Bits Blog: Asia Is No. 1 Market for Mobile Apps, Study Says

Mobile Ads Fuel a Jump in Profit at Facebook

After all, that’s how half of his company’s users connect to the social network and where half of its advertising revenue comes from.

He just has to be careful not to scare away the kids because the youngest ones are already starting to go elsewhere.

Facebook, which operates the largest online social network, reported Wednesday that its profits doubled in the third quarter, to $621 million, after excluding expenses related to stock options.

The company’s revenue rose 60 percent, to $2.02 billion, compared with last year’s third quarter. Most of that, about $1.8 billion, came from advertising.

Perhaps most important for Facebook’s future as an advertising-driven company in a world of iPads and Android smartphones, the company noted that mobile ads accounted for 49 percent of its advertising revenue, up from 41 percent in the second quarter. Facebook said prices for mobile ads remained high, and users were clicking on them in their news feeds more frequently.

That bodes well, analysts said, for its smaller rival, Twitter, which takes a similar approach to mobile ads and is preparing to sell stock to investors in an initial offering as soon as next week.

Clark Fredricksen, a vice president with eMarketer, a research firm, said Twitter would benefit from Facebook’s efforts in mobile because the larger company had been investing heavily in educating marketers and users about mobile ads.

“Facebook has been a major force in helping advertisers and users get more comfortable with seeing and buying mobile ads,” he said.

Other big Internet companies like Yahoo and AOL are benefiting less from mobile ads, he said, because their ads are fragmented across various sites and are less appealing to advertisers.

The Facebook results beat Wall Street’s expectations for both revenue and profits, and cemented the company’s position as the leading platform for mobile display ads for products like games and sugary snacks. (Google, which eMarketer estimates will account for roughly half of the world’s $118 billion in digital advertising this year, is still the overall leader in mobile ad sales because of its dominant position in search ads.)

But Facebook, whose stock has doubled in the three months since its last earnings report, also tried to temper expectations for endless fast growth.

In a conference call with analysts, the company’s chief financial officer, David Ebersman, warned that the company would not keep increasing the percentage of ads in its users’ news feeds, especially for mobile users.

“This is important because increasing ads in News Feed has been a meaningful driver of our revenue growth in 2013,” he said. “So this should be factored into your expectations for next year.”

Although he did not disclose how many ads Facebook was showing its users, the company said this year that roughly 1 in 20 posts sent to users’ news feeds were ads.

Shares of Facebook, which were down slightly in regular trading to $49.01, initially soared about 12 percent in after-hours trading following the earnings report. But the stock quickly lost the gains as investors digested the results.

LinkedIn, another leading social networking company, issued a similar warning late Tuesday, saying that its sizzling growth rate could not continue — hardly surprising, given the law of large numbers, but still a shock of cold water to investors. LinkedIn shares fell more than 9 percent on Wednesday.

Mr. Ebersman also confirmed an observation made by outside researchers that teenagers were using Facebook less. Although the overall engagement of teenagers remained stable, he said, younger teenagers were indeed using the service less.

It’s unclear how big a problem that will be for the company since those younger users are in part flocking to Instagram, a photo-sharing service owned by Facebook that just began showing ads this month.

“Facebook is the obvious audience for advertisers looking to reach mobile users,” Mr. Fredricksen said. “They are capturing market share by leaps and bounds on an annual and quarterly basis.”

Ronald Josey, a senior research analyst following the Internet industry for JMP Securities, said Facebook’s results were solid. “They’ve learned mobile,” he said. Clearly they have the right product for advertisers.”

But even before Mr. Ebersman’s comments, Mr. Josey predicted that the company would put a damper on the exuberance that has doubled the price of the company’s stock in the last three months. “They are going to try to temper expectations,” he said.

The company also continued to add to its user base slightly. In the third quarter, 1.19 billion people used the site at least once a month, up from 1.15 billion in the second quarter.

Facebook is expected to account for 5.41 percent of the $117.6 billion global digital ad market this year, up from 4.11 percent last year, according to eMarketer.

Facebook’s presence in the mobile ad market is growing especially quickly. The company will account for 15.8 percent of worldwide mobile ad spending in 2013, according to eMarketers, up from 5.35 percent last year.

Mark Mahaney, an analyst with RBC Capital Markets, said Facebook posted its highest profit margins in a year and half and built on its mobile strength.

“But you can’t keep accelerating forever,” he said.

Bits Blog: Developing Countries Surge in Mobile Broadband, U.N. Finds

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Bits: PayPal Refreshes Mobile App to Woo Shoppers and Fight Off Rivals

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Bits Blog: The End of an Era in Mobile

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Bits Blog: The Rise and Fall of Windows Mobile, Under Ballmer

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Bits Blog: OpenTable Begins Testing Mobile Payments

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Facebook Is Erasing Doubts on Mobile

The social networking company said Wednesday that it had revved up its mobile advertising from virtually nothing a year ago to 41 percent of its total ad revenue of $1.6 billion in the second quarter.

“Soon we’ll have more revenue on mobile than desktop,” Mark Zuckerberg, Facebook’s founder and chief executive, said in a conference call with analysts.

Facebook’s results elated investors, who sent the company’s stock up nearly 17 percent, to $30.94, in after-hours trading.

Analysts said the strong performance dissipated lingering worries that the company could not adapt to the current Internet environment, in which users are relying more on mobile devices instead of personal computers to access the information they want.

Those concerns have dogged the company since its disappointing initial public offering in May 2012, in which it sold shares at $38 and then saw them fall by half.

“One of the biggest overhangs from their I.P.O. is that this company had been blindsided by mobile,” said Mark Mahaney, an analyst with RBC Capital Markets. “They caught up. Instead of being behind the curve on mobile, they are ahead of the curve.”

The company said it had net income of $333 million, or 13 cents a share, in the second quarter. Excluding stock-based compensation expenses, profits were $488 million or 19 cents a share, compared with $295 million, or 12 cents a share, in the second quarter a year ago.

The company’s revenue soared 53 percent, to $1.81 billion.

Facebook had particularly strong demand for ads that appear in its users’ news feeds, the flow of updates from friends that they see when they log on. About 1 in 20 posts in the news feed is an ad, and advertisers cannot seem to get enough of them.

The company expects those ads to continue to grow in the second half, its chief financial officer, David Ebersman, said in a conference call with analysts.

One concern for the future is whether Facebook will annoy its users if it significantly increases the number of ads in news feeds, said Debra Aho Williamson, an analyst with eMarketer, a research firm.

“How many ads will people tolerate?” she asked.

Mr. Zuckerberg said Facebook’s studies had shown that users were noticing ads more, and the company was working to improve the quality and relevance of ads.

Facebook is also studying when and how to introduce video ads, which are expected to command at least several hundred thousand dollars each.

“We have nothing to announce today,” Facebook’s chief operating officer, Sheryl Sandberg, said in an interview. But she said video was “tremendously important” for users as well as marketers. Videos made and shared through Facebook’s new video feature in Instagram are growing quickly.

The company’s results also show how its users are continuing to shift toward mobile phones and tablets to use the site instead of a computer’s Web browser. Although the company’s total number of active monthly users worldwide grew slightly from the first quarter, to 1.15 billion, the number of people who use its mobile versions at least once a month grew 9 percent, to 819 million in that time.

Total ad revenue, a crucial measure watched by Wall Street, was $1.6 billion, up 61 percent from the second quarter of 2012. Of total ad revenue, 41 percent came from mobile, up from 30 percent in the first quarter.

“I think this shows that all the questions that people might have had in the past about whether Facebook could monetize on mobile devices, they’ve settled definitively,” Ms. Williamson said.

Users’ preference for reading Facebook on the go has created special revenue opportunities, like ads that prompt users to install mobile apps like games. But advertisers are generally willing to pay much less for a mobile ad than they are for the desktop.

The company’s sharp revenue growth reflects increased competition among advertisers to reach Facebook’s large user base, said Rob Jewell, chief executive of Spruce Media, a firm that helps advertisers like McDonald’s and the insurer Progressive to buy ads on the social network and measure their effectiveness.

Facebook’s ad rates are generally set through a bidding process, and Mr. Jewell said that his clients paid about 10 percent more on average for ads in the second quarter than in the first quarter. Ads in the news feed, both on the desktop and mobile versions of Facebook, were in particularly high demand, with rates up about 75 percent from the first quarter for both categories, he said.

“Facebook is the best channel for mobile app advertisers to purchase advertising,” Mr. Jewell said.

In the second quarter of 2012, the company reported a net loss of $743 million, or 8 cents a share. But that figure included $1.3 billion in compensation expenses related to the company’s initial public offering. In the year ago quarter, Facebook’s revenue was $1.2 billion.

The company far exceeded Wall Street’s expectations. Analysts had predicted the company would report earnings of 14 cents a share, excluding stock compensation costs, on revenue of $1.62 billion, according to a survey by Thomson Reuters.

Facebook’s surprisingly strong second-quarter earnings contrasted with those of Google, which last week reported disappointing profits in mobile advertising.

While the two companies are not strictly comparable because Facebook is expanding its ads from a much a smaller base, Ronald Josey, an analyst at JMP Securities, said Facebook was doing extremely well in mobile categories like ads prompting users to install new mobile applications.

“This company is becoming more and more of a mobile company,” he said.

This article has been revised to reflect the following correction:

Correction: July 24, 2013

An earlier version of this article misstated the title of Rob Jewell. He is the chief executive of Spruce Media, not the president.

Uppercut Games' AAA Mobile Sequel Epoch 2 Unveiled

Uppercut Games made plenty of waves in 2011 with the release of Epoch, an Unreal-powered third person shooter for phones and tablets. Rather than take traditional controls and force them onto a touch screen, Uppercut designed a system that made sense for mobile. We liked the set-up enough to award the game an 8/10, specifically praising its intuitive, snappy controls. It truly felt like a mobile shooter that "core" gamers could get behind.

Uppercut Games has revealed to IGN that Epoch 2 is deep in development. Besides continuing Epoch's robot apocalypse storyline (finally giving gamers the opportunity to rescue the missing Princess Amelia), Epoch 2 also introduces a variety of gameplay improvements.

Fighting on a traaaiiiinn.

A new melee combat system provides gamers an up-close-and-personal way to dispatch their robotic foes. The in-game camera and environments have also been made more dynamic, featuring stages set on moving trains, swinging ledges and more. Finally, an active reload system cribbed from Epic's Gears of War franchise gives you reason to time those reloads perfectly.

In terms of pure numbers, Epoch 2 also includes the requisite "more" that it seems every sequel must include. Uppercut promises the campaign lasts are 3X as long, with 8 fresh enemies and 5 new weapons to keep returning Epoch veterans on their toes.

Yeah - I thought they were eyebrows at first, too.

IGN will have much more on Epoch 2 soon. In the meantime, check out our gallery of screenshots and concept art.

Justin Davis is the second or third best-looking Editor at IGN. You can follow him on Twitter at @ErrorJustin and on IGN.

Google Results Show Struggle With Mobile

Despite a range of efforts by Google, the riddle remains unsolved, its financial report Thursday revealed.

Google reported second-quarter results that missed analysts’ expectations for revenue and profit. They showed that its desktop search business continues to slow and ad prices continue to fall as it struggles to make as much money on mobile devices.

The report was particularly incongruous given how Google’s share price climbed 27 percent this year.

It is a vexing problem for every company that has generated revenue through advertising, be it a century-old magazine with a mobile app or a new Web site aggregating the news. Mobile ads do not command the premium that Web advertising does (and Web ads do not make as much as print ads).

Colin W. Gillis, a technology analyst at BGC Partners, wrote a haiku before the earnings announcement: “The results should be/ pretty as a picture to/ justify the stock.”

They were not. Shares, which fell 1 percent ahead of the report on Thursday, fell another 4 percent in after-hours trading.

“One of the reasons why people like Google is you can look forward and see what they’re doing with Glass and laying fiber and driverless cars and Chrome, chasing after new revenue streams,” Mr. Gillis said. “But those are still pretty far away. Google’s core business is all about advertising and clicks, and the core business is absolutely maturing.”

Mobile ads, he added, are inexpensive yet “overpriced because the conversion rates are so low.”

“It’s still too hard to transact on a phone,” Mr. Gillis said.

Google had seemed to have finally found a solution to the riddle, by making the biggest-ever change to its AdWords advertising product. The new program, called enhanced campaigns, which was introduced in February and will be mandatory for all advertisers on Monday, gives advertisers less choice about advertising on mobile devices by automatically including desktop, tablet and cellphone ads for all campaigns. Advertisers can choose not to buy cellphone ads but are required to buy tablet ads.

Google says that this simplifies the process for advertisers and makes it easier to reach customers who use devices indiscriminately. More important than the type of device, the company says, is whether someone is at a desk or on the sofa, in the mood to shop or eat.

But it also means that the price of mobile ads, which has been about half that of desktop ads, will most likely increase. Google’s ads are sold at auction, and one reason mobile prices have been low is that there has been less demand. Enhanced campaigns should change that.

For example, the cost per ad click, known as C.P.C., for clients of the Search Agency, a search ad firm, rose 22 percent in the quarter, largely because of Google’s ad-buying changes. It was the first time that tablet ads cost more than those on desktops, and advertisers increased spending on smartphones 25 percent, the most of any device category.

“There used to be a discount you would get for going after traffic on tablets instead of desktops,” said Keith Wilson, vice president for agency products at the Search Agency. “Now that is disappearing. That is what is going to drive up C.P.C.’s in the mobile space. This has been a catalyst for prioritizing mobile.”

But it was too early for the results of the new ad program to show up in Google’s financial report, company executives said Thursday. The price that advertisers pay when Google users click on their ads decreased 6 percent from last year and 2 percent from the previous quarter, declining for the seventh quarter in a row and at a steeper annual rate than in the previous quarter.

Mobile ad pricing is “one of the many factors at work” affecting click prices, said Nikesh Arora, Google’s chief business officer. Google is in the early stages of enhanced campaigns and it will most likely take a year for the results to become apparent, he said. He added that another important metric at Google, the number of clicks on ads, is up 23 percent over last year, partly because of increased mobile use.

Larry Page, Google’s chief executive, said that six million advertisers had already switched to enhanced campaigns. American Apparel, according to Google, doubled its mobile conversion rate with the new ads, and M&Ms, the Mars candy brand, increased it by 41 percent.

In addition to enhanced campaigns, Google is doing other things to improve its mobile offerings and its profits from mobile ads. It has been encouraging Web sites to improve their mobile versions, and last month it said Web sites without easy-to-use mobile versions could fall in search rankings. And it introduced its product listing ads, for shopping, to mobile devices.

Google reported second-quarter revenue of $14.11 billion, up 19 percent from $11.8 billion a year ago. Net revenue, which excludes payments to ad partners, was $11.1 billion, up from $9.2 billion. Net income rose to $3.23 billion, or $9.54 a share, from $2.79 billion, or $8.42 a share. Excluding the cost of stock options, Google’s second-quarter profit was $9.56 a share.

Analysts had expected net revenue of $11.33 billion and earnings, excluding the cost of stock options, of $10.78 a share.

Adding to the disappointing results was a $342 million operating loss at Motorola Mobility, which is expected to introduce a new phone, the Moto X, this summer.

As shareholders and analysts wait for Google to find the next product to reignite revenue growth as the core search business slows, Mr. Page acknowledged the challenges of building new products that reach people on the same scale as search.

“It’s pretty easy to come up with ideas,” he said. “It’s pretty hard to make them real and get them to billions of people. And that’s to me what’s so exciting.”

Gadgetwise: Revealing Your Location (or Not) to Mobile Apps

Why do so many smartphone apps want permission to use my location — even apps that have nothing to do with maps or navigation?

Some apps may request your current location so they can display information relevant to the area. Weather apps, restaurant finders, city guides and social-media programs are among those that usually request permission to see your location. Apps that work with your phone’s photos may also ask to use location data because some of the pictures may have embedded geotags (information about where they were taken).

While some apps have legitimate reasons for peeking at your whereabouts, some are simply nosy and overreaching — and can run your battery down if left unattended. Free apps that serve up advertising may also request your coordinates so they can display ads for local businesses and services.

Although you can often deny or work around the location request by just manually entering a ZIP code in an app’s settings to get generalized area information, turning on your phone’s location services feature temporarily can be useful. For example, if you have a weather app that can pinpoint your position and you are driving in bad weather, you can flip on location services at the rest stop to see the radar map for the exact area — and get a better idea of up-to-the-minute travel conditions.

Bits Blog: After Fighting Mobile Trend, Intel Now Embraces It

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Bits Blog: Love and Hate for Apple’s New Mobile Software

Kimberly White/Getty Images Apple’s Craig Federighi introduced features of the new mobile operating system, which has been significantly redesigned.

Apple this week unveiled a major redesign for iOS, the mobile software system running on iPhones and iPads. The software, called iOS 7, adopts a “flat” design principle that simplifies the look, while introducing thin typography and a vibrant color palette.

After Apple demonstrated iOS 7, Twitter lit up with reactions from designers, Apple fans and even some former Apple employees. The responses were polarized: Some loved the new design, while others despised it.

Here’s a sampling of tweets from notable people in the technology industry.

Andrew Borovsky, a former Apple designer who now works at Square, said the operating system was not designed for everyday people.

iOS (like Windows Phone) is now a type orgy that appeals to print designers not human beings.

— Andrew Borovsky (@borovsky) 11 Jun 13

John Gruber, owner of Daring Fireball, an influential Apple fan blog, could not begin to fathom why anyone would dislike iOS 7.

If you don’t think iOS 7 is beautiful, I don’t know what to say to you.

— John Gruber (@gruber) 10 Jun 13

Khoi Vinh, a former design director for The New York Times who is now an app developer, suggested that Scott Forstall, Apple’s former head of mobile software who was fired last year, did not have much to worry about.

If iOS 7 is revenge on Forstall, Forstall’s revenge may be that it’s kind of not that great.

— Khoi Vinh (@khoi) 12 Jun 13

Matt Gemmell, an Apple app developer, didn’t like some elements of the operating system, but he was otherwise positive about the overall improvements.

The least-mature aspect of iOS 7’s aesthetic change is clearly the Home screen/icons. Don’t let it ruin the excellent improvements.

— Matt Gemmell (@mattgemmell) 10 Jun 13

Sebastiaan de With, chief creative officer of DoubleTwist, the maker of a music app for mobile devices, disliked the icons and the typography of the system.

This is iOS as re-imagined by a graphic designer. Non-obvious, undiscoverable interactions, extremely poor iconography, over-Helveticated.

— Sebastiaan de With (@sdw) 10 Jun 13

Josh Brewer, a designer at Twitter, wondered whether Apple had thoroughly tested iOS 7 before going with this approach.

You gotta wonder if they took their phones outside and looked at all that thin-lined icon + transparency stuff in the sunlight.

— Josh Brewer (@jbrewer) 10 Jun 13

Mobile Companies Crave Maps That Live and Breathe

As mobile phones become all-in-one tools for living, suggesting where to eat and the fastest way to the dentist’s office, the map of where we are becomes a vital piece of data. From Facebook to Foursquare, Twitter to Travelocity, the companies that seek the attention of people on the go rely heavily on location to deliver relevant information, including advertising.

Maps that are dynamic, adapting to current conditions like traffic or the time of day, are the most useful of all.

The importance of such maps to mobile services helps explain why Google is deep in negotiations to buy Waze, a social mapping service used by millions of drivers around the world, for more than $1 billion. Although a final agreement has not yet been struck, people with knowledge of the discussions say that an acquisition could be announced as soon as this week.

“Context is everything — where you are, what other people have said about where you are, how to get there, what’s interesting to do when you get there,” said Charles Golvin, a principal analyst at Forrester Research who studies mobile technology.

Google and Waze declined to comment on the possibility of an acquisition of Waze by Google.

Google, of course, is no slouch when it comes to maps. The search giant’s Maps service, painstakingly compiled by the company over many years and augmented by suggestions from tens of thousands of users, is considered the gold standard of mobile maps.

For users of smartphones that run Google’s Android software in particular, maps and directions are smoothly integrated into the address book, calendar and location-sensitive applications like Web searches and dining recommendations. Even for people with other phones, Google Maps still provides the back-end technology for many applications.

“We’re seeing maps become the canvas to everyone’s app,” said Eric Gundersen, chief executive of MapBox, which provides mapping tools to a number of popular apps like Foursquare and Evernote. “The map is alive; the map is responsive.”

But largely missing from Google’s Maps — and from those of other players in the field like Microsoft and Apple — is the social component. The map is simply presented by the company.

With Waze, the mob is the map, and like a mob, it can be churning with energy. The start-up, which has only a few employees, has generated many of its maps by tracking the movements of its nearly 50 million users via GPS. In any given month, about one-third of them are firing up the app, and as they drive, they can share information about slowdowns, speed traps and road closures, allowing Waze to update suggested routes in real time. The most dedicated fans can also edit the maps directly to improve their accuracy.

“It’s not just crowdsourcing. It’s personal participation,” said Di-Ann Eisnor, Waze’s vice president for platforms and partnerships.

That sense of contributing to the common good is part of Waze’s appeal.

“They created this culture where you can really help others,” said Bret McVey, a graphic designer in Omaha who has contributed about 280,000 changes to Waze’s maps in the year he has been using the app.

Waze rewards such passion with points and badges, and the top 500 or so map editors can get direct access to Waze employees around the clock to deal with problems, like adapting the maps of Oklahoma to show road closures after this spring’s tornadoes.

In Los Angeles, said Ms. Eisnor, about 10 percent of drivers use Waze. In places like Costa Rica and Malaysia, Waze users helped create the first useful navigable maps of the country, she said.

The communal energy of Waze’s users drew the attention of Facebook, which held discussions about acquiring Waze last month. Facebook users can already sign in to Waze with their Facebook identity and share their driving with their friends, and Waze recently added new integration of its maps into Facebook’s Events feature. After the talks ended without a deal, Waze turned its attention to Google.

For Google, analysts and industry executives said, Waze would provide two benefits.

One is that user passion. “This is less about direct revenue that Google can get and really about keeping Google customers in the Google sphere and using Google services,” Mr. Golvin said.

The other is to keep a useful map out of the hands of competitors like Apple, which has struggled with its own map service, and Facebook, which is battling Google to connect its users with their friends.

Jeff Carpenter, of Des Moines, who is a volunteer editor for both Waze and Google Maps, views the second point — keeping Waze from others — as the main reason that Google would buy its much smaller rival. “I don’t think there’s anything in Waze that Google couldn’t have done over time,” he said.

Google, which also allows users like him to contribute edits, used to take months to integrate the changes. Now the company allows some changes instantaneously, he said, and others are quickly reviewed. Mr. Carpenter said Google’s maps were also better integrated into other applications. Waze must be used independently, which makes it much harder to use.

If Google does buy Waze, however, it needs to be careful to court Waze’s dedicated users. “It’s important for them to roadmap what’s going to happen, for the community,” Mr. Carpenter said. “Without the contributors, they really have nothing.”

From Apple, an Overhaul for Mobile and the Mac

The company on Monday introduced a major redesign of iOS, its mobile software system, as well as upgrades for some of its Mac computers. It also unveiled a new online music service for its music player, iTunes. The company, under intense pressure from investors, introduced the new software and Macs on the first day of its annual conference for software developers.

Its stock has fallen to about $450 after peaking at about $700 in September. Some investors worry that the company’s growth is slowing because it has lost its way after the death of Mr. Jobs, its visionary leader. Apple’s vexation showed at the conference. After unveiling a major upgrade for a Mac computer, Phil Schiller, the company’s vice president for global marketing, offered a sarcastic response to those who have suggested that Apple could no longer innovate.

Charles Golvin, a technology analyst at Forrester Research, said Mr. Schiller’s remarks indicated that “they have a chip on their shoulder.” But Mr. Golvin said that Apple was adding improvements to battery life and other enhancements to software that people would actually find useful. “What customers are getting here is tremendous innovation under the cover,” he said.

Timothy D. Cook, Apple’s chief executive, called Apple’s new mobile operating system, iOS 7, the “biggest change to iOS since the introduction of the iPhone.”

The new mobile software system is the first made under the company’s lead hardware designer, Jony Ive. He was put in charge of software interface design after the company fired Scott Forstall, the former head of mobile software development, during a flurry of negative news reports surrounding Apple’s new mapping software.

The design in iOS 7 introduces thin typography, similar to Microsoft’s Windows Phone software, and a new color palette. The keyboard looks simple, with gray letters on flat, white backgrounds. Apple also removed textures that made some apps mimic real-life objects. The Calendar app has shed its faux leather; the Game Center app no longer has green felt; and the shelves in the iBookstore app are no longer wood-grained. And the home screen has an effect called parallax to make the app icons look as if they are popping out in 3-D.

“We have always thought of design of being so much more than the way something looks,” Mr. Ive said in a video demonstrating the operating system. “It’s the whole thing, the way something actually works on so many different levels.”

A new iOS feature, called Activation Lock, disables the iPhone even if a thief has turned it off or erased the data on the phone. Some police officers have called for a feature like this — a “remote kill switch” that renders the stolen phone useless and difficult to sell in the black market. The phone can be reactivated only after the user logs into it with the right Apple ID and password.“We think this is going to be a great theft deterrent,” said Craig Federighi, Apple’s senior vice president for software engineering.

In iOS 7, Apple also made improvements to Siri, the voice-controlled assistant of the iPhone, which has been ridiculed for its spottiness and ineptitude. The feature has new male and female voices that sound more realistic, and it responds to more commands, like “Play my last voice mail” or “Increase my screen brightness.” In 2014, iOS and Siri will be integrated into cars made by a dozen manufacturers, including Nissan, Kia, Honda and Toyota, said Eddy Cue, Apple’s senior vice president for Internet software and services.

Apple said iOS 7 would arrive in the fall. It will be a free update for iPhone and iPad owners.

The iPhone is driving Apple’s business, but the company is not lifting the gas pedal on its Macs. The company unveiled a major upgrade for the Mac Pro, its desktop computer for professionals, which it said would be assembled in the United States. The computer, scheduled for release this year, looks like a metal cylinder — a big change from the original rectangular tower. This was the first big upgrade for the desktop in three years.

It also unveiled new MacBook Airs, which it said would have enough battery life to last all day. The 11-inch version has nine hours of battery life and the 13-inch version has 12 hours, according to Mr. Schiller. Both versions start shipping immediately.

“You can watch the entire trilogy of ‘Lord of the Rings,’ ” on a single charge, Mr. Schiller said.

Apple also previewed its next Mac operating system, called OS X Mavericks. (The name is the first in a new theme, California, for Apple’s operating systems, after years of naming them for big cats. Mavericks is a reference to a major surf spot in California.) The new system includes some minor improvements, like the ability to tag documents to find them more easily. An urgent document can be tagged “Important,” for example, and can be quickly found in the operating system’s navigation window in a section labeled Important.

The hardware and software upgrades come at a crucial moment for in the competitive mobile market. One of Apple’s chief rivals, Samsung Electronics, has released several compelling smartphones and tablets over the last two years. And Google has gradually bulked up the Android software that runs on Samsung’s phones with powerful Internet services.

But Apple is, by some measures, still leading the mobile industry. The iPhone 5 is the best-selling smartphone in the world. Samsung Electronics sells the most phones over all because it sells multiple smartphones at different sizes and prices, whereas Apple has released one new iPhone a year.

Nick Bilton contributed reporting.

App Smart: Mobile Editing Tools for Smartphone Photos

The granddaddy of photo manipulation on a smartphone is Photoshop. The Photoshop Touch app is a touch-screen version of the original ($10 for a tablet version on iOS and Android, $6 for iOS and Android phones). It’s powerful and can apply many of the effects you have seen in magazines and on the Web. That includes adjustments like the tilt-shift effect, which can make a townscape look like a miniature model, as well as better-known effects like red-eye reduction.

A tutorial shows beginners how to manipulate sample photos, step by step. Soon you’ll be experimenting on your own.

Because of its complexity, however, this app isn’t ideal for occasional use or for simple touch-ups of your holiday snaps. Unless you take the time to make yourself familiar with it, you’ll easily get lost in its hundreds of settings. You may find it hard to remember the purpose of its many icons.

A simpler app, Photoshop Express (free on iOS and Android) is ideal for quick fixes because it has only about a dozen effects. It’s great for cropping or quick brightness adjustments. It has clear controls and an obvious mechanism for undoing changes, though it would be nice to be able to undo an earlier effect without changing later adjustments.

You can also use it to share your tweaked photos via e-mail or over social networks like Twitter. It’s a simple app, and there’s little to dislike about it.

For a different, more entertaining experience, Snapseed is free on iOS and Android. It doesn’t have Photoshop Touch’s range of functions, but Snapseed’s tools are presented in an interesting, gesture-based interface.

Icons represent different adjustments it can make, including cropping, rotating, tilt-shift effects and retro-looking filters.

After you choose a photo from your phone’s library and select one of these effects, the app takes you to an editing page. You’ll see the image you’re working on and a simple icon bar at the bottom. In many cases, you adjust the selected photo effect with screen gestures: to crop an image you simply drag a finger from any corner of the image until you achieve the framing you desire.

Other settings, like rotating the cropping window, are controlled via the icon bar. You can hold your finger on the Preview button to see the photo before and after you’ve applied your chosen effect. When you’re satisfied, click Apply.

Some of the effects are beautiful. But I’ll admit that, even though this is one of my favorite apps and I’m practiced in its use, I find it easy to forget which gestures do what. Fortunately, the app reminds you when you start work.

A great alternative $1 app on iOS is Luminance. A full-featured app, it’s a little like Photoshop Express, but with a few more effects and a slightly different interface. It’s much more icon-driven than Snapseed and is a little more intuitive than Adobe’s apps.

For example, clicking on the icon that looks like a group of slider controls brings up a panel where you can adjust features like brightness, contrast or color saturation by moving a slider. The app also has a timeline of your edits so that you can see exactly what you did to your photo in the order you did it. It doesn’t have much in the way of tutorials or instructions, though, so mastering it may take some trial and error.

Quick Call

Google has given the free YouTube app for Windows Phone 8 an overhaul, turning it into a full-featured video app. Among its features are the ability to share videos over social networks and play clips in the background.

Mobile Ads Help Propel Earnings At Facebook

Those concerns were silenced a bit on Wednesday, when Facebook’s earnings report offered early signs that the company was cracking the mobile revenue code.

In the first three months of the year, the company’s mobile advertising generated $375 million in revenue, exceeding what analysts had expected. Mobile revenue accounted for 30 percent of the company’s advertising revenue in the first quarter of this year, compared with 23 percent in the same period last year.

“What we have seen has made us more confident we can do more with advertising over time,” the company’s chief executive and co-founder, Mark Zuckerberg, told analysts on an earnings call on Wednesday. He said one of his top goals was to build “the best mobile product” — and make money from it.

Despite the strong mobile numbers, investors did not extol the company on Wednesday, largely because it continues to spend a lot of money to develop new features. The company’s shares fell about 1 percent, closing at $27.43, before the earnings were reported. Facebook shares swung up and down in after-hours trading but ended at $27.51.

Just last year, Mr. Zuckerberg said that Facebook was late in retooling itself for the mobile era. At Facebook headquarters, morale-raising posters went up on the walls screaming “Our Mobile Future.”

Since then, Facebook has introduced more than a half-dozen advertising products. They include what are called app-install ads, which are meant to help app developers draw new customers and more refined advertising tailored to consumers’ online and offline behavior.

Facebook has recently partnered with third-party data companies that track who buys soda at the supermarket and who is planning to buy a car in the next six months.

Facebook executives said the company planned to hone its targeting even more.

Two-thirds of Facebook’s 1.1 billion users across the world log into the site on their phones, the company said Wednesday, accounting for what executives described as strong growth in populous countries like India and Brazil.

For those mobile users, the changes mean more ads when they log in on their cellphones and eventually more finely targeted ads. And they mean a redesigned News Feed, a feature introduced in March, that offers marketers a chance to show off pictures and bigger and more prominent links.

“We want content in ads that’s as good as content from a friend or somewhere else on the site, as well as to have a higher return for marketers,” said Sheryl Sandberg, the company’s chief operating officer. “Those go hand in hand. What you’ll see from us is better targeting.”

All told, revenue increased 38 percent, to $1.46 billion, exceeding the $1.44 billion estimate of financial analysts surveyed by Bloomberg News. The company had $219 million in net income. It reported a profit of 12 cents a share, missing the average estimate by a penny.

“Over all, they’re on track,” said Aaron Kessler, an analyst with Raymond James. “They’re still rolling out new products for advertisers. They’re definitely more focused on creating shareholder value and driving revenue growth.”

In early April, the company introduced mobile software for Android phones called Facebook Home that is intended to nudge Facebook users to return to their mobile News Feeds even more frequently than they do now.

The new suite of applications effectively turns the News Feed into the screen saver of a smartphone, updating it constantly with Facebook posts and messages. It appears to be only a matter of time until the company introduces ads there.

Last May, Facebook held a widely publicized initial public offering of stock, at a price of $38 a share. Its fairy tale rise took a sharp dive almost immediately, resulting in lawsuits and angry recriminations. Its shares slumped to half the opening price at one point last fall, and they have inched up cautiously since then.

On Wednesday, Facebook filed a motion asking a federal judge to dismiss a lawsuit that accused the company of misleading investors about its financial strategy before the public offering, Reuters reported. The company said in court papers that it was not legally obligated to disclose publicly how mobile adoption would affect its financial performance in the future.

Wall Street analysts have watched closely for signs of Facebook fatigue among users. In the first quarter, they point out, fewer monthly users returned to Facebook on their desktop computers in the United States and Europe, according to comScore figures.

Analysts worried whether that meant that users in more mature and lucrative markets were getting bored with Facebook. But they noted that the figures applied only to desktop users and revealed little about mobile users of Facebook.

Samsung Sets Record-High Profit on Mobile Momentum

SEOUL, South Korea (AP) — Samsung Electronics Co. said Friday its first quarter profit jumped to a record high as smartphone sales remained strong despite the April launch of an updated version of its flagship Galaxy phone.

Sales of consumer electronics usually slow in the first three months of the year after the holiday shopping season, an effect that analysts thought would be compounded by this month's release of the Galaxy S4 smartphone since many delay buying until the newest model is available. Apple Inc. has cited the upcoming release of a new iPhone as a reason for a slowdown in sales of older models.

Samsung began sales of the S4 in its home South Korean market Friday and starts U.S. sales on Saturday. Analysts expect Samsung's profits to reach new highs in the second and third quarters if S4 sales are strong. Lee Don-Joo, head of sales and marketing at Samsung's mobile division, said sales of the S4 will outdo its predecessor, the Galaxy S III.

Samsung said January-March net profit surged 42 percent to 7.2 trillion won ($6.5 billion) from 5 trillion won a year earlier. That increase was despite booking a one-time charge against earnings related to settlement of its intellectual property battle with Apple. Analysts estimated the charge at $600 million.

Sales rose 17 percent to 52.9 trillion won. Operating profit was up 54 percent to 8.8 trillion won, in line with its preliminary results released earlier this month.

Profit was up 2 percent from the previous quarter's result, beating market expectations for a fall. Sales of the S III smartphone and the oversized handset called the Galaxy Note remained strong and shored up profit, Samsung said. It also spent less on marketing its mobile devices than it did in the previous quarter when competition heated up.

Samsung's IT and Mobile Communications division that makes smartphones, tablets, PCs and cameras reported 6.51 trillion won in operating income for the first quarter, up 56 percent from a year earlier and its highest since Samsung reorganized the division to merge PC and handset departments.

Samsung capitalized on global demand for smartphones with a range of mobile devices that come in a variety of screen sizes and prices, outpacing rivals including Apple Inc. and Nokia Corp.

As the S4 goes on sales several months before rival Apple introduces a new version of iPhone, analysts said Samsung's streak of record-setting profit will not stop any time soon.

"You can say it is like a snowball is rolling," said James Song, head of technology at Daewoo Securities. Song forecast Samsung's second quarter operating income to surpass 10 trillion won ($9 billion).

Market research firm IDC estimated that Samsung shipped 70.7 million smartphones during the first quarter, up 61 percent over a year earlier and capturing 33 percent market share. Apple, the second-largest smartphone maker, sold 37.4 million iPhones. Its market share fell to 17 percent from 23 percent a year earlier, IDC said.

Samsung, based in Suwon, South Korea, is also the world's largest maker of memory chips, televisions, mobile handsets and liquid crystal display panels.

The company's strong performance in the mobile market helped offset sluggish demand for TVs and a still weak recovery in display panel sales.

For the first time in recent years, Samsung refrained from increasing its annual capital expenditure on semiconductor and display panel production lines, a sign that it sees slower growth in demand for memory chips and display panels. Its annual capital expenditure for 2013 will be capped at 22.9 trillion won ($20.5 billion).

But Samsung said it will boost its spending on research and development even though it is already one of the largest R&D spenders. Its R&D expense was $2.97 billion during the first three months of this year, nearly three times more than Apple's $1.12 billion, according to financial information provider FactSet.

"Although market uncertainties from the European crisis and the slow global economic recovery are still lingering, we expect to increase R&D spending for strengthening our competitiveness ahead of planned new product launches," said Robert Yi, head of investor relations at Samsung.

Seo Won-seok, an analyst at Korea Investment & Securities, said Samsung's businesses require heavy spending on research and development for future products, especially divisions that make electronic components.

At a Las Vegas trade show in January, Samsung showcased mobile handsets that use curved glasses, a first stage in what would eventually become flexible displays. Adopting more advanced technology is also crucial to lowering memory chip manufacturing costs.

Bits Blog: Facebook Seeks to Be Mobile ‘Home’ of Android Users

Jim Wilson/The New York Times Mark Zuckerberg introduced the Facebook Home app at the company’s Menlo Park, Calif., headquarters.

9:20 p.m. | Updated Added more details and analysis.

MENLO PARK, Calif. — Cellphones have long been Facebook’s Achilles’ heel. With its users flocking to mobile phones by the millions — and many of its newest users never accessing the services on computers at all — the company has struggled to catch up to them.

On Thursday, Facebook unveiled its latest, most ambitious effort to crack the challenge: a package of mobile software called Facebook Home that is designed to draw more users and nudge them to be more active on the social network.

The new suite of applications effectively turns the Facebook news feed into the screen saver of a smartphone, updating it constantly and seamlessly with Facebook posts and messages.

In so doing, Facebook has cleverly, perhaps also dangerously, exploited technology owned by one of its leading rivals, Google. Facebook Home works on Google’s Android operating system, which has become the most popular underlying software for smartphones in the world.

The Facebook News Feed appears as soon as the phone is turned on. Pictures take up most of the real estate, with each news feed entry scrolling by like a slide show. Messages and notifications pop up on the home page. To “like” something requires no more than two taps. Facebook apps are within easy reach, making the phone essentially synonymous with the Facebook ecosystem.

“Today, our phones are designed around apps, not people,” said Mark Zuckerberg, Facebook’s chief executive, at a news conference here at the company’s headquarters. “We want to flip that around.”

Facebook Home will be available for download from Google’s app store, Play, on April 12 for four popular, moderately priced phones that use Android and are made by HTC and Samsung. A fifth one, a new model called the HTC First, will be sold by AT&T for $100 with the software already loaded.

For the time being, Facebook will not show ads on the phone’s home screen, which Facebook is calling Cover Feed. Since advertising revenue is crucial to the company’s finances, however, it will almost certainly display ads there in the future.

Facebook Home is also clearly designed to get Facebook users to return to their news feeds even more frequently than they do now. Every time they glance at their phone at the supermarket checkout line or on the bus to work, they will, in essence, be looking at their Facebook page.

“It’s going to convert idle moments to Facebook moments,” said Chris Silva, a mobile industry analyst with the Altimeter Group. “I’m ‘liking’ things, I’m messaging people, and when ads roll out, I’m interacting with them and letting Facebook monetize me as a user.”

Krishna Subramanian, the chief marketing officer at Velti, a San Francisco-based company that buys targeted advertisements online on behalf of brands, pointed out that even without showing ads on the mobile cover feed, Facebook Home could prove to be a lucrative tool.

By nudging its users to do more on the social network, he said, the company will inevitably get “an explosion of mobile data that can be tied back into desktop advertising” to Facebook users.

A majority of Facebook’s one billion-plus users log in on their cellphones. Most Americans now have an Internet-enabled phone, and smartphone penetration is growing especially fast in emerging market countries, where Facebook has substantial blocs of its users.

At Thursday’s press event, Mr. Zuckerberg repeatedly signaled that he wanted the new product to enable a mass, global audience to connect to Facebook, especially those have yet to get on the Internet. “We want to build something that’s accessible to everyone,” he said.

Although HTC is rolling out the first new phone with Facebook Home installed, and AT&T has agreed to sell it, other phone makers and carriers may be reluctant to load the software.

Jan Dawson, a telecom analyst at Ovum, said that Apple’s iPhone and many Android smartphones already do a good job of integrating the Facebook application into their phones. And he said phone carriers were unlikely to give a Facebook phone made by HTC much support because the Taiwanese phone maker’s past attempt at a Facebook phone — the ChaCha, which had a physical button for posting photos on Facebook — sold poorly.

“HTC may be desperate enough to do this, but carriers aren’t likely to promote it heavily,” Mr. Dawson said. “As a gimmick, it may bring customers into stores, but they’ll mostly end up buying something else.”

At Facebook headquarters Thursday, HTC’s chief executive, Peter Chou, showed off a model of his new Facebook phone, called HTC First, in lipstick red. “HTC First is the ultimate social phone,” he said. “It combines the new Facebook Home and great HTC design.”

Whether consumers will embrace a phone that emphasizes Facebook over everything else also remains to be seen. Some are likely to have concerns about how much personal information they are being asked to share with Facebook. Additionally, checking Facebook dozens of times every day could result in hefty data use charges, unless users are connected to a Wi-Fi network or negotiate special packages with carriers.

Facebook and AT&T executives said they had taken that into account. Users will be notified when they are about to reach their data limits. The software can also be set to download data-heavy content like video only when the user is connected to a Wi-Fi network, and then save it in its memory.

The software’s most powerful feature is to turn the cellphone into a starkly personal gadget.

Facebook employees, current and past, were invited to the product announcement, a sign of how crucial it has been for Facebook to crack the mobile puzzle. Silicon Valley has whispered for months about the prospects of a Facebook phone. Mr. Zuckerberg has consistently denied building one.

Thursday’s announcement signaled that Facebook had stopped short of even building an operating system. Instead, it had simply altered its rival Google’s technology.

The Android platform, Mr. Zuckerberg said, was built to be open to new integrations. Asked at the news conference whether he feared that Google executives would change their mind about Facebook using it to advance its mobile aims, he turned somewhat testy.

“Anything can change in the future,” he said. “We think Google takes its commitment to openness very seriously.”

Google, for its part, was notably genteel. “This latest collaboration demonstrates the openness and flexibility that has made Android so popular,” the company said in an e-mailed statement. “And it’s a win for users who want a customized Facebook experience from Google Play — the heart of the Android ecosystem — along with their favorite Google services like Gmail, Search and Google Maps.”

Brian X. Chen contributed reporting.

As Web Search Goes Mobile, Competitors Chip at Google’s Lead

Either way, Google lost a customer.

Google remains the undisputed king of search, with about two-thirds of the market. But the nature of search is changing, especially as more people search for what they want to buy, eat or learn on their mobile devices. This has put the $22 billion search industry, perhaps the most lucrative and influential of online businesses, at its most significant crossroad since its invention.

No longer do consumers want to search the Web like the index of a book — finding links at which a particular keyword appears. They expect new kinds of customized search, like that on topical sites such as Yelp, TripAdvisor or Amazon, which are chipping away at Google’s hold. Google and its competitors are trying to develop the knowledge and comprehension to answer specific queries, not just point users in the right direction.

“What people want is, ‘You ask a very simple question and you get a very simple answer,’ ” said Oren Etzioni, a professor at the University of Washington who has co-founded companies for shopping and flight search. “We don’t want the 10 blue links on that small screen. We want to know the closest sushi place, make a reservation and be on our way.”

People are overwhelmed at how crowded the Internet has become — Google says there are 30 trillion Web addresses, up from 1 trillion five years ago — and users expect their computers and phones to be smarter and do more for them. Many of the new efforts are services that people do not even think of as search engines.

Amazon, for example, has a larger share than Google of shopping searches, the most lucrative kind because people are in the mood to buy something. On sites like Pinterest and Polyvore, users have curated their favorite things from around the Web to produce results when you search for, say, “lace dress.”

On smartphones, people skip Google and go directly to apps, like Kayak or Weather Underground. Other apps send people information, like traffic or flight delays, before they even ask for it.

People use YouTube to search for things like how to tie a bow tie, Siri to search on their iPhones, online maps to find local places and Facebook to find things their friends have liked.

And services like LinkedIn Influencers and Quora are trying to be different kinds of search engines — places to find high-quality, expert content and avoid weeding through everything else on the Web. On Quora, questions like “What was it like to work for Steve Jobs?” get answered by people with firsthand knowledge, something Google cannot provide.

“There is a lot of pressure on search engines to deliver more customized, more relevant results,” said Shar VanBoskirk, an analyst at Forrester. “Users don’t need links to Web pages. We need answers, solutions, whatever intel we were searching for.”

But Google remains the one to beat, even as alternative search sites become popular. “They’re the specialty store you’re going into here and there,” said Danny Sullivan, an editor of Search Engine Land, a blog, “but they’re not your grocery store.”

Yet the promise of search is big enough that even though Microsoft loses billions of dollars a year on Bing and has failed to make a dent in Google’s market share, it keeps at it. Microsoft — which in February had 17 percent of the market, and 26 percent including the searches it powered for Yahoo — has said it views search as essential to its other products, from the Xbox to phones. And there is still a lot of money to be made as No. 2.

“You have millions of people a day saying exactly what they want, and if you’re an advertiser, it’s a beautiful vehicle,” Mr. Sullivan said.

EMarketer estimates that Google earns about three-quarters of search ad spending. Search engines bring companies troves of data and a measure of control as Internet users’ entry point to the digital world.

There are signs that people’s search behaviors are changing, however, with consequences for these companies.