Top 10 Apple Stories Of 2008Top 10 Apple Stories Of 2008

When I started working on this guide to the top 10 Apple stories of 2008, I thought that this was a relatively quiet year for Apple. After all, this wasn't a year for blockbuster product introductions like the iPod or iPhone. It was, I thought, a year of incremental changes.

By the time I was done with my research, I'd changed my mind. This was a huge year for Apple. While there was no single triumphant product introduction, the company moved forward briskly on all fronts. It accelerated the iPhone's revolution of the smartphone industry by upgrading hardware and software and introducing the App Store. It reversed its previously poor record on environmentalism. It continued to be financially successful in an economy where blue-chip companies are failing. And it bolstered its notebook and desktop computer line, struggled with false rumors about Steve Jobs's health, fought a company looking to make Mac clones, and struggled with its MobileMe service.

Apple Floats On Air

Steve Jobs kicked off the year with a bang, unveiling the "world's thinnest notebook," the MacBook Air, a notebook so slender that it fits into a manila envelope.

The $1,799 notebook, weighing in at just 3 pounds, includes 2 GB memory, Intel Core 2 Duo 1.6-GHz or 1.86 GHz processor, supports Bluetooth and Wi-Fi, and has a five-hour battery life. Storage is either a 120 GB hard disk drive, or 128 GB solid state drive.

But the most impressive specs are the measurements: three quarters of an inch at the hinge, tapering to a nearly razor-sharp 0.16 inches at the front, where it closes with a magnetic, rather than mechanical, latch.

information reviewer Richard Hoffman said the machine is a "study in compromises," praising its size, weight, style, and overall portability. The processor is fast enough, but slower than other Macs; the battery is long-lived, but not user-removable, meaning you can't carry around an extra battery. Memory is good, but not expandable.

The Air helped drive strong Mac sales. It also drove competition: Toshiba introduced a 2.4-pound notebook in June that it said was the world's lightest, and Hewlett-Packard introduced the Vooodoo Envy 133.

The compact Air also drove accessory sales, such as this $55 case that resembles a manila envelope, but is made of leather.

For the fashionable business traveler, the MacBook Air is the must-have notebook. Apple Upgrades The iPhone 3G

In a conspiracy to annoy speculators who predict failure for Apple, the company followed the triumph of its iPhone in 2007 with the iPhone 3G in July 2008, adding faster, 3G networking (hence the name -- duh) and onboard GPS. Apple also upgraded the software to allow developers to run approved third-party applications on the iPhone, which users could download from the Apple-run App Store.

By November, the iPhone became the fastest-selling phone in the U.S., displacing the Motorola Razr. Apple sold 6.8 million iPhones in the quarter ending Sept. 27, blowing the doors off its goal, stated when the iPhone was introduced last year, of selling 10 million by the end of this year.

MacDailyNews celebrated the iPhone's smashing sales by rounding up quotes from experts predicting the iPhone's failure, from 2007 and early this year. Top choices:

"The iPhone is nothing more than a luxury bauble that will appeal to a few gadget freaks." -- Matthew Lynn, Bloomberg, Jan. 15, 2007.

"Apple should pull the plug on the iPhone... What Apple risks here is its reputation as a hot company that can do no wrong," John C. Dvorak, March 28, 2007

But my favorite prediction of iPhone failure isn't included in that MacDailyNews piece; it's from a April, 2007, interview with Microsoft's Steve Ballmer: "There's no chance that the iPhone is going to get any significant market share. No chance."

We expect the iPhone will continue to thwart predictions of its failure in 2009. Apple Introduces The App Store

The App Store is the secret ingredient that makes the iPhone so tasty. When Apple introduced the iPhone last year, it was a closed platform -- only Apple could write approved apps for the iPhone; third-party developers were limited to writing JavaScript apps that ran inside the Mobile Safari browser, or to writing unsupported apps that used "jailbreak" programs that Apple broke regularly.

That changed with the iPhone 2.0 firmware, introduced simultaneously with the iPhone 3G -- the new firmware allowed developers to write and sell third-party apps for the iPhone and iPod Touch. The new iPhone 2.0 firmware was standard on new iPhones and iPod Touches, and available as an upgrade to users of older models -- free for iPhone 3G, $20 for the Touch.

As of this writing, users had downloaded 300 million apps out of the 10,000 available in the App Store, according ads placed in the Wall Street Journal and New York Times by Apple. Financial analyst Jason Schwarz, writing on the blog Seeking Alpha in November, said the App Store is Apple's greatest ideayet ... It's bigger than the Mac, it's bigger than the iPod, and it's bigger than the iPhone."

But despite the success, the iPhone app development and distribution process has had its problems.

When Apple announced the App Store in the beginning of the year, developers worriedabout Apple's control-freak management of the store and apps. Apple requires developers to distribute all their apps through the App Store. It screens apps before releasing them, and occasionally blocks applications it considers inappropriate from being released. And it charges a 30% cut of the revenue developers get for selling their apps.

Developers had other concerns. Apple made developers sign a restrictive nondisclosure agreement, which forbade them from discussing the SDK, even with other developers who'd also signed the SDK. This blocked developers from creating mailing lists and other discussion forums for sharing tips and talking about problems and best practices. Apple finally loosened its NDA terms in the autumn.

The company also blocked third-party applications from running in the background, so, for example, a third-party instant-messaging application couldn't run in the background while you were doing something else and notify you when a new IM came in. Only a few of Apple's own apps would be permitted to run in the background: Mail, SMS, and the iPod app.

Developers are also chafing under the restrictions of Apple's app- screening process. Apple rejected Podcaster, an app for automatically downloading podcasts wirelessly, saying it duplicates the functionality of the desktop version of iTunes, according to the developer writing on his own blog. He added:

The developer noted that Apple allows many other applications that duplicate functionality available in the iPhone -- calculators, weather apps, even other applications that download podcasts -- and accused Apple of being unfair and inconsistent.

Likewise, Apple rejected MailWrangler, a dedicated Gmail client for the iPhone, because it duplicated functionality available in the built-in Mail client.

Another problem for developers: Users resist paying more than $5 per app, says Mark Schramm on The Unofficial Apple Weblog, making it hard for developers to make big investments in their apps. On the other hand: Developer Marco Armet sells a pro version of his popular InstaPaper app for $9.99; he has some tips for developers on how they can succeed in writing apps that users will pay more for.

But while developers grumble, users are eating up iPhone apps like M&Ms. For ideas on which iPhone and iPod Touch apps you might find worthwhile, visit our guides to 7 apps worth paying for and 13 free apps.

With Google's Android phone stepping up the competition in 2009, Apple will face increased pressure to fix problems with its App Store. But for now at least, the business is a smash hit.

Apple Faces Rumors About Steve Jobs's Health

More than any other major company, Apple is an extension of one man. The company's products and services are a manifestation of that one man's vision. Every product and service that Apple sells is infused with the essence of Steve Jobs.

So when a rail-thin Jobs turned up at the iPhone announcement in June, observers went into a frenzy of worry and speculation. Marketwatch described him as "gaunt" and "emaciated." Parodist Dan Lyons said he was ending his Fake Steve Jobs blog because Jobs looked terrible.

Rumors of ill health are magnified for Jobs because he is a pancreatic cancer survivor. The life expectancy of most pancreatic cancer sufferers is about a year. But Jobs had a rare form that was treated surgically and successfully in 2004.

In response to the buzz Apple issued a statement, saying that Jobs -- the real Steve -- had a "common bug."

But investors remained jumpy. Apple stock took a 10-point dive in October after a prankster posted a false message, on CNN's iReport citizen journalism site saying Jobs had had a major heart attack.

Such nervousness demonstrates that Apple needs to demonstrate a clear plan of succession for Jobs. Apple Fights Clone-Maker

Psystar delivered a kick in the kneecaps to Apple early this year, when it started shipping Mac clones that undercut Apple's prices. The problem from Apple's perspective: One of the pillars of Apple's business model is tight integration between hardware and software; that's why the company's terms of service expressly forbid installing Mac OS on other hardware.

Apple's rules don't stop hackers from getting Mac OS X running on non- Apple hardware, especially notebooks and netbooks, and Apple seems to ignore those modifications if they're for personal use. However, when Psystar went a step further and started selling machines in competition with Apple, Apple hit back.

PsyStar's OpenPro systems shipped with a choice of pre-installed operating systems, including Ubuntu, Windows Vista or XP, or Apple Mac OS X 10.5 "Leopard." One version featured Leopard on generic PC hardware including an Intel Core 2 Duo processor at 2.66 GHz, 250-GB hard drive, and Nvidia GeForce 8600 GT graphics card. The Psystar system was priced at about $800, a similarly Apple-branded computer would cost more than $2,000.

Predictably, Apple sued to block the sales and demanded a recall. Psystar filed its own claim that Macs were a distinct computer market -- separate from PCs -- and Apple had a monopoly in that market. A judge dismissed the claim.

As of this writing, Psystar is still offering Mac clones for sale on its home page. The company even had a Cyber Monday sale.

If Psystar wins its case, that would set a precedent allowing anybody to make Mac clones. Reliability is essential to Apple's reputation, and if every white-box vendor and high school kid can legally build and re-sell their own Macs, that's going to result in a lot of buggy machines hitting the market. This is not a case that Apple can afford to lose.

Apple Users Struggle With MobileMe Problems

Maybe they should have called it MobileMess. As part of the summertime launch of the iPhone 3G, Apple re-launched its .Mac service for synching data between multiple Macs and accessing it on the Web. Now called MobileMe, the service allows users to synch information including e-mail, calendar, contacts, and more between multiple computers. It also synchs with the iPhone, so if you update information on your iPhone, you don't have to attach it to your desktop computer to get the information onto the desktop. Apple called MobileMe "Exchange for the rest of us" -- bringing the benefits of Microsoft Exchange to non-enterprise users.

Except it didn't quite work out that way. For one thing, Exchange is a "push" service, meaning it synchs your messages immediately, enabling many corporate CrackBerry crackheads Exchange users to use it like IM or text messages, holding conversations in realtime. MobileMe synchs every 15 minutes at its most frequent, leading some users to accuse Apple of misleading advertising.

And the service at launch was plagued by multiple outages.

In an internal e-mail about a month after launch, Steve Jobs said MobileMe was "not up to Apple's standards" and the service should have been rolled out in phases. "It was a mistake to launch MobileMe at the same times as iPhone 3G, iPhone 2.0 software, and the App Store," Jobs wrote. "We all had more than enough to do, and MobileMe could have been delayed without consequence." Jobs re-organized the MobileMe group, putting it under Eddy Cue, who leads all Internet-related services at Apple, including iTunes and the App Store, and who reports directly to Jobs.

For what it's worth, I like MobileMe a lot. I like knowing that my iPhone contacts, e-mail, and calendar are being backed up over the air frequently in (near) realtime. I like it even better with the iPhone 2.2 firmware update that Apple released in late November, which allows users to download podcasts wirelessly. Those features mean I don't have to synch my iPhone to the desktop very often -- one less thing to remember to do every day.

Apple Spurns The Enterprise

Apple lost its top enterprise guy in November, and doesn't plan to replace him. Al Shipp, the company's senior vice president of enterprise sales, left and won't be replaced. The people that formerly reported to Shipp now reporting directly to John Brandon, senior vice president of sales for the Americas and Asia Pacific.

But, as IT manager and Mac enthusiast John Welch points out, Apple is not and never has been an enterprisecompany. Apple's products have cult popularity in some enterprises -- most notably, the iPhone, which this year got Exchange support. And the products are likely to become even more popular next year, when Apple ships the "Snow Leopard" version of Mac OS X, with its own support for Exchange.

However, Apple simply doesn't provide the kind of support enterprise IT managers need.

Enterprises need things to be predictable. Apple hates predictability -- they love to surprise and delight customers with unexpected products. Enterprises need to be able to dictate product specs and services to their vendors; Apple takes orders from nobody -- that's their corporate culture.

So if you want to know whether Shipp's departure will be a blow to Apple's enterprise strategy, the correct answer to that is: What enterprise strategy?

Apple Goes Green

A year after bashing Apple for making iPhones containing "hazardous chemicals," Greenpeace praised Apple in October for reducing pollutants in the latest editions of MacBook laptops.

The new MacBook, MacBook Pro, and MacBook Air introduced in October have lesser amounts of PVC plastic and brominated flame retardants, or BFRs, than the previous MacBook line. Apple claimed to have the "world's greenest family of notebooks" in an ad campaign launched in November.

But Greenpeace wants Apple to do more. "Not quite the breakthrough were hoping for," the organization said. Apple eliminated PVC plastic and brominated flame retardants (BFRs) in internal components' Greenpeace called on Apple to entirely eliminate the chemicals.

Apple has come a long way since 2003, when Greenpeace first asked Apple for information on the company's use of toxic chemicals in products and manufacturing. Apple finally delivered in 2004. Two years later, Greenpeace rated electronics companies on their environmental friendliness, giving Apple a dismal 2.7 rating out of a possible 10, ranking it fourth from the bottom of 14 electronics companies.

With the economic downturn, many companies will cut back on green initiatives to cut costs. It remains to be seen whether Apple will be one of them. Apple Refreshes The MacBook, iMac, And iPod Lines

Apple followed up the MacBook Air introduction nine months later -- in September -- with a new batch of lighter, aluminum MacBooks with faster graphics and a better display, and lowered the entry-level price of the white plastic MacBook to $999. Apple also upgraded the MacBook Air. The systems got a graphics boost by switching from Intel's integrated graphics chipsets to the Nvidia 9400M chipset, as well as getting LED backlit displays with glass front, and a larger, multi-touch trackpad.

Prior to the launch, Apple blogs fueled rumors of an $800 MacBook, Apple's answer to the emerging netbook market of small, low-powered, low-priced laptops. But that didn't happen.

Apple updated its all-in-one iMac line in April, with faster Intel Core 2 Duo processors and an optional more powerful graphics processor on its high-end 24-inch model. The company said it shipped 2.3 million Macs in the first quarter of 2008, up 51% year-over-year. IDC reported that Apple's share of the U.S. PC market during the first quarter reached 7.1%, up from 4.9% year-over-year.

Apple refreshed the iPod line in September, with new designs and lower prices. The new iPod Touch and Nano are thinner and more curved than previous models, with a new "Genius" feature that can play a playlist of up to 100 songs similar to any tune chosen from the user's music library. In addition, the Nano got a new "shake to shuffle" feature to play songs at random. And new pricing was announced: The Nano, now available in nine colors, sells starting at $149. The new iPod Touch sells starting at $229.

While the iPhone and MacBook Air were the sexy products of 2008, Macs and the iPod are the workhorses of the Apple line.

Apple Succeeds Financially In Bleak Economy

It's hard to say that any company is doing well in the current economic climate. But Apple seems to be weathering the storm pretty well.

Sales were up 27% in the quarter fourth ending Sept. 27, driven by strong Mac and iPhone demand. The company said it passed its goal of selling 10 million iPhones this year and profits reached the $1.14 billion mark.

Steve Jobs himself put in a rare appearance on the analyst conference call announcing results Oct. 21. He said the company is prepared for the economic slowdown with a loyal customer base that's likely to delay purchases rather than turn to competitors. Furthermore, Apple has a successful product portfolio that offers strong value for the money, and $25 billion in the bank, Jobs told analysts.

How's Apple doing today? Analysts are optimistic. Shaw Wu of Kaufman Brothers gave Apple a buy rating in late November, saying its strong product line and small market share work in its favor. True, Apple's stock price is tumbling, but that just makes it a strong value stock, says BusinessWeek financial columnist Gene Marcial.

The iPhone in particular might do well in a down economy. Surprisingly, the iPhone is popular among low-income users, who use it as a replacement for multiple devices for work and entertainment, according to a study by ComScore.

It's hard to predict a prosperous 2009 for Apple -- or anyone else. However, Apple is a pillar of strength in a storm-tossed economy.

A year from now, we could be facing a complete collapse of civilization, and bartering livestock to survive. In that case, you can be sure that Apple's cows and sheep will be sleeker and easier to milk than other vendors' -- while critics say Apple's livestock are just overpriced goats with expensive haircuts.