. When I hear that refrain (usually, from Microsoft folks,) I nod and add, “Yeah…and that’s still one helluva pony.”

But here’s the rub: if advertising comes under more pressure during the next 12 months, does Google have the chops to come up with another big idea to compensate for any financial shortfall? Google’s page-ranking technology was a breakthrough and a huge moneymaker. Even Google’s biggest fans have acknowledged that nothing remotely similar has since made its way off the drawing board.

“Interestingly, what we saw in November and December was consumers searching much more disproportionately for two-for-one, for sales, for coupons, and advertisers really trying to make sure that they were able to sell the inventory which they purchased when they were anticipating a better economic situation.”

Focused. But that’s not the same as arguing the keyword search business is recession-proof. With more businesses and consumers reducing spending, how long before advertisers have to lower their keyword bids?

But if you’re a glass-half-empty type, is this a harbinger of trouble? Revenue growth slowed to an 18 percent annual rate, compared with 31 percent in the third quarter. Listening to Eric Schmidt’s team handle Wall Street’s questions on the company’s conference call Thursday afternoon, you realize that the folks running Google are too experienced to believe they can defy history.

And who knows? If stuff like Google Scholar is the best that Google can muster, maybe Ballmer won’t have to slam his head for much longer. To be continued…

“So, one of the things we have to ask ourselves now is how much of that inventory has actually flowed through the system…Obviously, we would be adversely impacted if there were less total commerce moving forward. So that’s really the wildcard from a user standpoint that we need to watch.”

“I think the management team is really working with two agendas always. One is, manage our resources prudently. I think Eric was right in saying in some ways the easy part was done in Q4. In that sense, this is a worldwide recession with a lot of visibility about what’s going to happen. We just have to be prudent, and therefore, we’re focused.”

He’s quite right about that. Nobody knows the sort of hand Google’s likely to get dealt. Anybody who tells you otherwise is simply a pumper or a dumper. Or maybe they just work for CNBC.

After reporting quarterly earnings, Google finished Friday up more than $18.
So at this point, at least, it’s still Google 1, Recession 0. The cool kids have the upper hand–at least for the time being.

Steve Ballmer, who just announced to the troops that Microsoft was firing 5,000 employees due to the recession, might be excused for wanting to slam his head against the wall at this point.

At best, they may be able to slow it down through a combination of managing smartly and prudent cost-cutting. Apropos, here’s what Google’s CFO, Patrick Pichette, had to say:

I’m the last to suggest that Google is immune to the drag of an economic slowdown. Everyone these days is obviously tightening their belts, and Google is no exception. The company let go of 100 contractors and recently ordered three projects shut down as cost-savings measures. (How long before more money losers get dumped?)

Business was so bad for so many companies in the fourth quarter that many retailers were offering distress sales in a rush to clear inventory. And that affected search patterns during the last couple of months of 2008. Here’s what Jonathan Rosenberg, Google’s senior vice president of product management, had to say about the anomaly:

Need even more justification to slack off? Click below to hear about it in Dr. Coker’s own voice.

But this doesn’t apply to everyone. Approximately 14 percent of the sample showed signs of Internet addiction and, for them, Web surfing can decrease productivity. The more they surfed at work, the less productive they were. The reason for this, he said, “is because of an ‘urge’ to search the Internet. “Those that aren’t addicted, don’t have this urge and they surf the Internet as a reward.”

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The reason that “WILB” increases productivity, he said, is that “people need to zone out for a bit to get back their concentration. Think back to when you were in class listening to a lecture–after about 20 minutes your concentration probably went right down, yet after a break your concentration was restored.”

Here’s some good news that you should forward to your boss.

(Credit:
University of Melbourne)

Professor Brent Coker

*A postscript based on reader comments:

A study conducted in Australia found that people who engage in “Workplace Internet Leisure Browsing” (WILB) are more productive than those who don’t. Workers who “surf the Internet for fun at work–within a reasonable limit of less than 20 percent of their total time in the office–are more productive by about 9 percent,”* according to the study’s author, Professor Brent Coker, from the University of Melbourne’s Department of Management and Marketing.

I’m not sure whether the result of this Australian study applies to workers in the U.S. and other countries, but I for one have a vested interest in believing what he says. If nothing else, it’s a great excuse, especially if your boss is giving you a hard time for “WILB.”

The study found that 70% of the 300 workers surveyed engage in “WILB.” The report was released in Melbourne on April 2nd when it was still April 1st in the United States. In an email, Dr. Coker assured me that it’s not an April fools joke.

Some people have wisely questioned the researcher’s math. In an exact quote from the study’s author, I point out that workers who “surf the Internet for fun at work–within a reasonable limit of less than 20 percent of their total time in the office–are more productive by about 9 percent.” What isn’t clear is whether or not there is 9% productivity gain after accounting for up to 20% fewer hours of work. I emailed the study’s author with that question and will file an update when I receive an answer.

Updated at the end with response to some reader comments

A short break, such as surfing the Internet, “enables the mind to rest itself, leading to a higher total net concentration for a day’s work, and as a result, increased productivity.”

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VRAC)

A team from Iowa State University is using virtual reality technology to develop “immersive” ground control stations that will give operators of military unmanned aircraft (UAV) an overall view of their planes and the battle space they are flying over.

The university’s Virtual Reality Applications Center (VRAC) team is working under a $4.2 million contract as part of the U.S. Air Force Research Laboratory’s effort to develop the “next generation control interface” for military UAVs. If successful, the real-time virtual view of the battle space will allow a single operator to control several UAVs simultaneously, all the while monitoring onboard instruments, cameras and weapons systems.

“We’re also developing and measuring the effectiveness of new human interface techniques, which will enable operators to effectively control multiple, semi-autonomous aircraft. Already, up to 230 persons can be interfaced to participate in the system simultaneously,” research leader Dr. James Oliver said in an interview with Space War.

The idea is to use novel eye-tracking and voice control technology to provide a shared, situational awareness interface, which robo plane crews can then monitor and interact with on large screen displays.

This approach inverts the typical paradigm for conveying information to UAV jockeys, according to VRAC. Because rather than augmenting the real-time camera picture with sensor generated information, the new interface works more like a virtual operating theater–one that’s constantly fed by a myriad array of spatial and temporal information sources.

Ray Ozzie

“Microsoft has both the capacity to invest and the willingness to be in that kind of a business and to give that kind of trust assurance to developers and to enterprises,” he said.

(Credit:
Ina Fried/CNET News)

“The day-to-day writing of code will translate fairly readily,” Ozzie said. “Things that are fundamentally different tend to be at the application framework level. The fundamental assumption in Windows Azure is that there is no single point of failure. No computer by going down will take down your application. If your app is not written in that way…then fundamentally the application pattern does have to change.”

“Infrastructure will be a no-brainer,” he said. “The things where there isn’t unique business value added to a given system–e-mail infrastructure is a good example, phones, live meetings. As long as we achieve the performance objectives and cost objectives… I see no reason why those won’t move very quickly to the cloud.”

“For somebody who has used (Amazon) EC2,” he said, “it will be a lot easier to get up to speed because there are some of the concepts that are carried across.”

LOS ANGELES–Microsoft has to do more than just convince businesses that it has the right vision with Windows Azure, its burgeoning take on cloud computing, according to Ray Ozzie, the company’s chief software architect. Fundamentally, it has to get them to place a huge amount of trust in the software provider.

Ozzie said that Microsoft is well-positioned to garner that trust, both because of the scale of its investments as well as the fact it is putting its own applications on top of this same infrastructure.

Core business software won’t get migrated so quickly, he said.

“In terms of business applications, it’s really going to take longer… for a variety of reasons, including the risk profile,” Ozzie said. “Some companies might do it quickly.”

As for developers, Ozzie said some of their skills will translate, but applications will have to be rewritten.

The full Q&A is here: “What Ray Ozzie sees in Azure’s cloud.” See below for a video interview.

Most applications will not run that way out of the box, he said. Those that have used Amazon’s Web services will probably be further along than those simply used to writing traditional Windows applications.

Some types of things will move more quickly than others, in Ozzie’s view.

“Cloud computing is ultimately going to be, do you trust this provider to have more to lose than I have to lose as a company if they mess me up?” Ozzie said in an interview with CNET News here Monday at Microsoft’s Professional Developers Conference.

The linking also confuses readers, leading them to believe that GateHouse endorses the linking practice, according to the lawsuit.

In an e-mail sent to GateHouse staff, an executive said GateHouse had taken the legal action after being unable to resolve the matter informally.

Updated 12:43 p.m. PST with GateHouse comment in e-mail sent to staff, as well as comment from Chicago Reader Web editor.

“Boston.com’s local pages, like hundreds of other news sites, aggregate headlines and snippets of relevant stories published on the Web. They link back to the originating site where the interested user can read the entire article,” she wrote in a statement.

In an e-mail sent to CNET News on Tuesday, Chicago Reader Web Editor Whet Moser wrote that the Huffington Post had printed multiple concert previews “in full from multiple publications over the course of a couple months.”

“GateHouse has taken this step to enforce its rights under the law and protect the integrity of its trademarks and original news content, in furtherance of its ability to provide hyper-local news coverage to its newspaper readers and website viewers in the communities throughout the greater Boston region which it has served over many years,” wrote Kirk Davis, president of GateHouse Media New England. “As a matter of policy, I won’t be commenting further on this matter. Instead, it is appropriate that we let this matter take its natural legal course.”

Huffington Post co-founder Jonah Peretti defended the site’s aggregation practice to Wired News and said the complete article re-printing was a mistake.

Catherine Mathis, senior vice president of corporate communications at the New York Times, said the linking practice is commonly used around the Web and that GateHouse’s claims are without merit.

Meanwhile, a weekly publication in Chicago, The Chicago Reader, has pointed the finger at The Huffington Post for re-posting an entire concert preview.

“Far from being illegal or improper, this practice of linking to sites is common and is familiar to anyone who has searched the Web,” Mathis wrote. “It is fair and benefits both Web users and the originating site.”

Google got heat a few years ago for its Google News aggregation of headlines and summaries and settled a copyright lawsuit with Agence France-Presse last year. Google also is paying the Associated Press to use its content on Google News.

A publisher of mostly small, local newspapers has sued the New York Times Co. over its aggregation of news headlines on Boston.com, challenging the practice many sites use of linking to other sources.

In its lawsuit filed in U.S. District Court in Massachusetts on Monday, Fairport, N.Y.-based GateHouse Media, which publishes more than 100 papers in Massachusetts, accuses the Times of violating copyright by allowing its Boston Globe online unit to copy verbatim the headlines and first sentences from articles published on sites owned by GateHouse, including the Newton Tab.

The links, as seen on Boston.com’s Newton site for instance, lead to the original articles on the GateHouse-owned sites, which display advertising. However the lawsuit claims GateHouse is losing advertising revenue as a result of the linking because readers don’t see the ads on the GateHouse site’s home page.