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iTunes Rewind 2010 Highlights Top Apps, App Trends
Apple’s year-in-review iTunes Rewind special section of the iTunes Store went live today, and the App Store selections in particular give a good overview at the year that was for iOS software. The App Store sections of iTunes Rewind are broken down into iPhone and iPad categories, with top downloads for the year and hot trends listed for both platforms.

Apple identifies a number of trends that seem to have struck a chord with consumers. Photo and video apps are the first trend identified for iPhone apps, including Instagram and Path, which we featured recently in a roundup of social photo sharing applications. Other sections include news apps, augmented reality software, four separate categories for different types of games, cloud apps and location-based software. Maybe the most interesting category? Zombies, which is a subject that seems to have really captured the public imagination of late (see The Walking Dead if you require additional proof).

iPad trends include many of the same categories found in the iPhone section. Photos and videos apps aren’t on the list, probably due to the iPad’s current lack of any camera, but magazines and newspapers, apps for painting and sketching, mobile office apps and interactive stories were all trends that seem to uniquely benefit from the iPad’s larger screen.

The top paid apps for 2010 for iPhone and iPad probably won’t be a surprise to anyone who regularly checks out the App Store charts, but they do say a lot about where consumers are spending their money, and how much they’re willing to spend.

The top five paid apps overall for iPhone were Angry Birds, Doodle Jump, Skee-Ball, Bejeweled 2 + Blitz and Fruit Ninja. Notice any similarities? Yes, they’re all games, but that’s not all. Each is also priced at $0.99. By contrast, the t op five overall paid apps on the iPad were Pages, GoodReader for iPad, Numbers, Angry Birds HD and Keynote. There’s only one game on that list, and three are Apple’s own products. Four of the five are productivity apps, and the average selling price is $7.59. The pricing gap between the two lists reflects what we’ve seen in earlier reports.

Apple also breaks down the top apps for each category for the year. It’s worth noting that despite the absence of a single universal app in the top five overall list for iPad, a significant percentage of the individual category leaders are optimized for use on both iPad and iPhone. The same definitely can’t be said for the leading iPhone apps in each category. That seems to suggest that many iPad owners also own an iPhone or iPod touch, and that cross-platform compatibility is a key selling point for them.

Check out the full iTunes Rewind micro-site at the iTunes Store for a look at which free apps were most successful, which apps grossed the most, and at the top performers in music, movies and TV for the year.

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Apple Turns on 90-Second iTunes Song Previews
Apple made good on its promise to extend iTunes song previews to 90 seconds very early Thursday, Dec. 9. Only some songs 2:30 and longer will get the new preview length, with shorter tracks and some exceptions retaining the original 30-second preview length.

The company originally stated its intent to alter preview length in November, through a letter to music labels notifying them of the impending change. The letter didn’t mention when Apple was planning to implement the new times, but it did say that music labels should indicate their compliance by simply continuing to offer music through iTunes. Many labels weren’t very pleased with this decision, according to reports.

It looks like Apple’s hard-line negotiation wasn’t entirely successful, because not all tracks on iTunes 2:30 or longer have the new 90-second previews. For example, tracks from Ra Ra Riot’s The Rhumb Line all retain the 30-second preview length. Same with artists Bloc Party and Tokyo Police Club, which suggests that independent artists responsible for licensing their own content might be exempt from Apple’s blanket policy change. Major label releases seem mostly to have adopted the new standard.

Longer previews are only available through the U.S. iTunes Store as of this writing. It’s unclear whether Apple will be rolling out extended song samples to other areas in the future. It’s possible that this initial roll-out is just a trial to see how labels react before Apple flips the switch worldwide. We contacted Apple for comment, but the company didn’t respond in time for publication.

Personally, 90 second previews are a lot more likely to encourage me to buy an album, but I’m very conservative with my music purchasing and won’t buy something unless I’m absolutely sure I’ll enjoy it. How will the new sample length affect your own buying habits, if at all?

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iPad 2: The Android Challenge

Despite mixed reviews and a version of Android "not optimized" for tablets, Samsung sold 600,000 Galaxy Tabs in its first month, and recently claimed to have sold a million. If Steve Jobs isn't concerned by those numbers, he should be. It was a just over a year ago the Motorola Droid launched with Android on Verizon’s network, and we all know how that turned out for iPhone market share.

Setting aside the expected iPad 2 improvements, a faster CPU, more memory and storage, cameras, Apple needs to look at what the competition is doing today and tomorrow. With a yearly release schedule, Apple needs to match the Android tablets of 2012 in 2011, but first needs to look at 2007.

Past Mistakes and Future Connectivity

The first step in preventing Android world domination of tablets is not to repeat mistakes made with the iPhone. In 2007, Apple launched the 8GB iPhone at $599, only to drop the price $200 two months later. In 2010, the iPad launched the 16GB Wi-Fi iPad for $499, and nine months later competitors like Samsung are struggling to match that price point with smaller tablets. Lesson learned, Apple.

Unfortunately, Apple is still learning the hard way about carrier exclusivity, since the iPhone is still exclusive in countries like the U.S., though that’s expected to change soon. Likewise, the iPad 3G only works out of the box with AT&T, though this is mitigated by mobile wireless routers which allows the Wi-Fi version to theoretically use any network. An extra dongle, however, is a very un-Apple solution. In contrast, the Galaxy Tab is available on all four major U.S. carriers with built-in connectivity.

Apple needs to match that kind of accessibility and take it a step further, making 3G standard on every iPad sold. If this can't be done without raising prices, the increase should be minimized, as market share matters more than margins with a new platform like tablets. Let Samsung try to compete with a $529 3G iPad that works with any wireless data provider.

Size Matters

At the last conference call, Steve Jobs attempted to dismiss tablets with 7-inch screens as being unable to "compete with iPads." Nearly a million Galaxy Tab owners would seem to disagree. Jobs also asserted there were “clear limits” on how small and close elements could be on a display, and yet more than a hundred million iPod touch and iPhone owners seem to be doing just fine.

What Jobs should have said was, “a 7-inch iPad would put downward pressure on iPod touch and iPhone prices, and we don’t want that.” Nonetheless, Apple needs a 7-inch iPad to undercut an expected deluge of Android competitors, perhaps at $349 for an 8GB model, $399 for 16GB. If it becomes necessary to to sell the 8GB, 16GB, and 32GB iPod touch at $199, $249, and $299, then so be it. The Galaxy Tab has already proven 7-inch tablets sell, and the RIM PlayBook is next. A 7-inch iPad would provide a smaller, lighter iOS alternative, and one that should be more than price competitive with Google and RIM offerings.

Flash Compromises

If it seems difficult for Steve Jobs to put out a 7-inch tablet after dismissing them, that's nothing compared to allowing Flash on iOS tablets. Steve Jobs has said Flash hurts battery life and performance, causes crashes and has security issues, but if Flash is so terrible, then why not make it incompatible with OS X?

It's because Flash is expected on a "traditional" computer. On handhelds and tablets, Apple hopes to keep such expectations from ever developing. That seems unlikely. Flash is or will be everywhere, except iOS. Can you imagine people switching from PCs to Macs and finding out Flash doesn't work and there's nothing to be done about it? That's what will increasingly be happening with handhelds and tablets as they become just another computer.

iPad Independence

The iPad needs a computer, a proprietary cable, and iTunes for syncing content and software updates. The Galaxy Tab at least can do OTA updates, though it still requires a cable with a proprietary 30-pin connector for some syncing. Presumably, webOS tablets from HP will be more advanced OTA devices in 2011, as will future Android tablets. This is where Apple really needs to go with the iPad, making it a computer unto itself. If a cable connection is needed, it should use the new MicroUSB standard instead of the proprietary dock connector.

If it sounds like I’m saying Apple needs to make a lot of concessions regarding its current ideas around tablet design, it doesn’t, so long as the company is happy with a minority (if highly profitable) share of the tablet market. Of course, a plurality, or even majority, could pay more in the long run, but that requires paying more attention to the competition today, and down the road.

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Refurbished Wi-Fi iPads Get a Discount from Apple
Looking for a last-minute gift for someone really special? As of Dec. 8, Apple has discounted the prices of refurbished Wi-Fi model iPads by between $20 and $50. The discounts were originally labelled “Special Limited Time Price,” but Apple has removed that caveat as of this writing, though the deals remain.

The deal is only available in the U.S. online store, and doesn’t apply to the Wi-Fi + 3G iPad models. The price of the 16GB Wi-Fi model is $20 cheaper than it usually is, making the total discount $70, while the 32GB and 64GB models get $50 over and above their existing discounts, bringing the total savings for those bigger-capacity iPads to $100.

Refurbished iPads come complete with brand-new external casings and batteries, and the same one-year warranty that brand-new units enjoy. You can’t get custom engraving on refurb iPads like you can with new ones, and the refurbs generally come in generic packaging, but, as anyone who has experience with Apple’s refurbished products will likely tell you, you’re basically getting a new product.

If you aren’t willing to wait to see what iPad 2 has in store, this is a pretty good deal. The 32GB Wi-Fi model is an especially good deal, with the highest total savings percentage-wise (16 percent vs. 14 percent for the others) and a price tag that matches that of the Wi-Fi 16GB model brand new. I know I wouldn’t complain if that ended up under my tree, plain brown box notwithstanding.

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