CUPERTINO BUSINESS REPORT
Buyouts, Hires and Designs: What's Going On Behind Cupertino's Curtain?

The buzz around Apple (Nasdaq: AAPL) has been deafening this past week. The latest rumors are that Apple might buy Twitter and that it might soon begin producing its own chips.

Meanwhile, the NPD Group has announced that Research In Motion's (Nasdaq: RIMM) BlackBerry Curve outsold the iPhone in the first quarter of this year. With the next-generation iPhone widely expected to make an appearance in June, the competition is heating up.

What's going on in Cupertino?

Will Apple Buy Twitter?

Apple is considering putting up US$700 million to buy microblogging service Twitter, if a Valleywag report is to be believed. This isn't the first time that talk of a possible Twitter purchase by a cash-rich suitor has hit the headlines. That's understandable enough, as the number of visitors to Twitter skyrocketed 131 percent in March to total 9.3 million visitors, according to comScore.

Facebook is said to have been interested at some point, but cash problems reportedly scuttled the deal .

A report last month put Google (Nasdaq: GOOG) in the buyer's seat. When pressed for details on that matter, however, Twitter cofounder Biz Stone referred to a company blog post expressing his desire to build an "independent company."

Buying Twitter would make sense for Apple, Laura DiDio, principal analyst at research firm ITIC, told MacNewsWorld. "Twitter is just exploding, and social networking is all the rage, so Apple getting in on the party would let it take advantage of the social networking craze."

Apple had not returned calls requesting comment by press time.

When the Chips Are Down

After snapping up PA Semi, a company that makes low-power microprocessors based on the PowerPC chip used in a previous-generation of Apple computers, Apple has apparently gone on a chip engineer hiring spree.

It's reportedly hired the chief technology officer of the graphics product group at chip giant AMD (NYSE: AMD), Bob Drebin, and his successor, Raja Koduri. It's also said to be picking up chip experts from Intel (Nasdaq: INTC), Samsung and Qualcomm (Nasdaq: QCOM).

Apple may want to design its own chips to run increasingly sophisticated software on the iPhone and iPod, two of its best-selling items. That would give it more control over costs and its product, since it won't have to share its ideas with third-party chip manufacturers. It could also help push Apple's profit margins higher.

These chip developments could point to the creation of a new iPhone that would be smaller, slimmer and cheaper than the current iPhone because it would rely on a system on a chip, or SOC.

SOCs integrate several components of a computer into a single chip. They may include analog, digital and communications functions, all on the same square of silicon.

Competition With RIM Heats Up

Of all the products coming out of Cupertino, the iPhone is one of Apple's biggest moneymakers -- carrier AT&T (NYSE: T) activated 1.6 million of these smartphones during the first quarter.

However, consumer and retail research firm NPD Group has announced that Research In Motion's BlackBerry Curve smartphone actually outsold the iPhone in the first quarter.

RIM managed to increase its consumer smartphone market share to nearly 50 percent in the quarter, NPD said, while Apple's and Palm's (Nasdaq: PALM) market shares both fell by about 10 percent.

RIM's growth is attributable to Verizon's buy-one-get-one-free BlackBerry promotion, as well as the fact that the Curve is available on all four major U.S. wireless carriers, according to NPD. In the U.S., the iPhone is only available through AT&T.

Three of the top five best-selling smartphones in the first quarter were BlackBerry devices. They took the first (Curve), third (Storm) and fourth (Pearl) spots; the iPhone 3G came in second; and the T-Mobile G1 Android phone came in fifth.

Competition Heats Up

Apple will have to increasingly look over its shoulder at competitors in the smartphone market.

Apart from the various BlackBerry devices already available, the upcoming Palm Pre has managed to create a lot of prerelease buzz. Palm might dare to try and steal some of Apple's thunder by releasing the Pre around the time of Apple's Worldwide Developers Conference, to be held in San Francisco in June, though Palm has thus far said only that the Pre will arrive in the first half of this year.

In addition, more Android smartphones are working their way to store shelves.

"Google [has] got Motorola (NYSE: MOT) coming on, they've got a few from Samsung and from HTC," Carl Howe, a Yankee Group analyst, told MacNewsWorld. HTC is a Taiwanese handset manufacturer.

Apple may need to allow another carrier to sell the iPhone if it wants to keep its numbers up.

"The big knock against the iPhone is that it has only this single carrier -- AT&T," ITIC's DiDio said, "but that could change."