A source within Apple’s iTunes group has alerted us that Apple plans to revamp the extremely popular but highly controversial App Store. The change most likely to generate discussion will be the addition of franchises that allow anyone who meets Apple’s criteria to run their own version of the App Store, but we think the more interesting development is Apple’s plan to start accepting Macintosh software as well.

Although details remain sketchy, the frequent negative press surrounding app rejections and removals has reportedly created significant pressure within Apple. Rather than take a common-carrier approach and open the App Store up to all comers, Apple has opted to go in the other direction, with plans to remove tens of thousands of apps that supposedly offend Steve Jobs, who never anticipated the glut of fart apps.

To put the company in a position where it could defend its choice to remove so many apps, Apple iTunes head Eddy Cue reportedly took a page from the plans for the upcoming iBookstore (where Apple doesn’t assume it will be the sole supplier of books for the iPad) and came up with the idea of franchising the App Store, thus allowing other companies to run their own versions of the App Store and accept whatever apps they wish.

According to sources, franchisees would have to meet certain aesthetic and performance criteria set down by Apple, and could sell apps through either desktop applications like iTunes, or through iPhone OS apps like the App Store app. Franchisees would also agree to certain liability clauses should apps they distribute result in any sort of denial of service to a cell carrier’s data network or cause other widespread harm. The goal is to allow franchisees to write their own acceptance policies, but to set up the contracts to eliminate the likelihood of malware.

This will undoubtedly result in some franchisees accepting a flood of adult applications that Apple has thus far refused, and franchisees will also have an instant customer base among the developers whose apps Apple plans to remove from the App Store. Although franchisees will be free to set their own royalty sharing deals, Apple will take a 10 percent royalty on all sales.

App developer James Thomson of TLA Systems was positive about the proposed move. “Finally, with these new franchise stores, I can remove all the censorship from PCalc,” he said. Thomson made headlines last year when he released a version of his scientific calculator with a profanity filter (see “PCalc Prevents iPhone Profanity,” 1 October 2009). His other iPhone app, a LOLcat/Twitter mashup called Twitkitteh, might not meet Apple’s new criteria, but Thomson was undeterred. “Hopefully, another store will allow me to realize my true vision for Twitkitteh.”

More interesting, in our opinion, is that Apple also plans to start accepting Macintosh applications to the App Store. They’ll have their own section of the store, and developers can upload and manage them through iTunes Connect, just as they do with iPhone OS apps now. Developers will still be free to set their own prices, and Apple’s standard 70/30 deal will apply. On the user side, Mac applications will be purchased, downloaded, and updated through iTunes, in exactly the same manner as iPhone apps.

Jon Gotow of St. Clair Software, makers of Default Folder X and HistoryHound, said, “We’re thrilled that Apple is letting us in on the action with the huge user base in the App Store – as Mac developers, we’ve felt left out with all the iPhone and iPad excitement.”

Developers will be free to sell their Mac applications directly and through other resellers, just as they do now, which will make Apple just another reseller, though one with a store that’s located on every Macintosh sold. Our source indicated that acceptance into the App Store will be a non-trivial process for Mac applications, since Apple wants to ensure that it’s selling only the best applications, and Apple may require a significantly higher standard in terms of interface design and software quality assurance than many developers are able to meet.

St. Clair Software’s Gotow noted, “I’m confident that we’ll meet their acceptance criteria if we ramp up our spending on artwork to the same levels we normally put into development.”

Along with the additional sales opportunities, some independent developers expressed interest in running their own versions of the App Store, Gotow among them. “Being able to open our own app store and accept whatever we judge to be good software will open all kinds of new opportunities.”

Although the criteria for opening an App Store franchise might be beyond the means of an individual developer, we anticipate that some franchisees will enable the creation of branded sub-stores – perhaps embedded within a Mac application itself – that would enable a small developer to resell products from like-minded indies.

Though nothing was said about the iTunes Music Store or the upcoming iBookstore, we’re hoping the franchise opportunity extends beyond the App Store, since we’d love to run our own online bookstore with just those titles we think are worthwhile. And we’re sure that there are numerous sites out there that would sell their grandmothers for the chance to dip a toe into the iTunes music sales business. However, Apple may be less interested in opening up to franchisees in both of those cases, given that there is already plenty of competition that enables Apple to avoid criticism of heavy-handed approval policies.

One of the most popular Macintosh programs of all time will be resurrected this weekend when Apple ships the iPad. Eudora, the venerable email client created by Steve Dorner while at the University of Illinois at Urbana-Champaign in 1988, purchased by Qualcomm in 1992, and maintained through its eventual demise in 2006, will return to life as a free iPad-only app. An undergraduate interning at Qualcomm named Paul O’Walty, while engaged on some cleanup of the Eudora group’s revision control system, discovered the Eudora source code and decided to port it to the iPhone OS, with the specific intent of seeing if he could get it to run acceptably on the iPad.

Although Qualcomm has reportedly signed off on the release of Eudora for iPad, due to O’Walty’s reliance on the open-source aspects of the Eudora code base and use of the Mail framework on the iPad, he did admit to some trepidation about whether or not Apple would approve Eudora for iPad, since it replicates the functionality of the iPad’s Mail app. Eudora will be available only for the iPad; it wasn’t practical to convert it to the small screens of the iPhone and iPod touch.

From what I’ve seen of the beta O’Walty sent me, Eudora on the iPad will look and work as much like the classic version of Eudora as possible given the iPad’s multitouch interface. Standard Eudora features like a message preview pane with content concentrator (for showing threaded messages without displaying quoted content) convert well to the iPad’s 1024 by 768 pixel screen, which, if you think about it, is significantly larger than the screens commonly available when Eudora was first developed in 1988. Also, the Mailbox and Transfer menus work much as they did in the Mac version, providing quick, hierarchical access to mailboxes without wasting screen real estate on unwieldy panes like other Mac email clients. Fortunately, one of my
favorite Eudora tricks – Option-clicking on a piece of metadata in mailbox windows to select messages with similar metadata – is available when the iPad is outfitted with a keyboard via either the iPad Keyboard Dock or a Bluetooth keyboard.

O’Walty admitted that he had to cut some corners when porting some of the last-century Eudora code to run on the iPad. Although Eudora for iPad looks and works much like the classic program, some of Eudora’s traditional – and much-vaunted – flexibility is missing. Most notably, although the essential option “Waste cycles drawing trendy 3D junk” remains (and checking it does reduce Eudora’s performance on the iPad), the vast majority of Eudora’s 1,031 x-eudora-settings options haven’t yet been brought over from the original code base.

Nevertheless, for die-hard Eudora users, the release of Eudora for the iPad will recreate a familiar and highly productive environment on the new computing device.

After every quarterly earnings call, when Apple reveals just how much cash the company has on hand, that number continues to climb. At the end of Apple’s first fiscal quarter of 2010 in January, the company reported $39.8 billion in cash and securities, an increase of $5.8 billion over the previous quarter (see “Apple Reports Record Sales and Profits for Q1 2010,” 25 January 2010). By now, it seems entirely likely that Apple has surpassed $40 billion, which is an astonishing amount of money.

So what could Apple buy with $40 billion? For the moment, the company seems content to sit on the cash, using it as security against a downturn and to pick up the occasional small company for a few hundred million dollars. Commentators have suggested that Apple could buy Sony or Adobe, but that’s silly – Apple wants to make Apple products, not the kinds of things that Adobe and Sony make. Similarly, Apple could buy a content company or a cellular carrier, but why bother when Apple can play them off against one another for lower prices?

If we’re going to contemplate silly things Apple could do with its $40 billion in cash, our thinking shouldn’t be so constrained. Here then, are our top seven ideas for how Apple could spend its money.

Design the Mac’s Next CPU — Apple is happy to let commodity suppliers gouge each other for market share, but Steve Jobs doesn’t like being beholden to any one company, Intel included. AMD’s chips are a possibility, but our bet is that Apple could take the lessons it learned from designing the iPad’s A4 processor and make the Mac’s next CPU. An article in the New York Times claims that it can cost as much as $1 billion to create the CPU for a smartphone from scratch, so let’s assume that a CPU for the Mac would be a few more billion dollars. It would still be cheap at twice the price if it means Apple can set its own processor future independent of Intel.

Build More Data Centers — Although Apple has been happy to rely on content delivery networks like Akamai and Limelight Networks, the company clearly wants to control its own data centers as well, presumably in a push into more cloud computing services. According to an article in Data Center Knowledge, Apple’s in-progress data center in North Carolina will cost a cool $1 billion, but you have to assume that Apple would want data centers distributed throughout the world to keep performance of future cloud-based services high. Some of that $40 billion is undoubtedly marked for more data centers in Europe,
Asia, and elsewhere.

Create the iCar — You wanted the iPod, you lusted after the iPhone, and you’re waiting on tenterhooks for the iPad. But all of that would pale before the iCar. Wired claimed in 2002 that it costs a major car company nearly a billion dollars to bring a car to market, and prices have skyrocketed since then, but Apple has more than enough cash to buy the engineering and design talent necessary to bring the company’s legendary attention to detail to the automotive world. GM’s AUTOnomy fuel-cell car hasn’t yet appeared in 2010, as predicted in that 2002 Wired article, but the company is on the ropes, whereas Apple is flying high and
isn’t afraid to ignore conventional wisdom to do it right. Please?

Buy Dell — If buying Sony doesn’t make sense, why would Apple buy Dell? Remember back in 1997 when Michael Dell said what he’d do to fix Apple? “What would I do? I’d shut it down and give the money back to the shareholders.” Dell’s market cap is only about $29 billion, so Apple could buy Dell, shut it down, and still have $11 billion left to play with. Do you think Steve Jobs holds a grudge?

Aesthetic Improvement — Steve Jobs has long believed in creating working environments that encourage creativity, and what could encourage more creativity than the world’s most expensive paintings? Convincing their current owners to part with them might require turning up the Reality Distortion Field, but for a mere $3 billion, Apple could decorate its campus (which already boasts impressive security) with Pollack, de Kooning, Klimt, van Gogh, Renoir, Picasso, and more.

Bigger than Bill Gates — The Apple/Microsoft competition is the rivalry between Steve Jobs and Bill Gates writ large. But Gates changed the game by resigning his CEO post at Microsoft to spend more time on the Bill & Melinda Gates Foundation’s charitable work. Apple’s market cap has nearly equalled Microsoft’s; will Steve Jobs retain his desire to create new and better iProducts once Apple passes Microsoft? If not, Apple could change the world with a $40 billion investment in the Steve Jobs Foundation, giving it an endowment that’s some $6 billion larger than the Bill & Melinda Gates Foundation’s $33.5 billion endowment. And
just imagine what the world would be like with those two competing to outdo one another in philanthropic works!

Half of a Private Island — A basic tenet of business is to sell high and buy low, and nothing is lower than Haiti right now following its devastating earthquake. The country has requested $11.5 billion to rebuild the country’s infrastructure, which is well within Apple’s budget. But Apple wouldn’t just rebuild Haiti out of the kindness of Steve’s heart; Haiti could become the world’s largest company town, enabling Apple to pull out of awkward Chinese manufacturing contracts. Sure, Apple would have to build a chip fab ($3 billion) and some manufacturing plants (a few more billion, undoubtedly), but labor will be cheap for some time to come. Heck, for another $1.5 billion, Apple could build a world-class sports stadium, and although it might not be a good idea in an earthquake zone, a contender for the world’s tallest skyscraper in Port-au-Prince would cost only another $2 billion.

Space, the Final Frontier — A Space Shuttle costs about $1.7 billion to build, and although the costs of building the International Space Station have been much higher than Apple could have covered so far (making it perhaps the most expensive object ever constructed), it’s possible the partner countries would be happy to unload it for $20 or $30 billion. Why would Apple spend so much? Steve Jobs has gone to extensive lengths to procure a liver transplant; what if a zero-gravity environment were to prove necessary to maintain the prescient CEO’s health
through another round or two of technology paradigm shifts? Sure, it sounds nuts, but with 900 million shares of Apple stock in circulation, avoiding even a small drop in stock price could justify a massive expense to keep Jobs, well, on the job.

The iPhone, iPod touch, and (imminently) iPad are hot properties, making them attractive targets for thieves. Although Apple has greatly increased security over time (see “iPhone 3GS Offers Enterprise-Class Security for Everyone,” 27 July 2009) and has introduced useful features for dealing with lost or stolen devices (see “Find Your Lost iPhone or iPod touch with iPhone OS 3.0,” 17 June 2009, and “Use Find My iPhone from an iPhone, 30 September 2009), one visible weakness has been the use of an optional four-digit numeric passcode to get to the Home screen. Although four digits enable
9,999 possible number combinations, that’s nothing for basic cracking software to work through. Plus, most people just use the same four-digit PINs that they use on credit cards, increasing overall vulnerability if the code is cracked.

In response, Apple has developed an ingenious alternative. Although the four-digit passcode remains the default, a new Find My Locker feature of MobileMe promises extra security that you’re more likely to remember. When the service is activated (both on the device and via the Settings page at https://secure.me.com/locker), Apple accesses a private database that recollects the six-digit combination from a locker you used in school.

When you first sign up, you can choose between your junior high and high school lockers. For users who are more security conscious, a “Gym Locker” subcategory is available for each school era.

We were skeptical, to say the least, when Apple demoed the feature for us. However, TidBITS security editor Rich Mogull confirmed that, “Yeah, holy cow, that is the same locker I used during gym class in the 8th grade!” Other staff members also had no difficulty remembering their old combinations, which long ago had been burned into their memories by repetition during their formative years. Jeff Carlson successfully associated his gym locker combination by recalling the day when another kid on the basketball court tried to beat him up after gym class.

TidBITS publisher Adam Engst wasn’t as enthusiastic about the technology, noting that he still uses the same combination padlock from junior high when he goes for his daily run. “It’s one-fifth of my IQ, half my European shoe size, and my first cat’s name in ROT13 converted into digits then added together,” he said, “and I’m not wild about the fact that Apple knows it.”

Apple wouldn’t comment in response to our increasingly pointed questions about where they’re getting the data, and how it can be so specifically targeted; after repeated queries, the spokesperson implied that we should not be asking such questions where others could hear.

However, Apple did acknowledge that numbers given to customers who are not yet in junior high will work with the lockers to which they will be assigned when they’re older.

In an effort to silence critics who consider the iPad nothing more than a big iPod touch, Apple is releasing a new device called “big iPod touch,” with models available for pre-order as soon as Apple updates the online Apple Store today. 8 GB, 32 GB, and 64 GB options will cost $399, $499, and $599, respectively.

Apple spokesperson John Bigbooté said, “Ever since we announced the iPad in January, critics have confused it with a big iPod touch, but nothing could be further from the truth. So, to fill out our mobile product line and eliminate this confusion, we are announcing an actual big iPod touch today. Apple takes customer feedback seriously, and based on the responses to our announcement of the iPad we realized there was clear demand for a larger iPod. big iPod touch is available today for pre-order.”

The new big iPod touch shares the dimensions of the iPad, but uses the processor, memory, and operating system of the current iPod touch. It will run all compatible iPhone OS applications, scaled up to the larger screen size, but it will not support iPad-specific applications. The big iPod touch’s body uses the composite plastic materials of the iPod touch, as opposed to the aluminum construction of the iPad.

Bigbooté told us, “From Apple’s perspective, the most exciting aspect of this announcement is that we were able to bring big iPod touch to market in record time thanks to proprietary Mac OS X tools running on high-end Mac Pro workstations.” According to sources, Apple engineers were able to design the product quickly by loading their engineering diagrams in Apple’s internal computer-aided design software and pressing Command-+ until the schematics were large enough, a feature not available on any Windows-based CAD package.

As a result of this design process, the screen resolution remains 480 by 320 pixels, but each pixel has been scaled up to fill the larger physical screen dimensions. The original iPod touch uses a 3.5-inch display, while the big iPod touch shares the iPad’s 9.7-inch screen. Another consequence is that the headphone connector has been resized to accept the larger 1/4-inch phono plug instead of the common minijack plug. This enables customers to use high-end audiophile headphones without special adapters. However, standard Apple earbuds will require a 1/4-inch-to-minijack adapter, available in the Apple Store for $22.

In a press release, Apple CEO Steve Jobs stated, “A benefit of this truly special screen design is that iPod touch apps run natively on the device without scaling images or adding black borders. When you hold the device at the proper distance, the images magically come together for a superlative experience.” The 55-year-old Jobs claimed that the screen size and resolution clearly differentiate the big iPod touch from the iPad while filling market demand for devices with larger pixel sizes that are more visible to baby boomers.

Actor, author, and occasional technology pundit Stephen Fry said, “Well as much as my publisher will beat me about the head and shoulders for voyeuristically gawping instead of tip-typing away at my book, we members of the more rapidly aging classes will make the big iPod touch a winner for Apple. I marvel at any device that I can use without a reconnoiter of the flat for my spectacles.” Fry is 52 years old.

Another industry analyst, who wished to remain anonymous for no apparent reason, agreed. “This is another master stroke from Apple,” he or she said, “instantly silencing iPad critics, filling a just-created gap in their product line, and appealing to a particularly affluent demographic in a single move.” Wall Street analysts estimate that 1,500,000 units of the big iPod touch will be pre-ordered in the first week.

Reactions throughout the Apple world weren’t entirely positive. Frequently quoted Apple skeptic Rod Benderleaf wrote on his Tumblr blog, “Like the iMac, iPod, and iPhone before it, big iPod touch is nothing original and is doomed to fail. Without a camera, USB port, or physical keyboard, there’s no way it can compete with Microsoft’s forthcoming Big Zune or a Linux-based netbook.”

In a related development, Apple rumor sites are reporting evidence of additional new products in Apple’s pipeline. The latest version of iTunes includes a hidden icon for a “big iPhone” that shares the same physical dimensions of the big iPod touch. Rumor site sources have also discovered references to an “iMac mini,” complete with a tiny keyboard and mouse, and a rack-mountable “big Mac mini” that shares the physical footprint of an Xserve, but which reportedly uses a “special sauce” form of liquid cooling to reduce power consumption and heat generation.

“If these rumors are true, and all evidence indicates they are, Apple’s strategy is nothing short of brilliant!” wrote a pseudonymous poster at AppleInsider. “By completing their product line with new size options, Apple is destroying the market for Apple criticism. I’m particularly hoping for the inevitable ‘big iPhone,’ since I have large hands and prefer baggy pants with roomy pockets.”

Apple, as usual, refused to comment on the rumors, other potential products, or even whether the company is open today.