HELSINKI (Reuters) - Handset makers sold 14 percent more phones in January-March than a year ago, growing at the fastest pace in five quarters, research firms said on Friday.

In 2006, market growth was at over 20 percent level throughout the year.

“Global handset volume continues to increase at a healthy pace. Recent annual growth rates have actually gone up, not down. Emerging markets continue to surge,” said Neil Mawston, analyst at Strategy Analytics.

The world’s largest phone maker Nokia (NOK1V.HE), and Korean vendors Samsung Electronics (005930.KS) and LG Electronics (066570.KS), won further share of the market, helped by attractive designs and wide offerings.

The world’s two largest vendors, Nokia and Samsung grew twice as fast as the market, research firms IDC and Strategy Analytics said.

Struggling Motorola (MOT.N), Swedish-Japanese Sony Ericsson (6758.T) (ERICb.ST) and Apple (AAPL.O), a newcomer to the industry, could not keep up with continuing fast growth on the market.

Sony Ericsson saw its profits halved in the quarter and its fourth spot in the market lost to LG, as demand slowed for its more expensive camera and music handsets.

“We see that the demand on the high end has softened,” Sony Ericsson sales chief Anders Runevad told a conference call, adding that consumers were becoming more cautious.

However, the 14 percent growth shows the market has been relatively little hurt by worries over global economy, so far.

“Disposable income is being eroded by rising food and fuel prices and worries about global financial markets and slow economic growth are creating a cautious outlook for the months ahead,” IDC analyst Ramon T. Llamas, said in a statement.

Microsoft issued an update to MS-08-024 last night, modifying the Critical bulletin to include systems running Internet explorer 7 on Windows XP with Service Pack 3. In other Microsoft news, TechNet and MSDN subscribers are spitting fire over the recent announcement about XP SP3’s release date.

You can see this as a negative, but adding SP3 to the security bulletins is actually positive. The addition to the affected software list means that Windows XP Service Pack 3 (32 or 64-bit) has its first security fix. It also means that Microsoft is paying attention, and being proactive. MS08-024 addresses a remote code execution flaw that exists in Internet Explorer 6 and 7. “The vulnerability could allow remote code execution if a user viewed a specially crafted Web page using Internet Explorer,” according to Microsoft. Systems with Internet Explorer 6 running windows XP SP3 (32 or 64-bit) are not affected according to the update.

Also updated was MS07-040, issued in 2007. MS07-040 addresses three issues. Two of these issues could allow remote code execution on client systems with .NET Framework installed, and one could allow information disclosure on Web servers running ASP.NET. Windows XP SP3 is not vulnerable if you run .NET version 3.0 with or without .NET SP1.

If you have already installed these updates, and upgrade to SP3 on XP, you are protected.

The release this week of SP3 to OEM’s is catching heat because TechNet and MSDN subscribers were left out of the release cycle. They will have to wait until general release to test the update. The news that the SP3 timetable for TechNet and MSDN was pushed up until May 2 enraged some users.

“Why is this even happening? Can they not see that after Vista SP1 there would be an outcry about their serious lack of respect for their subscribers? I can’t understand why no-one has even attempted to clarify this and why it is the case. If the code was finished on the 13th and you clearly have RTM builds why cant they be added to the subscriber downloads? Why is it some time in ‘the next month’,” reads one post to the TechNet forums.

In February, Microsoft refused to let MSDN and TechNet subscribers download the Service Pack for Vista, remaining a sore spot for many IT shops who pay to get such early releases.

“This is utter stupidity. Hold back SP3 from those of us who have to support deployments. Have the MSDN/TechNet folks lost their minds or are they drinking the same “Vista is great” Kool-Aid as other MS employees. Release SP3 to MSDN/TechNet PRIOR to the public release or be ready for not XP to Vista migrations in 2009 but us to push for more Mac OS X deployments. I’ve had it with paying for access to YOUR products to support YOUR customers only to be slapped in the face like this. How did the ones who help support MS products now become the enemy?,” another post read.

Microsoft is remaining silent on the issue.

Boston (dbTechno) - Apple is less than two months away from launching iPhone firmware update 2.0, which will include plenty of applications, games, etc. Apple has also filed a patent application for a universal interface for real-time text chat services. This has led many to believe Apple is hard at work on instant messaging for the iPhone.

The new patent application is for a universal interface for real-time text chat services. It is titled Portable Electronic Device for Instant Messaging.

The patent was published back in March, with it talking in detail about a system for instant messaging on the iPhone, as well as other touchscreen devices.

The system is similar to a text messaging system, but has many differences as well.

The belief is that the patent could be used for SMS messaging as well as MMS (Multimedia Message Service) picture and video messages.

This comes just weeks before Apple will launch the final version of the SDK.

This shows that Apple clearly has IM on its mind.

Apple purchases PA Semi for $278M

Intel has high hopes for its Atom processor platform. Intel believes that the processors will allow it to tap into nearly $40B in new markets around the globe.

The current Z5xx family of Silverthorne-based Atom processors is indeed impressive given their small 13mm x 14mm package size. The processors range in speed from 800MHz to 1.86GHz and feature a thermal design power (TDP) ranging from 0.65 W to 2.4 W.

Intel has actively courted Apple with its new line of Atom processors — and its future variants — for use in a number of Apple products, namely the iPhone. While Intel’s Atom looks impressive on paper, it appears that the performance-per-watt is still not quite to Apple’s liking, hence the Cupertino-based company’s decision to purchase fabless chip company PA Semi.

Apple yesterday confirmed that it purchased microprocessor design company PA Semi — a person familiar with the deal said the transaction was worth $278M. “Apple buys smaller technology companies from time to time, and we generally do not comment on our purposes and plans,” said Apple spokesman Steve Dowling to Forbes.

PA Semi was founded in 2003 by Dan Dobberpuhl who was the lead designer for DEC’s Alpha and StrongARM processors. PA Semi is now best-known for its PWRficient 64-bit multi-core processors which are based on Power Architecture.

Apple’s move to have greater control over major components included in its mobile products could help the company stay out ahead of the competition with regards to innovation. However, new Apple products using PA Semi’s processors could still be more than a year away so we still have a while to see how Apple will take advantage of its recent purchase.

Nokia, the world’s largest manufacturer of mobile telephones, and Sony BMG, the world’s second larges record label, will work together on “Comes With Music”, a handset which Nokia plans to launch in the second half of 2008.

Both companies made statements announcing that they will team up on this one.

“We think this business model will encourage users to sample a wide range of material, expand their musical tastes, and listen to more music than ever before,” said Thomas Hesse, Sony BMG’s President of Global Digital Business.

Nokia customers who will purchase a “Comes With Music” mobile device will be granted 12-months free access to the music catalogues of Sony BMG as well as Universal Music Group, the first to sign such a deal.

The customers of the device will be able to download tracks to their mobile phones as well as on their computers. The music downloaded during the 12 months will remain theirs after that period. There will be no limit on the number of tracks a customer would be able to download.

Sony BMG’s music catalogue includes famous singers like Alicia Keys, Britney Spears and Bruce Springsteen.

The Finnish phone manufacturer and vendor called on all major labels to follow on the foot steps to Sony BMG and Universal. However, Nokia hasn’t provided any details about where the new product will be launched and on which phones.

Apple has allegedly discussed a similar deal with music labels according to CNET News.com. The concept, which isn’t exclusive to Nokia, shows the industry’s efforts to develop new business models that can compete with piracy and decreasing CD sales.

“When you give consumers the key to the candy store without any limitations, there’s a lot more opportunity for discovering music that you might not have found before,” said Thomas Hesse according to The Associated Press.

The Finnish mobile phone behemoth announced its plans for Nokia Music Store, a counter-candidate for Apple’s iTunes, last summer. In August 2007, Nokia made public its plans to pack millions of tracks from thousands of renowned artists or local celebrities and give its users the option of streaming that content on their compatible Nokia handsets or download it directly on their phones and PCs.

Nokia devices compatible with the new, probably revolutionary service include the N95 and the N81. The latter, considered a “multimedia computer”, boasts with dedicated music and gaming keys, 3.5 mm headphone connector and 3G and WLAN connectivity.

The customers of Nokia’s “Comes With Music” will be able to browse for new music, get recommendations or search for their favorite artists, songs or albums. Once a track captures their attention, they’ll be able to download it and it’s theirs for life.

LONDON (Reuters) - Mobile phone groups O2 and Carphone Warehouse (CPW.L) have cut the price for the most basic version of Apple Inc’s (AAPL.O) iPhone in Britain by 100 pounds ($197) ahead of the expected launch of a new model.

The two groups said the 8 gigabyte phone would be available for 169 pounds until June 1, while the 16GB phone will remain priced at 329 pounds.

O2 said the offer would be available on the original iPhone tariffs which start at 35 pounds per month and the operator expects it to create additional momentum for O2’s fastest selling device.

Some analysts have questioned whether sales could soften at the high end of the handset market, but Carphone’s Finance Director Roger Taylor told Reuters on Tuesday the company had not seen any signs of this.

While sales of the iPhone may have slowed since the initial launch, the announcement on the price cut is more likely to be linked to Apple’s expected launch later this quarter of a third-generation high-speed version of the iPhone.

Apple declined to comment on this. T-Mobile reduced the price for the smaller iPhone in Germany earlier this month.

“More and more this is starting to look like they want to clear stock of an older model, with a looming revision to the iPhone which will likely include 3G,” CCS Insight analyst Ben Wood told Reuters.

“But also we think the iPhone has slowed down during the first quarter and we think this (a 3G launch) should give sales a bit of a lift.”

Mobile operator O2, which is owned by Telefonica (TEF.MC), and retailer Carphone Warehouse secured the deal to sell the iPhone in Britain last year.

But both groups have since been reluctant to divulge any sales figures.

A spokeswoman for Apple said this was an “O2-led promotion” and the price would not change in its retail stores.