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Well, it happened. Google’s voice recognition mobile app finally arrived today on the iPhone App Store. Until today all we had to go by was the demo video that Google created showing it in action.

And that video shows something that quite simply changes the way I’d use the phone. Instead of clicking buttons on the virtual keyboard to search the web or my contacts, I’d just hit a button and use the Google Mobile App. And it really is just one button - it knows, via the accelerometer, when you put the phone to your ear and when you take it away. Voila! Cool stuff happens.

Here’s the video, narrated by Mike LeBeau on the Google Mobile team:

Let’s compare that video to my actual results. First, the big letdown is that you can’t search contacts by voice - you have to type for that, and it’s not really worth using the app just to do that when the normal contact application works just as well.

Also, it’s important that there is very little background noise when you use the app. A steady hum from an electric heater six feet away from me confounded the app on speakerphone. The noise from a car, certainly, will prohibit speakerphone usage while driving. The results below were done in a silent room with the phone held up to my ear, and I spoke as clearly as I am able. The demo results are shown on the left, my actual results are on the right.

First query: Pictures of the Golden Gate bridge at sunset: Results were perfect.

Second Query: How big is a giant squid?: Crazy results - I got “public citizen times square”

Third Query: Movie Showtimes: Results were perfect, and it used my location

25 degrees Celsius in Fahrenheit: Results were perfect

The contact search also went exactly as the video showed, but it’s a little misleading. You can’t search contacts by voice, only by typing. The video shows that, but by that point you’re all hopped up on voice goodness and you don’t really realize that its all typing at that point, which is little better than using the normal contact app that comes with the phone.

Overall, other than the one snafu with the giant squid, everything went well. But the voice recognition is far from perfect, as the demo video suggests. And the limitation on contact search is a letdown.

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So we've bought about 10 of them, all of them have awful problems recognizing clicks. The trackpad has a bug where it does not click about 60% of the time.

The advertising war between Apple and Microsoft continues. Apple’s latest TV spots mock Microsoft’s $350 million ad campaign for Windows Vista, suggesting that some of that money would be better spent fixing Vista. The ad is funny (see above), but it does seem petty and elitist. After all, the new Microsoft ads got much better once they dumped Jerry Seinfeld as a spokesperson and went with the everyman “I’m a PC” rallying cry (which itself was a response to Apple’s long-running campaign mocking PCs).

It is also hypocritical. Apple’s advertising budget is also pretty massive. I mean, I see more Apple commercials on TV than ads for Barack Obama. Apple is on track to spend more than $3.5 billion on SG&A (selling, general, and administrative expenses) for its fiscal year that ended September 30. How much of that was spent on advertising? I don’t know, but 10 percent doesn’t seem unreasonable.

The second ad, which makes fun of Microsoft’s new naming conventions for Windows is below. It’s not as funny.

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Here is a one-month stock chart comparing Apple (down 40 percent), Google (down 20 percent), Yahoo (ditto), and Microsoft (down about 10 percent). Microsoft is holding up best. If Yahoo keeps diving, what next?

Discuss among yourselves.

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Apple’s stock took a temporary 10-point hit this morning after a false report surfaced on CNN’s iReport that Steve Jobs had a heart attack. The report has been removed, but only after Silicon Alley Insider and others confirmed with Apple that Jobs did not have a heart attack. And the stock jumped right back up to its opening levels. SIA captured the original report:

Steve Jobs was rushed to the ER just a few hours ago after suffering a major heart attack. I have an insider who tells me that paramedics were called after Steve claimed to be suffering from severe chest pains and shortness of breath. My source has opted to remain anonymous, but he is quite reliable. I haven’t seen anything about this anywhere else yet, and as of right now, I have no further information, so I thought this would be a good place to start. If anyone else has more information, please share it.

Was this just a short seller trying to make a quick buck, or someone trying to see how fast and far they could spread a false rumor? And what does it say about the value of citizen journalists?

Rather than fight the rise of citizen journalism, CNN decided to try to co-opt it by launching iReport. CNN’s iReport site lets anyone put up posts and videos about the news. Its tagline is “Unedited. Unfiltered. News.” Sometimes these reports get on CNN proper (presumably, after being vetted).

But as this incident shows even the an unvetted report carries more weight than if it had appeared on Twitter or a random blog because it is on a CNN site. And that may be purely because it gets distributed more broadly. It could also be because people tend to believe what they read on CNN-branded sites.

Let’s not let one bad apple ruin the whole experiment, though. Obviously, there are a lot of smart people out there who can contribute to general news gathering. There needs to be a better truth filter on iReport and other sites that allow the anonymous reporting of news. A better reputation system for contributors would help. They shouldbe encouraged to use their real names. And maybe a bigger disclaimer needs to be placed up top saying: “Read At Your Own Risk.”

Apple can also learn a lesson from this. The stock would not have dropped so much if there wasn’t already a deep level of concern for Steve Jobs’ health and if the market knew who might take over in case of an emergency.

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When the iPhone was first released, there was an abundance of speculation over whether the phone’s lack of Flash support would cripple its browser and give us something less than “the real web” that Apple had promised. At the time, Steve Jobs explained that the full version of Flash wouldn’t run well on the iPhone (the iPhone runs on an ARM11 chip, which doesn’t play nice with Flash), but that Adobe’s Mobile Flash was lacking in functionality - he wanted a product in the middle before Apple would consider putting Flash on the iPhone.

Today at the Flash On The Beach (FOTB) conference, Adobe has confirmed that such an application is in development (it had previously been speculated to exist, but there was no official word from either company Adobe previously annouced it had a version working on an emulator). Adobe Sr. Director of Engineering Paul Betlem made the announcement, stating “My team is working on Flash on the iPhone, but it’s a closed platform.”

Betlem’s insistence that the iPhone is a closed platform is meant to infer that Adobe isn’t ultimately in control of whether or not Flash will ever make an apperance. This may be strictly true, but it’s unlikely that Adobe would begin work on the iPhone plugin in the first place if it didn’t have a reasonable expectation that Apple would include it, once it met Jobs’ expectations.

So it sounds like Flash is on the way. But do we really want it?

These days, most of us use Flash primarily to view videos on sites like Hulu, YouTube, and CNN. Flash on the iPhone may give us access to all of these sites (assuming its CPU can handle video), but I’d rather see native applications for each of these media hubs similar to what YouTube has created. Flash is notoriously CPU-intensive, which is the last thing the iPhone needs with its already lackluster battery life - native apps would allow for H.264 video playback on the phone’s Quicktime player that would probably require only a fraction of the CPU cycles.

Other issues with Flash crop up on more standard websites. Flash-based sites can be fun and innovative, but they also tend to be inefficient and unnecessarily difficult to navigate (see the Chipotle homepage for a good example). Finally, there’s the concern over Flash-based advertisements, which can be incredibly intrusive.

These issues aside, Flash still plays an integral role on the web, and there’s nothing more frustrating than getting denied trying to watch a Flash-only video clip. Apple should include Flash if only for completeness’ sake, while trying to give web developers an incentive to use it sparingly on their mobile sites.

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This week there have been several stories on the blogsphere (here, here, and here, for example) which consist of developers complaining that Apple has rejected an iPhone application that they submitted to be part of the App Store in iTunes, or because they believe that the process for submitting an application is too cumbersome. At least two of these have been because Apple believes the applications would be competitive with a product or feature set that Apple already has in the iPhone. This has, in turn, devolved into a chorus of voices (Ryan Block for example) exclaiming the virtues of openness and transparency, along with opining on the evils of Apple’s terms of service for iPhone developers. To all those who are annoyed at Apple here is what I have to say to you: Get Off Your High Horse.

Apple, like Facebook, Microsoft, and virtually every other major software producer is in the business of platforms. They create the environment that developers want to develop in. Developers need platforms, whether the platform is a distribution channel or operating system. When you create the platform, you set the rules. If Apple wants to restrict iPhone applications to those that do not compete with features built into the iPhone, well, they can go right ahead and do so. It is right in the SDK’s user agreement. Developers will go out and develop for another environment, or make a product that complies with the rules of the road. No one is forcing developers to build for the iPhone. Six months ago, it was not even possible for developers to create programs for the iPhone. So, to all of the developers who are annoyed with Apple, just go out and develop for Android, Blackberry OS, Windows Mobile, Palm OS or S60.

However, lets be honest here. Serious developers, those that really want to distribute and monetize their applications will keep on developing for the iPhone. There are many reasons to believe this. The first is just the hardware. High end software requires high end hardware, and there is no more capable mobile device from a hardware perspective than the iPhone 3G. The competing Android G1’s paltry 1GB of native storage and lack of an onboard 3.5MM headphone jack, let alone its clunky industrial design, puts it at a slight disadvantage.

Then there are the approximately fourteen million iPhones. The size of the installed base alone makes developing for the iPhone a strategically advantageous move for developers. Finally, the ability to distribute applications over the air and to the desktop makes the Apple distribution scheme much more appealing to those who care about actually getting software in the hands of consumers. The fact that more than 100,000,000 applications have been downloaded in the past three months from the App Store is indicative of the strength of the eco-system which Apple has built. If you want access to that eco-system, it means that you need to comply with Apple’s rules not the other way around.

Android is exciting because it is open, but openness does not come without its tradeoffs. From a developer’s perspective this means having a free-for-all distribution system.  And don’t forget that Google’s partners have yet to sell one Android phone, though no doubt they will. As more Android based phones come out, with the ability to pick and choose which modules are included, support, stability, and usability—all essential on a mobile device—will likely suffer.

What about the other mobile platforms?  S60 just is not robust enough for most developers to build applications for, and it does not have a solid distribution system for mobile apps. Windows mobile devices suffer from the perennial and proverbial blue screen of death, and the next generation Palm OS might very well turn out to be vaporware. The Blackberry could be a real platform if RIM ever comes up with a better way to distribute apps (more in terms of making them easy to find than actually getting them on the phones).

So to developers out there, those who love the App Store and those who loathe it, recall that the power of the platform is to create a system which connects software developers and consumers of that software. But when someone makes a platform, they also control the rules which go along with that platform. And right now the platform to be on is the iPhone platform. To those who are unhappy with the restrictions that Apple places on the App Store, don’t complain.  Just keep on coding.

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I sat down to write a post that highlights the really innovative new Apple ad running over two ad units on the New York Times (see video below). The ad unit came out today, the same day as Microsoft released their new set of “I’m a PC” commercials, and shows once again that Apple is always one innovative step ahead of just about everyone else. A video of the ad is below.

Except…the ads aren’t quite as funny any more. And the post that I was going to write, about how much better Apple is at messaging than Microsoft (which is true), just kept writing itself differently. And so I scratched the original post and here I am (a topic for another time is how I never quite know what I’m going to write until I’ve written it).

Those Microsoft commercials aren’t particularly engaging, and they don’t make me want to go out and buy a copy of Vista. But what they do is show lots of fascinating people saying that they use PCs. They highlight the fact that many people may be somewhat offended by the idea that they can’t be interesting or cool if they don’t use a Mac.

Suddenly, Apple looks a little elitist. I mean, they were elitist before, but in a way that made you want to be a part of the club. Now, they just seem a little snobby.

If that’s what Microsoft and their pushing clients to the edge advertising agency Crispin Porter + Bogusky were aiming for, it’s brilliant.

With Microsoft’s still dominant market share, all they have to do is fight Apple to a draw and they still win. And if Apple can’t continue to beat Microsoft over the head with their Mac v. PC ads, they’ll have to think up a new way to get people’s attention.

I still think the Seinfeld commercials were a flop, but I give them credit for this new set of commercials. We’ll see if Apple continues to run their ads, and how people respond to them. But Microsoft may have just made a really smart move.

That New York Times Apple ad is really cool though. I give them that.

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Today at its Let’s Rock event, Apple has announced that an upgrade to its rocky iPhone 2.0 firmware is on the way, and will be available starting Friday. Many users have been plagued by long backup times and connection issues since the 2.0 firmware (and the iPhone 3G) launched last July. Unfortunately, there was no mention of the much-awaited Push support for third party programs, which Apple had previously promised for a September release.

Apple also made a number of other announcements, though they were somewhat underwhelming - Apple’s stock price has dipped nearly 4% today. Many of the new updates have been leaked over the last few weeks, with especially accurate predictions offered by Digg founder (and TC50 expert panelist) Kevin Rose.

Among the updates:

-iTunes 8, which includes Genius - an intelligent playlist generator that will make use of anonymous data uploaded to Apple’s servers to help improve results.
-Apple has made amends with NBC, which pulled its content from the iTunes store last year. NBC shows like The Office and 30 Rock will be back, and will be available in HD for $2.99 (as will content from a number of other networks).
Click here to get CrunchGear’s full story on the new iTunes

-A second generation iPod Touch, with built in support for the Nike+ jogging accessory. The new Touch is substantially less expensive, at 229 (8GB), $299 (16GB), and $399 (32GB), and now shares the iPhone 3G curved design.
Click here for CrunchGear’s initial review of the new iPod Touch.

-A new nano has been released, with a slimmer profile and a built-in accelerometer. They also have more space, with 8GB for $150 and 16GB for $200, and are available in more colors.
Click here for CrunchGear’s initial review of the new Nano.

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Now that Apple has enjoyed some success with its App Store, smartphone manufacturers are starting to realize that having such a service is a worthwhile endeavor. An App Store with the right ingredients for success not only makes people want to buy the smartphone more than others, but it offers a new revenue-sharing opportunity that could become extremely lucrative.

Perhaps that’s why Microsoft’s new store for Windows Mobile 7, called Skymarket, leaked today. And it’s also why Google announced late last week that it was planning on launching the Android Market to compete with Apple’s store.  Each and every company going after the mobile Web is trying to do what Apple has done with its own App Store.

If nothing else, the App Store has shown that there really is a recipe for success in this space.  What is that recipe?  At this point, success in the Mobile App Store market requires:

1.  A popular device.

2.  A single marketplace where users can find any application they want in one location.

3.  A developer platform that’s both easy to use and powerful enough to create fantastic apps.

4. A dose of enterprise applications.

5.  The ability to deploy the same applications on multiple devices.

6.  The ability for users to download applications wirelessly to their device from a Wi-Fi or 3G connection.

Apple has most of these ingredients and is performing extremely well in the app market, but its competitors — RIM and Microsoft — seem lost. Both companies have applications that can be downloaded from countless places on the Web, the applications simply aren’t as usable as iPhone apps, and there’s no simple way to add applications to the phone without connecting it to your computer. (Update: To clarify and echo what some commenters have noted, BlackBerry owners can download apps over-the-air and do so on a daily basis.)

While Apple wins out in most of those categories, Microsoft and RIM can still stand up in a few where Apple isn’t quite so strong. For example, Apple’s applications appeal mainly to the consumer, but RIM offers the enterprise solutions that have been left out of Apple’s store so far. But in the end, it’s Apple that reigns supreme in the app store market and will continue to force the others to modify their offerings and catch up.

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iPhone application development house taptaptap has published sales figures for the first month of sales for their two AppStore applications, bringing further insight into overall sales volume and figures for the online store. The two applications developed by the company are WhereTo, an application that provides a more general GPS interface to the iPhone with location-based services, and Tipulator, a simple tip calculator.

WhereTo retails for $2.99 in the store and 24,094 copies were sold in the first month - netting the company just over $50,000 in revenue after Apple took their cut (it currently ranks #69 on the top paid application list). Tipulator retails for 99 cents, and sold 3,168 copies which resulted in just over $2,200 of revenue (it is currently unranked). The table below outlines overall sales volumes and revenues for each application:

taptaptap AppStore sales and revenue numbers for US sales, month 1

The resulting net profit and sales figures are good for a small company that has developed one application that is relatively sophisticated, and another that is very straight forward and simple but yet still brings in $2,000 a month. There is definitely great revenue potential for developers of iPhone applications, as users of the AppStore and the iPhone in general are more likely to pay for applications. Integrating with iTunes makes the process simple for the user, but for the developer poses a challenge as all applications must be submitted to Apple and must meet their approval.

We should also note that while both of these applications have done well, their download figures unsurprisingly pale in comparison to those of Facebook and Tap Tap Revenge, both of which have over 1 million users. The real money in the App Store may well lie in monetizing these free applications, be it through integrated advertising or downloadable content (though it remains to be seen what restrictions Apple will place on this kind of strategy).

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