According to a Reuters report, Rubin, the Google VP Engineering who oversees Android development, has been deep in talks with record labels and “hopes to have the service up and running by Christmas.”

Google’s service would be an iTunes challenger that would be deeply connected to the Android mobile operating system. As we reported over the summer, it seems the company plans to first launch a music download service and progress to an online subscription service by next year. Ultimately, “Google Music” would be a cloud-based subscription service with the ability to stream directly to Android mobile devices.

An anonymous record label exec confirmed to the newswire that Google was, indeed, in talks with labels about launching such a service and that labels aren’t at all upset about the prospect.

“Finally here’s an entity with the reach, resources and wherewithal to take on iTunes as a formidable competitor by tying it into search and Android mobile platform. What you’ll have is a very powerful player in the market that’s good for the music business,” the source said.

Right now, the ever-more-popular swarm of Android phones have an integration with Amazon’s MP3 store, but it’s not the best-integrated solution. If Google can perfect a music downloading system and include some of the mobile-desktop syncing features we saw at Google I/O, they just might have a killer app on their hands — one that would continue to allow Android to successfully challenge Apple’s iPhone in the mobile market, too.

Google began its work in the music space last year with the launch of a music search feature. When users searched Google for any kind of music, among search results would be streaming audio previews and music discovery features from music-centric companies including Pandora and Rhapsody.

With the recent launch of iTunes 10 and built-in music social network Ping, Apple is aiming for a major revitalization of its music offering. But so far, users’ reactions to the new software has been lukewarm at best.

Do you think Google could emerge in just a couple months with a winning approach to music downloading? How do you think this move might — or might not — affect Apple’s bottom line? Let us know your opinions in the comments.

On Wednesday, Apple unveiled a smaller, cheaper version of Apple TV, which connects to a high-definition television and can show rented movies and TV shows from Apple’s own service, plus content from Netflix, photos on Flickr, YouTube clips and more.

The new $99 gadget marks a slight improvement over Apple’s first television set-top box, which went on sale in 2007. The original Apple TV had to sync with a computer, a concept most consumers weren’t ready for, Apple CEO Steve Jobs said at a media event Wednesday. It also didn’t record live television shows the way TiVo and other digital recorders did, at a time when that was becoming a popular way to watch TV.

“We’ve sold a lot of them, but it’s never been a huge hit,” Jobs said of the existing Apple TV, which went for $229.

Jobs, who presided over a media event in San Francisco wearing a black crew neck instead of his trademark mock turtleneck, also unveiled social media features for its iTunes software, a new lineup of iPods including a touch-screen Nano and new software for its iPhone, iPod Touch and iPad devices.

Apple’s new TV box, about four inches square, still doesn’t record television, but it comes at a time when more people have gotten used to watching shows online.

The device lets people rent, not buy, content. Apple TV owners will pay $4.99 to rent first-run high-definition movies the day they come out on DVD. High-definition TV show rentals will be 99 cents.

Apple said the same movie studios that have allowed iTunes users to rent and buy movies have agreed to include their titles for streaming. Apple did not rent TV shows before, but now episodes will be available from News Corp.’s Fox, The Walt Disney Co.’s ABC, ABC Family and Disney Channel and BBC America. Jobs said he hoped other television companies would join once the service gains popularity.

Apple TV, which will be available within a month, will also display shows, movies, photos and music streamed over Wi-Fi from other devices — computers with iTunes installed, as well as iPhones, iPads and the iPod Touch. For example, an iPad owner could start watching a movie on the tablet, then walk into the living room and, with a few taps, finish watching it on the TV screen.

Consumers may have grown more savvy about watching TV over the Internet since Apple’s first attempt, but Apple now faces increased competition for their attention.

Some television companies replay episodes on their own websites, while others allow viewers to tune in on aggregator sites such as Hulu. Netflix has made its streaming library available to its subscribers on many devices, including Microsoft Corp.’s Xbox 360 video game system, Apple’s own iPhone and iPod and Roku’s set-top boxes. Roku, anticipating Apple’s announcement, cut the prices of its devices this week, with the least expensive now costing $60. A high-definition version costs $70 — still $29 less than the new Apple TV.

In a surprise counter-punch, Amazon.com Inc. on Wednesday began selling ABC, Fox and BBC TV shows for 99 cents each to own, not just rent. The shows, in both standard and high-def, are a mirror image of the content available to rent on Apple TV; people can watch on PCs, using Roku’s set-top box and through other devices that carry Amazon’s Video on Demand service.

In Fox’s case, Amazon did not seek to renegotiate the wholesale price on the shows, according a person familiar with the matter. That means Amazon has likely cut into its own profit margin to stay competitive.

Amazon did not immediately respond to a request for more information about the 99-cent offering. Apple declined to comment.

Forrester analyst James McQuivey said in an interview Wednesday that he doesn’t believe Apple TV will add significant momentum to the currently small set-top box business. Nor does McQuivey believe it will grow into a big moneymaker for Apple, a company that has successfully built buzz around the iPhone and iPad, such that customers camp out for hours or days to be among the first to own one.

Apple TV is “a slightly smarter Roku, that has a significantly better marketing push behind it than Roku did,” McQuivey said. “I’m actually kind of surprised that Apple didn’t realize that they weren’t revolutionizing the category much.”

Instead, McQuivey said he sees Apple TV as a peripheral for iPad owners who spent a lot of money on the coolest new device and might be willing to spend $99 more to extend its contents onto the TV screen.

Additional content at attractive prices may be the way to get more people interested in Apple TV, McQuivey said — bundled subscriptions to TV channels or shows, plus content from Netflix and Hulu’s pay offerings, perhaps.

But Apple may continue to face resistance from media companies, many of which fear that such bundles cut undercut lucrative cable TV deals and that the 99-cent television rentals would hurt higher-priced offerings for permanent download. Most episodes currently sell on iTunes for $1.99 or $2.99.

News Corp., for one, had a fierce internal debate about the merits of the 99-cent plan, but CEO Rupert Murdoch pushed to accept it, mainly because of the success of The Wall Street Journal’s iPad app, which is free to the Journal’s paying subscribers, according to the person familiar with the matter.

The deal for Fox-created TV shows including “Glee” is limited to a trial period of several months, which mollified those opposed to the plan, the person said. The person spoke on condition of anonymity because internal discussions were confidential.

In a public statement, Fox Filmed Entertainment CEO Jim Gianopulos said “we’re excited to be working with them over the next several months to explore this innovative offering.”

Fox cannot let Apple rent shows that it buys from other studios, including “American Idol,” made by FremantleMedia Ltd., and “Fringe,” which is made by Time Warner Inc.’s Warner Bros. Television. Fox’s rentals include “Glee,” “Family Guy” and “The Cleveland Show.”

Anne Sweeney, co-chairwoman of the Disney-ABC Television Group, said in a statement the company was proud to team up with Apple on its rental offering, which will make available shows such as “Cougar Town” and “Desperate Housewives.” Apple’s Jobs is Disney’s largest single shareholder and sits on the company’s board.

Kurt Scherf, an analyst with the market-research group Parks Associates, said requiring consumers to buy yet another box for the living room “is a real inhibitor.”

And although he praised Apple’s decision to lower the price of the device itself, he had doubts about TV rentals for 99 cents.

“Part of me is still wondering if that is too rich for a consumer to pay, given all the other options that are out there to consume and catch up on TV shows that don’t cost a thing,” he said.

Michael Gartenberg, a partner at consulting firm Altimeter Group, cast a more optimistic light on Apple’s chances of making it into consumers’ living rooms, but said in an interview that he doesn’t expect it to drastically change anyone’s TV watching habits.

Instead, it just raises the stakes for Apple’s competitors.

“This puts a lot of pressure on the Rokus and the Boxees and all the other minor league players,” he said.

Shares of Apple gained $7.23, or 3 percent, to close at $250.33 Wednesday.

That’s the challenge Google will try to tackle Tuesday with the introduction of a tool called “Priority Inbox” in its Gmail service.

The feature relies on formulas devised by Google engineers to automatically figure out and highlight which incoming messages are likely to be the most important to each Gmail user.

Users who opt to turn on the Priority Inbox will see their messages separated into three categories. “Important and unread” e-mails will be at the top followed by messages that have been previously stamped with a star by an accountholder. Everything else appears at the bottom.

Switching back to the standard view of the inbox can be done with a click on a link along the left side of the Web page.

Google’s e-mail analysis is based on a variety of factors, including a person’s most frequent contacts and how many other people are getting the same message. The content of the e-mail also is factored into the equation.

Although it might unnerve some people, the notion of Google’s computers scanning through the content of individual e-mails isn’t new. Google has been doing it for years to determine what kinds of ads to show to the right of e-mails and to block junk e-mail commonly known as “spam.”

With more than 100 daily e-mails pouring into some inboxes now, people now need help to identify “the bacon and baloney” along with the spam, said Keith Coleman, Gmail’s product director.

Google helped create the information clutter six years ago when it introduced its free Gmail service with a then-unheard of 1 gigabyte of storage per account. Other e-mail services quickly expanded their capacity limits to remain competitive, and now most inboxes can store multiple gigabytes of information.

How popular, exactly? Well, according to a tweet from Google, the users seem to love it, as over one million calls were placed in the first 24 hours since the feature went live.

Let’s put that into perspective. Gmail itself is huge, with over 176 million users (according to comScore) as of December 2009, but voice calling is currently enabled only in the U.S., so it’s reasonable to expect the number of users to grow as the service spreads to other countries.

The key word here, however, is “free”: calls to the U.S. and Canada are completely free (and will stay so for at least the rest of the year,) while calls to other countries are billed at modest rates.

Google has already tried to conquer several markets through Gmail – its instant messaging counterpart is very successful, while Buzz, Google’s competitor to Twitter, was much less so. Voice calls seem like a natural addition to Gmail, and if this first figure is any indication, Skype will soon have a very formidable competitor.

I believes the revamped and renamed Apple TV hardware will “change everything” for a number of reasons, including the addition of TV applications written for the iOS operating system. Like the iPhone and iPad, Apple’s new iTV will have access to the App Store where users will be able to download software to run on their device, he said.

With these applications, he said, content providers will be able to provide iTV owners “a la carte” stations that Rose believes will change the way people watch content on their television.

“With Apple’s iAds, content producers (eg. ABC/NBC/etc.) can directly monetize and distribute their content,” he said. “This will eventually destroy the television side of the cable and satellite industry, as your only requirement to access these on-demand stations will be an internet connection. Say goodbye to your monthly cable bill.”

The $99 device will make it easy for users to share pictures and videos “with the push of a button.” He suggested the device could include a feature that would notify users when new family photos or videos are available to be viewed.

The new iTV will turn Apple’s iPad into a remote control, as the “preferred input device” for the set top box. The iPad will also allow users to edit videos, control games, and “extend the interactive television experience,” he said. He gave an example of watching football while viewing other camera angles on the iPad.

Google TV, the search giant’s already-announced Android-powered set top box set to launch this fall. He said that people should keep an eye on Google’s product as well. “This is going to be a hot space in 2011,”.

@labarta

Today’s report goes on to say that the tablet could be as cheap as free with a Verizon data plan. That wouldn’t be a total surprise – Verizon currently offers a number of netbooks essentially for free – though it would obviously give the device a significant price advantage over the iPad.

Download Squad also details the purported specs of the tablet, featuring at least one key differentiator over the current generation iPad: a webcam.

Google and Verizon remain mum on their tablet plans, though a holiday launch is consistent with what we’ve been hearing and would obviously make a lot of sense from a competitive standpoint. It’s worth noting (though it’s likely completely coincidental) that the news follows more details emerging last night about the Chrome Web Store, a place where users of a Chrome OS tablet could conceivably buy apps.

Scott Thompson, the online payment service’s president, said Thursday that PayPal plans to roll out a payment product by the end of the year that helps businesses collect “micropayments” on the Web.

Generally, if you want to buy, say, a virtual sword in an online game, you need to first purchase a chunk of credit — perhaps $5 or $10 — that you can then spend on a 49-cent virtual sword on a game on Facebook or other websites. That’s because the costs associated with credit card transactions quickly eat away at the profit a merchant would make on something that costs a few dollars or less.

Thompson thinks consumers want to be able to buy items one at a time, though. And with this in mind, he said PayPal intends to allow purchases in small increments.

PayPal, which is owned by eBay Inc., plans to make that work by compiling consumers’ transactions. Someone might buy $10 worth of news articles, or goods in an online game, before getting billed by PayPal. PayPal thinks this will appeal more to consumers while benefiting merchants and PayPal, too.

Online micropayments are not new. They emerged in the 1990s but never really caught on, in part because early attempts often had people spend tiny amounts of money — a dime here, a quarter there — instead of the currently popular model where you buy a bunch of credits up front and use them a little at a time.

But consumers are now much more used to the idea of buying virtual goods in online games and downloading content like songs and videos, and this change in behavior could benefit PayPal.

PayPal is already involved in the digital payment space. Last year, $2 billion of its total $71 billion in payment volume came from digital goods such as downloads of music, videos and software people bought online. And it seems to be growing: In the first half of this year, the company processed $1.3 billion in digital goods payments, Thompson said.

The company has gotten its feet wet in the world of micropayments, too, offering merchants a micropayment option that websites can use, charging a fee of 5 percent plus 5 cents for small transactions, which it sees as generally less than $10 apiece. This way, a $3 micropayment for a news article would cost the merchant 20 cents in transaction fees; under PayPal’s normal fee schedule for items that cost up to $3,000, it would cost about 39 cents.

Still, Thompson thinks the upcoming payment product will be better, and hopefully more convenient, too. Right now, if you use PayPal to buy items in an online game such as Zynga’s popular FarmVille, you’re still prompted to leave the game mid-session to make the actual payment. Thompson wants to change this with PayPal’s upcoming offering.

“The whole intent is to keep you in the experience, don’t force you to do anything else … and keep it economical for all parties,” he said.

To owners of Android-based phones and the iPhone, particularly in the U.S., the BlackBerry is starting to look more than a little too old-school. These phones don’t really run apps. They don’t store much music. Their screens, in general, are much smaller than those of smartphone competitors, meaning it’s difficult or impossible to browse the Web comfortably or watch online video.

A new BlackBerry phone — the Torch — was unveiled on Tuesday by maker Research In Motion. Even hard-core BlackBerry users don’t seem that enthralled by it. Meanwhile, a survey released by the Nielsen Co. on Monday found the majority of U.S. BlackBerry owners — 58 percent — want to buy another kind of phone, usually an Android or iPhone, when they upgrade.

But here’s the kicker: Despite the fact that the BlackBerry isn’t hip, high-tech or cheaper than its main competitors, the phones are still the most popular (or at least the most common) in the U.S. market, and they’re growing internationally.

So why do so many people still tolerate these phones?

It turns out, according to a handful of interviews with BlackBerry users, there are three basic reasons: People are addicted to the click-clacking keyboard; they love the blinking red light on the top, which alerts users to new messages; and many just happen to have the phone because it’s required for work.

The click-clacking keyboard

Ask a BlackBerry user what they like about their phone, and they’re bound to mention the keyboard. Ask them why that keyboard is so great, and they’ll go into sensual detail about the click of the keys, how the buttons are raised just so and how the “shift” key — oh, the shift key! — is just as easy to use as those on a full-size computer keyboard.
“The keyboard is definitely a hook for RIM, and it’s interesting to see that the marketplace, in general, has conceded it to RIM,” said Kevin Michaluk, founder of the BlackBerry fan website Crackberry.com. “Everyone sees the iPhone, and they think apps. And I think everyone sees a phone with a keyboard, and they think BlackBerry, whether it is or isn’t.”

This comes at a time when most smartphones — including the iPhone — are moving toward touch-screen-only interfaces, where users tap on glass to type instead of pecking away at tactile keys.

The details of how the BlackBerry keyboard feels are what make it addictive, said Nan Palmero, a writer for another fan site, BlackBerryCool.com.

“They really go to great lengths to raise plastic in certain ways on the keys,” he said of the tactile keyboard’s design. “They kind of describe it as guitar frets: Your hand naturally knows where to go and where to be.”

Palmero said he can type up to 40 words per minute on his phone. Michaluk said he can hit 65. Neither has to look at the keyboard.

Kevin Kovanich, a 23-year-old BlackBerry user in Chicago, Illinois, who responded to a CNN Tech question about the phones on Twitter, said he loves that he can still “rock the keyboard” even though his thumbs are “larger than average.”

“It is really nice how far the buttons stick up — and you can really feel that click,” he said. “It doesn’t feel like you’re making any mistakes … no matter how big your fingers are.”

That red light

On top of every BlackBerry, there’s a little sliver of a red light, and it blinks at you when a new message or call comes in.

People get seriously addicted to that light, Michaluk said.

“You put a blinking red light on a device, and when that light blinks, you jump,” he said. “It’s Pavlovian training, right? For me, really, it’s my connection to my people. And second, it’s my connection to the world in terms of news and everything.”

He added: “It’s one of those things that always calls you back to your BlackBerry.”

Of course, other phones have ways of alerting people to new messages, too, but none has the same feel as that BlackBerry light, users said.

Because it’s businessy

The BlackBerry is the get-things-done phone.

It’s not designed to run flashy applications, for playing games or for uploading pictures to Facebook and Twitter. It started out a business-minded device, and RIM has continued to market it as a business-friendly device, although recent ads have pitched it as a leisure phone for young multitaskers as well.

Part of the allure is that the BlackBerry is known for being secure. It encrypts messages, which makes business owners more comfortable giving the phones to their employees, who may share sensitive documents and e-mails over the phones.

This issue came into focus this week as the United Arab Emirates and Saudi Arabia threatened to stop BlackBerry service for this very reason: because they wanted to get inside private messages on the phones and couldn’t.

Other smartphone operating systems,including iOS 4 from Apple, are trying to cater more to privacy-minded business clients, but overall they’ve been more focused on the consumer experience.

That image can work in BlackBerry’s favor, writes Callie Schweitzer on a blog called Neon Tommy. She says the phone has a “mullet effect” in that it’s “business in the front, party in the back.”

“See someone typing away furiously on a Blackberry? They’re probably sending a top-secret e-mail,” she writes. “See someone intently focused on an iPhone? They’re probably playing with the Bubblewrap or Lightsaber Unleashed apps. Regardless of what a Blackberry user is really doing, the phone itself just seems so much more straight-laced and serious than the iPhone.”

Businesspeople also say BlackBerrys are just good for productivity.

Partly it’s the keyboard. Partly is a range of shortcuts. But this no-frills phone has hooked many people in the bushiness world.

That includes Michaluk, who said he was given his first BlackBerry phone — he called it “old blue” — from an employer several years ago.

He’s been hooked since.

“That thing was just a tank; it was ugly; it had that low-res, almost monochrome display. And that thing — I just loved [it],” he said

source: CNN.com

AOL is in the midst of a turnaround effort under CEO Tim Armstrong, a former Google Inc. executive who is trying to shift AOL from relying on a shrinking dial-up Internet business to finding growth in online ad sales.

So far, this has not been easy. Since splitting from Time Warner Inc. in December, the company has shown few obvious signs of progress, and on the surface the second quarter may sound like more bad news.

On Wednesday, AOL reported $1.4 billion in writedowns for the declining value of its assets and the sale of social networking site Bebo. The company’s advertising revenue fell even faster than it did in the first three months of the year.

Still, Armstrong remained resolute about AOL’s chances for survival, saying he believes the company in the past year has “moved the needle from ‘survive’ to ‘thrive.’”

Armstrong said that the writedown doesn’t point toward problems at AOL, but rather indicates that “the patient is getting healthier.”

“If you look underneath it, it’s really about cleaning up what happened during the AOL-Time Warner years,” Armstrong said in an interview.

Some analysts agreed.

David Joyce, an analyst at Miller Tabak & Co., called the quarter “a mix of positive and negative,” and said there are “some signs of improvement starting to show through.”

AOL shares rose $1.63, or 7.7 percent, to close Wednesday at $22.75. Since the spinoff, AOL shares rose as high as $29.45 in April, but it’s now trading nearly 23 percent lower.

AOL bought Time Warner at the height of the dot-com boom back in 2001, hoping that Time Warner’s TV and magazine content would fit with AOL’s dial-up Internet business. But the rise of speedier broadband Internet connections started killing off AOL’s main revenue source. After years spent trying and failing to integrate the two companies, Time Warner finally spun off AOL.

The change has not been easy, as AOL’s second-quarter results make clear. The company reported a net loss of $1.06 billion, or $9.89 per share, in the April-June period, compared with net income of $90.7 million, or 86 cents per share, a year ago.

And revenue sank 26 percent to $584 million from last year’s nearly $792 million — far lower than the $602 million analysts surveyed by Thomson Reuters expected, on average.

Advertising revenue fell by 27 percent to $297 million. Other companies that rely heavily on online advertising have seen more positive results: Both Google and IAC/InterActiveCorp, for example, recently reported online ad growth in the April-June period.

Armstrong said much of AOL’s decline stemmed from its efforts to get rid of ad products and operations that may be contributing to its revenue but not to its earnings.

This includes the disposal of Bebo, which AOL bought for $850 million in 2008, hoping it would drive traffic to its other Web properties. It hasn’t, and AOL sold it during the quarter to private investment firm Criterion Capital Partners for an undisclosed amount — most likely a fraction of what it initially paid for it.

Overall, he said, the online advertising market is recovering from last year’s slump, and he expects next year to be even stronger than this one.

“I think our results are a reflection of what we’re doing to make AOL a healthy company, rather than what’s happening in the industry,” he said.

Meanwhile, revenue from AOL’s subscription dial-up Internet business fell 27 percent to $260 million. This business has steadily declined for years as consumers gravitate to speedier broadband Internet services. The business ended the quarter with 4.4 million subscribers, down 25 percent from last year. At its peak in 2002, AOL had 26.7 million subscribers.

Clayton Moran, a Benchmark Co. analyst, said that although AOL still faces plenty of challenges, it looks much better than it did a year ago.

“I think you’re beginning to see through all the reshaping and reorganization of the company; you’re beginning to see a little light at the end of the tunnel,” he said.