Someone I respect a lot thought my article in the current issue of Fortune about Gil Amelio’s latest venture was “a bit heavy-handed and gossipy.” The article, “A SPAC That Went Splat,” is about a special purpose acquisition company, also known as a blank-check company, organized by some prominent Apple (AAPL) alumni from yesteryear, including Amelio, longtime IBMer (IBM) Ellen Hancock and co-founder Steve Wozniak.

You can read my piece and judge for yourself its relative heavy-handedness, which I interpret to mean my having been unkind to Amelio, as well as whether or not the article is merely gossipy, again, which I suppose is a way of saying it is titillating yet trivial or irrelevant.

I’ve already mentioned that I respect my critic quite a bit, so I thought about the criticism. Unsurprisingly, I respectuflly disagree. This story is important because it’s one of managerial hubris and investor naivete. Amelio and his crew spun a tale of newfangled convergence and then went out and bought a plain-vanilla dog of a semiconductor company. Investors, wowed by big names and their association with an unqualified success — that would be Apple — forked over $176 million for Amelio’s SPAC. (It’s worth about $14 million today.) Never mind that Amelio hadn’t been at Apple for 10 years, that Wozniak had been gone longer and that Hancock’s last big effort was a Web hosting company that went kaplooey.

SPAC’s have an alarming level of respectability these days. Yet all they are is a bet on a management team. (My colleague Jennifer Reingold explained last year how they work here.) They’ve been called poor-man’s private equity firms, but even the worst private-equity shop makes numerous bets, not one, as a SPAC does.

Andrew Ross Sorkin recently wrote an entertaining column in the New York Times about one prominent SPAC. He ended with the observation that only one prominent investment bank, Goldman Sachs (GS), so far had stayed away from underwriting SPACs.

Exactly a month later The Wall Street Journal reported that Goldman will enter the field , though with a slight twist. It will allow management to own only 10% of the purchased company, rather than the typical 20%. As if that makes the whole thing virtuous.

Is it heavy-handed and gossipy to expose how management enriches itself, generates fees for investment bankers (including, potentially, the high and mighty Goldman Sachs), and pulls one over on investors?

I think not.

Netscape, we hardly knew ye. This Friday AOL, which, like Fortune Magazine, is part of the Time Warner (TWX) empire, will become a zombie browser. AOL announced late last year that it will no longer support Netscape, meaning that it won’t update features or provide security upgrades. That means the few people who continue to use the browser should stop. Already, AOL is recommending that Netscape users switch to Firefox.

It’s a peculiar quality of the technology industry that such important companies and products can simply vanish in so short a time. Netscape went public just a dozen years ago and sold to AOL in 1999 for $10 billion. Its battle with Microsoft (MSFT) spawned an epic antitrust fight with the Justice Department, a topic covered in an interesting Financial Times column today.

Most interestingly, though, is the story of how Netscape itself gave birth to Firefox, today’s browser of choice for non-Apple (AAPL) users who prefer not to use Microsoft’s Internet Explorer. I use Firefox and cover Silicon Valley, but I didn’t quite know the whole story of how Firefox came to be. It was told quite well today in an article in the San Francisco Chronicle.

It’s been a couple days since what has now been a widely panned dud of a keynote speech by Steve Jobs at Macworld. No “one more thing … ” No breathtaking surprises. No stunning celebrity. (Randy Newman? Come on.)

I was in the audience, and I thought the lower-key keynote was just fine. It’s true that Jobs blew no one away. Top honchos from Twentieth Century Fox and Intel (CEO) won’t wow the crowd. Movie rentals can’t compare with the reinvention of an industry. And while Apple’s (AAPL) new ultrathin notebook looks fabulous, it’s not priced for the mass market. (And will people pay $1800 and up for a device with no Ethernet port? These are the types of topics geeks can endlessly debate.)

But so what? After a year like Apple had last year, it’d be silly to try to blow people away at Macworld. Perhaps it was better to lower expectations. I’m guessing that whether intentionally or not, that’s what Jobs did on Tuesday. And for what it’s worth, while Randy Newman isn’t as sexy as John Mayer or Kanye West, past Macworld performers, his two songs were really good.

The faithful’s disappointment had nothing on Wall Street’s, though. Apple’s shares have now fallen $19, or almost 11%, since Monday’s closing price. This will seem confusing to market watchers of the amateur variety as well as the pros. No one has answers, only guesses. Citi analyst Richard Gardner, for example, called Tuesday’s stock behavior a “typical seasonal pullback.” His explication covers all the bases:

While we are surprised by the magnitude of today’s pullback in Apple shares following an as-expected Macworld keynote, we believe the reaction reflects the view that today’s product announcements will do little to help Apple during [the first half of calendar-year 2008]. The products either represent minor enhancements to existing products (i.e., software updates for iPhone and iPod touch), niche products (i.e., the new ultraportable MacBook Air) or new services that will drive iPod and AppleTV sales over the long-term but contribute little or nothing to operating income during 2008 (i.e., iTunes movie rentals).

Trying to understand the selloff almost isn’t worth the effort. Apple is one of those stocks that defies explanation. It was equally tough to understand is recent high of almost $203.

So focus instead on how the company is valued. At $160 a share, Apple trades for about 31 times expected earnings for its year that ends in September. Analysts expect Apple to grow earnings this year about 31%, an astounding growth rate for a company this size. Next year they see 25% growth. In other words, at its current multiple, Apple is getting little or no premium to the market, despite the iPhone working out to be a bigger than expected seller and the Macintosh picking up speed. (Google (GOOG), by the way, at $616, is off 18% from its high. It trades for about 30 times expected 2008 earnings and is expected to grow by 33% … I’m just saying … )

Apple reports earnings next week. It has a habit of underpromising and overdelivering. It isn’t the expensive stock it used to be.

Mighty Microsoft (MSFT) held its annual shareholders meeting today in Redmond, Wash. I know this because the company sent me a press release about it.

I quickly skimmed the blah, blah, blah about “positive customer momentum” and “strategy of investing in innovation,” and, for some reason, took a careful look at Mr. Softee’s board of directors, which the company printed in the release. Here’s the roster, with emphasis added to make the point I’m about to discuss:

Microsoft’s board of directors consists of William H. Gates, Microsoft chairman; Steven A. Ballmer, Microsoft chief executive officer; James I. Cash Jr., Ph.D., former James E. Robison professor of business administration at Harvard Business School; Dina Dublon, former chief financial officer of JPMorgan Chase; Raymond V. Gilmartin, former chairman, president and chief executive officer of Merck & Co. Inc.; Reed Hastings, founder, chairman and chief executive officer of Netflix Inc.; David F. Marquardt, general partner at August Capital; Charles H. Noski, former vice chairman of AT&T Corp.; Dr. Helmut Panke, former chairman of the board of management at BMW Bayerische Motoren Werke AG; and Jon A. Shirley, former president and chief operating officer of Microsoft.

I think you can see where I’m going. That’s six out of ten “formers” on the board, seven if you count Bill Gates, former CEO. Not counting CEO Steve Ballmer, there is precisely one current operating executive on the board, Reed Hastings, CEO of Netflix (NFLX), an innovative company that is nonetheless a pipsqueak in a narrow market niche.

Buzz words aside, Microsoft still hasn’t been able to shake itself from the torpor of having its butt kicked by Google (GOOG) in the online advertising world. By comparison, Google’s board includes the presidents of Princeton and Stanford, and the CEOs of Genentech (DNA) and Intel (INTC). Apple’s (AAPL) board includes the CEOs of Google, Genentech and J. Crew (JCG).

Could it be that Microsoft’s board of “formers” isn’t helping matters?

Last Friday, Apple (AAPL) was hit with a $1.2 billion class action for allegedly bricking — i.e., intentionally disabling — the iPhones of customers who had used unauthorized “unlocking” software on their phones (enabling them to use carriers other than AT&T) or unauthorized applications on their handsets (like non-Apple ringtone software). AT&T Mobility (T) is also named as a co-defendant.

The suit seeks $1.2 billion in damages, alleging violations of the federal antitrust laws, California unfair business practices laws, and the tort of “computer or chattel trespass.” It also claims that Apple’s customer warranty and license agreements, by forbidding customers from using third-party software on their phones, violate the Magnuson-Moss Warranty Act. (For the text of that act, see section (c) of the statute linked here.)

Both Apple and AT&T, through spokespersons, declined comment. Here is the complaint, and the suit’s official web site, set up by the plaintiffs lawyers, is here. (Don’t miss the picture of Steve Jobs in the iPhone screen looking suitably Satanic.)

The case stems from a series of unusual events that began with a carefully worded press release from Apple on September 24. (These events have been extensively covered in the blagosphere, but a good place to begin might be with my colleague Philip Elmer-DeWitt’s Apple 2.0 post, here.)

“Apple has discovered,” it said, “that many of the unauthorized iPhone unlocking programs available on the Internet cause irreparable damage to the iPhone’s software, which will likely result in the modified iPhone becoming permanently inoperable when a future Apple-supplied iPhone software update is installed.” It went on to warn that “unauthorized modifications” to the iPhone’s software violated the customer’s license agreement and voided the warranty.”

Four days later the company released version 1.1.1 of its iPhone operating system which did, indeed, cause problems, with many of the expensive phones being disabled — some permanently.

The suit alleges that none of these problems were actually inadvertent or inevitable byproducts of necessary upgrades, but were, instead, intentionally engineered efforts to punish customers for using competitors’ applications or services instead of Apple’s and AT&T’s. It also asserts that Apple customer service personnel were instructed to refuse to help customers restore the damaged phones to service, even though inexpensive fixes were technically feasible.

In an email, lead plaintiffs counsel Max Folkenflik, of New York’s Folkenflik & McGerity, says that he is seeking certification of a class that would include all purchasers of iPhones, regardless of whether the phones were actually disabled by Apple’s release of version 1.1.1. “All purchasers have less choice and pay higher prices than they would in a competitive market,” he writes. “Freedom of choice is worth money in the same way that markets value liquid investments over illiquid investments. The fact that unlocked iPhones sold for more than locked iPhones provides evidence for that conclusion if any were needed.”

He then totes up the damages as follows. “Our actual damage estimate of $200 million is based on a 2 million member class,” which is based on the number of iPhone customers that are predicted by December. He then theorizes that each purchaser suffered about $100 in injury due to “higher voice and data costs, avoidable roaming charges, fees for termination of T-Mobile plans, and the reduction of value based on the locked up technology.”

The antitrust laws and the California statute allow trebling of damages, which would bring the figure up to $600 milion. Then he also seeks punitive damages under the tort count (chattel trespass) of an additional $600 million, pushing the total figure up to $1.2 billion.

Though the suit raises many thorny issues, one of the more eyebrow-raising claims accuses Apple of monopolistic practices on the theory that the iPhone is such a distinctive device that it constitutes its own market — i.e., no other cell phone manufacturer even rises to the level of being a competitor. Since Apple obviously enjoys a monopoly over the iPhone market, the suit claims it is now illegally trying to extend that monopoly into other areas, including phone service and handset software.

To support the claim that the iPhone should be deemed to constitute its own market, the plaintiffs allege: “For many users, including the Plaintiffs and the Class, there was no product available which offered anywhere near the same combination of services and ease of use.”

It seems that being sued for antitrust violations may be overtaking plagiarism as the sincerest form of flattery.

While the jury continues to deliberate over whether to convict former Brocade (BRCD) CEO Gregory Reyes of felony fraud in connection with that company’s options backdating practices, it is already clear that proving criminal wrongdoing in such cases is much harder than many experts originally predicted. It seems most unlikely that government will be attempting to prosecute many more pure backdating cases criminally in the future. (Cases of backdating plus self-dealing, forgery, and other shenanigans — like the alleged creation at Comverse Technology (CMVT) of a phony account in the name of “I.M. Fanton” (“I am Phantom”) — are another matter, of course.)

For the U.S. Attorney’s Office in San Francisco to come away with a conviction after this six-week trial — which involved a clear-cut, repeated, and long-term pattern of backdating plus evidence of after-the-fact lying by the CEO — it will have to win two arduous victories: one with the jury and, even if successful there, a second with the judge, who has already expressed concern about whether the government has proven Reyes’s criminal intent to even the bare minimum level legally required to sustain a jury verdict. Already one has to wonder whether prosecutors will proceed with their scheduled criminal trial of Reyes’s human resources subordinate, Stephanie Jensen, in light of how difficult it has proven to land the much bigger fish. (Though Jensen and Reyes were indicted together, Jensen’s lawyers won a severance, allowing her to be tried separately.)

Tellingly, on July 25, when the government charged KLA-Tencor’s (KLAC) former CEO Kenneth Schroeder in connection with that company’s options backdating, it brought only civil charges, even though the evidence of Schroeder’s guilty state of mind was arguably stronger than anything presented in the Reyes case. At KLA-Tencor the SEC alleges that in March 2001 the company’s general counsel e-mailed Schroeder a memo explaining why it was illegal to backdate, only to have Schroeder e-mail back: “Please don’t take away some of my best tools for attracting and retaining people. We need those people to win the battle. Help me, don’t just tell me how to follow a strict interpretation of rules. I need a ‘war time counselor,’ not someone who can recite page and verse.”

Nevertheless, even with this sort of powerful evidence about Schroeder’s state of mind, the SEC charges only that Schroeder “knew or was reckless in not knowing” (emphasis added) that his company was not properly accounting for the options it was granting — a mindset warranting only civil, not criminal penalties. (Schroeder’s counsel told the Wall Street Journal that, subsequent to this e-mail exchange, Schroeder spoke to the company’s finance chief and received assurances that the company was handling the options properly. See here.)

Even Apple’s (AAPL) former general counsel Nancy Heinen, whom the SEC charges with having ordered the creation of phony documents to conceal the backdating going on at that company, has only been charged civilly. And, of course, neither Apple nor its CEO were ever charged with anything.

Reyes may have been unfortunate in that Brocade happened to be the first company where backdating came to light. Its problems were not among those exposed by the famous Wall Street Journal Perfect Payday article of March 2006 (see here), but rather came to light more than a year earlier, when a disgruntled employee blew the whistle in late 2004.

On a tangential note, in their desperation to win their challenging case against Reyes, the prosecutors seem to have engaged in some unbecomingly fancy footwork, judging from both the motion to dismiss the indictment that Reyes’s counsel Richard Marmaro filed this past weekend and, to an even greater degree, the government’s legalistic response to it. It appears from the papers that the prosecutors bringing the criminal case have, at the very least, tried to present to the jury a much cleaner and more simplistic picture of what was happening at Brocade than was really the case. The prosecutors have argued to the jury, for instance, that officials in Brocade’s finance and accounting department “didn’t know a thing” of Reyes’s backdating and were deceived by him, but they’ve failed to call many of the key finance officials in question, several of whom have given statements to the FBI and SEC, according to Marmaro’s motion, suggesting considerable knowledge of and acquiescence in at least certain backdating transactions. Indeed, the SEC has charged Brocade’s former CFO Antonio Canova in a civil case, alleging that “he knew, or was reckless in not knowing,” that Brocade was backdating options and not accounting for them properly.

The government’s response to Marmaro’s motion fell far short of the outraged denial that one ordinarily expects in these Kabuki dances. Instead, it begins with the sort of fine, tortured, scholastic distinction that one doesn’t like to see used by public prosecutors: “The defendant [Reyes] contends that the allegations of the SEC’s complaint . . . are actually facts and that the United States’ attorneys erred by making arguments contradicted by those allegations qua ‘facts.’ . . . He cites no authority for that proposition.”

The hair-splitting then continues: “The United States Attorney’s Office . . . and the SEC are independent litigating entities. . . . Indeed, the SEC has on occasion taken positions in litigation opposed to that of the USAO.” Before it’s done, the government admits that it did, during rebuttal summation, “inadvertently” mischaracterize an exhibit related to this issue, but that the harm could be cured by having the jury instructed to disregard the prosecutor’s remark.

Maybe I’m being unfair, so I’ll let you judge for yourself. Here is Marmaro’s motion, here’s the Government’s response, and here’s Marmaro’s reply. Judge Charles Breyer has not yet ruled on the motion, which could, of course, be mooted out by an acquittal.

Even before Brocade Communications System’s (BRCD) former CEO Gregory Reyes was indicted last summer for his role in that company’s stock options back-dating scandal, he seemed to be preparing to implicate Palo Alto superlawyer Larry Sonsini in the mess.

Sonsini’s firm, Wilson Sonsini Goodrich & Rosati, was Brocade’s outside counsel and Sonsini was a director on Brocade’s board. In an interview with Business Week in February 2006, available here, Reyes suggested that the company’s board was scapegoating him, and he seemed particularly incensed with Sonsini. Reyes argued that Sonsini — who had talked Reyes into resigning in January 2005, after an internal investigation at the firm confirmed backdating problems — had been the one who counseled him in 1999 to serve as a “committee of one” when granting stock options, rather than requiring the full board to approve each grant. This was a factor that had presumably made it easier for Reyes to backdate with impunity.

When I wrote a profile of Sonsini that ran in the November 17, 2006, issue of Fortune (available here), Reyes’s criminal defense attorney Richard Marmaro, of Skadden Arps Slate Meagher & Flom, also seemed to be linking Reyes’s plight to Sonsini, albeit more backhandedly: “Sonsini at all times acted totally above board and with the highest ethics of the profession,” Marmaro told me then, “and my client relied on his sage advice.”

But last Wednesday, the day Marmaro had told reporters he would be calling Sonsini as a witness , he didn’t, and it now appears likely that Sonsini won’t be called at all. (Marmaro did not respond to an email seeking comment.) The government had also put Sonsini on its witness list, but didn’t call him.

Reyes’s accusation against Sonsini — that he advised setting up the committee of one — was always a giant step removed from anything that would either truly exonerate Reyes of wrongdoing or truly implicate Sonsini in it. Notably, Reyes never accused Sonsini of telling him that it was okay to backdate, which is what the crime was. Committees of one were, and still are, commonly used for awarding options for lower level corporate executives, especially at companies like Silicon Valley startups for which options constitute a critical part of rank-and-file employees’ compensation. The law of Delaware, where Brocade was incorporated, authorizes their use for that purpose, and that’s the only use Brocade made of them. (Committees of one can’t be used for granting options to corporate officers, directors, or 10% shareholders — which would create a risk of self-dealing — and Brocade didn’t use them for that purpose.)

When I did my profile, Wilson Sonsini’s spokesperson also noted that, for what it was worth, the firm hadn’t even been the one that set up Brocade’s “committee of one” in any event. She said that committee had already been in place when Sonsini began advising Brocade, having been set up when a different law firm was advising Brocade, although she declined to name it. But in late May (as the Wall Street Journal reported here), after civil class action lawyers asked a judge to take judicial notice that Sonsini had set up Brocade’s committee of one (relying on press accounts of what Reyes told Business Week), the firm finally produced a copy of the February 1998 board minutes which do, indeed, show that the committee was created then, about 11 months before Sonsini began representing Brocade and joined its board. The firm’s outside attorneys in February 1998 had been Fenwick & West, another highly regarded Palo Alto firm, and the minutes were signed by its partner Dennis DeBroeck, as Brocade’s corporate secretary. (Wilson Sonsini’s filing, with the minutes attached as Exhibit A, is available here. DeBroeck, by the way — and I’m really just offering this in the spirit of “small world!” and not as an intimation of a vast conspiracy — is the husband of Nancy Heinen, the former general counsel of Apple (AAPL), who has been charged civilly by the SEC in connection with Apple’s backdating problems. (Calls and emails to DeBroeck and the firm’s chairman were returned by a spokesperson, who declined comment.)

Meanwhile, the pivotal issue in the Reyes trial has turned out to be what it so often is in white-collar trials: criminal intent. And though Marmaro has developed a rather complicated and interesting theory about why backdating involved no “material” misrepresentation (required to make out a fraud case), see earlier post on that, the crux of the case is proving to be much simpler and more basic: Did Reyes even realize he was doing anything wrong? In essence, it’s the Steve Jobs defense: Marmaro says Reyes didn’t understand the accounting repercussions of backdating. And just as the SEC evidently did not think it could prove Jobs knew that backdating was wrong (even by a less rigorous civil standard of proof), Judge Charles Breyer is now weighing seriously whether the government failed to meet its burden of proving beyond a reasonable doubt that Reyes knew he was doing something wrong. Breyer said he’d deliver his ruling on Thursday.

If Judge Breyer rules against Reyes and allows the trial to proceed, the moral for Reyes may be a hackneyed one: it’s not the crime, it’s the cover-up. The best evidence at the moment that Reyes knew he did anything wrong is that he allegedly lied to the attorney performing Brocade’s internal investigation in late 2004 when asked whether he used “look-backs” to price options at Brocade. The attorney, Craig Martin of Morrison & Foerster, testified that Reyes denied using look-backs — i.e., retrospectively looking for the lowest stock price of the previous quarter and then backdating options grants to that date — when in fact the company used them routinely and the evidence establishes that Reyes had to have known it did.

As bad as that looks, though, a crucial question remains as to when Reyes learned that there was something wrong with using look-backs. The backdating occurred from 2000 to 2002, so Reyes may have only learned that there was a problem much later. Much of the other evidence offered by the government as to Reyes’s state of mind suffers from the same problem. An email he authored, saying “IT IS ILLEGAL TO BACKDATE OPTIONS GRANTS,” was not written until October 2004. Similarly, a human resources officer who testified that Reyes told her, “It’s not illegal if you don’t get caught,” was uncertain as to precisely when the conversation occurred and even as to what Reyes meant by “it.”

The most likely outcome is that Judge Breyer will deny the motion for acquittal and let the jury grapple with the same questions itself. If he grants the acquittal motion now, the trial is over, the jury never gets to consider the case, and the acquittal order is unappealable, law professor Robert Weisberg of Stanford tells me, since double jeopardy attaches immediately. If, on the other hand, Breyer lets the jury decide the case, and the jury ultimately convicts, the judge could still enter a judgment of acquittal notwithstanding the verdict (called a judgment “NOV,” the acronym for the equivalent Latin phrase) at that point. In that event, the government could appeal the acquittal NOV and an appeals court, if it disagreed with Breyer, could reinstate the jury’s conviction.

Last week I wrote about the revelation that Steve Jobs in a way is the biggest Windows applications developer of them all because of how frequently iTunes is downloaded onto PCs. The insight came from an interview with the Apple (AAPL) CEO by Walt Mossberg at the Wall Street Journal’s tech conference in Southern California. Today, the WSJ’s million-dollar-man expanded on his own interview with a fascinating explanation of just how clever Apple is in exploiting its window into Windows.

What particularly caught my eye in Mossberg’s lesson was his discussion of how iTunes allows users to share their music libraries with others on the same computer network. Listen to Walt, with my emphasis added:

Out of the box, each copy of iTunes looks for other shared iTunes music libraries on your local network. It doesn’t share your library unless you authorize it to do so. The user merely has to go into iTunes’ Preferences function (under the Edit menu in the Windows version), click on the Sharing tab and select “Share my library on my local network.” You can choose to share your entire library or just selected playlists. You can require people to enter a password to gain access, or not. You can also turn off the function that allows you to see others’ libraries.

I’m emphasizing this for the simple reason that Apple requires you to OPT IN to its function to share your music with others. Most other companies – including that company that does no evil, Google (GOOG) – probably would go ahead and enable the software to share unless you OPTED OUT. That’s the deal Google asks book publishers to follow, for example. If they don’t want their copyrighted titles indexed on Google they need to say so. Similarly, YouTube (owned by The Goog) asks content producers to inform them if their property shows up on YouTube in an unauthorized way. (It also bugs me that YouTube requires tags, even if I have no interest in tagging my videos; whose purpose does that serve?)

Asking users to opt out of services you want them to use is at best arrogant and at worst evil. Opting IN is the respectful way to do business on the Web. Am I wrong?

(Have your say below, or, more anonymously, in this poll.)

I don’t often gush about products. I’m just not a gadget guy. I liken my knowledge of computer-related toys to my fluency in Japanese a decade ago: Pretty darn good compared to someone who speaks no Japanese; pretty weak compared to someone who does.

Anyway, I’ve just started using a product that is gushworthy. It’s called the Flip camcorder, and it’s made by a San Francisco technology company called Pure Digital Technologies. What’s so great about the Flip is that 1) it’s cheap; 2) the quality is darn good; and 3) it is brain-dead easy to connect to YouTube. In other words, for $120 or $150, you can get a really basic camcorder and then quickly post videos on the Web, as my fellow CNNMoney blog MediaBiz did recently. Trust me, it’s an instant grandparent pleaser. This product isn’t for the ultra-techy crowd. It’s for people like me, who haven’t gotten around to buying an expensive camcorder (I will) and spending hours editing videos.

As for the business, this is Pure Digital’s second product line, the first being a single-use (i.e., disposable, though the company works hard to recycle them) digital camera. The company is funded by Sequoia, Benchmark, Morgan Stanley (MS) (hey Mary … missed you at D!) and others. It’s already selling Flips at retailers like Best Buy (BBY), Target (TGT) and Costco (COST) and promises to add a bunch more. What Pure Digital has gotten right is incorporating seemless software into a small device that you’re happy to toss into your bag and forget about when you’re not using. It’s really similar, in fact, to how Apple (AAPL) built the iPod around its iTunes software. And it’s got me thinking, why in the world doesn’t Sony do this? And if it won’t, why wouldn’t Sony (SNE) buy Pure Digital?

By the way, to see the Flip in action, watch this short video of Pure Digital CEO Jonathan Kaplan talking about his own company:

The broad world of technology industry gurus and enthusiasts alike still are basking in the glow of the amicable appearance Wednesday night by Microsoft (MSFT) Chairman Bill Gates and Apple (APPL) CEO Steve Jobs. The two most often are portrayed as bitter enemies. But in a bit of staged theater that clearly also was genuine, the two spoke at length of their mutual admiration and shared experiences. Josh Quittner has a pitch-perfect review here about what it was like to be in the room.

Perhaps the best moment of the evening came when veteran investor Lise Buyer, a daughter of journalists, asked what easily was the best question of the evening: What did each man admire about the other and wish he had been able to do differently? Their answers were deeply sincere and reflected the strengths and weaknesses of their respective companies. Gates said he admires Jobs’s “taste,” and implicitly acknowledged the many criticisms over the years that Microsoft is a rather artless imitator, a ruthless company that goes for profits over style. Jobs noted that Gates always got “partnering” better than he did, in part because Microsoft, initially a software-only company, needed others from the beginning. Jobs acknowledged there, without using these words, that if only Apple hadn’t remained so closed so many years ago it could be Microsoft’s size today.

A final reflection. Gates and Jobs repeatedly were asked their view of the future. Gates, who is transitioning into a full-time philanthropist, was willing to share thoughts on new kinds of screens, for example. Jobs pointedly refused to share his thoughts, obviously because he doesn’t want to forecast where Apple is going. Gates is moving on to become a senior statesman of the industry. Jobs is still very much in the thick of the fight.