More on Apple’s Billions: This Time, It’s iTunes

Billions and billions. It’s a theme that has accompanied me all week. In fact, I imagine I know a little how Carl Sagan must have felt. After writing about Apple’s billions just a few days ago, here I am again — but this time it’s not data centers and custom silicon — it’s music.

We reported here back in early February that Apple was running its 10 Billion Song Countdown Contest. Yesterday afternoon, as Steve Jobs was (probably not) blowing out the fifty five candles on his birthday cake, the odometer stopped when, according to The Loop, Louie Sulcer of Woodstock, Georgia, downloaded Guess Things Happen That Way by Johnny Cash.

The download likely earned Johnny Cash the usual pittance in royalties, while Sulcer became the lucky recipient of a $10,000 iTunes Gift Card from Apple.

Naturally, I’m insanely jealous.

Milestone

Apple is understandably keen to celebrate the milestone. The iTunes Store first opened for business in April 2003 with a little over 200,000 items available for sale. Almost seven years later, the iTunes Store boasts more than 12 million songs, 55,000 TV episodes and 8,500 movies. In April 2008, it ranked as the number one (legal) online music seller in the United States.

10 billion songs in seven years is really something — in fact, my calculator tells me it’s a touch more than one song downloaded every second of every minute, day and night, since the store was launched. People with better math skills than me can (and most certainly will) take great pleasure correcting me in the comments below. The point is, my clumsy calculations notwithstanding, the iTunes Store is big business. In fact, it must be a big, fat, cash cow for Apple, right?

True Purpose

Well, as it happens, no, it’s not a big, fat, cash cow. It’s more like a well-fed, contented heifer. It certainly makes a good deal of money; according to one analyst it generated revenue of $520 million in the last quarter alone.

However, Apple’s CFO Peter Oppenheimer told analysts during an earnings call last month that the store wasn’t “a real money maker.” Our own Darrell Etherington wrote here about declining music sales which have undoubtedly had an affect on Apple’s earnings recently. And as far back as May last year I wrote about the problem of variable pricing in the iTunes Store. Only a few weeks ago Warner Music Group announced the news (already completely obvious to everyone except music industry executives) that iTunes music sales had slowed since higher prices were introduced. (Honestly, when will the old-school music industry just shut up and admit defeat?)

So the iTunes Store might be pushing huge numbers in digital downloads (10 billion songs, three billion apps and counting) but the revenue it generates is decidedly small-frys. So why run it?

Well, it’s not a loss-maker by any means, and besides, Apple claims profit isn’t the purpose for the iTunes Store. Oppenheimer said during his earnings call:

Regarding the App Store and the iTunes stores, we are running those a bit over break even and that hasn’t changed. We are very excited to be providing our developers with a fabulous opportunity and we think that is helping us a lot with the iPhone and the iPod touch platform.

As far as Apple is concerned, the iTunes Store exists as a mechanism for selling its hardware. iPods enjoy seamless integration with iTunes. As a relatively inexpensive software publishing and delivery platform for iPhones and iPod touches, third-party app developers (almost) couldn’t ask for more.

Defense Tactic

The whole “a bit over break even” business is probably preferable over a service that is wildly profitable. Think about it; Apple’s super-success with the iPod, the iPhone & iPod touch and, presumably, with the upcoming iPad, translates into an awful lot of people around the world using iTunes (and the iTunes Store) all the time, every single day. My own clunky math above tells me this already happens, but we’re talking about this intense activity steadily increasing as the iPhone continues to dominate and the iPad begins to make waves.

As Apple’s hardware sales soar, and as more and more of its hardware ships with, or depends upon, iTunes software and services in some shape or form, the bitter cries of “anti-competitive” and “monopoly” from major competitors will grow louder.

That the iTunes Store is not a means to print its own money gives Apple the ability to play its “But It’s Not Very Profitable For Us” card when the threat of antitrust inquiries looms (and oh boy will it loom). It might not be strong enough a defense to save it from unsavory intervention by the law courts (particularly those in Europe, which can’t help but interfere with successful businesses) but it certainly can’t do it any harm.

It’s ironic, really; when the iTunes Store launched it was lambasted by critics certain it had no chance at success. Of course, those criticisms have since proved unfounded, yet today it seems Apple is in an awkward place, and paying a price for its success.

Gartner Report – Mobile Phone Market

Gartner has a new report out detailing mobile phone market slices. It's no news to regular reagers that MSFT has been absolutely failing the last two years in a market they once dominated. But we need to keep in mind the smartphone market is just BEGINNING to take off. Consider these two statistics:- Worldwide mobile phone sales to end users totalled 1.211 billion units in 2009- In 2009, smartphone sales reached 172.4 million units, a 23.8% increase from 2008There is no doubt that the iPhone has momentum in the market. And so does Android, thought it's not taking off as fast as some had predicted it would. Smartphones are replacing "non-smartphones" but currently represent less that 16% of the total mobile phone market. That's a LOT of market share still in play. In many ways, we're still in the "early adopter" phase of the smartphone market. The mobile smartphone platform "wars" will go on for ages yet. In fact not until the "so-called" 4G cellular networks are fully in place will we have any idea who the eventual winners and loosers will be. It's still early days in this market.Check this out from Gartner. http://www.gartner.com/it/page.jsp?id=1306513 Gartner Says Worldwide Mobile Phone Sales to End Users Grew 8 Per Cent in Fourth Quarter 2009; Market Remained Flat in 2009Combined Market Share of Top Five Mobile Phone Vendors Dropped More Than 4 Percentage Points in 2009Egham, UK, February 23, 2010 Worldwide mobile phone sales to end users totalled 1.211 billion units in 2009, a 0.9 per cent decline from 2008, according to Gartner, Inc. In the fourth quarter of 2009, the market registered a single-digit growth as mobile phone sales to end users surpassed 340 million units, an 8.3 per cent increase from the fourth quarter of 2008."The mobile devices market finished on a very positive note, driven by growth in smartphones and low-end devices," said Carolina Milanesi, research director at Gartner. Smartphone sales to end users continued their strong growth in the fourth quarter of 2009, totalling 53.8 million units, up 41.1 per cent from the same period in 2008. In 2009, smartphone sales reached 172.4 million units, a 23.8 per cent increase from 2008. In 2009, smartphone-focused vendors like Apple and Research In Motion (RIM) successfully captured market share from other larger device producers, controlling 14.4 and 19.9 per cent of the worldwide smartphone market, respectively.Throughout 2009, intense price competition put pressure on average selling prices (ASPs). The major handset producers had to respond more aggressively in markets such as China and India to compete with white-box producers, while in mature markets they competed hard with each other for market share. Gartner expects the better economic environment and the changing mix of sales to stabilise ASPs in 2010.Three of the top five mobile phone vendors experienced a decline in sales in 2009 (see Table 1). The top five vendors continued to lose market share to Apple and other vendors, with their combined share dropping from 79.7 in 2008 to 75.3 per cent in 2009.In 2009, Nokia's annual mobile phone sales to end users reached 441 million units, a 2.2 per cent drop in market share from 2008. Although Nokia outperformed industry expectations in sales and revenue in the fourth quarter of 2009, its declining smartphone ASP showed that it continues to face challenges from other smartphone vendors. "Nokia will face a tough first half of 2010 as improvement to Symbian and new products based on the Meego platform will not reach the market well before the second half of 2010," said Ms Milanesi. "Its very strong mid-tier portfolio will help it hold market share, but its ongoing weakness at the high end of the portfolio will hurt its share of market value."Samsung was the clear winner among the top five with market share growing by 3.2 percentage points from 2008. This achievement came as a result of improved channel relationships with distributors to extend its reach and better address the needs of individual markets as well as a rich mid-tier portfolio. For 2010, the company is putting a focus on Bada, its new operating system (OS) that aims at adding the value of an ecosystem to its successful hardware lineup.Motorola sold slightly more than half of its 2008 sales and exhibited the sharpest drop in market share, accounting for 4.8 per cent market share in 2009. "Its refocus away from the low-end market limited the volume opportunity, but should help it drive margins going forward. Motorola's hardest barrier is to grow brand awareness outside the North American market, where it benefits from a long-lasting relationship with key communications service providers (CSPs).In the smartphone OS market, Symbian continued its lead, but its share dropped 5.4 percentage points in 2009 (see Table 2). Competitive pressure from its competitors, such as RIM and Apple, and the continued weakness of Nokia's high-end device sales have negatively impacted Symbian's share.At Mobile World Congress 2010, Symbian Foundation announced its first release since Symbian became fully open source. Symbian^3 should be made available by the end of the first quarter of 2010 and may reach the first devices by the third quarter of 2010, while Symbian^4 should be released by the end of 2010."Symbian had become uncompetitive in recent years, but its market share, particularly on Nokia devices, is still strong. If Symbian can use this momentum, it could return to positive growth," said Roberta Cozza, principal research analyst at Gartner.The two best performers in 2009 were Android and Apple. Android increased its market share by 3.5 percentage points in 2009, while Apple's share grew by 6.2 percentage points from 2008, which helped it move to the No. 3 position and displace Microsoft Windows Mobile.Android's success experienced in the fourth quarter of 2009 should continue into 2010 as more manufacturers launch Android products, but some CSPs and manufacturers have expressed growing concern about Google's intentions in the mobile market, Ms Cozza said. If such concerns cause manufacturers to change their product strategies or CSPs to change which devices they stock, this might hinder Android's growth in 2010."Looking back at the announcements during Mobile World Congress 2010, we can expect 2010 to retain a strong focus around operating systems, services and applications while hardware takes a back seat," said Ms Milanesi. "Sales will return to low-double-digit growth, but competition will continue to put a strain on vendors' margins."Additional information is in the Gartner report "Competitive Landscape: Mobile Devices, Worldwide, 4Q09 and 2009." The report is available on Gartner's website at www.gartner.com.

How-To: Build Your First Site in iWeb

In this iWeb video tutorial you’ll learn how to import content, create links, embed a video and publish your website.

If you’re planning to build your own site, Apple’s iWeb is an easy way for you to get into web-design and launch your first online project. With a little practice, you can be the webmaster of your own domain in no time.

This tutorial is all about getting you comfortable with iWeb. To show you how easy it is to create professional looking sites, I created the site for my new iPhone game using iWeb: www.thecosmokid.com

Rather than use a pre-set template, we’re going to dive right in and recreate the Cosmo Kid website. Before you start the tutorial, make sure to download the Cosmo Kid Content Pack (ZIP, 274 KB), it’s got all the parts you’ll need to build the site.

Check out the video after the jump, or view the full-size, full-resolution video here (MOV, 135MB).

Apple COO Tim Cook Confirms Mobile Device Focus, Calls Apple TV a ‘Hobby’

Apple’s Chief Operating Officer Tim Cook wasn’t shy about the company’s focus through 2010, in a conversation with Goldman Sachs analyst David Bailey. The talk took place at the Goldman Sachs Technology and Internet Conference this Tuesday in San Francisco, and was given before an audience of investors. An audio stream of the talk is available here.

In general, the talk was what you’d expect. Cook sang the praises of the company’s current offerings, and gave highest praise to the yet to be released iPad, a device for which the company obviously has very high expectations. But he also took time to frame one of the company’s weakest sellers in a fairly dismissive light.

Cook called Apple TV “a hobby” owing to its low sales numbers when compared to the Mac line. He did, however, state that Apple would continue to invest money into its hobby, if only because “our gut tells us there’s something there.” While being dismissive about a weak seller is a good strategy when talking to investors, I can’t imagine the comments made do much for consumer confidence in Apple’s set top box, and it must be especially disheartening to hear for those that already own the product.

While downplaying Apple’s role in the home theatre TV-viewing aspect of consumers lives, Cook also couldn’t stress enough the significance the Mac maker has in terms of its viewing on mobile devices. Much of the talk focused on the iPad, which is rumored to be gearing up for pre-sale later this week. Cook basically reiterated the company line regarding the iPad’s considerable web browsing, email and photo viewing capabilities, and he went after netbooks, too:

The netbook is not an experience people are going to continue wanting to have. When they play with the iPad and experience the magic of using it… I have a hard time believing they’re going to go for a netbook.

I suppose when asked how your new product, which occupies an entirely new category, is going to compete with a tried and tested strong seller, “magic” is as good an answer as any. But Cook emphasized the company’s confidence in the product by pointing out how focused it manages to keep its product line, despite the temptation to grow it further, owing to the high number of great ideas they have coming from the elite staff they hire. He also reminded investors about the pricing strategy Apple took with the iPad, saying “we didn’t want to leave a pricing umbrella for competition, so we got very aggressive on this.”

Cook also said he wasn’t afraid of the iPad cannibalizing sales of its other products. That point I agree with, though I would be very afraid of the opposite being true. It seems to me that a lot of potential iPad owners would probably be better suited by an iPhone/iPod touch or a computer. The iPad could do more to help people choose a lane than encourage them to straddle two.

Another area Cook addressed was Apple retail, revealing that Apple hopes to aim higher this year than it has in 2008 and 2009 in terms of new store openings. It’s been staying closer to the 25 stores per year bottom end of its target range owing to the recent international economic troubles, but it has 50 new locations planned for 2010. The expansion plans bode well for the future, since the company depends so much on direct sales.

U.S. customers hoping for an end to exclusivity will be disappointed by Cook’s comments regarding AT&T. He mainly discussed the advantages of a single carrier model, citing simplicity and the ability to work together in close partnership to introduce innovative new features. He also added that while Apple has seen more sales and higher profits in all the markets where multiple carriers have been introduced, that won’t necessarily be the case every time. Brave words considering there’s no data to back them up. Cook’s defense of the much-derided AT&T was definitely the low point of the talk, and struck me as fairly hollow overall.

Skyfire version 1.5 is out! for Windows Mobile and Symbian

With this release Skyfire is now available on the latest Nokia touch-screen phones (Symbian S60 5th Edition). Skyfire 1.5 also supports the newest higher resolution screens like VGA and wVGA, so you'll enjoy crisp text and stunning graphics and video. The new version also adds a more finger-friendly user interface (goodbye stylus!), and upgrades both our client and our server for an even faster browsing experience.What's new? Symbian S60 5th Edition support (beta) Full high resolution support: Skyfire now provides native support for the high-resolution VGA and wVGA screens found on many newer phones. Finger friendly UI: A new, intuitive, and finger friendly UI for touch screen phones provides an easier browsing experience Smooth Scrolling: Kinetic scrolling has been added to Skyfire. Pan or flick the screen to move in any direction smoothly. Full screen mode: For touch screens, browse in full screen mode with no UI elements on the screen for maximum page visibility Updated Flash & Silverlight: Both upgraded to the newest version available Performance: Upgraded both client and server for faster and more responsive browsing Get Skyfire Here!

Apple’s Billions and Billions

Yesterday, the New York Times published an article examining what it refers to as the upcoming “war” between computer chip manufacturers. It’s an interesting read if you’re desperately into that sort of thing, but what’s most compelling is the assertion that Apple probably invested at least a billion dollars in the iPad’s custom silicon.

As we reported here, Apple bought chip manufacturer P.A. Semi back in April 2008 for a cool $278 million, ostensibly to acquire the company’s engineering talent and manufacturing expertise, and, perhaps, the use of its existing facilities to produce its own custom-designed chips. Perhaps this helped save Apple a little money up-front, if the NYT’s is correct about the development costs of the chips alone;

Even without the direct investment of a factory, it can cost […] about $1 billion to create a smartphone chip from scratch.

Does this mean Apple saved a cool seven hundred million dollars when it bought P.A. Semi? If you’re a company with almost forty billion dollars in the bank, finding the ready cash to develop your own groundbreaking processor doesn’t seem quite such a mammoth undertaking. And I’ll be the first to admit I’m likely oversimplifying the whole thing, but y’know, that Jobs fellow is a wily old fox…

(Chip) War is Hell

From the New York Times;

Now, the chip wars are about to become even more bloody. In this next phase, the manufacturers will be fighting to supply the silicon for one of the fastest-growing segments of computing: smartphones, tiny laptops and tablet-style devices.

The fight pits several big chip companies — each trying to put its own stamp on the same basic design for mobile chips — against Intel, the dominant maker of PC chips, which is using an entirely different design to enter a market segment in which it has a minuscule presence.

Of course, Intel’s favorite chip for mobile devices is still the Atom processor, commonly found nestling at the heart of netbooks everywhere. The Atom processor is small, energy-efficient — and terribly slow.

The challenge, then, is clear: make a smaller, ever-more-energy-efficient chip that doesn’t trade performance for low-power-consumption. Steve Jobs, when announcing the iPad to the world in January, hinted that the iPad’s A4 processor might have achieved this lofty goal;

iPad is powered by our own custom silicon. We have an incredible group that does custom silicon at Apple. We have a chip called A4, which is our most advanced chip we’ve ever done that powers the iPad. It’s got the processor, the graphics, the I/O, the memory controller… Everything in this one chip. And it screams.

Mind you, Steve Jobs is the King of Hyperbole, so we should take his claims of speed with a grain (or ten) of salt. It’s encouraging, then, that the feedback from level-headed reporters, and specifically, beloved Mac-head Andy Ihnatko, confirms that, at least when compared to the iPhone 3GS, the iPad is unquestionably nimble;

This thing is FAST. I stretch-zoom a webpage and it keeps up with me now [sic] matter how fast I zoom and scroll. When you turn a page in iBook, it’s not “an animation of a page turning”… you are TURNING a freaking PAGE.

I think, most importantly, this “$1 billion” investment speaks volumes about Apple’s commitment to the iPad and iPhone product families. (We all fully expect the A4 to wind up in an iPhone sooner or later, yes? I mean, that much is obvious, right?)

The iPhone set the stage for mobile touch-based computing and the iPad will soon step into the spotlight. Let’s not forget, also, that Jobs very deliberately (re)defined Apple as a mobile devices company. Apple is taking its touch-based, mobile-computing strategy seriously enough that it’s prepared to spend real money investing in it.

Billions and Billions

Impressively, this isn’t the only billion-dollar investment Apple has made recently. I wrote here back in May 2009 how Apple’s still-under-construction server farm in North Carolina also represents an estimated $1 billion investment. Apple hasn’t confirmed what the server farm will be used for, but it’s sensible to assume Apple is looking to improve and expand its cloud-based services.

You see, a great many of Apple’s mobile devices are going to be connected to the web, so it makes sense that Apple should want to provide end-to-end software and services for its iPhones, iPads and MacBooks. Aside from the obvious aesthetic niceties of Apple-software running on Apple-hardware, the “it just works” ease-of-use of MobileMe and iWork on a MacBook or iPad more than make up for their expense.

Apple knows that if its software works exceptionally well, and is a pleasure to use, people will pay for it despite the existence of free alternatives. Sadly, MobileMe and iWork.com can only be described as “decent” and “adequate.” Perhaps the server farm is one step toward making them “exceptional?”

However you look at it, the facts speak for themselves; Apple is gearing-up for a future that is focused on mobile computing hardware and services, and its recent sizeable investments and acquisitions are bold steps toward that goal.

$2 billion in two years doesn’t sound like a lot for a company as wealthy as Apple. But make no mistake, it’s still a huge bet, and a particularly brave one, too, given how many tech pundits and punters have failed to understand the utility of the iPad and what it means for the future of computing.

iPhone developers angry as Apple purges adult apps

The poor Apple porn APP developers have been cutoff by big brother. Why not just have a special porn section/search word that won't let innocent APP searchers hit a porn APP without specifying porn or adult? BBC: Developers have expressed anger at Apple's decision to ban some adult-themed applications from its iPhone.Thousands of apps with adult-themed content have been removed from the store since Friday although some, such as one from Playboy, remain.Apple has said that certain apps were removed following customer complaints. Developer Jon Atherton is angry that previously-approved apps have been pulled, and accuses Apple of "experimenting with our livelihoods". Read More

Delicious Library Fix for New iMacs, Retail Boxes, and More!

When Apple updated the new iMacs with the Core i5 and i7 processors, it also quietly introduced a change to the built-in iSight camera with a new lens and a different focal length. An improvement to the barcode scanning algorithm for Delicious Library is coming soon that will provide a fix for the new iMacs and promises better accuracy for all other cameras as well. In addition, Delicious Library is coming to retail stores later this year.

I had a quick chat with Wil Shipley, the founder of Delicious Monster, and he shed some light on all of the above.

Barcode Scanning Now 7x Better

Unlike the original external iSight that featured an auto-focus system, the built-in iSight has a fixed focus. The new iMacs have a lens that shifts the fixed focus from 1′ to 2′. While this change is probably better for focusing on your face when videoconferencing, it didn’t work very well for trying to scan a barcode that is a bit small when held 2 feet away or too blurry when held close enough to fill the camera frame.

Wil has spent the last few months working on improvements to the barcode scanning algorithm that improve accuracy up to 7x. The best part is that these improvements are coming in a free update to all Delicious Library 2 customers that will improve barcode recognition on all computers, not just the new iMacs.

The new scanning is up to 700% more sensitive than it was before. It almost beeps before you’re ready. It’s kinda like that old knock, knock joke about the interrupting cow…

Knock Knock
Who’s There?
Interrupting Cow
Interrupting Cow wh… Moo!!!!

I actually have a test harness set up to test so I can measure the exact difference in recognition and it’s working great. I rewrote the DL algorithm from scratch to unblur the image as you move the book around. It just works great.

A beta release for DL2 is coming soon.

Delicious Library Coming to Retail Stores

Wil also shared that Delicious Monster has reached an agreement with Dr. Bott to distribute Delicious Library to retail outlets.

We are finally going to retail boxes and are going to be in stores. I’ve been putting it off for a long time because, you know, I was really firm against it because the retail chain takes so much money out of the product. So it took a while to get here. But now we have an agreement with Dr. Bott and a really beautiful box. We’ve heard stories of people using Delicious Library to sell Macs – come see this, this is cool – and now we can be in the stores.

I’m really proud of the box design itself. I think it’s some of the best work we’ve done yet as far as graphic feel.

Will We See Delicious Library on the iPad?

Delicious Library on the go would be great, but Shipley has run afoul of Amazon’s limitations on using data from the Amazon product info API on a mobile device in the past. The software runs fine in the iPad simulator, but the real question is if Amazon will consider the iPad to be a mobile device in the same class as a smartphone. Wil also has some frustrations about the lack of a MobileMe syncing framework for the iPhone when it exists on the Mac desktop and the lack of a public USB syncing framework for hybrid desktop/iPhone apps.

While we might not see Delicious Library for iPad, Wil did let out that he is excited about the possibilities of the new device and has a project in mind.

I’m still in the planning stages for our next program, well this idea has been gestating for five years now. I don’t have code yet so any release is 1 or 2 years out, but I think this idea could be even bigger than Delicious Library.

Personally, I can’t wait to see it.

How-To: Sync NewsFire on Multiple Computers

It seems like you can’t swing a dead cat these days without hitting a tech pundit eager to tell you that RSS is dead. Personally, I’m not buying it. RSS feeds and readers are the No. 1 way I stay up to date with online content, and I don’t see that changing anytime soon.

Over the years I’ve tried out a number of different feed readers including NetNewsWire, Google Reader, Fever, and on and on. Each time I switch though, I always find my way back to NewsFire. For me it’s just the perfect balance of form and function. Well, it’s almost perfect. To paraphrase Churchill I’d say that NewsFire is actually the worst RSS reader, except for all the other RSS readers. The major gaps in my mind are its inability to sync across multiple machines and the lack of an app for the iPhone. As with all things in technology though, there are a lot of ways to skin that cat.

As someone who splits his time among multiple Macs, having the ability to sync my news reader across those machines is a must. If I’m on my work machine paging through new items, when I get home I obviously want those items to show up as having been read. Out of the box NewsFire has no option for syncing but a workable solution turns out to be shockingly simple: Download the free version of Dropbox, create some symbolic links to a few key points on each computer and it’s done. Changes made on one computer are synced through Dropbox and show up on the other.

Setting up the Sync

First, move the follow folder and files into your Dropbox:

~/library/Application Support/NewsFire
~/Library/Caches/org.xlife.NewsFire
~/Library/preferences/org.xlife.NewsFire.plist

You’ll then need to replace them with symbolic links. To create a symbolic link just fire up the Terminal and use the ln command. The format will be (ln -s) (filepath to target) (filepath to link), for example:

ln -s /Users/yournamehere/Dropbox/newsfiresymlinks/org.xlife.NewsFire.plist /Users/yournamehere/Library/Preferences

When you finish making the symlink for the preference file you’ll need to lock it to prevent the application from overwriting it when you quit. To lock it, just right click the file to “Get Info” and select the Locked option.

Now just use the same Dropbox account to link up NewsFire installs on your other machines and you’ll be able to stay in sync. There is one caveat: In order to add new feeds you’ll have to first unlock the .plist file on one end, make the change and then re-link it. For the most part, however, my feeds are already set and I’m really just interested in making sure that the status of an item can be passed back and forth between machines.

Obviously, this approach is not as good as baked-in support would be. But I’m hopeful that we’ll soon see an updated version of NewsFire that will not only support syncing but also close that other major gap, iPhone support. It’s been a long while since NewsFire’s developer David Watanabe dropped this tease about a possible iPhone app. I just hope he can tear himself away from Xtorrent updates long enough to show NewsFire some love.

The App Store Gets a Little Smaller: ngmoco Acquires Freeverse

Big news today as two of the iPhone’s biggest game makers become one through acquisition. ngmoco, makers of such hits as Rolando 2 and Eliminate Pro, has purchased Freeverse, another hit game maker with some significant successes under its belt, including many early App Store hits. Flick Fishing and Moto Chaser might ring some bells, sitting as they did on the top 25 list for long stretches.

The acquisition brings together two of the most significant developers in App Store history, both of which have built their considerable reputations exclusively through their efforts with the iPhone and iPod touch. It’s a step that represents a big milestone in the life of the App Store’s maturing ecosystem.

On the surface, it doesn’t appear at this point as though the merger will affect what most App Store users see. According to ngmoco’s CEO Neil Young:

Freeverse, much like us, is comprised of true game-makers. Now with our combined forces, their titles can reach more people and the talented folks at Freeverse can keep doing what they do best, which is making great games.

Freeverse won’t undergo any changes in terms of its name, branding or management now that its owned by ngmoco. All Freeverse games will likely now include Plus+ network features, which allow gamers to have a more social experience akin to an Xbox live for iPhone users. Freeverse was already a partner involved in that ngmoco-started endeavor, beginning with Flick Fishing.

Even if the effects of this acquisition aren’t immediately apparent or even visible to the average consumer, that doesn’t mean this doesn’t represent a significant change in how the App Store operates. Freeverse is just the beginning for ngmoco, and a way to diversify its brand. The maker of Eliminate Pro and Touch Pets Dogs has itself acknowledged a shift towards producing primarily free-to-play games in the press release announcing the acquisition, which depend on additional purchases of in-app content to generate revenue:

Last year ngmoco added top executives from the games, platform technology and web sectors and launched its leading player network, Plus+. The company shifted its production structures to build free-to-play games.

Now it can offer more traditional single-purchase games via Freeverse to get the best of both worlds while establishing strong, coherent brand identity. It will also quite easily be able to adopt and implement one model over the other if either one becomes much more obviously profitable or preferable to consumers.

Mergers and acquisitions will help smaller studios like ngmoco that made their name on the App Store go toe-to-toe with big production studios like EA Mobile and Gameloft, which were established players long before Apple’s mobile gaming device lineup ever existed. It’s good news for App Store shoppers, since ngmoco has been nothing but innovative to date and should now be better able to continue bringing quality titles to market.

But it’s also a sign that the tumultuous, super-heated forge that was the App Store in its inception is cooling, and that the landscape is taking on a much more static guise. A status quo is asserting itself, and with that, a definite aristocracy of content providers that will become harder and harder to knock off their perches. Games will become more less varied and surprising, but quality will improve.

I hesitate to comment on whether or not this is ultimately a good thing for iPhone users, but I think it is. As with any new market, the frontier days are fun, but maturity and establishment brings with it more focused efforts at improving quality and lowering cost for consumers. It’s time the App Store started getting much better at what it does well, even if some innovation is lost in the bargain.

Related GigaOM Pro Research: Is There Any Demand For a True Gaming Phone?