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Betanews begins its transition to the new decade with an examination of the critical issues that taught us valuable lessons in the past year. If you’re old enough to remember 1999, you may remember the sense of wonder, possibility, and dreams yet to be fulfilled that was drummed up by what used to be called the “media,” during the much-celebrated rollover of the odometer. The first decade of the new millennium hit us squarely between the eyes, awakening us to the colder, more tangible reality that before we start cultivating new problems for our descendants to solve, we have to resolve all the old ones we’ve been sweeping under the rug.

Time Magazine thought the past decade sucked. We were all saddened to hear how disappointed the editors at Time were by the performance of the 2000s, especially when compared to brighter, livelier, more dramatic decades such as the 1940s, 1960s, and that harbinger of great times and cool tunes, the 1060s.

If the 2000s from an historical perspective can be characterized in my personal memory by a single phrase, I think it should be the Decade of Whining — a decade most appropriately commemorated by the tone at Time. The great voices that defined our society sounded less like Thomas Jefferson, Archibald MacLeish, or Ronald Reagan and more like Andy Rooney, Howard Stern, and Rush Limbaugh — people wasting time listing the things they hate, without motivating themselves so much as to stand up.

In the absence of anything motivational or inspirational or spiritual — or, in many cases, factual — whining rises to the top, becoming a powerful, exploitable force. It conjures just enough public discontent with the status quo to evoke the minimum response in one’s favor, without provoking the whiner into undertaking such a revolutionary level of reaction that the cause of the whining itself becomes quashed. Exploiting whining doesn’t require much effort — for example, painting the word “Change” on a billion signs. The response can be compared to a cacophony of babies insisting on a change of diapers, the collective outcry of a populace unequipped to do the job for themselves.

All bits are not created equal

In 2009, the net neutrality debate became a textbook example of harnessing the latent power of whining. In some countries, the question of whether an Internet service provider should have the right to manage data traffic based on the applications for which that data was being used, was elevated to nothing less than a human rights debate, on the order of a citizen’s right to speak freely or to vote.

“Civil rights are fundamentally about protecting fairness, equality and freedom for all people. Net Neutrality is about protecting fairness, equality and freedom for all online data,” writes SaveTheInternet.com online activist Garlin Gilchrist II. “From a values perspective, these two concepts are functionally equivalent.”

The existence of net neutrality as a cause came about as the result of legislation proposed in 2005 by the then-Republican-controlled Congress, that would have created an alternative national licensing system for ISPs. In lieu of tax breaks as incentive for ISPs to choose national over existing municipal licenses (what cable companies such as Comcast and Time Warner must contend with, in every municipality in the US), the Senate considered relaxing regulations for national licensees — for example, enabling them to build premium tier services for Internet applications they could then resell at a premium. The progress toward passing this legislation was effectively defeated by mostly Democratic opposition who successfully encapsulated the creation of “fast lanes” for potential high-bandwidth customers such as Google, as an issue of promoting unfairness and anti-competitive behavior.

The earliest tangible form of opposition to national licensing came in the form of legislation designed more to solidify the legal concept of net neutrality than to be passed by a floor vote. The latest evolution of that legislation, however, is now actively being considered in Congress for passage as law: HR 3458, the Internet Freedom Preservation Act.

Though the bill’s provision prohibiting an ISP (such as Comcast) from blocking a user’s access to a particular application (such as BitTorrent) receives the most attention, another prominent provision harks back to the root of the whole debate.

“Each Internet access service provider shall have the duty to…not provide or sell to any content, application, or service provider, including any affiliate provider or joint venture, any offering that prioritizes traffic over that of other such providers on an Internet access service,” reads the bill’s current draft.

The Web happened

The prohibition of any method of premium packet prioritization seems fair if one considers the Internet the way Google has most often characterized it: in short, as the Web by another name. Google proposed a formal regulatory definition for net neutrality to the Federal Communications Commission in June 2007. Citing the co-author of the original TCP/IP Reference Model — its own Chief Internet Evangelist, Vint Cerf — Google wrote, “The Internet’s open, neutral architecture has provided an enormous engine for market innovation, economic growth, social discourse, and the free flow of ideas. The remarkable success of the Internet can be traced to a few simple network principles — end-to-end design, layered architecture, and open standards — which together give consumers choice and control over their online activities.”

History reveals a very different story. In Andrew S. Tanenbaum’s 1996 edition of his famous reference guide, Computer Networks, he compared TCP/IP to the then-recently-defeated OSI model of data interchange:

“The TCP/IP model and protocols have their problems too,” Prof. Tanenbaum wrote. “First, the model does not clearly distinguish the concepts of service, interface, and protocol. Good software engineering practice requires differentiating between the specification and the implementation, something that OSI does very carefully, and TCP/IP does not. Consequently, the TCP/IP model is not much of a guide for designing new networks using new technologies.

“Although the IP and TCP protocols were carefully thought out, and well implemented, many of the other protocols were ad hoc, generally produced by a couple of graduate students hacking away until they got tired,” the Dutch professor continued later. “The protocol implementations were then distributed free, which resulted in their becoming widely used, deeply entrenched, and thus hard to replace. Some of them are a bit of an embarrassment now.”

That was 14 years ago, of course. In an effort to provide some support for the development of applications that were emerging on the Internet at the time, Tanenbaum chronicles the creation of the Internet Society (ISOC) in 1992. That group would define the principal applications of TCP/IP as: e-mail, news (NNTP), remote login (Telnet), and file transfer (FTP), though ISOC would refrain from serving as a governing body. The Web, however, developed despite that definition, as an application unto itself.

While there had been consideration over the mechanisms and methods that could be used to regulate and prioritize traffic — for example, so that congestion due to FTP didn’t drag down e-mail — the consideration of the social stance of the Internet as an entity is a much later invention. So while Google refers to the “overarching rationale” for the Internet’s creation as “the revolutionary intention not to have an uninvited gatekeeper anywhere in the network, but instead to give ordinary end users ultimate control over what to do, where to go, and whom to communicate with,” the truth is that the concept of the Internet as a communications medium between individuals, rather than — as ISOC originally proposed it — a network of bridges between research organizations and universities, is a relatively recent discovery.

Next: Gaining the most leverage…

Gaining the most leverage

The campaign-ability of net neutrality was most effectively realized in 2008 by a ranking member of then-candidate Barack Obama’s transition team named Julius Genachowski, now the chairman of the FCC. In the FCC’s notice of proposed rulemaking for net neutrality last October, Chairman Genachowski essentially absorbed Google’s definition of the Internet as something designed from the beginning to enable free and open communication over the Web. Credited with the invention of the whole thing were: the US government for TCP/IP, Tim Berners-Lee for HTTP, and Marc Andreessen for Mosaic.

“Another more technical aspect of Internet openness has had the effect of empowering entrepreneurs to innovate without needing to seek permission. TCP/IP reflects a so-called ‘end-to-end’ system design, in which the routers in the middle of the network are not optimized toward the handling of any particular application, while network endpoints (the user’s computer or other communicating device) are expected to perform the functions necessary to support specific networked applications,” reads the NPRM (PDF available here). “The practical implication of this design philosophy has been that a software developer can develop new networked applications by writing programs only for end-user computers, without needing to modify the far more specialized programs running on network routing equipment.”

History shows that the Internet wasn’t so much a product of design as one of happenstance: The net happened. It is the very fact that applications have been written for the Internet without direct concern for how the network can sustain their traffic, that has fueled the entire net neutrality debate this past year. While the issue was born from the debate over national licensing, it transformed into a kind of privacy issue: If Comcast could throttle down your Internet pipeline after booting up a BitTorrent client, something, somewhere, must know that you’re using BitTorrent. Which means you must be downloading something really big…and should Comcast know about that?

What’s forgotten during that whole debate is the probability that Comcast may prefer not to know about that. If it did have “awareness,” if you will, of your online activity, it could become legally responsible for it, and thus a target of lawsuits from rights holders who believe BitTorrent is the harbinger of IP theft.

Casting a skeptical eye on the whole affair from its outset has been FCC Commissioner Robert McDowell. In his partial dissent from the proposed rulemaking last October, Comm. McDowell cited the advanced engineering of Cisco’s routers as evidence that the Internet is not, and never was, a dumb pipeline.

“Is the Commission suggesting today that the government draw a bright line of distinction between networks and applications in an effort to justify regulation in this space?” McDowell asked. “If so, should not the Commission refine its view because networks and applications are converging faster than regulators can measure? Otherwise, would the Commission not be favoring one market player over another absent evidence of an abuse of market power? For example, Cisco builds Internet routers that contain over 28.1 million lines of code. How are we to ascertain whether each line of code offers a pure operating system function or some other application that adds value? Should that be the Commission’s role? Can we make such determinations efficiently? Do we even have the statutory authority to do any of this?”

McDowell’s partial dissent is one of the few statements of reasoned opposition to currently proposed legislation that turns the entire issue of net neutrality — appropriately — on its head. Specifically, if the law were to decide that all applications were created equal, wouldn’t the prohibition of any type of discrimination by routers and engineering equipment result in a kind of Darwinian virtual battleground, where applications of lesser bandwidth (those that are less equal than others) get pushed out?

Or to put it more directly: Would net neutrality legislation and regulation, as it is currently presented, bring about the very situation it was intended to prevent?

“During the course of this debate, many have confused the important difference between discriminatory conduct and anticompetitive conduct,” McDowell goes on. “But the reality is that the Internet can function only if engineers are allowed to discriminate among different types of traffic. The word ‘discriminate’ carries with it negative connotations, but to network engineers it means ‘network management.’ Discriminatory conduct, in the network management context, does not necessarily mean anticompetitive conduct. For example, to enjoy online video downloads without interruption or distortion, consumers expect video bits to be given priority over other bits, such as e-mail bits. Such conduct is discriminatory, but not necessarily anticompetitive. If discriminatory conduct were to become anticompetitive conduct, then could it not be addressed in the context of competition and antitrust laws?”

How not to close a sale

In the era before net neutrality regulation was first considered, there were no truly bandwidth-heavy applications — even HTTP can be rather lightweight. And there were no hot-button applications provoking knee-jerk responses from their practitioners — FTP, for example, wasn’t considered a kind of virtual red-light district the way many paint BitTorrent today.

But as many legitimate BitTorrent users will point out, there’s much more to the Internet than the Web. In order for ISPs to continue making investments in building out broadband to do things way beyond the Web, from their vantage point, they would prefer some incentives, a little payback.

Voice-over-IP is a main area of contention. It’s a bandwidth-intensive Internet application that’s viewed as inherently legitimate, unlike BitTorrent which is often given a negative connotation. ISPs such as Comcast could conceivably afford to build out broadband if they could compete more effectively against Verizon and AT&T for telephone service. For that to happen, VoIP needs to not only become more cost-effective, but more reliably and explicitly managed — a methodology which, when cast in a more populist light, looks like preferential treatment.

McDowell’s scrutiny brings with it the danger that the debate over net neutrality will thoroughly decompose into a reasoned, thoughtful, intellectual discussion over network management practices and engineering principles — in short, something that won’t get hits on Google News. For that reason, most other net neutrality skeptics and opponents have instead resorted to clamoring for the oft-fumbled football of populism: a way to compel citizens to stand on one side or the other, on issues they don’t necessarily have to understand.

So net neutrality opponents are attempting to leverage the First Amendment as being threatened by Genachowski’s proposed rulemaking. Earlier this month, Kyle McSlarrow, who leads the NCTA — one of the cable industry’s leading advocacy groups — suggested that by disallowing any kind of special management of VoIP traffic, the US government may not only be threatening the rights of NCTA member companies such as Comcast (assuming the right to offer services falls under “free speech”), but the free speech rights of those who would prefer to communicate with one another using VoIP rather than landline or wireless. “By its plain terms and history, the First Amendment is a limitation on government power, not an empowerment of government,” McSlarrow said.

Then last week, in response to criticism that net neutrality is not a civil rights issue in the way that…say, civil rights was a civil rights issue in the 1960s, the SaveTheInternet.com Coalition suggested that telecommunications companies such as Verizon and AT&T were making investments — hedge bets, of a sort — in “national civil rights groups and in communities of color,” in hopes of encouraging “the civil rights community” to stand with them in opposition to net neutrality.

“In the wake of a conservative agenda to shrink government and decrease public investment in our communities, there is a long history of investment by telecommunications companies in national civil rights groups and in communities of color. So when companies like Verizon or AT&T frame an issue, they are trusted and believed…In a society marked by media systems that maintain and echo the interests of the dominant group,” wrote contributor Malkia Cyril, “it’s sound business and political strategy for telecommunications companies to invest in subordinated communities.”

The smokescreens from both campaigns effectively mask an old and, to borrow a phrase, inconvenient truth: Any decision on the regulation of Internet traffic, including to disallow some or all regulation of it, constitutes control of that traffic. If it’s decided that VoIP and BitTorrent and HTTP are “all created equal” — to misappropriate those words used more eloquently to refer to people, not apps — then conceivably the least efficient and most bandwidth-intensive of those apps will always take precedent over the simplest and least complex, perhaps even HTTP itself. And if it’s decided instead that certain applications do deserve preferential treatment, then the boundlessness of today’s playing field of popular debate indicates that the clamor over which application deserves that preference, will be a bloody free-for-all.

In either instance, applications and their creators and users will compete for bandwidth, space, time, and money. All we’re dickering about now are the rules of the fight: Marcus of Queensbury, or cage-match. In no scenario is there an outcome of blissful, functional utopia. There is no net neutrality, due in large part to the fact that the concept wasn’t created by engineers, but by politicians.

Sync will define connected tech products released or updated in 2010 and the few years that follow. Tech companies that get sync right will set the agenda for the delivery of content and services. Right now, Amazon, Apple and Google are sync leaders. Microsoft is a player but competing in the wrong game.

In a March 2008 blog post, I asserted that “synchronization is the natural killer application for the connected world.” I also warned that “should Google get synchronization right before Microsoft, it would be game over. Google would be able to extend the relevancy of the Web platform back to the desktop on its terms — think invading army — and across many devices or services.” It’s game over now, and Microsoft has lent Google a helping hand in self-destruction.

Google gets Sync Right

In last week’s post, “10 things Microsoft did wrong in 2010,” I faulted the company for licensing ActiveSync to Google — in February. Immediately, Google used ActiveSync for e-mail, calendar and contact synchronization from its cloud services to iPhone and Windows Mobile handsets. Google also used the technology to provide Exchange Server sync with Google Apps, so that businesses could use the hosted service instead of Outlook. 

Sync is quickly defining Google’s mobile handset and mobile cloud strategies. In using Android-based handsets, I’ve found Google push sync to be exceptionally fast and functional — and extensible. For example, Facebook sync and notifications are a marvel on the T-Mobile MyTouch compared to Apple iPhone. Google is quickly rolling out real-time notifications and sync to all its services and providing in Android and Chrome means for developers to easily tap into these functionalities. 

It’s not a question of if but when Google will use sync services in conjunction with mobile phone location services to provide better real-time search, such as sale prices at nearby stores or barcode scannable coupons. The pieces already are in place. Last month, my daughter forgot to bring a $20-off coupon to Sephora. But she had it in Gmail on her Android-based Motorola CLIQ. The store simply scanned the barcode from the phone screen. But what if she had been able to subscribe to an Android phone location-based Sephora service that sent a notification and barcode coupon when in proximity to the store? Sync is more than just about moving calendars, contacts and e-mail between mobile devices, clouds services and computers. 

Sync is the elixir for ebooks, too. It’s the magic behind Amazon’s Whispernet and Whispersync services that delivers ebooks to iPhone, Kindle or PC — and marks where the reading last stopped. Amazon and Google sync services share something fundamentally important in common: Device to cloud; no PC required. Barnes & Nobles’ Nook ebook reader is the same, and it runs Google’s Android. 

Longhorn short on Sync 

For Microsoft, the most natural place for sync is the operating system. During Professional Developers Conference 2003, Microsoft product managers touted a new synchronization layer coming with Windows Longhorn. But Microsoft dumped sync with many other features during 2004 and 2005. OS synchronization could have nipped the Google and cloud services problems in the bud. Sync should have been the feature pulling computational and informational relevance back to the PC operating system. Instead, sync will shift computational and informational relevance to mobile devices and cloud-based services. 

Sure, Microsoft has several different sync services and strategies, and some of the technologies, like Zune 4.0 and Zune HD, work well. Windows Live SkyDrive and Windows Live Sync are promising sync services, but they’re too PC-centric too late. Amazon and Google have got better device sync, and Google is a looming Microsoft competitor. 

Then there is Apple, which offered sync as part of Mac OS years ago but perfected the mechanism through iTunes. Apple’s media software is a strange sync engine, for all the well it works. What business would want to use iTunes as sync engine for calendars or contacts? But iTunes sync works exceptionally well, such that it recalls where the user stopped watching that movie on Apple TV, iPhone, iPod, Mac or Windows PC and resumes at the right place. Apple’s sync consistency and quality are exceptional. 

MobileMe takes Apple sync to the device and cloud, where it belongs. Push address book, calendar and e-mail sync works surprisingly well. I’ve never had a problem with it on any iPhone. Apple’s push notification service is a sync workaround that is acceptable, even if deficient. Better: The more real-time sync available with widgets residing on some handsets’ homescreens. My daughter has this with her CLIQ, as I have with some Nokia touchscreen handsets, such as the N97. 

What If 

Sync is the glue binding together cloud services and mobile devices — and it will reach mature delivery in 2010. Amazon gets it. Apple gets it. Barnes & Noble gets it. Google gets it. Microsoft is getting it, but not fast enough. Amazon had a terrific holiday selling Kindle ebook readers, which could only be spoiled by the rumored Apple tablet. Sync will enable delivery of newspaper and magazine subscriptions in 2010, more real-time than what Amazon does today with Kindle. 

• If Google turns search and location-based GPS into a sync service…
• If Apple offers TV subscriptions via iTunes for portable devices and Apple TV…
• If Amazon can support more devices — and include more content such as music and videos…
• If Apple releases a versatile tablet with combined audio book, ebook, enews, music, podcast and video store…
• If Android becomes the most widely deployed mobile operating system (by number of supporting hardware manufacturers)…
• If Digital Newsstand partners Conde Nast, Hearst Corp., Meredith Corp., News Corp. and Time produce an ebook reader or cut content deals for other devices…

…Sync will be 2010’s defining technology, even if not heralded by tech pundits. 

Where is Microsoft’s sync strategy? In too many ways, it’s stalled. Microsoft sync is scattered across consumer products, although it’s more vertically defined in the enterprise. But even enterprise advantages can’t make up for what’s missing: A cohesive mobile operating system, sync service and device strategy. Microsoft has mobile pieces in place, but it’s a puzzle apart. Other companies are innovating in sync — and delivering real and useful products now — whereas Microsoft makes promises of something better to come. 

The company to watch most closely is Google, which during the 2008-09 recession made strategic research investments and released new products or services that are defining. Apple is a sync leader, too. Microsoft helped Google — and also Apple — along by licensing ActiveSync. How strange is that?

Way back last August, the Mozilla organization’s developers set their sights on November 2009 as a release timeframe for Firefox 3.6, the latest round of functionality improvements to the most popular cross-platform Web browser. That date had been unofficially bumped forward to December, but that was before the release of the earliest betas to the general public slipped past the original mid-October release window — it ended up going live just before Halloween.

The delays in the development of Firefox happened then, not now. But with only three days left in the year, bloggers came to realize that general availability (GA) of 3.6 had slipped from its end-of-year targets set way back last summer. This despite obvious notices that a planning meeting on the subject of setting a date, was set for January 5.

In actuality, work is proceeding at full steam on the public Beta 5 of 3.6, released earlier this month; and the need for a Beta 6 was made evident weeks ago by releases of private test builds of Beta 6 at the same time Beta 5 was let loose. Betanews projects a 13.5% performance improvement in Beta 5 over the current stable Firefox release 3.5.6. But work obviously remains to be done, as 21 “blockers” remain in the Bugzilla database, many due to the change in its plug-in architecture — now disallowing add-on components that were simply dropped into the components directory.

The latest quarterly timeframe chart released by Mozilla (actually released much earlier in December, not yesterday) clearly shows Firefox 3.6 being geared for a mid-January release, with the first stable Firefox 3.7 still aiming for mid-March — which is not a delay, even from Mozilla’s mid-summer estimates. The first public peek at Firefox 4 is slated for late Q2; and although RTM is set for Q4, history tells us to expect that actual time to fall in early Q1 2010.

Mozilla estimates some 600,000 active daily users of various builds of Firefox 3.6 already in the field worldwide, making the collection of “telemetry” from testers of this build some of the most intense in the product’s history.

Apple is ending 2009 with a seemingly big bang. The stock is soaring higher than ever, lifted by scathes of rumors about an impeding tablet announcement. But tablets are oh-so 2001, when Microsoft Chairman Bill Gates showed off the Tablet PC. Apple tablet rumors show how much hype — and not might — is lifting Apple’s share price. Hype has a way of turning on companies. Just ask Microsoft, which hype meter measured off the scale in 1995, but barely registers a decibel today.

Few companies reach Apple’s success level in a day, a week, a year or even five years. Successful companies make strategic investments over time and many still fail to reach the stratosphere, or, for that matter, escape velocity. Apple made some wise strategic investments after the turn of the century, benefitted from good luck and rebuilt the brand image through its retail stores and smart marketing efforts.

But Apple’s end-of-decade successes come from past innovations. As I explained in mid-September post “2001: An Apple Odyssey,” strategic investments made during the last recession were the foundation of all the company’s current successes. In 2001, Apple released iTunes, launched Mac OS X (and issued the 10.1 release), opened retail stores and introduced iPod. I’ll once again assert that next to 1984, 2001 was the most important year in Apple’s history. It most certainly is not 2009, which successes can be chocked up to past innovations.

For the long haul, I predict that 2009 will turn out to be the year Apple stumbled — as companies often do at the height of success. I do not share the optimism of those people warming in the glow of tablet hype or rising Apple shares. Nineteen days ago I blogged “Why Apple succeeds, and always will,” knowing the title would draw in readers. But that always is qualified by Apple continuing to use “David Thinking,” which challenges the status quo rather than tries to preserve it. I warned: “The challenge ahead: Resisting the temptation to protect the status quo — to truly be Goliath.” In preparing last week’s twin posts “10 things Apple did right in 2009” and “10 things Apple did wrong in 2009,” I am disturbed to conclude that the year was almost all about preserving the status quo through iteration, rather than delivering innovation that has defined the company.

The principal reason isn’t rocket science. Apple’s legendary cofounder and CEO, Steve Jobs, took six-month medical leave in January. That effectively put COO Tim Cook in charge of Apple. Cook proved to be a competent manager, but not a visionary one. He kept the good ship Apple on course, but never ventured into dangerous waters. With so much perception about Apple’s success tied to Jobs’ persona, Cook had few options but to stay the course — for concern about toppling Apple shares already pushed down by the September 2008 stock market crash. Cook steered Apple competently, but in process gave up — perhaps because of circumstance, personal character or both — making important strategic investments during the current recession that will be important to Apple in just three years.

Microsoft CEO Steve Ballmer is right. During the Consumer Electronics Show 2009 keynote, he asserted: “I believe that companies and industries that continue to pursue innovation during tough economic times will achieve a significant competitive advantage positioning themselves for growth far more effectively than companies that hold back.” Apple is example (not that Ballmer used it), based on risks taken during the last recession.

2009: Apple’s Year of Iteration

Iteration defines Apple 2009. What major Apple product greatly improved during this recessionary year? The iMac and iPhone got hardware refreshes, but no new designs or splashy features. OK, iPod nano has a camera, but what’s really innovative about that? So Apple upgraded the hardware on its major products, but it is innovation in software that made for truly compelling products. Where was the software innovation in 2009? No question, iPhone UI improved — and in many good ways — but by iteration. New App Store features aren’t that different from older ones. The iTunes makeover added clutter, even as Microsoft cleaned up rival Zune 4.0.

Cook’s competence shown brightly through pricing and resisting the temptation to slash Mac selling prices south of $1,000. Another smart decision: Lowering 8GB iPhone 3G to $99. Competent management certainly is a good attribute. But Apple missed opportunity to innovate the way it did during the 2000-01 recession — and it was risky, too. Apple’s stock price collapsed in late 2000, following a profit warning, and remained in the dredges even into 2003. The last recession’s innovations and investments were taken with great risk. In a way, Apple bet its future on risks taken in 2001 and early 2002.

Where is the risk taken in 2009? In surveying the year, I see only one major Apple investment in the future — and it’s one the hype makers and share price chasers completely overlook: Mac OS X 10.6 (aka Snow Leopard). I’ve criticized Snow Leopard’s tired user interface — another place where Apple failed to innovate in 2009 — but under the hood, 10.6 improvements are substantial. I’ll repeat my previous assertion that Snow Leopard is the most important Mac OS X version since the original March 2001 release (and its September 2001 10.1 upgrade). The $29 pricing was a brilliant (and competent) strategy, allowing Apple to quickly move the install base to 64-bit architecture.

Apple’s year of iteration closes strong not on past performance but promise of the future: The long-rumored tablet. What happens if the hype proves false — that Apple doesn’t announce a tablet in about a month, as widely rumored? What happens if the tablet is announced but not released for many more months? What if the tablet is innovative but not ready for the mass market?

The real 2008-2009 risk taker was Google, which through Android, Chrome, Chrome OS and Wave, among other products, has invested in the future. Google, and not Apple or even Microsoft, is the company to watch in the next decade. The information giant innovated and took risks doing so.

Surely some commenters will wrongly assume I predict the ruin of Apple. That’s absolutely not the point of this post. Apple is hugely successful and will continue to be — but largely from iterations of past innovations. The 2008-2009 recession was opportunity for Apple to truly innovate and make investments that would pay off in another three to seven years. Apple missed this huge opportunity. Plain, pure and simple.

Though Palm has not yet officially confirmed it, Sprint has posted a support article that says today is the day when WebOS will be updated to version 1.3.5.

Sprint’s description of the 1.3.5 update is brief, and lists only four “enhancements” to Palm’s flagship operating system:

• Improvement in battery life optimization when in marginal coverage areas.
• QCELP capability fix to allow play and audio of video sent via MMS.
• Launch Google Maps or Sprint Nav when tapping an address from contacts.
• Minimized package of MR size through binary difference. Customers can now download over 2G connections if necessary.

Palm’s support forum does not yet list the changes, and there haven’t been any reports on the user side of the over-the-air rollout yet, but generally speaking, Sprint and Palm have released their update notes on the same day, so users remain optimistic that an over-the-air update is coming.

Betanews has contacted Palm for further information on the subject, and we’ll update when we hear back.

Like the other over-50% of smartphone-owning people in North America, I’m quite the fan of my BlackBerry. Even in an era when newer kids on the block — namely Apple’s iPhone and Google’s Android — garner more accolades and headlines for having slicker interfaces and cooler (and more) apps, the BlackBerry platform remains the safe, reliable choice that’s good enough for most consumers and businesses. Despite analyst predictions that the BlackBerry will someday be reeled in by the upstarts, Research In Motion continues to grow and dominate the market it practically defined a decade ago.

We may want to revisit the “reliable” bit, though. After a week from hell marked by two highly publicized continent-wide outages, BlackBerry users are asking themselves whether this is the new normal, and why BlackBerry devices seem especially vulnerable to this kind of mass outage when competing platforms like iPhone and Android are not.

Centralization or distribution?

At issue is RIM’s philosophy of routing messages through a centralized Network Operations Center (NOC). This architecture applies to BlackBerry Internet Service subscribers (corporate traffic routes through each company’s own BlackBerry Enterprise Server), and allows RIM greater control over encryption and security than more distributed solutions.

This degree of centralization comes with a downside, however: Lose the NOC and you lose everything.

While the Internet was originally designed as a distributed network of networks that could keep functioning even if entire chunks were blown away by a global thermonuclear exchange, RIM’s philosophy is more like the conventional data centers of old, where monolithic machines behind impermeable walls managed all traffic and processing. In doing so, they allowed companies to have maximum control of all consolidated resources because they could manage virtually everything from a single pane of glass. It was simple. As long as everything worked.

As it built a solution that allowed it to deliver a level of end-to-end encryption that its competitors could only dream of, RIM evolved its NOCs to scale to global proportions. With 36 million subscribers and climbing, its network of NOCs — each one allocated to a broad geographic region — scaled to meet this growing demand. When the first mass outages became front-page news in 2007, however, the BlackBerry’s Achilles Heel became all too apparent. As the problem persists almost three years later, it’s fair to ask if a little more — or, perhaps, a lot more — redundancy is called for.

The increasing irrelevance of security

The thing is, the average person walking into a carrier’s retail outlet doesn’t much care whether one device, platform, or service is an order of magnitude more secure than another. For all our discussion about keeping ourselves safe when we go online, about bulletproof online banking and about keeping the latest malware away from our machines, we still haven’t adapted our day-to-day behaviors to reflect this new high-security reality. We still don’t think It Can Happen to Us — we still click “Go Here” links that friends send us via e-mail and Facebook, and we still update our banking on surreptitiously grabbed (because they’re free) Wi-Fi connections at the local coffee shop.

We do so because we believe that security, in general, is fundamentally good enough. Whatever devices, applications, and services we choose to use, and however we decide to make use of them, the risk of something really horrid happening to us — at least from our vantage point — remains tolerably low. So despite the fact that BlackBerry has always been the one with the differentially robust security architecture, the alarming truth for RIM is that most mainstream consumers don’t give platform security a huge amount of thought before they invest in it.

This is who I root for

I live not too far from RIM’s Waterloo, Ontario, Canada headquarters and the company casts a broad shadow throughout the region. Since RIM is ultimately my hometown team, I’ll admit to sitting by the sidelines and wishing the company could lick this issue and stop future outages from happening. But despite its robust growth to-date, I fear it’s only a matter of time before users get fed up with these unannounced service interruptions and start seriously considering alternatives. Will they dump their BlackBerry devices en masse in the months to come? Hardly. But will they start to entertain alternatives for the day when their contract runs out and it’s time to consider a replacement? Absolutely. It’s a slowly evolving process that RIM wants to stop, cold, now.

Like Microsoft before it, RIM’s image as the inviolable alternative for its existing customers will end sooner if it can’t put these high-profile failures behind it. In the absence of a permanent solution, the loyalty of existing customers will loosen just enough to give competitors room to weasel in, while the impression of potential customers will be muddied by the potential for future failures…and the memory of recent ones.

There’s no rule that says a given platform will remain dominant forever. Just as Microsoft is grappling with a new reality, where longstanding customers of its packaged Office productivity suite are ever-so-slowly starting to look at less expensive or online alternatives, RIM now finds itself catering to customers whose long-held allegiance to its platform is beginning to weaken in the face of more robust competition and a fast-evolving market demand that cares less about security than it does about ease of use and application availability. Headlines like this don’t help matters.

As we lean more heavily on our mobile devices to manage our day-to-day workflow, having our connectivity simply removed for hours at a stretch, with nary a word from the vendor, itself becomes a security risk. When you’re away from the office, your mobile device is your lifeline. As much as RIM wants customers to believe that encryption and centralized vendor control are the keys to an effective and safe mobile experience, customers beg to differ. Customers simply want it to work, and if the back-end technologies and processes aren’t enough to keep widespread outages from happening, they’ll happily go elsewhere to keep themselves connected and in business.

It’s a radically different view of security than the one that RIM first laid out years ago, but one the company needs to both internalize and apply if it hopes to avoid flatlining in the year ahead. The proverbial clock is ticking.

There is so much buzz about Apple’s rumored tablet, Santa Claus landed back in Cupertino (the Mac maker’s Calif. headquarters) instead of the North Pole. Not that he found anything more than a lump of rumors packaged like a real present. Poor Santa. He’s not the only person being fooled. The Apple tablet buzz stinks of blog and news media manipulation and quite possibly stock manipulation — not that the latter is new for the goings on around Apple. Sadly, bloggers and journalists are too willing to be manipulated by people leaking information.

The state of the news media, fueled in part by SEO — search engine obsession, ah, optimization — where the story or post first and flawed is better than second and straight-up, favors gossip and rumors to drive pageviews. Nothing has to be true, as long as the post makes the top of Google News. Unnamed sourced stories and ancient domain registrations are the new news. So it is with Apple’s iSlab — surely not its name but good enough for this bitchy commentary.

When Rumors Run Wild

How strange is the coincidence — the number of Apple tablet news stories and blog posts coming this past week, the juiciest ones popping on December 23 and lifting Apple’s share price to new heights. Dan Frommer blogged at Silicon Alley Insider: “Apple is preparing to show off a new, larger mobile device with a higher resolution display in January — probably a version of the Apple tablet we’ve been hearing about for months — according to a plugged-in source in the mobile industry.”

Who wouldn’t believe the unnamed “plugged-in source,” eh? In a separate post, just 80 minutes later, SAI’s Jay Yarow further treated rumor as fact: “Apple’s tablet, which is expected to be unveiled in January, won’t be a huge growth driver for the company next year.” He referred to yet more news from Apple bizarroland. In a research note, Piper Jaffray analyst Gene Munster predicted Apple would sell 1.4 million tablets in 2010. Excuse me, but what tablet? Apple hasn’t announced squat. Oh, yeah, that number is based on $600 pricing, something else Apple hasn’t announced.

Same day, the Financial Times Tech Blog pulled off some seemingly sleuth reporting (or was it leaked?). David Gelles wrote about Apple renting the Yerba Buena Center for the Arts, which is in San Francisco, near the end of January. Gelles cited unnamed sources about the renting and a “major product announcement on Tuesday, January 26th.”

Scathes of blogs connected the rumored event with the rumored tablet — that the two must intertwine. Apple must be announcing its tablet on January 26. More supposition and conjecture suddenly became fact. 

Same day, again, those pesky unnamed sources popped up elsewhere; Nick Bilton posted to the New York Times Bits blog: 

When one of my colleagues here asked if the rumors of the Apple tablet were true, and when we could expect such a device, the response from his source was, ‘I can’t really say anything, but, let’s just say Steve is extremely happy with the new tablet.’ Yet another recently departed Apple employee tipped me: ‘You will be very surprised how you interact with the new tablet.’

Interesting reporting, the second-hand sourcing: My friend’s acquaintance said “Blah, blah, blah,” so it must be true. On the basis of this sourcing — and a few other “signs,” Bilton asserted: “I have no doubt that Apple will release a tabletlike device in 2010.” 

On Christmas Eve, bloggers figuratively fell over one another to feed the rumors for more pageviews. Late on Christmas Eve, Arnold Kim proclaimed that “MacRumors has found evidence that Apple acquired the domain name iSlate.com presumably in preparation for the new device.” Kim and MacRumors (with help from “Mark Gurman from AppleRejectedMe.com“) did some arguably good sleuthing, but that “in preparation for the new device” is quite the leap. MacRumors reported that Apple acquired the iSlate.com domain in 2007. But somehow, “given this evidence ‘iSlate’ seems a likely candidate for the device’s name.” Really now? 

The voice of reason came December 20 and three days before the FT, SAI and Times blog posts. Journalist Ian Betteridge astutely quoted from another blog: “I have no less than 5 sources saying an Apple tablet announcement is due soon.” Betteridge observed the post was from 2005! “What it goes to prove is simply that Apple tablet rumours have been around a very, very long time,” he wrote. “Nothing came of the ones from 2005, and it’s perfectly possible that nothing will come of all the current round of rumours as well.” 

Did Someone Manipulate Apple Shares? 

But something has come from the rumors: More buoyancy to Apple’s share price, which reached a new high on Christmas Eve, closing at $209.04. Christmas brought a slate of iSlate presents — ah, blog posts — to the InterWeb and perhaps to Apple’s share price come Monday when stock markets reopen. [Update: Apple opened on Monday at $2 more than Thursday's close, reaching a new high of $213.95 in early trading.] 

At this point in writing this post, I stopped to search my RSS feeds for “iSlate.com,” and found Engadget also had posted (yesterday) about Apple’s soaring share price. Ross Miller blogged: 

It seems everyone decided to spend their holiday bonuses on some Apple shares. Now, we’re not claiming to be professionals here by any stretch of the imagination, but it seems a lot of the activity here can be attributed to the recent flux of rumors.

From November 23, Apple shares started a steady decline from about $206 to around $189 on December 7. On December 17, after a brief rise, Apple shares reached their second bottom for the month, around $192. A series of spikes followed, perhaps not surprisingly tracking with news about Mac and iPhone sales projections and Apple tablet rumors. From December 17, the share price rose sharply as tablet rumors increased, such as leaks about possible content deals and private developer briefings. These rumors lifted Apple shares over the next six days from $191.88 to $202.10 on December 23. On Christmas Eve, the shares spiked about $7 more, to the aforementioned $209.04 close. 

Please forgive my eggnog-induced, conspiracy-theory thinking, but don’t ignore it. A number of unnamed source(s) leaked to SEO-obsessed blogs about an Apple event and possible tablet all around the same time — and during the holidays, when there is less business or tech news to report and senior staff might be vacationing. Perhaps it’s no coincidence that financial analysts or blogs sourced these unnamed people. Gasp — did someone try to lift Apple’s share price higher? Or maybe it’s all a great coincidence, or the most amazing feat of simultaneously good reporting? 

I’m not asserting that Apple won’t soon announce a tablet. I am claiming not to know, and that most of the rumors are coming from people who also don’t know. They’re guessing, and their guesses aren’t facts. With that I have to ask: What do you think of these rumors and, in context, Apple’s rising share price? What about the rumored Apple tablet? Should Apple release one at all?

Earlier today, I posted “10 things Microsoft did right in 2009.” I originally planned to post the did-wrong list tomorrow. But in view of today’s news about Microsoft’s out-going chief financial officer, Chris Liddell, I changed the timetable. Liddell’s departure is one of the things Microsoft did wrong in 2009 (He will become CFO at GM).

The did-wrong list was way too much easier to compile than the did-right list. I could easily put 20 items here. The year 2009 was perhaps the most difficult for Microsoft since Bill Gates and Paul Allen founded the company nearly 35 years ago. Company executives can thank economic turmoil for the hardships. But Microsoft could have handled 2009 much better than it did. Hopefully, 2010 will be better.

I present the list of 10 things Microsoft did wrong in 2009 in no order of importance. They’re all important. Microsoft:

1. Let Chris Liddell get away. Liddell has proven to be an exceptionally adept Microsoft CFO. He managed Microsoft finances in better times and bad, doing a resounding good job overseeing difficult cost cutting as global economic crisis sapped software sales. Liddell has an excellent relationship with Wall Street analysts and — until January (see #4) — he offered continually conservative guidance to them. His departure is a huge loss at Microsoft’s highest executive level. 

There is simply no excuse for Microsoft CEO Steve Ballmer and his board of directors letting Liddell leave for General Motors. No incentive should have been enough to keep him, although given Liddell’s tight-fisted financial operations during the econolypse, as CFO he might not have allowed it. How ironic is that? 

2. Offered no direct Windows XP to Windows 7 upgrade. Some Betanews readers will be surprised to read that this only marginally makes the list. From a customer relations and software sales perspective, the Windows XP upgrade path to 7 is a frak up. Windows XP users shouldn’t have to backup everything, do a clean installation and restore data from backup. For many enterprises, a fresh image would be business as usual. For consumers and small businesses, Microsoft has placed a huge deterrent to Windows 7 upgrades. 

But like with Zune HD (see #7 in the did-right list), Microsoft backed away from the shackles of its longstanding practice of putting backwards compatibility before anything else. From that perspective, the Windows XP to Windows 7 upgrade is something Microsoft did right — and hopefully foreshadows more of it. Microsoft can’t support every customer running any old version of its software. Such practice keeps Windows from being the modern operating system it needs to be. 

3. Laid off Don Dodge. Microsoft’s January announcement of 5,000-plus layoffs showed how quickly the economic crisis waylaid the company. Or did it? In a future post I will apply a magnifying glass to Microsoft layoffs, which appear to have been more about firing highly paid, tenured staff than making necessary cuts of employee fat. Microsoft’s ambassador to Silicon Valley, Don Dodge, was the most surprising of the layoffs — and yet from the perspective of lopping big salaries it was not. Microsoft lost three things with Dodge: 

• Vital experience sussing out good startups
• Someone well respected in Silicon Valley
• An ally, who became a competitive enemy

In mid November, less than two weeks after being laid off by Microsoft, Dodge took a job with Google. How the frak did Microsoft executives not see that one coming? 

4. Withheld financial guidance. Starting in January, Microsoft stopped giving financial guidance to Wall Street. It was simply a disastrous decision that established an even worse precedent. Sure, the guidance couldn’t be good (given sagging sales) and risked further run on the stock, as if the last quarter of 2008 wasn’t bad enough for Microsoft and nearly every other public company. But bad guidance would have been better than none. Successful public companies don’t just manage finances, they manage perceptions about their performance. 

By withholding guidance, Microsoft let uncertainty and gossip determine perceptions about its sales and earnings performance. By comparison, Apple continued to release guidance and, combined with marketing and product launches and leaks, generated positive perceptions. These perceptions helped to lift Apple’s share price to new heights. Meanwhile, Microsoft shares remained in the doldrums, even while quarterly results remained relatively buoyant considering economic conditions. Microsoft lost opportunity to generate really positive perceptions on Wall Street during Windows 7’s late development and October launch. 

5. Botched the mobile phone strategy. Earlier this month, I encouraged Microsoft not to hang up on its mobile phone strategy. But the company has fewer options by the day, as hardware manufacturers hang up on Windows Mobile and shift to Google’s Android. In October and mid-December posts, I observed how Google has put together a winning mobile strategy — in third quarter, according to Gartner, reaching 3.5 percent smartphone market share, up from zero a year earlier. 

Meanwhile, Microsoft has got simply nothing to offer. Windows Mobile 6.5, which launched in October, lags behind Android and iPhone OS in critical areas of innovation. Meanwhile, Windows Mobile 7.0 is MIA, with rumors running about delays into late 2010 or early 2011. Microsoft’s mobile browser is oh-so early century, and the company is rapidly losing developers to Apple and Google. With sophisticated handsets and smartphones poised to be, with cloud services, the next-generation computing platform, Microsoft’s disastrous, run-aground mobile strategy is just short of corporate malfeasance against shareholders. 

6. Chased Google in search — again. Microsoft should just give up its pursuit of Google in Web search from PCs. Google’s search share lead is insurmountable. Microsoft’s only real hope is mobile, which will be the future of search, but the company’s mobile strategy is hosed (as explained in #5). Microsoft frittered away 2008 chasing Yahoo, only to bag a Yahoo search deal in July of this year. 

I called the agreement “Google’s Christmas-in-July present.” As I predicted then, and as recent ComScore numbers show, Microsoft can only take search share from Yahoo; when the deal is complete and implemented, Microsoft will cannibalize Yahoo share rather than combine with it. Microsoft’s Google search obsession distracts the company from what’s important: Mobile and the cloud, which will be the next-generation computing platform. 

7. Retrenched into enterprise. Microsoft responded to the economic crisis by doing exactly what Ballmer recommended against. In January, during his Consumer Electronics Show 2009 keynote, Microsoft’s CEO extolled the importance of investing during hard times — that historically successful companies reaped from research and development and other investments sowed during recessions. But Microsoft did something else: Retreat to the enterprise. Microsoft also killed vital incubation projects (see #9). 

Nearly as bad (reiterating #6), Google continued to set the development agenda, with Microsoft again chasing the search giant’s every cloud software or service. Aside from some modest Bing features and user interface changes, Microsoft failed to leap ahead of its rival. 

8. Allowed netbooks to grow unchecked. Netbooks are a plague, sucking the margins out of the PC industry and from Microsoft. The company should have used every means imaginable to discourage these pesky, cheap underpowered portables. But somewhere inside the hallowed halls of Microsoft’s corporate campus, someone freaked about all those early netbooks running Linux, resulting in the disastrous 2008 decision to license Windows XP Home for the little buggers. If Linux on netbooks is so bad an experience, as Microsoft product managers claim, sales collapse should have been the future without Windows licensing. 

Instead, Microsoft encouraged netbooks’ continued sales surge by licensing Windows 7 Starter Edition for them, all the while pushing costlier, thin-and-light laptops as the better alternative. Cheap rules the day. Gartner predicted that netbooks — and not Windows 7 — would lift sagging 2009 PC sales. 

9. Killed incubation projects. Microsoft didn’t just wield the cost-cutting axe against valuable employees, it whacked vital incubation projects. The nastiness started in earnest with April’s gutting of Live Labs. As I blogged then: “Stupid, stupid, stupid, stupid. Did I not say stupid?” Microsoft continued jettisoning projects all year, again, contradicting Ballmer’s January assertion “that companies and industries that continue to pursue innovation during tough economic times will achieve a significant competitive advantage positioning themselves for growth far more effectively than companies that hold back. That’s why Microsoft continues to focus on R&D.” 

Oh, yeah? How is killing incubation projects investing in R&D? Some of Microsoft’s best product development over the last three years came from incubation groups that acted more like internal startups. Who’s running this company, if the CEO says one thing and underlings do something else — or, worse, he is the contradiction? 

10. Licensed ActiveSync to Google. Synchronization is the killer application for the connected world. So why in hell would Microsoft license its synchronization protocols to competitor Google? Perhaps someone at Microsoft saw advantage for Exchange Server. That’s one way Google used ActiveSync, but not where the company got the real bang. 

Immediately, Google used ActiveSync for e-mail, calendar and contact synchronization from its cloud services to iPhone and Windows Mobile handsets. Google also used the technology to provide Exchange Server sync with Google Apps, so that businesses could use the hosted service instead of Outlook. Sync is quickly defining Google’s mobile handset and mobile cloud strategies, and Microsoft helped move it along faster. How dumb is that?

The year 2009 was pretty good to Microsoft, even as the weak economy ravaged sales. Microsoft actually did a few things right. The did-wrong list will come later today (not tomorrow as previously posted). For now, I present the list of 10 things Microsoft did right in 2009 — in no order of importance. They’re all important. Microsoft:

1. Flawlessly launched Windows 7. There’s a metaphor somehow in Microsoft launching Windows 7 during the 40th anniversary year of the Apollo moon landing. Microsoft’s precision reminds of NASA sending man to the moon. While the human risk wasn’t as great and many of the engineering challenges were far less than Apollo 11, Windows 7 needed perfect launch and delivery, from testing to release candidate to voluming licensing availability and retail release. Microsoft pulled it off.

It’s clear that Microsoft re-engineered the engineering process. The mistakes that led to overlong development of Windows Vista, the dumping of well-publicized features and late delivery (How could Microsoft miss Holiday 2006?) didn’t reappear. Microsoft successfully executed a taunt development schedule, improved performance in the right places (like startup and wakeup), made better the user interface and insured that most drivers would be available for popular devices.

Microsoft’s success was as much about managing perceptions as developing and delivering a good product. The company clearly worked the blogs that Microsoft influencers, IT managers and some consumers read, as well social networks and forums they might participate in. Early positive reviews and some kick-ass “Laptop Hunters” marketing helped Windows 7 to pull free from the negative reaction gravity that kept Windows Vista from achieving escape velocity. 

2. Opened retail stores. Coordinated with Windows 7’s launch, Microsoft opened retail stores in Arizona and California and a café in France. The stores are a first step that will need many more to follow. During his Consumer Electronics Show 2009 keynote, Microsoft CEO Steve Ballmer said that companies most likely to succeed after a recession make investments during one. Retail stores are one such investment. Apple opened its first retail stores during the 2000-01 recession. Microsoft’s situation and timing remind of Apple in May 2001, for starters during a recession. Microsoft’s retail strategy will require commitment, if necessary, including running stores at losses for their greater marketing benefit. 

3. Offered crapware-free PCs. Microsoft started selling Windows 7 PCs through its online and brick-and-mortar stores in October, free of the preloaded software — crapware — that can bog down the performance of even a new system. It’s an important change to giving Windows 7 PC users the experience Microsoft engineered out of the box. 

4. Launched Bing. Microsoft’s “decision engine” may never catch Google. Bing will cannibalize Yahoo search share first. But as a consumer product, with excellent user interface and simply exceptional advertising, Bing already is helping to revive Microsoft’s brand outside of the business market. Search is the most popular activity on the Web. By being there with a solid product and big brand, Microsoft can snatch some of the good consumer feeling that Apple or Google gets. 

5. Released Security Essentials. Microsoft finally did the right thing by customers and the Windows brand by offering free malware protection. No doubt, Microsoft long resisted the inevitable for the benefit of its anti-malware software partners and for concern about antitrust problems. Security Essentials is reliable malware protection that doesn’t overtax Windows. For 2010, Microsoft could make the software better by making it even easier for consumers to get — say, on new PCs. 

6. Promoted Steven Sinofsky. The man who methodically led the team that turned around Microsoft’s flagship operating system now leads the Windows & Windows Live division. Sinfosky hugely deserved the promotion to president of the division (see #1). Next up: Turning around Windows Live. Can Sinofsky and team deliver? First answer may come at MIX 10, in March. 

7. Released Zune 4.0 software and Zune HD. It’s too bad iPod is so popular. Zune 4.0 and Zune HD are both kick-ass products. Microsoft showed that Xbox 360 and Xbox Live aren’t flukes. Microsoft can provide good end-to-end solutions in other markets. The company also learned, hopefully, an important lesson: Backwards compatibility isn’t everything. Microsoft broke backwards compatibility, by providing new features in Zune HD not available for older devices. 

8. Settled antitrust case with the European Union. Last week’s browser “Choice Screen” agreement with the EU’s Competition Commission is much bigger than it seems. Microsoft’s concessions did more than end the browser antitrust case, they effectively sidelined another open investigation, by the company agreeing to release additional interoperability information — and for products broader than Windows, including Office and SharePoint Server. 

9. Improved advertising. Microsoft advertising has long been major lame, particularly the persistent and pointless corporate commercials. From February, Microsoft hit a series of marketing home runs, each stronger than the last: 

• “The Rookies,” featuring cute kids using Windows Live Photo Gallery.
• “Laptop Hunters,” where people shopped for a PC, which they could keep if within their pre-agreed budget.
• “Bing,” which commercials made real the limitations of search keywords.
• “Windows 7 was my idea,” what anyone’s idea of good Microsoft advertising should be.

If 2010 advertising is this good, or even better, Microsoft will get a good branding start for the new decade. 

10. Debuted Silverlight 4.0. Microsoft continued making its nearly annual updates to Silverlight, releasing v4 beta during Professional Developers Conference 2009. Sadly, Silverlight 4.0 was the only real light coming out of PDC. Internet Explorer 9 is vaporware and Azure has morphed into last year’s Amazon Web Services. But Silverlight promises Adobe AIR-like capabilities, support for microphones and Webcams, standalone Silverlight containers and better HTML support, including HTTP streaming, among other new features. A good thing is getting even better.

The year 2009 will go on record as one of Apple’s best years ever, as I explained in the “10 things Apple did right in 2009” list. This second, did-wrong list looks at the mistakes, and there were plenty. But one did-wrong is pervasive throughout nearly all of them. Apple failed to innovate the way it did during the last recession. Apple CEO Steve Jobs and his senior executives took many of the actions affecting 2009 during 2001 and early 2002. With that introduction, I present the list of 10 things Apple did wrong in 2009 — in no order of importance. They’re all important. Apple:

1. Made no CES commitment. Apple has given up Macworld, so why not make a big splash at Consumer Electronics Show, which is January 7-10 next year? During the summer, there were rumors (and they may not have been true) that Jobs had been asked to keynote in 2010. Apple is a Consumer Electronics Association member but not currently listed as a CES 2010 exhibitor.

For years, Apple has been a shadow CES participant because of Macworld and rumors what the company might reveal during the expo. Some rumors, like iPhone, literally stole the CES thunder. For years, CES and Macworld have taken place days apart or even overlapped. This year, with Apple gone, IDG will hold Macworld in early February. There may be some Apple tablet rumors, but no event venue to drive expectations. CES will be Google’s show, judging by the staggering buzz about the Nexus One smartphone. For a company that gains so much from buzz, including its soaring stock price, Apple’s CES no show is baffling.

That said, after I wrote the two above paragraphs and before I posted, rumors started circulating about a late-January 2010 Apple event. Timing would be more preemptive to Macworld, leaving Google and other smartphone and mobile/device manufacturers to storm the CES buzz.

2. Made no spectacular investments. Apple ended the decade strong in part because of decisions made during the 2000-01 recession. In 2001, Apple opened retail stores, launched Mac OS X, released iPod and debuted iTunes. Microsoft CEO Steve Ballmer is right. He said during his Consumer Electronics Show 2009 keynote that companies making strategic investments during economic hard times tend to emerge stronger than competitors later on. Apple’s 2001 product launches and Apple Store openings were daring for their timing. Other than product pricing, there was nothing daring about 2009. Apple advanced incrementally rather than aggressively (See #s 3, 4, 6, 8 and 10). Mac defenders will use Jobs’ medical leave as excuse. Oh? That changes what good for Apple’s future?

3. Iterated rather than innovated iPhone 3GS. Sure, Apple amped the hardware — faster processor, more memory and double the 3G throughput — but the third-generation iPhone doesn’t extend the platform. The device’s fixed battery forces compromises, with truncated multitasking being the most severe. All other modern mobile operating systems, including Android, Maemo, Symbian, Web OS and Windows Mobile, freely allow background applications to run. Apple limits them, throwing developers the push notification bone when they’re hungry for meat.

If not for the App Store and what developers and not Apple are doing to advance the platform, iPhone would be a second-rate smartphone with a pretty UI (think Palm Pre). Already, new Android handsets, like Droid and Nexus One, are starting to make iPhone look outdated. Mac fans will go absolutely atomic when reading this paragraph. Suck it up. The truth hurts.

4. Botched the iPhone 3GS launch. Iteration still generated plenty of demand for iPhone during second half 2009. But sales could have been much greater. Apple acknowledged during its third calendar quarter earnings conference call, it couldn’t produce enough iPhones to meet demand. According to Gartner, Apple sold 7 million iPhones during the quarter, compared to the 7.4 million the company said it shipped. That means Apple ended the quarter with only 400,000 units in inventory — and by executives’ admission from a slight build up late Q3 — rather than the more typical 2.2 million units. Lost sales aren’t easily quantified, but there was plenty enough concern how much to keep Wall Street analysts repeatedly asking during the conference call.

5. Lied about Steve Jobs’ illness. This one makes both lists, because Apple’s execution was both good and bad. Using “lied” surely will inflame hardcore Mac fans, but misled simply doesn’t apply here. The lying started in December 2008, with the announcement that Apple would pull out of Macworld from 2010, which really masked something bigger: Jobs wouldn’t give the 2009 keynote.

Apple wasn’t under any regulatory obligation to disclose Job’s illness, or, when it did somewhat, to reveal everything. But there is another kind of obligation that Apple may pay for whenever times get bad — and they can’t stay good forever: Shareholders. Apple is a public company, which success comes in part from the trust shareholders place in future performance. Full disclosure risked a run on the stock, but could have generated trust and even concern and goodwill towards Jobs. Trust is a commodity which value is simply immeasurable.

The comment flamers to this post will insist that Jobs’ has a right to privacy. As a private person he has this right but not as CEO of a public company. Jobs doesn’t work for his board of directors. He works for Apple shareholders. Apple secretiveness and corporate denial may yet be a future problem for the company, when performance lags and some shareholders look at Apple’s response with mistrust.

6. Poorly placed iPod nano camera. Apple usually gets design better than right, but when bad it’s terribly so. Nothing feels right about the iPod nano video camera other than the marketing, which is superb. Video quality is so-so, which Apple tries to make up for by applying flaw-covering visual effects and marketing them as features. But the camera’s placement, near the lower-left hand corner (when viewed from the back) is bizarre. Other mobile devices and handsets tend to have the camera at the top rather than at the bottom of the device, which also is better placement for looking at objects to shoot on the display.

7. Shipped iPhone to China without Wifi. The phones cost too much, also. A feature-deficient iPhone is the wrong approach for China. Apple isn’t the only handset manufacturer facing this problem. The reason: Growing grey market sales. The grey market is really two: Sales of unlocked iPhones imported from other countries; fake iPhones, many of which adding new features not found in the original. When the fakes’ features are better than original, the original’s manufacturer has a problem. Apple should diminish grey market sales, rather than encouraging them by offering something less to the Chinese market.

8. Sat on a mountain of cash. Apple ended fiscal 2009 (on September 26) with $34 billion in cash, up from $24.5 billion in FY 2008 and $15 billion in FY 2007. Cash is a huge asset during a recession. Apple has the means to buy good companies and technologies for cheap. Apple’s major list of 2009 has one item: The early December acquisition of Lala. The year 2009 should have been Apple’s buying spree, particularly in context of #2, where Apple failed to make the strategic internal, organic investments that defined company operations during the 2000-01 recession.

9. Rejected Google Voice. This one could easily be on the did-good list, seeing as how Apple and Google are on a collision course in the mobile operating systems, device, services and applications market. These two partners are rapidly becoming competitors. That said, Google Voice rejection brought lots of unnecessary negative attention to the App Store approval process. Apple still isn’t free of it. The U.S. Federal Communications Commission has opened an investigation into the rejection.

10. Couldn’t stop/fix Mac display problems. Apple has struggled with customer complaints about ELD display problem all year long. It’s unclear the cause, although graphics chips are good candidate. On Tuesday, Apple released a firmware update designed to resolve various display problems, such as flickering. Yesterday, Betanews founder Nate Mook told me: “My 24-inch LED flicks to black a couple times a day.” There’s an 11-page Apple support thread about the blackout problem.

In typical fashion, Apple has a taken a secretive approach to the ongoing display problems. On December 13, Apple apologized for 27-inch iMac delays, without saying why there was delay. Was there too much demand for supplies, or did Apple hold back new shipments while it fixed graphics problems? I approached Apple PR but couldn’t get a clear answer.

Apple’s marketing reputation is about quality — and as a benefit for paying higher prices than most Windows PCs. Ongoing display problems undermine Apple’s reputation and raise questions that higher volumes come with less quality control. That’s not the message Apple should want to convey to customers. I agree with Nate Mook who observed: “As Apple gets bigger, these type of problems intensify.”