Dark Side Arises for Phone Apps

Dark Side Arises for Phone Apps
Security Concerns Prompt Warnings

By SPENCER E. ANTE

As smartphones and the applications that run on them take off, businesses and consumers are beginning to confront a budding dark side of the wireless Web.

Online stores run by Apple Inc., Google Inc. and others now offer more than 250,000 applications such as games and financial tools. The apps have been a key selling point for devices like Apple’s iPhone. But concerns are growing among security researchers and government officials that efforts to keep out malicious software aren’t keeping up with the apps craze.

In one incident, Google pulled dozens of unauthorized mobile-banking apps from its Android Market in December. The apps, priced at $1.50, were made by a developer named “09Droid” and claimed to offer access to accounts at many of the world’s banks. Google said it pulled the apps because they violated its trademark policy.

The apps were more useless than malicious, but could have been updated to capture customers’ banking credentials, said John Hering, chief executive of Lookout, a mobile security provider. “It is becoming easier for the bad guys to use the app stores,” Mr. Hering said.

Unlike Apple or BlackBerry maker Research In Motion Ltd., Google doesn’t have employees dedicated to vetting applications submitted to its Android store. Google said it removes apps that violate its policies, but largely relies on users to alert it to bad software. “We check reactively,” said a Google spokesman. “There is no manual bottleneck.”

As more companies, governments and consumers use wireless gadgets to conduct commerce and share private information, computer bad guys are beginning to target them, according to government officials and security researchers.

Read the rest of the story here.

Verizon Still Wants the iPhone (Despite those Droid Ads)

Despite a recent slew of negative ads dissing the Apple iPhone in support of Verizon’s new Android-based device, Verizon chairman and CEO Ivan G. Seidenberg told investors on its earnings call today that the company still covets the iPhone.

“This is a decision that is exclusively in Apple’s court,” said Seidenberg. “We obviously would be interested in any point in the future they thought it would make sense for them to have us as a partner. And so we’ll leave it with them on that score.”

This statement jives with my feeling that Verizon’s embrace of the Google Android operating system is just as much a negotiating tactic as a hedge against the iPhone.

Without the iPhone, a game-changing devices that is the world’s single hottest smart phone, Verizon is pursuing a sort of spread-your-bets strategy in which they offer a whole range of new devices, including most importantly a series of Blackberry handsets.

For example, Verizon this week is launching the Storm 2, an updated version of the first touchscreen Blackberry, which is getting much better reviews than the first one. And the Motorola Droid, a super-thin phone that uses Google’s Android operating system, will be unveiled on Wednesday.

“We have expanded our base of other devices,” explained Seidenberg. “So our view is to broaden the base of choice for customers and hopefully along the way, Apple as well as others will decide to jump on the bandwagon.”

Why Dell Chose Google Over Microsoft for its New Cell Phone

Today, I appeared on CNBC’s Power Lunch to discuss the news reports that Dell is teaming up with Google’s Android mobile operating system to release a smart phone in early 2010.

Check out the video segment here where I mix it up with host Dennis Kneale.

BW Exclusive: Verizon Wireless: An App Store to Take On Apple

Check out the top of my BusinessWeek scoop on Verizon’s new wireless application store.

Verizon Wireless: An App Store to Take On Apple
The carrier is joining with Vodafone, Japan’s SoftBank, and China Mobile to grab a piece of the mobile-software market from the phonemakers

By Spencer E. Ante

In a move that could rattle the wireless industry, Verizon Wireless is gearing up to challenge Apple (AAPL) in the market for software applications that are downloaded to cell phones. Verizon, the top U.S. wireless operator, plans to preview its software store on July 28 and is pouring substantial resources into the effort. But it will be a struggle to catch up to Apple, which has built broad support among software developers and customers in the year since it launched its App Store.

Software apps are all the rage in wireless these days. Customers are flocking to devices such as the iPhone that offer myriad programs, and developers are cooking up software to meet the demand. You can use an iPhone to look for jobs, read golf greens, tune into digital radio, or play games. Juniper Research estimates sales of mobile applications could hit $25 billion in 2014, up from $5 billion this year.

What’s yet to be decided is who will control this market. Wireless carriers have long been the gatekeepers for what people do with their phones. But phonemakers, led by Apple and Research In Motion (RIMM), have grabbed an early lead by creating software stores that are easy for customers to use and profitable for developers. Apple says 100,000 developers have created more than 65,000 iPhone applications so far, and customers have downloaded those applications more than 1.5 billion times. “It is going to be very hard for others to catch up,” boasted Apple CEO Steve Jobs in a July 14 press release.

To get into the game, Verizon is crafting a strategy that’s more open and global than it has ever used in the past. It is teaming up with Vodafone (VOD), Japan’s SoftBank, and China Mobile (CHL) to create a common software foundation. Developers will be able to write applications for the standard, which the carriers are calling the Joint Innovation Lab (JIL). When the store launches in the fall, it could reach as many as 1 billion customers, the combined total for the four operators. “I am not here to bash anybody, but if I could write one application that could touch every iPhone customer or one billion customers, who am I going to write for?” says Verizon Wireless CEO Lowell McAdam.

Click here to read the rest of the story, along with a video.

Telecom Monday: Telcos Face the Credit Crunch and Moto’s New Android Phone

Today, BusinessWeek Online published two must-read stories. One, by my colleague Olga Kharif, breaking the news that troubled handset maker Motorola is hard at work developing its own Android-based device.

Writes Olga:
“Motorola has been showing spec sheets and images of the phone to carriers around the world in the past two months and is likely to introduce the handset in the U.S. sometime in the second quarter of 2009, according to people familiar with Motorola’s plans.”

The second story, written by me, explains why the telecom industry won’t be able to escape the wrath of the financial crisis.

Writes me:
“Although most analysts believe the damage won’t be nearly as bad as the last telecom bust—when hundreds of firms went bankrupt, including giant Worldcom—there is growing evidence that the financial crisis is going to depress the debt-heavy telecom industry. To start with, rising capital costs are likely to take a bite out of earnings. In addition, the softening economy will probably crimp demand for such telecom services as land lines, cell phones, and Internet connections.”

Android’s Coming-Out Party: Quick Thoughts on T-Mobile’s G1

Yesterday my colleague Arik Hesseldahl got a hold of the T-Mobile G1, the first phone to be powered by Google’s Android operating system. I played around with it and, despite the criticisms that are coming out today, I found it more appealing than I expected.

Is it as elegant and game-changing as Apple’s iPhone? Not quite. But it is a nice-looking device that has a lot to recommend. First, the G1 has a large color touch-screen that swivels out to reveal a full keyboard. Second, the software and Web browsing works pretty well, better than most cell phones I’ve seen, letting users download games and tools from an online bazaar akin to the Apple App Store. And it only costs $179–$20 cheaper than the iPhone.

Bottom line: While it will take Android a while to build market share in the cell phone world, the G1 suggests that Google’s operating system is the real deal and will be a factor to contend with over the next few years. Motorola, LG and Samsung are expected to launch Android models worldwide in 2009. My colleague Olga Kharif wrote a story reporting that analysts predict that G1 manufacturer HTC will sell 200,000 to 400,000 units this year, once the device becomes available on Oct. 22 in select markets.

Nokia Embraces Openness; Welcome to Openness Wars

Today, in yet another sign that open networks are coming to the US wireless world, Nokia announced it will purchase the remaining stock it doesn’t own in Symbian and then migrate the solution to an “Open” platform.

First question: why are they doing this? According to ABI Research vice president Stuart Carlaw: “There has been financial pressure on Nokia to move in this direction at some point. The sheer economics of the number of devices it ships with the OS versus the value it gets out of its historic shareholding clearly indicated that such a `rescue’ was inevitable at some point.”

The second question of course is: How open will the platform be? “Perhaps this is an admission that the pressure from the Linux industry is really forcing Nokia and Symbian to change their game,” adds Carlaw. “Questions remain as to whether the solution will be truly open and what the cost of a Symbian Foundation membership will be.”

ABI research director Kevin Burden believes Nokia may still maintain a proprietary operating system for high-end mobile devices. “It’s very possible that Nokia will eventually position the Symbian platform for mid-tier devices with another platform powering its high-end devices – a position that Sony Ericsson has already taken,” says Burden.

Om Malik has a good post on what it means. My bottom line is that there is clearly going to be a war to dominate the open wireless platform. And it’s probably going to take a few years for all of this to settle out. In the meantime, innovation will flourish but not as much as if the industry had already decided upon a single open platform. Get ready for the next standards war featuring Android by Google, Symbian by the Symbian Foundation, Blackberry by RIMM, OS X by Apple, Windows Mobile by Microsoft and the LiMo by the LiMo Foundation. It’s enough to make your head spin!!!