Simple: It needs to bulk up to contend with the might of Apple, one of the largest buyers of flash memory.
Samsung has supplied the memory chips for Apple's iPhone since its launch last year. Before then, Samsung sold Apple memory for its iPod line, and continues to do so today. Apple is a huge customer for Samsung — so huge that it can command deep discounts, and tie up an enormous amount of Samsung's manufacturing capability. When Apple first launched its flash-memory iPod Nano, it locked up enough production to keep rivals off the market for months. (Even Samsung and SanDisk tried to launch me-too clones of the Nano, to no effect.)

Regulators may block Samsung's SanDisk bid. But they ought to keep an eye on Apple, too. Antitrust cops tend to spend all their time watching for monopolies — sellers who wield undue influence over a market. They should crack open their investment glossaries and look up "monopsony" — the condition that exists when a buyer dominates a market.

(Illustration via Apple Insider)

I’m still trying to figure out why they held an actual event today instead of just putting out a press release. As a fellow filthy hack commented to me after the big show, “Can you imagine if Sony did this?” Nevertheless, there was much cheering and shouting and clapping and whooping, even though much of it came from Apple employees who had been instructed to remove their green event T-shirts so they’d look like regular members of the public. I’m not making that up. Friends, it’s true — Apple brings along its own employees and has them cheer like mad for their own products.

I don't have a problem with updates being reviewed but it has to go a lot faster. Given the no-demos rule, an app lives or dies by App Store reviews. It's incredibly frustrating to watch review after review complain about a bug that you fixed and "shipped" two weeks ago.

Facing an iPod-related patent infringement lawsuit from a company called Burst, Apple's lawyers had to be delighted to find a British inventor who filed lapsed patents on a music player back in 1979. So they called Kramer and asked him to tell a judge that whatever Burst's claims about creating the technology behind the iPod, he came up with the iPod first and was happy to see it doing so well.

"The questioning by the Burst legal counsel there was tough, ten hours of it. But I was happy to do it," Kramer told the Daily Mail. "To be honest, I was just so pleased that finally something that I had done which has been a huge success and changed the music industry was being acknowledged."

For his pains, Kramer received a consulting fee from Apple and is now negotiating compensation for a copyright he owns on a patent drawing that looks like most any early MP3 player. Apple and Burst settled out of court.

Apple has determined that in very rare cases batteries in first generation iPod nanos sold between September 2005 and December 2006 can overheat causing failure and deformation of the iPod nano. Apple has received very few reports of such incidents (less than 0.001 percent of first generation iPod nano units), which have been traced back to a single battery supplier. There have been no reports of serious injuries or property damage, and no reports of incidents for any other iPod nano model.

Any first generation iPod nano customers who have experienced their battery overheating should contact AppleCare for a replacement. Any other customers who have concerns about their first generation iPod nano battery should also contact AppleCare.

I told a little story about Heath's iPod. Whenever we went into the trailer we'd say "Whose iPod is this?" Because it would always be some wacked-out music nobody had ever heard of before. And it was Heath's. And that iPod has since become a symbol of Heath and his friends pass it around to each other, download the music and then pass it on.

Eckhart has obviously strayed from the Hollywood line on copyright— downloading music from someone else's iPod is clearly infringement. But a blithe diffidence to piracy isn't the only way Eckhart's form of mourning shows how the mass culture has been infected by Silicon Valley.

A number of cases where bereavement meets technology have arisen over the last few years, such as the father of a American soldier who died in Iraq but couldn't get into his son's email account because Yahoo refused to allow access, or the numerous tributes left for the dead on their social network profile pages.

Ledger was only 28 when he died, on the cusp of the generation often called "Millennials." If he was anything like his peers, he must have defined himself in part by his taste in music. It's only natural that friends would go through his music collection as a way of getting a sense of the man they lost, with a song they enjoyed together providing a poignant point of shared experience.

But for those who already carefully craft their playlists the way my generation once obsessed over mixtapes, it puts a whole other layer of meaning onto your selections. I can see asking myself before synching with iTunes, "Will my friends appreciate the irony of including Journey's Greatest Hits if I get run over by a bus and all that's left of me is this iPod?"

Eckhart's recollection of Ledger suggests we can be known by our silicon — that we don't go to heaven as much as upload our digitized lives to the clouds. It is a view of our mortality that the programmers of Silicon Valley would be entirely comfortable with: Ashes to ashes, bits to bits.

Beyond vertically integrating yet another step in the process of making the popular devices, it would also keep the technology out of the hands of competitors, like the Samsung multitouch phone that looks strikingly similar to Jobs's pet project, and allow the company to keep an even tighter lid on leaks. The only thing Apple still won't do is fabricate the chips and assemble the devices, so while the boxes will still read "Designed by Apple in California," the devices inside will very much be "Assembled in China." (Photo by Chen Zhao)

Which strikes us as odd. Te program's intent is to entice young, well-educated potential customers to get used to working in the relative luxury of OS X. Wouldn't getting them hooked to a monthly bill, like those ubiquitous credit-card offers on college campuses, be a better idea? Especially considering that the company's still-minuscule market share in cell phones was reportedly down in the last quarter.

No, this is about the twisted dynamics of the music industry. Selling unprotected MP3s is all the rage now, even though label executives have insisted for years on copy-protected formats, like the kind Apple sells through iTunes. Forget Jobs's propaganda about Apple wanting to "free" music from copy protection. He doesn't care one bit about the digital-rights management software, or DRM, that record labels insist on. And he knows that most consumers don't care about the issue. He just wants to sell iPods, and his customers just want to buy them.

What Jobs does care about is other music stores having something Apple doesn't. The labels have been favoring competitors like Amazon.com with licenses for MP3 files — because they now fear Apple more than they fear piracy. And Jobs knows that DRM doesn't work to stop piracy, anyway. But what it does do is lock music to devices, because hardware manufacturers can't risk breaking the DMCA's circumvention provisions.

So Apple needs a new hook to win the labels back. Selling subscription music would allow Apple to lock down its music once more. According to reports of the proposals Apple and the labels are considering, iPod buyers would pay anywhere from $20 to $100 to get all the music they can download. Ah, but they'd have to download it from iTunes, onto an iPod.

Bundling music would give Apple a huge edge over the competition. Nokia's also proposing an all-you-can-hear music plan. But for all of Nokia's talk about cell phones replacing MP3 players, only 7 percent of cell-phone owners listen to music on their handsets. Amazon.com could try a subscription plan, but it's hard to see how it would make money, since it doesn't have the iPod's hefty profit margins.

Jobs comes out on top, again. Apple sells more iPods by giving the record labels what they want — copy protection and revenue — without having to share the iPod's profits. The compliant tech press corps will hail his plan as genius, forgetting he ever said anything about consumers wanting to own their music. The losers here are the musicians. Apple and the labels will divvy up subscription revenues, and the artists' cut will likely be smaller than what they'd make off of by-the-song sales. But since when has anyone asked their opinion about how to run the music business?

(Photo by AP/Paul Sakuma)

NPD says $6.3 billion was spent on MP3 players in 2007. Pricegrabber reports the average player price was $169. This means roughly 37 million MP3 players were sold in the U.S. last year. Apple says it sold 52.685 million iPods globally in calendar 2007. Apple doesn't break out international versus U.S. sales, but we know that 45 percent of Apple's revenue comes from overseas. Using that number, and reports of Apple's market share at around 70 percent, we estimate that Apple sold 27 million iPods in the U.S. last year.

So, 27 million iPods sold in the U.S. last year, of which 10.8 million — 40 percent, assuming Cook's numbers hold up throughout the year — were to new iPod owners. 303,534,374 people in this country, and Steve Jobs managed to convert just 3 percent of them this year into iPod owners.

Apple has shipped a lot of white earbuds — more than 141 million globally — but Steve Jobs has a long way to go. Better step up those ad campaigns.

(Photo by AP/Ben Margot)

We put our energy into the launch of the iPod Touch ... we did it because it was very strategic for us to extend the iPod brand into being the first mainstream Wi-Fi mobile device ... I think we were very successful with it.

The product that didn't do so well last quarter on a year over year basis was Shuffle... in fact, Shuffle was down globally 17 percent and in the U.S. Shuffle was down more than that.

We decided to take the price of Shuffle down significantly... we did this because we believe there is elasticity in the market, somewhat in the U.S. and even more so in places outside the U.S. We will see if that exists or not.

Handily for the PM, U2's music is available on the Japanese iTunes store. In November 2006, Bono gave then Japanese Prime Minister Shinzo Abe a pair of his Armani Red campaign sunglasses for the same cause. (Photo by AP/Peter Dejong)

CFO Peter Oppenheimer and COO Tim Cook are on the call. No Steve Jobs, of course.

2:05 Pacific Time: Revenue grew 35 percent year over year.
2:06, Mac products and services were 42 percent of revenue. Shipments grew by over 2.5 times the industry average.
2:07, Leopard revenue was about $170 million in the quarter. Tiger only pulled $100 million in its first quarter.
2:08, 22 million iPods surpassed the last quarter.
2:09, iPod Touch came out at a higher price point than usual. This was a challenge. "We succeeded." NPD says iPod's market share in digital video players remained the same as last year.
2:10, Apple stores posted record quarterly results. 53 percent year over year growth, actually. The new store in Manhattan is "off to a great start." Average revenue per store was $8.5 million. Compared to $6.6 million in the year ago quarter.
2:11, 30+ million visitors came to the stores in the quarter. Up over 10 million from the same quarter last year.
2:12, Outlook for the next quarter. Targeting $6.8 billion, or 29 percent growth over the same quarter last year.
2:13, "We expect a decline in software signs as Leopard enters its second quarter." iLife is entering its second quarter as well. Lower revenue should come due to the seasonal change, too.
2:14, Time for questions.
2:15, Morgan Stanley asks: Over the last two years, this coming seasonal decline was pretty consistent. Your outlook is lower then usual. Why's your outlook is suggesting worse seasonality?
2:16, Oppenheimer: our guidance, that we're up 29 percent, is pretty good you know. "We remain very confident." Macs are up 40 percent year over year. 29 is actually up from a year ago quarter, when we grew 21 percent.
2:17, Analyst is asking about Macs.
2:17, Tim Cook: The Mac business is on fire. The Pro segment is up "very significantly" year over year.
2:18, Bill asks, did the $100 iPhone rebates effect earnings?
2:18, Oppenheimer: Nah, most of that's behind us now.
2:19, David Bailey from Goldman asks, give us detail on where you're unable to meet demand.
2:19, Tim: Our target is to be within 4 to 5 weeks of inventory. We didn't do that. Oops. Sales were much higher than we anticipated. We're trying to remedy that situation now.
2:20, Are we reaching a saturation point for music players?
2:20, The iPod market is bigger than music players. The iPod will be the first mainstream wifi platform.
2:21, Any cannibalization between iPod and iPhone?
2:21, Tim Cook: It could have been one of the factors in the US. Not in Germany and France.
2:23: Next question. Talk about linearity of sales of the iPod compared to seasonal downturn you expect. I ask cause I'm wondering if you have too much inventory.
2:24, Are you concerned about the US economy? And have you factored that into your guidance?
2:24, Cook: Um. We're focused on our business. We'll leave the economic forecasting to others.
2:25, Tim says we remain confident in our business. (Will you people stop asking questions?)
2:26, Stock buy back programs are being discussed by the board. But our preference remains to continue to have a strong balance sheet. For acquisitions, etc.
2:27, UBS asks about last year's similarly conservative guidance. Your guidance isn't good, he means to say. It feels like you're tricking us.
2:28, We give you guidance that we feel we can achieve. Then our focus is on the business.
2:28, Will the MacBook Air cannabalize businesss or be additive.
2:29, Cook: It's way too early to tell.
2:30, UBS: iPod sales were flat in the US during December. Why's that?
2:31, Oppenheimer: Woah. You're making that sound like a bad thing. We held our share. Also, we wanted to sell as many iPods as we said we would in our guidance. We did that. We grew iPod revenue 17 percent year over year. The highest growth rate over a year.
2:32, UBS breaks it down. The Touch sacrificed unit growth, but overall, Apple's happy about their iPod sales.
2:33, What's your goal for iTunes rentals. Drive sales or profitability in itself?
2:34, The objective is to break even. It helps us to sell iPods and Macs.
2:34, Is the MacBook Air a niche product?
2:34, Tim Cook says: We create beautiful things for all types of people. "Travelers, professors."
2:37, Tell me about the revenue sharing agreement with carriers. Does Apple share in the incremental revenues Orange gets in France on an unlocked phone?
2:39, Oppenheimer: sorry can't answer that.
2:40, You guys aren't economists. But people are freaking out. How should Apple investors take all that?
2:40, Oppenheimer: Well, we grew 27 percent in the US last year and 46 percent outside the US. We're very confident in our strategy and our products.
2:42, Bear Stearns asks. When you said iPod sales were flat, did you mean it?
2:42, Yes, they were flat in the US.
2:43, With all this traffic coming into the store, what can you tell us about what kind of money it made for you?
2:43, Mac sales were 504,000 in stores, up 64 percent year over year. Half of them went to first time Mac owners.
2:43, We're opening 35 to 40 stores in fiscal 2008.
2:47, Comment on the number of unlocked phones sold in the quarter?
2:47, Oppenheimer: We believe the number was significant, but we're unsure as to how to measure it. We don't know how long people will wait to activate their phones. We see this as expression of strong interest.
2:49, At Macworld Steve said you sold 4 million iPhones. But now you're saying only 2.3 million?
2:50, Silly, the 4 million was to date. The 2.3 million were just in December.
2:50, Would you say that sales accelerated?
2:50, We'll leave that analysis to you. But, frankly, duh.
2:52, The wireless phone business is seasonal. Should we build in an expectation of down shipments?
2:53, Aw shucks, we don't know much about all that, just getting into the business and all.
2:54, Your guidance is implying seasonality. But give me a little help. What do you make of iPhone seasonality?
2:54. Oppenheimer. Hm. Like I said. We don't know. We'll report later.
2:56, Tell me about your relationship with stores that sell the iPhone.
2:56, We have 2,000 or so stores in the US selling them. No plans for expansion.
2:56, Do you have any plans for in store marketing?
2:56, We have a plan but nothing to say about it.
2:57, That's it! Thanks everybody for asking questions we didn't want to answer!

When asked by Wired whether Apple had shown any interest in his research, the aptly name Bull replied:

The head of Apple's research division contacted me and said he wanted our results, and I said, "I don't have any." He wanted the quantity of things, and I said, "Well, I could give a seminar or come talk," and he said, "Well, if there were no results, I can't make time for you."

Apple already lets users voluntarily cap their volume. But this is Apple taking matters into its own hands. The libertarian in me worries about the implications. I live in Massachusetts — we're the only state in the country to ever repeal mandatory seat-belt laws. Who is Apple to tell us how loud our music is?

Actually, this is a clever solution to a real problem. Just because the iPod can be turned up to 11, should it be able to? The European-spec iPod is restricted to 100 decibels of output, perhaps due to the EU's stringent consumer-protection laws, but the stateside version isn't. In fact, Apple was sued for not having "adequate warnings regarding the likelihood of hearing loss."

Parents will like being able to protect their children's hearing and the kids probably won't notice any difference — and what they don't know won't hurt them, right?

(Photo by powerbooktrance)

In short, there's no loss of brand equity here for Microsoft. The new label suggests that devices and music stores are merely compatible with Windows — the real butter on Microsoft's bread. And even though the stores and players will likely work just as well with Windows XP, Microsoft has just tricked its music partners into giving free advertising to its newer, unloved operating system.

But don't bask in that glimmer of hope so fast, Apple haters. The tiny market share only means Apple really does have room to grow as large as Google and the French have to suffer through retro-styled advertising. Joswiak says Apple plans to bombard European airwaves with more traditional ads explaining the iPod's benefits, leaving the iconic, self-explanatory "silhouette" ads for later.

"Um, yeah, currently two Zunes in the top 25 electronics bestsellers on Amazon. Nine iPods." Deathbychici also points out that while Microsoft's heavily discounted $89 30GB model is currently outselling each of the various nine iPod models, different colors of the iPod Nano are outselling the regularly-priced Zune. Ouch.

(Photo by S Baker)

Yesterday morning, according to the almost certainly biased Puget Sound Business Journal, Microsoft's 30-gigabyte $134 Zune held the number one spot, followed by the iPod Nano and Apple's 80GB iPod. Leave it to Microsoft to blow the their chance at taking a bigger lead, though. Microsoft didn't manufacture enough 80GB Zunes and now they won't be availabe on Amazon until "early December." (Photo by S Baker)