HolidayBuyer's Guide

Week in review: An iPhone harvest for Apple

The Mac maker unveils its new 3G smartphone. Yahoo says Microhoo is over, then signs a search pact with Google. Also: Porn crackdown.

Steve Jobs this week took the wraps off the biggest secret that everyone already knew.

Apple's CEO unveiled the 3G version of the iPhone, along with a slew of new third-party applications designed for the device, at Apple's Worldwide Developers Conference in San Francisco.

The new iPhone, which will use third-generation wireless technology and run updated iPhone 2.0 software, is expected to launch July 11, Jobs said in his keynote speech.

The iPhone will also be cheaper than its predecessor, with a 16GB version priced at $299 and an 8GB version that costs $199. The dramatic price cut from the previous version is due to AT&T agreeing to subsidize the phone in return for a $10 increase in monthly unlimited data plans.

Unlimited 3G data plans for business users will cost $45 a month in addition to a voice plan, presumably because of a higher consumption of data. And AT&T will require U.S. iPhone buyers to sign a two-year contract and activate the iPhone on AT&T's network before they can take it home. This won't eliminate unlocking, but it could discourage it to some degree.

The company also made several software announcements that could set a new standard for getting innovative applications to market quickly. With a new software development kit and soon-to-be-launched application store featuring third-party applications, the company has created a powerful platform for developing applications, plus a set of simple tools that can be used to quickly and easily bring new mobile applications to market. And it's created an App Store, linked with its popular iTunes music and video store, where these applications can be easily searched for and downloaded.

CNET launched a site specially formatted for iPhone users. Point your iPhone or iPod Touch browser to iphone.cnet.com to read, watch, and listen to CNET on those devices. And check out iPhone Atlas, which reports daily on iPhone news, applications, and troubleshooting, and now offers forums for user discussions about the iPhone, iPod Touch, and Apple's Mobile OS X.

In other news, Apple announced the next evolution of its .Mac service, MobileMe. The service is a cloud storage solution that synchronizes e-mail, calendar items, contacts, photos, and other documents. MobileMe will replace Apple's consumer Web site service, .Mac, and adds to that service additional storage (.Mac's 10GB goes to MobileMe's 20GB), plus support for the new iPhone and for Windows PCs.

Deal and no deal
Eight years ago, Google provided the search muscle for Yahoo, and now the two have reunited. In another long-awaited development, Yahoo announced a nonexclusive partnership under which Google will supply some search ads to its rival, a move that could increase money generated from Yahoo's search business but that also gives Google even more power in the market.

Under the deal, Yahoo will select the search terms for which Google will supply ads, the companies said. The ads will be displayed in the United States and Canada, and Yahoo controls which Google results are displayed and when.

The partnership also extends beyond advertising. The two companies will make their instant-messaging services interoperable, lowering a barrier that separated two communities of users at the sites.

News of the partnership came on the heels of news that Microsoft's efforts to reach some sort of arrangement with Yahoo had broken down again. The search company said that at a meeting on June 8, Microsoft indicated that it is no longer interested in Yahoo, even at the $33 a share it had previously said it was willing to pay.

Microsoft said in a statement that although it is not interested in renewing its bid for Yahoo, "our alternative transaction remains available for discussion."

Yahoo's shares dropped more than 12 percent following the news, changing hands recently at $23.05, down $3.10.

Yahoo, which is trying to fend off a proxy fight from billionaire investor Carl Icahn, will be embarking on a road show with investors and would have likely felt some pressure from shareholders to explain where things stood with Microsoft.

Icahn kicked off the week with scathing questions for Yahoo, as his proxy fight heats up with roughly eight weeks to go before Yahoo's annual shareholder meeting.

In the latest salvo, Icahn presses Yahoo to answer his previous questions as to why the Internet search pioneer opted to install an expensive employee severance plan as a retention method, while neglecting to mention to its workers that Microsoft had earmarked $1.5 billion to retain employees, should it have been successful in acquiring Yahoo.

Icahn said Yahoo directors may be held "personally liable" for signing off on the company's controversial employee severance plans, which, as previously reported, could financially hamstring Icahn's dissident slate of directors, if it is successful in unseating Yahoo's board and taking a majority of the board seats.

Yahoo shareholders filed a statement seeking a trial date to invalidate the company's controversial employee severance plan prior to Yahoo's annual shareholder meeting. In the shareholder lawsuit, Yahoo's outside advisers on the severance plans characterized giving all full-time employees an accelerated vesting of stock options, a move typically reserved for executives, as "nuts."

However, Yahoo, in an FAQ to employees that was filed with the Securities and Exchange Commission, noted its compensation consultant did not mean Yahoo's severance plan was "nuts." Instead, the president of Compensia meant something else when he said "that's nuts" in an e-mail exchange with a co-worker, when the parties were discussing Yahoo's employee severance plans, according to Yahoo.

Porn crackdown
Internet service providers Verizon Communications, Sprint Nextel, and Time Warner Cable agreed to block Internet newsgroups and Web sites nationwide that disseminate child pornography. The move--part of an agreement with New York Attorney General Andrew Cuomo--will affect customers across the country. Negotiations are reportedly continuing with other ISPs.

What Cuomo didn't say is that his agreement with broadband providers means that they will broadly curb customers' access to Usenet--the venerable pre-Web home of some 100,000 discussion groups, by comparison only a handful of which contain illegal material.

Time Warner Cable said it will cease to offer customers access to any Usenet newsgroups, a decision that will affect customers nationwide. Sprint said it would no longer offer any of the tens of thousands of alt.* Usenet newsgroups. Verizon's plan is to eliminate access to some "fairly broad newsgroup areas."

Specifically, Verizon said it will stop offering its customers access to tens of thousands of Usenet discussion areas, including the alt.* groups that have been a free-flowing area for discussions for more than two decades.

A Verizon representative said only a subset of discussion groups, or newsgroups, would be offered to customers in the future. In Usenet parlance, those newsgroups are called the big 8; they include complex procedures for newsgroup creation and deletion, and even boast a formal management committee.

Also of note
Hewlett-Packard rolled out 50 new products at a conference in Berlin, the largest such product refresh in the Personal Systems Group's history...Google co-founder Sergey Brin has put down a $5 million deposit to book a flight into space with the space tourism company Space Adventures...A start-up called Glassdoor.com launched with the intention of making salary and workplace quality information as public as possible.

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