Even though Near Field Communications (NFC) has been around for 15 years, it could become mainstream in the U.S. smartphone market this year. NFC operates at 13.56Mhz and at speeds from 106 kbits/s to 848 kbits/s all within a 4 cm range. We are finally catching up with Japan (e.g., Osaifu-Keitai system) and other areas of the world where NFC is used for mobile commerce and payments. With better software integration, you now have the intersection of context, proximity and event handlers that blend the physical and virtual worlds. It would make sense if Google announced a mobile payment platform since NFC is natively supported in Android 2.3. You have to consider other players with a little more "trust" than Google such as Apple iTunes or even Paypal. Merchant players like First Data or GPN are reluctant to adopt an offering that is not industry standard. MasterCard and Visa have made progress raising consumer awareness for NFC but financial institutions are not good catalysts for ecosystems. Even though NFC silicon can be standardized, individual competitors that bring their own implementation of payment systems can stall adoption and create payment silos. The battle will be which model will prevail - operator-centric, bank-centric, collaboration-centric or peer-to-peer-centric. Perhaps it doesn't matter since once a user has selected a smartphone platform, they automatically get the mobile payment system. Otherwise we would need a system like "payment roaming" similar to what evolved during the early expansion of cellular networks and billing systems.

Apple's recent change to its developer rules requiring their approval to collect and send device data to third parties for aggregation, analytics or processing, has created a firestorm in the mobile blogosphere. If Facebook had a mobile operating system, they would not qualify as "independent" according to the new rules and hence could be blocked. Recent legislation, such as the draft privacy bill from Rep. Rick Boucher, seeks to define and require opt-in approval for "sensitive information." That could be your exact geographic location or something similar. Of course users comfortable with geo-location applications shouldn't have a problem providing their approval, not many people read those fine print in pop-ups anyway - but they should.  We are seeing inconsistent privacy notices and policies in use across desktop and mobile applications. Apple justifies their approach under the "privacy" banner, but could attract the scrutiny of the FTC. The recent leak of AT&T ICC-ID data to obtain user email addresses brings Apple's privacy concerns up front and personal. While not necessarily Apple's fault, they still require an email address for iTunes. Mobile advertising has evolved from the desktop space with some innovation, although there have not been many break-through ideas. Apple's iAd experience is very clever in that users clicking ads are presented an HTML5 container without leaving the app. Delivery and bundling of iAds via iTunes supports their cash engine. By forcing developers to use HTML5, this further drives the standard away from Adobe. Perhaps Apple could use iTunes as a repository for user opt-in status thereby eliminating interruptions in the application itself. 

Developers explain that using Xcode tools from Apple for Objective-C results in more efficient code and power management for the iPhone & iPad devices. This also ensures some consistency in the way the finished application looks and behaves. Even though Obj-C is not managed code like Microsoft .Net (e.g., with garbage collectors), developers have no problems releasing memory to fulfill the performance requirements imposed by Apple. If your program takes more than 20 seconds to respond to the user or tries to access more memory then is available, the OS shuts it down. I don't see Apple attempting to create a monopoly or impose unfair trade practices. They do not have the desktop market share that Microsoft had during the Internet Explorer DOJ actions. It's not Apple's concern what developers have to do to their app for another platform. Adobe can set up an Apple mobile devices group to develop Xcode libraries for their mobile application developers. This is no different than what Microsoft does with their Apple division where they have MS Office 2008 running very well on Snow Leopard. No need for the government to get involved.

The first draft of the HTML5 spec appeared in early 2008. Its design purpose is to eliminate the need for plug-ins such as Adobe Flash, Microsoft Silverlight or Sun JavaFX, especially when playing videos. Adobe Tools such as Creative Suite have enabled thousands of developers to make Flash the standard for 75% of video on the web today. But let's look at whose driving the standard. Ian Hickson is from Google and David Hyatt is from Apple, so it should come as no surprise why Adobe is odd man out. Refined standards take a long time to materialize; the Candidate Recommendation stage for HTML5 starts in 2012 and could end as late as 2022, but we're talking software, not hardware. Meanwhile, we are starting to see more useful implementations of the standard as it sits today. The recent iTunes Preview iPhone App is a good example of HTML5. The new Google Voice iPhone browser also uses HTML5 and leverages local caching of data. It supports voice tags that allow you to play audio voicemails in the browser. Is HTML5 advancing fast enough to overtake Flash on the web? If the CODEC debate of H.264 vs. Ogg Theora doesn't get resolved soon (H.264 has IP licensing and potential patent infringement issues), we will see a splintering of web browser support for HTML5 in the short term. For now, I'd keep some Flash developers around.

With a four-way price war going on between AT&T, Verizon, Sprint and T-Mobile, we have seemed to lost track of VoIP over 3G. Software from companies such as Fring or Truphone allow you to make VoIP calls on your iPhone, but only over WiFi. There are hacks (crash-x) that allow you to trick the iPhone into thinking you're connected to WiFi and make VoIP calls over 3G (or downspeed to EDGE/GPRS). I'm still wondering ... why bother? If the idea was to save minutes or money, the carriers have already responded by driving cheap voice with price reductions. Besides, VoIP over 3G needs massive data compression and low latency to battle quality of service issues that make the user experience poor.  Skype claims they only need a small amount of bandwidth - between 6 kbps and 40 kbps, but I don't think they can overcome latency issues. Many users were disappointed Skype 1.3 did not include push notifications or support VoIP over 3G. They still have usability issues using Skype when "real" phone calls come in (it logs you off). Eventually data plans will race for the bottom too so Skype could become irrelevant on 3G/4G handsets.

Last week HTC launched their latest Android device, dubbed the Hero. In addition to supporting multi-touch Flash Player 10 content, the Hero has a new UI layer called "HTC Sense." Among other things, it allows the use of widgets to bring information up the UI stack, like Twitter or other applications. It has similar behavior to the Palm Pre in this respect, allowing more end user customization. From a business perspective, it is strategically valuable to separate the user experience from the underlying operating system. That way, HTC can choose to change out Android for Windows Mobile and HTC Sense will still look the same. However this begins the fragmentation of open source code that could disrupt a fledgling ecosystem. For one thing, users would need to wait for HTC and the carrier to release updates. Google Android has made strides last year at the expense of the more prolific mobile OS, J2ME. Both Windows Mobile and J2ME variants suffer from a high degree of code fragmentation. J2ME is slowly dying and MIDP3 is way too late to make an impact. Apple got it right because they control the device and the OS, not to mention making app discovery and payment seamless and carrier independent. Developers will still need to maintain multiple versions of popular applications for Smartphones. We need a stable Android in order to achieve break-through market traction and avoid the developer frustration experienced with J2ME.

Warren East, CEO of ARM Holdings says there will be over 10 ARM-based Netbooks on the market by year end. That puts a lot of pressure on Microsoft to port Windows to the ARM processor, or does it? Here's the dilemma. If Microsoft ports to the ARM, Intel could optimize x86 CPUs like Atom for Linux (and Android). Even though Microsoft has embedded versions of Windows for kiosks & cash registers, it's not clear to me the ARM processor could handle a scaled down version of Windows. Not to mention how it would perform against a lightweight Linux ARM implementation. Intel wins either way. Apple's not playing this game; they've segmented the processor platform of the Intel MacBooks from the iPhone. They will most likely develop their own MPU/GPU combo chip as I've discussed here before. Microsoft should stay the course and stick with Intel. 

A WSJ article highlights recent discussions between Verizon and Microsoft to develop a new touch-screen multi-media device "in an ambitious effort to challenge Apple's iPhone." With Apple recently reaching over 1 billion application downloads, the bar is quite high for RIM, Google, Palm and Microsoft. Both Microsoft and Google prefer to stay out of the hardware design altogether. That makes sense because they are software companies. However, Apple has better control over the harmony between device and software. They recently hired AMD/ATI's CTO, Bob Drebin. A new CPU/graphics processor could be in the works under Drebin's direction utilizing talent Apple acquired from PA Semiconductor. Apple OpenCL is a specification that enables a single chip to do both graphics and computing. In chip-speak, it allows GPUs and multi-core CPUs to handle tasks like physical awareness & video rendering on a single die. Verizon seems set on retaining control by launching their own download store for a variety of applications and devices. I don't see them being too eager to introduce the device reported to be bigger than an iPOD and smaller than a laptop because it will have native WiFi & VoIP capability. Verizon is keeping their options open but they seem to be increasing subscribers fine without the iPhone ... for now.

With all the focus recently on social media and cloud computing, some might have missed recent developments in the next generation wireless network, LTE. Verizon announced at CTIA their new development center and one thing I find interesting is the fact that the operating system choices will have to collapse for 4G. Developers are still forced to choose between Windows Mobile, Android, iPhone, Qualcomm Brew and Symbian. Maybe what's needed is a mobile hyper-visor of sorts that will run managed code on any device, more on that later. The other thing that will trip us up will be the change in the economics of mobility revenue and profit opportunity. I believe LTE will require operators to abandon flat-rate, monthly unlimited data plans altogether - including wired. Time Warner and other MSOs got some backlash this year with their experimentation of metered broadband. Real-world bandwidth is nowhere near theoretical peaks (I expect users will get 10-20Mbps download links for LTE vs. the 100 Mbps advertised). Busy websites and network congestion happen. Spectrum is a shared and non-deterministic media. Combine this with operator backhaul capacity, device receiver power and cell configuration diversity and you have an industry marching to data caps, bandwidth restrictions and questionable service guarantees. Think about this easy example: when you are able to download data faster, you download more thereby triggering increased usage and reaching your data cap more quickly. Stacey Higginbotham had an excellent example of the difference in downloading HD video in a metered world where you thought you were saving money by not driving to Blockbuster! 

Peter Parkes, chief blogger for Skype reported there were over a million downloads of Skype for the iPhone in just two days. As reported here before, eBay failed to monetize their investment in Skype and realized a huge write-down. The surge in user interest is more a function of pre-release promotion, teasers & blog coverage, than anything else. The application does not work on 3G, only WiFi, therefore it automatically obsoletes those Skype WiFi phones. I like the application on a laptop and it's quite useful for international Skype-to-Skype calling. There are other alternatives; Truphone has an unlimited call package and other bloggers have tips to JailBreak your iPhone and install voipover3g to spoof the device in to thinking it's on WiFi. If you have a good connection, the voice quality is better than Fring or Truphone, but how many people will really use this application? If you already have Skype on your laptop at home and have a Skype contact list, all you'd be able to do is make calls from your handset unwired. We saw this pre-launch hype with the Palm Pre too and today they had some early looks at applications during CTIA 2009.

The Kindle is not a game changer like the Apple iPod was with music. This product has less of a growth curve than iPhones, NetBooks or other consumer devices. People are questioning the grayscale, the price and the experience but some like the aluminum case, the Stephen King eBook, "Ur" and the ability to get any printed book in 60 seconds. For $359, you can shop for a Netbook and get more functionality. The total cost of ownership of Kindle is higher because with newspaper subscriptions, books and other additions, you could run up to $100/month easily. Amazon doesn't break out the sales of their eBook business but they claim it is 10% of overall titles sold. The Kindle is Amazon's call option on the future of reading. I'm afraid that call option will expire worthless, there's a reason books haven't changed for 500 years, they still work!

Despite the lowest holiday sales in 40 years, Apple powered ahead in the fourth quarter with both a rise in profit and revenues and sending its quarterly sales past $10 billion for the first time. Tim Cook even took a shot at would-be copycats saying if anyone "rips off" Apple's IP, they will "go after anybody that does."  Former Apple executive, Jon Rubinstein was in opposition with Steve Jobs to the keyboard design of the iPhone. He left the company last year and with $325 million funding from Elevation Partners, he became Executive Chairman of Palm. My short evaluation of the Palm Pre was positive on the technology but negative on the business prospects. Maybe Jon should use some of that funding to pay royalties to Apple.

By building upon their heritage in personal information management devices, Palm has extended good functionality to popular websites that appeal to business users with the new Palm Pre. I believe this is the last Hoo-Haa for Palm as they have struggled for several years (stock was $1.50 in December). They redesigned the operating system, WebOS, from the ground up and many industry observers like the new user interface. It makes use of MEMS to support tilt like the iPhone. It received a lot of attention at the Consumer Electronics Show this week. The browser is based on WebKit and developers who know XHTML, Javascript, XML and Cascading Style Sheets should be able to develop for the device without learning any new languages. Palm has many loyal users. Their carrier partner, Sprint has experienced a severe drop in subscriber growth recently. So you have two weak players making another go at it. If Verizon gets a hold of it, that would help it flank AT&T's iPhone. We're not out jumping in the stock yet, it went from $3 to $6 in a couple of days, mostly a short-covering rally.