The successful IPO of Facebook, the flak surrounding Twitter’s decision to censor some tweets, and Google’s weaker-than-expected 4th-quarter earnings all point to one of the big events of our times: The crazy, chaotic, idealistic days of the Internet are ending. Once, the Prairies were open and shared by everyone. Then the farmers arrived and fenced them in. The same is happening to the Internet: Apple, Amazon and Facebook are putting up fences — and Google is increasingly being left outside.

The old Internet on which Google has thrived is still there, of course, but like the wilderness it is shrinking. Often these days, we sign up for Facebook or Amazon’s private version of the Internet. At other times, we use a smartphone and download an App instead of using Google search.

Investors are already placing their bets on who the winners of the new Internet will be: Over the past five years Amazon’s shares, despite their recent fall, have risen 370%. Apple’s are up 438%. Google’s, meanwhile, have merely risen by 17% in all that time.  It is still the early days of this long-term trend, but my hunch is that this gap in performance will widen over the coming year — and that Google’s long slow decline has already begun.

What makes Google’s predicament so serious is that it has little to do with technology and everything to do with business models. You can buy or copy technology, but changing a business model is about the hardest thing any company can do. Google’s business model, and nearly all its revenue and profits, depend on the Internet remaining open. When we search, Google pockets billions from advertising. If the old Internet is changing, Google’s original way of doing business loses value.

When Google reported its results two weeks ago, the first headlines focused on the 25% increase in fourth quarter revenues compared to last year. Investors, however, focused on the drop in the cost per click that Google is able to charge advertisers. The main reasons for the decline in this all-important metric is increased competition from Facebook, Amazon, and Apple.

Start with Facebook, which has erected a cyber fence around its 800 million-plus users and refuses to share some important data with Google. This means that Google’s searches are not quite as valuable to advertisers as they used to be when the Internet was open and when Facebook was much smaller than it is today.

Amazon is increasingly playing a similar trick — but with a twist. Amazon has taken Google’s freely available Android operating system and adapted it for its new Fire tablet. Amazon gets to free ride upon Google’s software, in other words, while the search giant gets nothing back in return. No data, and no advertising revenue.

Apple’s land grab, meanwhile, may be the most definitive. The Apple universe is like a cable TV network that owns content or aggregates it. It’s phones, computers and tablets are like the set-top boxes your cable company gives you. The content you consume might be a film that you download, a song, a book, an application or something you buy on line, like a pair of shoes. And none of the data Apple’s customers generate is available to Google. (Amazon basically has the same arrangement going with its Kindle and Fire. The only thing it doesn’t own is the network, but it doesn’t matter: Once you log into Amazon with a password, you’ve left Google’s open Internet.)

The danger to Google, in other words, is that as social networking, smartphones and tablets increasingly come to dominate the Internet, Google’s chance to earn advertising revenues from searching will shrink along with its influence.

Yes, Google has the Android and Google+, but these may not be enough to fight the shift to the closed Internet. Google+, of course, has just a tiny fraction of Facebook’s scale and there’s currently little reason to think it can catch up. The Android operating system, also an attempt by Google to build its own internet eco-system, is a more conspicuous success. Most commentators focus on the rapid growth of Android and the fact that it has greater market share than the iPhone.

But this analysis misses the point: The Android may have market share, but more than half of mobile searches come from iPhone users. Google may have developed Android but, unlike Apple’s iPhone, it does not really control it. Licensees like Samsung and HTC are able to adapt Android software to their own ends. And smart companies like Amazon are getting a free ride on Android while sharing little of the spoils with Google.

Don’t get me wrong: Google is still a force, just as Microsoft, Intel and IBM are. But they are no longer at the epicentre of the zeitgeist. Like Microsoft before it, Google can fight the good fight on many different fronts. Whether it can ever find an engine of growth capable of supplanting its core business is another question.

About the Author

Keith Woolcock has been covering technology as an analyst and journalist since the mid 1980s. He has worked for Nomura, Merrill Lynch, the Daily Telegraph and the Mail on Sunday; appears regularly on CNBC in London; and in 2010 founded 5thcolumnideas, which provides global thematic research and spots important investment trends — especially in technology – for institutional investors.

Here’s how a typical press interview with Steve Jobs used to go in the early 2000s. You wouldn’t be immediately ushered into his presence; you would be passed from PR person to PR person, corridor to corridor, waiting at each step, until you reached the inner sanctum.

You would often pass a fellow journalist on his way out, looking white as a sheet and shaking his head like he’d gone ten rounds with Mike Tyson. You would mentally prepare your questions about the latest Apple product, knowing that Steve would bat them away like flies and say what he wanted to say.

And then there you were, with the man himself: black turtleneck, jeans, white trainers, spiky salt-and-pepper stubble, and those no-nonsense eyes that could look straight into your soul. You’d sputter out a question while he sipped from a bottle of Odwalla. Perhaps he would deign to answer politely, or perhaps he would interrupt: “that’s a stupid question. That’s not what we should be talking about.”

If you could survive twenty minutes of this without cracking, his demeanor would soften. If you were lucky, then just for a moment the mask would slip, and Steve would break into a broad smile. It was a grin that acknowledged the silliness of this interview game — and that you both loved playing your roles in it.

Always Passionate

As a technology writer for Time magazine in the 1990s and 2000s, I went through this routine a dozen times. It’s easy to forget, but back then an Apple product launch was not a huge deal. The company was seen as struggling, a distant second to Microsoft, even years after Jobs had retaken the helm. I had to fight for a single page on the launch of the iPod in 2001, for instance, at a time when the headlines were all about war and terror.

But Jobs was always compelling. He was the news. His enormous passion for a product was unrivaled in any industry, before or since. As long as I could convey him on the page, Steve as he really was, Apple stories were an easy sell for my editors.

The Urgency of the Future

The more stories I did, the friendlier Steve got. He started calling me at home with story ideas and off-the-record information. He asked me to interview him on a video that would be broadcast at a Warner Music conference; this was when he was still trying to persuade the record labels to let him sell songs within iTunes.

I figured this meant we should start with a few softball questions about music in general, but Steve interrupted and got straight to the pitch: 99-cent MP3s would save the music industry. Of course, he was absolutely right, and of course, he got his way.

Here was a man who knew precisely what the future looked like, and had no patience for anyone or anything who got in the way. Not a second was to be wasted. The vision was too important. This is what he meant in that famous Stanford commencement speech: “your time is limited, so don’t waste it living someone else’s life.”

Making Airplanes In the Sun

But there was a whimsical side to him, too. Once Steve tried to pitch me a story on the architecture of Pixar’s headquarters. It wasn’t new; he was just eager to show it off, and hounded me until I agreed to take a tour with him. We must have sat down in every room in the building, Steve grinning like a proud parent the whole time. I patiently explained why it probably wasn’t going to be in the magazine (this was before modern Web journalism and its infinite capacity for stories).

It didn’t faze him one bit. In his mind, it was a worthy story, and that was all that mattered. For Steve Jobs, every day was like Christmas morning, and nothing could shake that feeling.

My most enduring memory of him speaks to that fact too. It was a Saturday afternoon in Palo Alto, and I was having lunch with a friend in an Italian restaurant. Suddenly, Steve came in and ordered takeout. He was wearing a T-shirt and cut-off jeans, just another happy suburban dad.

He took his food and left, and as he walked down that beautiful leafy street, he stretched out his arms like an airplane — like he was flying into the sunshine.

For all the times I’ve seen him at the height of his powers on stage, and for all the sweat-inducing interviews, that is how I will remember Steve Jobs — completely confident and carefree, being just who he wanted to be, flying straight into the future.

Apple’s new Smart Cover for the iPad 2 is one of the most interesting protective cases yet, not because of the clever magnet design, but rather the aggressive business strategy behind it.

The iPad 2 is 33 percent thinner than the original iPad; a significant design difference. That means first-generation iPad cases won’t fit on the new iPad. And when the iPad 2 ships March 11, Apple, the only company that’s had direct access to the iPad 2, will be the only vendor selling a case made to fit the product just right.

That gives Apple a few weeks to rake in juicy profits with the $40-$70 Smart Cover before third-party case manufacturers whip up other variations of protective accessories for the iPad 2. Keep in mind the most sales for a product typically come on launch day, plus Apple retail stores carefully select which third-party cases they display on shelves. With the Smart Cover, Apple can potentially create a temporary pseudo-monopoly on protective cases for the iPad 2, bringing in millions of dollars in profits to pad hardware sales.

This isn’t the first time Apple has enjoyed a head start on accessories. Apple shipped its own “Bumper” cases for the iPhone 4 (which probably didn’t work out so well because of Antennagate and the free case program), and Apple also sold cases for the original iPad when it launched.

Still, the Smart Cover is Apple’s hardest push in the accessories game yet. The marketing behind it is intense. Apple devoted an entire webpage and video just for the Smart Cover, embellished with some truly over-the-top ad copy: “A magnetic attraction.” “An on-again, off-again relationship.” “A cover that’s smart. And bright.” “That’s not just smart. It’s genius.”

To be fair, it’s a well-designed cover, and the ability to prop up the iPad at an angle makes it easier to type on a touchscreen. But it’s a plastic cover with a magnet on it, people.

Steve Jobs even noted that the case is made of polyurethane, “which is used to make spacesuits.” Polyurethane is also used to make some condoms, baby toys, carpet underlayment and mattress filling, facts which Jobs neglected to mention.

The Smart Cover comes in leather, too, and surprisingly Jobs didn’t note that leather is the same material used to make Phillip Lim motorcycle jackets or Olivia Harris purses.

Jokes aside, Apple’s accessory strategy might point to a change in its hardware evolution.

In the past, Apple only gave major makeovers to Macintosh computers every three or four years; the smaller upgrades in between would be incremental improvements in chip speeds and other small features. The iPhone also didn’t get a hardware revamp until the iPhone 4.

So it’s peculiar that the iPad 2’s design is so different, just one year after the first iPad. Meanwhile, The Wall Street Journal claims the iPhone 5 will have a “different form factor” than the iPhone 4. Maybe we’ll see more rapid hardware design changes occurring in Apple’s mobile products, partly motivated by Apple’s desire to compete in the accessories game.

That’s wishful thinking, as it would make each Apple announcement a bit more exciting, so long as you’re not an avid upgrader who always buys a case.

[Via Wired]

How do you imagine the iPad 2′s visuals? Our idea of how the device will look certainly doesn’t look too different from this image.

Although it looks professionally done and very convincing, the image could very well be just a fake, and not having an image of the iPad’s front side doesn’t help matters much.

Still, what we can see in the picture is in line with the most plausible rumors about Apple’s next generation iPad: a rear-facing camera, flat back and a slightly redesigned speaker. What do you think? Real or fake? Please, give us your opinions in the comments.

[via Mashable]

Recent rumors suggesting that Apple was planning to release a smaller, less expensive iPhone model—dubbed the “iPhone nano”—don’t appear to be true, at least according to a new report. Apple is said to be exploring making a less-expensive iPhone model, but it won’t be making a significantly smaller device to achieve that goal.

Sources speaking to The New York Times said that Apple won’t shrink the iPhone “anytime soon” in order to offer a less expensive model. One source in particular noted that simply shrinking the iPhone wouldn’t necessarily make it less expensive. Historically, making a device with the same functionality significantly smaller often costs more (in the short term), not less, and the source suggested that little or no savings in manufacturing costs would be realized by building an “iPhone nano.”

A smaller screen size would also necessitate additional work on the part of developers to account for changes in user interaction. While the iPhone 4 has an increased resolution compared to older iPhone (and iPod touch) models, the physical size is the same. Developers take into account the specific screen size and area when determining placement and spacing of buttons and other interface objects; a different size requires a rethinking of the interface design and could significantly impact usability. Having a consistent screen size is seen as one of the iPhone’s benefits compared other platforms.

Instead of making a tinier device, Apple is exploring ways to reduce the cost of an entry-level iPhone by changing internal components. Apple could use less NAND flash memory, a lower-resolution camera sensor, or other cost-saving measures, an anonymous source who claimed to have worked on multiple iPhone prototypes told the Times.

“Although the innards of the phone, including memory size or camera quality, could change to offer a less expensive model, the size of the device would not vary,” the source said.

The “N97″ codename cited in previous rumors as that of a purported iPhone nano was apparently the code name of the CDMA-compatible iPhone 4 release earlier this month, according to the report. There’s some question as to the validity of this source’s knowledge, however, as developer Steven Troughton-Smith verified that the code name for the Verizon iPhone is “N92″ as we previously reported last year.

N97 is very likely a prototype device—for instance, an early prototype of the iPhone 4 was codenamed N89, but the released product is referred to as N90. It could indeed be a prototype that is smaller in size compared to current iPhone models, as a source for a Wall Street Journal report who claimed to have seen it said. It’s perfectly possible for Apple to be experimenting in the labs without immediate plans to release such a product.

Sources for NYT did corroborate that Apple is working on advanced voice control for iOS devices, as reported in previous rumors, and that MobileMe is expected to receive a significant upgrade in the near future to enable syncing more types of content “without a cable,” and could be made free to better compete with services offered by Google.

Apple is in the process of building at least one new model of the iPhone that would be cheaper and about one-third smaller than the current iPhone 4, according to a new report.

Bloomberg, citing “people who have been briefed on the plans,” says Apple is considering launching a series of inexpensive phones as a way to counter the growth of Google Android. Apple is considering selling one of these devices for $200 without a two-year contract. The 16 GB iPhone 4 costs $599 without a service contract.

The device is supposedly “about one-third smaller than the iPhone 4?, according to one of Bloomberg‘s sources. The source supposedly saw the device sometime last year, so even if it is true, a lot could have changed.

Apple is also reportedly working on Universal SIM technology and dual-mode phones that can work on both CDMA and GSM networks. Neither of these reports surprise us. Apple has chosen Qualcomm to deliver chips that work on both networks. In fact, the Verizon iPhone could potentially work on both networks, since it uses a dual-mode Qualcomm chip.

Apple has also been interested in creating a SIM that would let users switch between networks. However, pressure from the networks could easily nix those plans.

A smaller version of the iPhone, one with older components and a smaller screen to keep the price down, would have to run iOS without compromising the integrity of the user experience. Apple has done this before in other markets (think about the iPod Nano), but Apple already sells a cheaper iPhone: the iPhone 3GS, available for $50 with a contract.

An “iPhone mini” or “iPhone nano” would be an interesting play, but like many projects at the company, it could be scrapped long before it sees the light of day.

The following may sound a little crazy considering that the iPad 2 has not even been acknowledged or introduced by Apple yet. But from what we’re hearing, the next iteration of the iPad — let’s call it “iPad 3? to keep it simple — may be coming along sooner than people realize.

Earlier today, HP held a big event in San Francisco to unveil their latest products based around the webOS software that they acquired when they bought Palm last year. One of these devices is a tablet, called TouchPad. The device looks like an iPad, but it has better specs. As such, some are already wondering if it’s a possible “iPad-killer”. Of course, the main problem is that the planned availability of the TouchPad isn’t until this summer. (And worse, there’s absolutely no word on pricing.). Then Daring Fireball’s John Gruber decided to quickly weigh in.

“Summer feels like a long time away. If my theory is right, they’re not only going to be months behind the iPad 2, but if they slip until late summer, they might bump up against the release of the iPad 3. And not only did they announce this with a distant ship date, they did it with no word on pricing,” he wrote on his site.

Did you catch the key phrase there? He snuck it in the middle, but it’s definitely there: iPad 3. This immediately led to Business Insider and others to speculate that the iPad 3 could be released this fall. But others weren’t so sure that’s what Gruber meant. They thought that perhaps he was just saying that a summer release would be close to a spring 2012 release for the iPad 3, which would be consistent with Apple’s cycle thus far.

But we’re hearing something else. Something that does in fact place the iPad 3 in line for release this fall.

A few days ago, we heard from a very good source that Apple was assembling the pieces for a “big fall surprise”. While intriguing, that could obviously mean anything. But the “surprise” part clearly means it’s something beyond the regular iPod/iTunes (and perhaps MacBook Air) refreshes that Apple does in the fall. Still, that leaves a lot of room for guesses. An actual Apple television? iTunes in the cloud? A touchscreen iMac? Who knows?

Well, until today. We’ve now heard that this “fall surprise” is related to this would-be iPad 3. We don’t have any more concrete information beyond that. But, as of right now, the plan is apparently to release one iteration of the iPad in the next few weeks. And then blow the doors open with another new version in the fall.

Obviously, this being Apple, that plan could change at any time. But here’s why it could make some sense.

While again, Apple hasn’t publicly said the iPad 2 even exists, basically everything is known about it. Just last night, on the eve of the HP event, the Wall Street Journal ran a story confirming not only that the new device was in production, but also confirming many of the specs that have been rumored for months. That includes a front-facing camera, a faster processor, more RAM, and support for both AT&T and Verizon’s networks. The other thing they’ve confirmed is that the device would not have the higher resolution screen that some had been hoping for. For what it’s worth, we’ve heard the exact same thing. The screen of the iPad 2 will be the same resolution as the original iPad.

So, aside from the camera and it being slimmer (which are a nice additions, but not a game-changing), it sounds like the iPad 2 will be to the iPad 1 what the iPhone 3GS was to the iPhone 3G. That is, a faster, more polished offering.

And that’s fine. Considering that over a year after its initial unveiling, no one else has a tablet out there yet that can hold a candle to the iPad, adding speed and polish should be more than enough to keep it far ahead this spring. But Apple isn’t stupid. They can see the armies forming around them. Everyone wants in on this tablet business. And come this summer, there should be a few interesting offerings in the space from competitors — like the HP TouchPad.

The iPad 2 will likely still be ahead of those products. But Apple has a history of not resting on their laurels. That’s perhaps the key reason why they’ve been so successful in recent years. And that’s exactly why they strike with the iPad 3 in the fall.

Now, I have no details as to what this iPad 3 would include. But one very solid guess is a retina-like display that the iPhone 4 currently has. There’s obviously been many rumors of this for the iPad 2, but it’s not happening yet. But perhaps it could this fall. Another, slightly smaller form factor will clearly be another guess. Steve Jobs has famously played down that idea in the past — but he often does that and turns around with an offering.

Another interesting question will be how Apple would pitch such a quick upgrade to consumers? Would those who bought the iPad 2 this spring be mad if a new version hits in the fall? Sure. But maybe Apple has more pricing tricks up their sleeve. More to come on this, I’m sure.

Update: In a new post, Gruber has clarified his “iPad 3? remark. While he calls it an actual guess, he says that he thinks an iPad 3 could hit in September alongside new iPods. And while his reasoning is in some ways the inverse of mine, we arrive at the same conclusion.

Gruber thinks the new iPad we may see in the fall will be more of a “iPad 2.5?, whereas my guess was the other way around. He thinks the launch date could have more to do with Apple attempting to move the yearly release schedule of the iPad to be closer to the holiday season. Again, that’s just his guess, but it also makes quite a bit of sense.

And his overall conclusion as to why Apple is okay releasing two iPad iterations in a six month span is:

But I’m certain that Apple sees the potential and the high stakes. They’re not going to leave any gas in the tank pushing the iPad hardware specs forward as fast as they can.

Yep.

Again, to be clear, my information on this isn’t a guess (though my thoughts as to the reasons why Apple would do this are). Apple’s plan, at least right now, is to release another version of the iPad in the fall. That may change, but that is currently the plan.

[Via TechCrunch]