Category: Apple

Apple related news, including iPhone, iPod, Macintosh, OS X, and whatever else

Apple, China, and the Truth

Seth Anderson0 comment

Torn and Frayed
Torn and Frayed

Mike Daisey deceived a lot of people with his fable about Chinese factory workers, including This American Life.

Ira Glass writes:

I have difficult news. We’ve learned that Mike Daisey’s story about Apple in China – which we broadcast in January – contained significant fabrications. We’re retracting the story because we can’t vouch for its truth. This is not a story we commissioned. It was an excerpt of Mike Daisey’s acclaimed one-man show “The Agony and the Ecstasy of Steve Jobs,” in which he talks about visiting a factory in China that makes iPhones and other Apple products.

The China correspondent for the public radio show Marketplace tracked down the interpreter that Daisey hired when he visited Shenzhen China. The interpreter disputed much of what Daisey has been saying on stage and on our show. On this week’s episode of This American Life, we will devote the entire hour to detailing the errors in “Mr. Daisey Goes to the Apple Factory.”

Daisey lied to me and to This American Life producer Brian Reed during the fact checking we did on the story, before it was broadcast. That doesn’t excuse the fact that we never should’ve put this on the air. In the end, this was our mistake.

We’re horrified to have let something like this onto public radio. Many dedicated reporters and editors – our friends and colleagues – have worked for years to build the reputation for accuracy and integrity that the journalism on public radio enjoys. It’s trusted by so many people for good reason. Our program adheres to the same journalistic standards as the other national shows, and in this case, we did not live up to those standards.

A press release with more details about all this is below. We’ll be posting the audio of the program and the transcript on Friday night this week, instead of waiting till Sunday.

(click here to continue reading Retracting “Mr. Daisey and the Apple Factory” | This American Life.)

Yikes! G4 - still chugging

Yikes! G4 – still chugging

Evan Osnos of The New Yorker adds:

“This American Life,” the public-radio show, has retracted a China piece that it says it never should’ve run. …The retracted story was by a monologist named Mike Daisey, who described journeying to the gates of Foxconn, the Apple supplier in the Chinese city of Shenzhen. He said he interviewed hundreds of workers, finding girls who were twelve and thirteen years old and others whose “hands shake uncontrollably” from chemicals used to clean iPhone screens. He said he visited other factories and saw surveillance cameras over the beds in dorm rooms, some kind of “sci-fi, dystopian, ‘Blade Runner,’ ‘1984’ bull[BLEEP].” And in the end, he winds his warning around to us, the consumers: “They’re making your crap that way today.”

But Daisey lied. He made up things about his trip, and the show’s attempts at fact-checking failed to uncover them. It all fell apart when Rob Schmitz, a seasoned reporter who is the China correspondent for the public-radio program “Marketplace,” got suspicious and tracked down the translator who’d worked with Daisey. It’s worth a listen, but, in short, Schmitz discovers that Daisey made up scenes, never took notes, conflated workers, never visited a dorm room, and so on. Watching it unravel from Beijing makes me wonder: What does the debacle say about how we all look at China? Why were so many people so eager to believe it?

(click here to continue reading Letter from China: Apple, China, and the Truth : The New Yorker.)

Pip and his MBA

Pip and his MBA

Rob Schmitz:

For the past year and a half, I’ve reported on Apple’s supply chain in China, where I work as Marketplace’s China Correspondent, based in Shanghai. When I heard Daisey’s story, certain details didn’t sound right. I tracked down Daisey’s Chinese translator to see for myself.

“My mistake, the mistake I truly regret, is that I had it on your show as journalism. And it’s not journalism. It’s theater.” – Mike Daisey For years, reporters in China have uncovered a sizable list of problems that have shown the dark side of what it’s like to work at factories that assemble Apple products. Mike Daisey would have you believe that he encountered—first-hand—some of the most egregious examples of this history all in just a six-day trip he took to the city of Shenzhen.

(click here to continue reading An acclaimed Apple critic made up the details | Marketplace from American Public Media.)

Google Tracked iPhones, Bypassing Apple Browser Privacy Settings

Seth Anderson1 Comment

Ride Smarter
Ride Smarter

Don’t Be Evil is a thing of the past, the new Google is brash in its insistence that consumers are the product. You are their product, to be sold to advertisers. What you want is not important, only your demographic information is, since that is the commodity that makes Google wealthy.

Google Inc. and other advertising companies have been bypassing the privacy settings of millions of people using Apple Inc.’s Web browser on their iPhones and computers—tracking the Web-browsing habits of people who intended for that kind of monitoring to be blocked.

The companies used special computer code that tricks Apple’s Safari Web-browsing software into letting them monitor many users. Safari, the most widely used browser on mobile devices, is designed to block such tracking by default.

Google disabled its code after being contacted by The Wall Street Journal.

WSJ’s Jennifer Valentino-DeVries has details of Google and other advertising companies that were bypassing privacy levels set by users of Apple’s Safari browser on their iPhones. Photos: Getty Images

The Google code was spotted by Stanford researcher Jonathan Mayer and independently confirmed by a technical adviser to the Journal, Ashkan Soltani.

…

In Google’s case, the findings appeared to contradict some of Google’s own instructions to Safari users on how to avoid tracking. Until recently, one Google site told Safari users they could rely on Safari’s privacy settings to prevent tracking by Google. Google removed that language from the site Tuesday night.

…Google’s privacy practices are under intense scrutiny. Last year, as part of a far-reaching legal settlement with the U.S. Federal Trade Commission the company pledged not to “misrepresent” its privacy practices to consumers. The fine for violating the agreement is $16,000 per violation, per day. The FTC declined to comment on the findings.

(click here to continue reading Google Tracked iPhones, Bypassing Apple Browser Privacy Settings – WSJ.com.)

Utterly embarrassing for Google, and right when the Congress is poised to look at Google’s privacy practices.

For the record, I use Google constantly, have had a Gmail account since it was first offered, use Google Analytics on this site, even have Google ads (if you haven’t blocked them like I have)

The EFF Foundation blogs:

Earlier today, the Wall Street Journal published evidence that Google has been circumventing the privacy settings of Safari and iPhone users, tracking them on non-Google sites despite Apple’s default settings, which were intended to prevent such tracking.

This tracking, discovered by Stanford researcher Jonathan Mayer, was a technical side-effect—probably an unintended side-effect—of a system that Google built to pass social personalization information (like, “your friend Suzy +1’ed this ad about candy”) from the google.com domain to the doubleclick.net domain. Further technical explanation can be found below.

Coming on the heels of Google’s controversial decision to tear down the privacy-protective walls between some of its other services, this is bad news for the company. It’s time for Google to acknowledge that it can do a better job of respecting the privacy of Web users. One way that Google can prove itself as a good actor in the online privacy debate is by providing meaningful ways for users to limit what data Google collects about them. Specifically, it’s time that Google’s third-party web servers start respecting Do Not Track requests, and time for Google to offer a built-in Do Not Track option.

Meanwhile, users who want to be safe against web tracking can’t rely on Safari’s well-intentioned but circumventable protections. Until Do Not Track is more widely respected, users who wish to defend themselves against online tracking should use AdBlock Plus for Firefox or Chrome, or Tracking Protection Lists for Internet Explorer.1 AdBlock needs to be used with EasyPrivacy and EasyList in order to offer maximal protection.

(click here to continue reading Google Circumvents Safari Privacy Protections – This is Why We Need Do Not Track | Electronic Frontier Foundation.)

Neil Young and the Sound of Music

Seth Anderson1 Comment

Neil Young

Neil Young has long fulminated against the sound of digital music…

You know what the biggest problem with music today is? Sound quality. That’s Neil Young’s take on the issue, anyway.

For years, the musician has been obsessed with improving the way modern music sounds, sonically speaking. In an interview with Walt Mossberg and Peter Kafka at our D: Dive Into Media conference, Young, the perennial music purist, said that while modern music formats like MP3 are convenient, they sound lousy.

“My goal is to try and rescue the art form that I’ve been practicing for the past 50 years,” Young said. “We live in the digital age and, unfortunately, it’s degrading our music, not improving it.” While modern digital encoding schemes might sound clear on our iPods and smartphones, they only feature a small percentage of the musical data present in a master recording, and Young is on a crusade to correct that.

“It’s not that digital is bad or inferior, it’s that the way it’s being used isn’t doing justice to the art,” Young said. “The MP3 only has 5 percent of the data present in the original recording. … The convenience of the digital age has forced people to choose between quality and convenience, but they shouldn’t have to make that choice.”

So what’s the solution? New hardware capable of playing audio files that preserve more of the data present in original recordings, said Young. Ah. But who’s going to produce that?

Said Young, “Some rich guy.” And evidently some rich guy was working on such a device. The late Apple CEO Steve Jobs. “Steve Jobs as a pioneer of digital music, and his legacy is tremendous,” Young said. “But when he went home, he listened to vinyl. And you’ve got to believe that if he’d lived long enough, he would have done what I’m trying to do.”

(click here to continue reading Neil Young and the Sound of Music (Dive into Media) – John Paczkowski – Dive Into Media – AllThingsD.)

People Are Spouting Nonsense about Chinese Manufacturing

Seth Anderson0 comment

Apple Store in Soho
Apple Store in Soho

But facts are so boring…

Wages paid to manufacturing workers in China are not determined by the productivity of those specific workers. They are not determined by US wages, by the profits that Apple makes nor even by the good intentions of the creative types that purchase Apple products. They are determined by the wages paid by other jobs in China and that is itself determined by the average level of productivity across the Chinese economy.

But now to the specific complaints that are being made. There are three that are being repeated around the intertubes as being particularly outrageous.

The first is the spate of suicides at the Foxconn plants. Suicides did indeed take place and each and every one an individual tragedy. Both for those who died and for those they left behind to mourn them. However, we are talking about some 18 suicides in 2010. What we actually want to know is whether that is a high or a low number. Suicide does happen in every society and country, so before we start blaming working conditions we’d like to know whether that rate is higher or lower than that in the surrounding society.

The general suicide rate in China is 22 per 100,000 people. That is a high rate by international standards but that is the one that we should be looking at to try and judge the suicide rate at Foxconn.

Foxconn employs some 1 million people in total so, if the Foxconn workforce were to have the same suicide rate as the general Chinese population (which, to be accurate, it won’t for suicide is not equally divided over age groups and the workforce is predominantly young) we would expect to see 220 suicides among such a number each year.

We actually have an outcry therefore about a suicide rate which is under one tenth of the general suicide rate in the country under discussion. If people were being rational about this instead of spouting nonsense then this would be something that was praised, not vilified.

(click here to continue reading The Apple Boycott: People Are Spouting Nonsense about Chinese Manufacturing – Forbes.)

About that first point, Paul Krugman writes:

First of all, even if we could assure the workers in Third World export industries of higher wages and better working conditions, this would do nothing for the peasants, day laborers, scavengers, and so on who make up the bulk of these countries’ populations. At best, forcing developing countries to adhere to our labor standards would create a privileged labor aristocracy, leaving the poor majority no better off.And it might not even do that. The advantages of established First World industries are still formidable. The only reason developing countries have been able to compete with those industries is their ability to offer employers cheap labor. Deny them that ability, and you might well deny them the prospect of continuing industrial growth, even reverse the growth that has been achieved. And since export-oriented growth, for all its injustice, has been a huge boon for the workers in those nations, anything that curtails that growth is very much against their interests. A policy of good jobs in principle, but no jobs in practice, might assuage our consciences, but it is no favor to its alleged beneficiaries.

and also wrote:

Wages are determined in a national labor market: The basic Ricardian model envisages a single factor, labor, which can move freely between industries. When one tries to talk about trade with laymen, however, one at least sometimes realizes that they do not think about things that way at all. They think about steelworkers, textile workers, and so on; there is no such thing as a national labor market. It does not occur to them that the wages earned in one industry are largely determined by the wages similar workers are earning in other industries. This has several consequences. First, unless it is carefully explained, the standard demonstration of the gains from trade in a Ricardian model — workers can earn more by moving into the industries in which you have a comparative advantage — simply fails to register with lay intellectuals. Their picture is of aircraft workers gaining and textile workers losing, and the idea that it is useful even for the sake of argument to imagine that workers can move from one industry to the other is foreign to them. Second, the link between productivity and wages is thoroughly misunderstood. Non-economists typically think that wages should reflect productivity at the level of the individual company. So if Xerox manages to increase its productivity 20 percent, it should raise the wages it pays by the same amount; if overall manufacturing productivity has risen 30 percent, the real wages of manufacturing workers should have risen 30 percent, even if service productivity has been stagnant; if this doesn’t happen, it is a sign that something has gone wrong. In other words, my criticism of Michael Lind would baffle many non-economists.

Associated with this problem is the misunderstanding of what international trade should do to wage rates. It is a fact that some Bangladeshi apparel factories manage to achieve labor productivity close to half those of comparable installations in the United States, although overall Bangladeshi manufacturing productivity is probably only about 5 percent of the US level. Non-economists find it extremely disturbing and puzzling that wages in those productive factories are only 10 percent of US standards.

Finally, and most importantly, it is not obvious to non-economists that wages are endogenous. Someone like Goldsmith looks at Vietnam and asks, “what would happen if people who work for such low wages manage to achieve Western productivity?” The economist’s answer is, “if they achieve Western productivity, they will be paid Western wages” — as has in fact happened in Japan. But to the non-economist this conclusion is neither natural nor plausible. (And he is likely to offer those Bangladeshi factories as a counterexample, missing the distinction between factory-level and national-level productivity).

Replacement iPod Nano

Seth Anderson0 comment

Apple emailed me about a month ago, writing, in part:

Dear iPod nano owner,

Apple has determined that, in very rare cases, the battery in the iPod nano (1st generation) may overheat and pose a safety risk. Affected iPod nanos were sold between September 2005 and December 2006.

This issue has been traced to a single battery supplier that produced batteries with a manufacturing defect. While the possibility of an incident is rare, the likelihood increases as the battery ages.

Apple recommends that you stop using your iPod nano (1st gen) and follow the process noted below to order a replacement unit, free of charge.

Note: This battery issue is specific to the iPod nano (1st gen) and does not affect any other iPod.

I followed the instructions, packed up the 1st generation nano, gave it to FedEx, and today received a brand new 8 GB Nano, with a much different form factor.

Here is what the old Nano looked like:

Ipodnano
1st Generation iPod Nano

and the new Nano:

Exchanged iPod nano

Quite happy with this deal, in all honesty. The old Nano was barely being used, and was from nearly five years ago, but the new one looks custom made for wearing while exercising, has a better screen, more disk capacity, larger screen, lighter, etc.

Thanks, Apple!

New Nano

Flying With iPads – A Pilot’s Perspective

Seth Anderson0 comment

Pip and his iPad

Even pilots don’t understand the “turn off all electronic devices” rule…

It’s somewhat ironic that American Airlines is loading more of its cockpits with iPads at roughly the same time that Alec Baldwin got kicked off for using his iDevice. But, American Airlines insists there are a lot of benefits to using Apple’s tablets as opposed to paper. First and foremost, the iPad replaces 45 pounds worth of paper for each pilot on a plane. If American is able to use iPads on every flight — its eventual goal — it stands to reduce its fuel usage by 500,000 gallons each year.

“That’s a significant savings,” said David Clark, the American pilot that is heading up the iPad effort. For the past six months, American has been testing iPad use on 777 flights out of Los Angeles–some 300 flights in all. As of last Friday, American has approval to use the iPads on all of its Boeing 777 aircraft for all phases of flight and Clark said the airline expects approval to use the tablets on 737s next year.

To answer every frequent flyer’s question, no, Clark isn’t really sure why the rest of us can’t use our iPads during takeoff and landing.

“I think that’s a fair and a good question,” Clark said. “First and foremost, the FAA makes the rules and we follow them.”

That being said, though, Clark notes that American Airlines did a lot of testing with the iPad and it is used only with all of its transmitting functions — including WiFi — turned off. At the back of the plane, Clark said, there can be any number of devices in use by dozens of passengers, making it hard to test for every possible scenario.

As for the pilots and their iPads, Clark said everything has gone swimmingly, Clark said. In general, even those who have never touched an iPad only need a half-hour or hour of training. “That speaks to the operating system,” Clark said.

(click here to continue reading American Airlines Top iPad Pilot Talks About Trading Paper for Electro – Ina Fried – Mobile – AllThingsD.)

Hofmann, Jobs and LSD

Seth Anderson0 comment

Steve Jobs and Albert Hofmann (source unknown)

stevejobsgrim.jpg

I know we’ve discussed Steve Jobs and LSD previously in this space, but I’m too lazy to find the link at the moment…

Anyway, too many of the obituaries of SJ omit this one facet of his life: he was imbued with the ethos of the counter-culture, possibly due to his experimentation with mind-expanding chemicals like Albert Hofmann’s “problem child”

“Dear Mr. Jobs,” begins the 2007 letter from Swiss scientist Albert Hofmann to Apple’s (AAPL) CEO. “I understand from media accounts that you feel LSD helped you creatively in your development of Apple computers and your personal spiritual quest. I’m interested in learning more about how LSD was useful to you.” Hofmann, as students of the sixties will recall, was the chemist who first synthesized, ingested and experienced the psychedelic effects of lysergic acid diethylamide.

LSD Art
LSD Art.jpeg

Steve Jobs, as readers of John Markoff’s “What the Dormouse Said: How the Sixties Counterculture Shaped the Personal Computer Industry” may remember, dabbled in psychedelics in the 1970s and has called his LSD experiences “one of the two or three most important things I have done in my life.” “I’m writing now,” Hofmann’s letter continues, “shortly after my 101st birthday, to request that you support Swiss psychiatrist Dr. Peter Gasser’s proposed study of LSD-assisted psychotherapy in subjects with anxiety associated with life-threatening illness.”

(click here to continue reading Dr. LSD to Steve Jobs: How was your trip? – Apple 2.0 – Fortune Tech.)

Ryan Grim adds:

The letter led to a roughly 30-minute conversation between Doblin and Jobs, says Doblin, but no contribution to the cause. “He was still thinking, ‘Let’s put it in the water supply and turn everybody on,'” recalls a disappointed Doblin, who says he still hasn’t given up hope that Jobs will come around and contribute.

That Jobs used LSD and values the contribution it made to his thinking is far from unusual in the world of computer technology. Psychedelic drugs have influenced some of America’s foremost computer scientists. The history of this connection is well documented in a number of books, the best probably being What the Dormouse Said: How the 60s Counterculture Shaped the Personal Computer, by New York Times technology reporter John Markoff.

Psychedelic drugs, Markoff argues, pushed the computer and Internet revolutions forward by showing folks that reality can be profoundly altered through unconventional, highly intuitive thinking. Douglas Engelbart is one example of a psychonaut who did just that: he helped invent the mouse. Apple’s Jobs has said that Microsoft’s Bill Gates, would “be a broader guy if he had dropped acid once.” In a 1994 interview with Playboy, however, Gates coyly didn’t deny having dosed as a young man.

Thinking differently–or learning to Think Different, as a Jobs slogan has it–is a hallmark of the acid experience. “When I’m on LSD and hearing something that’s pure rhythm, it takes me to another world and into anther brain state where I’ve stopped thinking and started knowing,” Kevin Herbert told Wired magazine at a symposium commemorating Hofmann’s one hundredth birthday. Herbert, an early employee of Cisco Systems who successfully banned drug testing of technologists at the company, reportedly “solved his toughest technical problems while tripping to drum solos by the Grateful Dead.”

“It must be changing something about the internal communication in my brain,” said Herbert. “Whatever my inner process is that lets me solve problems, it works differently, or maybe different parts of my brain are used.”

 

(click here to continue reading Ryan Grim: Read the Never-Before-Published Letter From LSD-Inventor Albert Hofmann to Apple CEO Steve Jobs.)

Keyboard Stops Working – Snow Leopard, Lion

Seth Anderson0 comment

Nike Control

I’ve encountered an annoying bug for a while now, dating from Snow Leopard (Mac OS X 10.6) at the least1 where my keyboard stops functioning. The mouse still works, the computer still does whatever it doing, but no key input registers with my Mac. The fix is simple enough, mouse into Activity Monitor, select Dock, quit it, and then the keyboard will work again. I haven’t figured out how to stop it from happening, but at least I can fix it without rebooting – which happened the first few times this happened.

Quit-Dock-in-Activity-Monitor.png

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I know that Screen Sharing and Spaces are both involved – the bug doesn’t appear unless I use these tools, in some combination, or in conjunction with some other process. Unplugging the keyboard from the USB port has no effect, plugging a new keyboard in has no effect, not using Screen Sharing and Spaces is not an option, so I live with having to quit Dock once or twice a day…

Footnotes:
  1. maybe earlier, my memory of such things gets fuzzy [↩]

Google: Rivals Are Ganging Up and Taking Our Lunch Money

Seth Anderson1 Comment

Alternative Google
Biggus Google

Poor, poor lil’ Google. They are a billion dollar company, and yet they whine like this:

Google Inc. accused rivals Oracle Corp., Microsoft Corp. and Apple Inc. of waging an “organized, hostile campaign” against the Internet search giant’s Android mobile phone software, using questionable patents.

“They want to make it harder for manufacturers to sell Android devices,” Google Chief Legal Officer David Drummond wrote on a company website. “Instead of competing by building new features or devices, they are fighting through litigation.”

The campaign against Android is being waged “through bogus patents,” Mr. Drummond wrote, adding that “Microsoft and Apple have always been at each other’s throats, so when they get into bed together you have to start wondering what’s going on.”

(click here to continue reading Google: Rivals Are Ganging Up – WSJ.com.)

I’m too lazy to write up responses to Google’s questionable, ridiculous arguments, but luckily, smarter folk have already done so. Like John Gruber:

So if Google had acquired the rights to these patents, that would have been OK. But when others acquired them, it’s a “hostile, organized campaign”. It’s OK for Google to undermine Microsoft’s for-pay OS licensing business by giving Android away for free, but it’s not OK for Microsoft to undermine Google’s attempts to give away for free an OS that violates patents belonging to Microsoft?

Or Brad Smith of Microsoft:

Google says we bought Novell patents to keep them from Google. Really? We asked them to bid jointly with us. They said no.

Ride Smarter
Ride Smarter

Google whines some more:

A consortium that included Microsoft and Apple recently paid $4.5 billion for patents auctioned by Nortel, an amount that Google notes was “five times larger than the pre-auction estimate of $1 billion.”

Take Action With Your Money
Take Action With Your Money

Daring Fireball again:

First, the “estimate” of $1 billion was partially set by Google itself.

Then when the auction actually started, it’s OK for Google to bid over $3.14 billion, but when Apple and Microsoft bid $4.5 billion, that’s “way beyond what they’re really worth”. And if these patents are “bogus”, why was Google willing to pay anything for them, let alone pi billion dollars?

No one other than Nathan Myhrvold and his cronies sees the U.S. patent system as functioning properly, but Google’s hypocrisy here is absurd. Google isn’t arguing against a handful of never-should-have-been-issued software patents. They’re not arguing against patent trolls like Myhrvold and his shell companies like Lodsys — companies that have no products of their own, no actual inventions, just patents for ideas for products. They’re effectively arguing against the idea of the patent system itself, simply because Android violates a bunch of patents held by Google’s competitors. It’s not “patents” that are attacking Android. It’s competing companies whose patents Google has violated — and whose business Android undermines — who are attacking Android.

John Paczkowski adds:

Clearly, the company is taking a new tack here, framing the issue in its own way and, presumably, putting whatever lobbying and legal muscle it has into throwing out roadblocks. To wit, these few lines, also taken from Drummond’s post:

We’re encouraged that the Department of Justice forced the group I mentioned earlier to license the former Novell patents on fair terms, and that it’s looking into whether Microsoft and Apple acquired the Nortel patents for anti-competitive means.

I bet you are. Particularly since you’re facing antitrust inquiries into your own core businesses. And in the end, that may be another purpose of this post: To show regulators that Google isn’t always the unstoppable juggernaut it is portrayed to be. Sometimes it’s the victim, or it would like to be viewed that way, especially by the FTC and the tough-talking judge presiding over its patent infringement showdown with Oracle. One last point: If the patents to which Google refers are “bogus,” why bother decrying them at all? Or, for that matter, trying to purchase them in the first place?

(click here to continue reading Google Rails Against Anti-Android Patent Purchases – John Paczkowski – News – AllThingsD.)

CB's Broken Balloons
CB’s Broken Balloons

TechCrunch wonders why Google is so interested in patents now…

As you’ve undoubtedly seen by now, Google decided to go on the offensive today with regard to patents. No, they didn’t go after any company for violating their patents. Nor did they spend billions acquiring new ones. Instead, David Drummond, Google’s SVP and Chief Legal Officer, took to the Google Blog to lash out at Microsoft, Apple, Oracle, and others for using “bogus patents” to attack their Android mobile platform.

But why now? In the past, Google has remained fairly mum on the topic. And they certainly weren’t calling out rivals by name. They’ve talked generally about the broken patent system, and even did a post explaining why they were willing to spend big money on the Nortel patents — for defensive purposes. But those approaches haven’t worked. Google is now arguably more vulnerable than they’ve ever been. And the stakes are about to go even higher.

When Google lost the Nortel bidding, they’re believed to have bid north of $4 billion before dropping out. Apple, backing Rockstar Bidco, eventually won with a bid of $4.5 billion. Now a battle for an even bigger treasure of patents looms.

(click here to continue reading Why Did Google Blog About Patents Today? Because The Nortel Loss Was Just The Beginning. | TechCrunch.)

Apple and Its Cash Hoard

Seth Anderson0 comment

Apple Store in Soho
Apple Store in Soho

Philip Elmer-DeWitt of Fortune Magazine links to an utterly fascinating perspective on what Apple is doing with its very large hoard of cash (in the neighborhood of $70,000,000,000 at the moment)

Apple’s cash for short-term and long-term marketable securities totaled $65.8 billion at the end of the March quarter. Cash increased by $6.1 billion.

The increase in cash is net of approximately $900 million for prepayments and capital expenditures related to the strategic supply agreements that Apple announced last quarter.

(click here to continue reading If Cash is King, Apple’s is an Emperor [Updated] | asymco.)

Instead of giving this money to stock holders as dividend payments, or using it to purchase other companies, Apple uses it as leverage to make arrangements with component factories, as explained below.

Apple actually uses its cash hoard in a very interesting way to maintain a decisive advantage over its rivals: When new component technologies (touchscreens, chips, LED displays) first come out, they are very expensive to produce, and building a factory that can produce them in mass quantities is even more expensive. Oftentimes, the upfront capital expenditure can be so huge and the margins are small enough (and shrink over time as the component is rapidly commoditized) that the companies who would build these factories cannot raise sufficient investment capital to cover the costs.

What Apple does is use its cash hoard to pay for the construction cost (or a significant fraction of it) of the factory in exchange for exclusive rights to the output production of the factory for a set period of time (maybe 6 – 36 months), and then for a discounted rate afterwards.

This yields two advantages: Apple has access to new component technology months or years before its rivals. This allows it to release groundbreaking products that are actually impossible to duplicate. Remember how for up to a year or so after the introduction of the iPhone, none of the would-be iPhone clones could even get a capacitive touchscreen to work as well as the iPhone’s? It wasn’t just the software – Apple simply has access to new components earlier, before anyone else in the world can gain access to it in mass quantities to make a consumer device.

One extraordinary example of this is the aluminum machining technology used to make Apple’s laptops – this remains a trade secret that Apple continues to have exclusive access to and allows them to make laptops with (for now) unsurpassed strength and lightness. Eventually its competitors catch up in component production technology, but by then Apple has their arrangement in place whereby it can source those parts at a lower cost due to the discounted rate they have negotiated with the (now) most-experienced and skilled provider of those parts – who has probably also brought his production costs down too. This discount is also potentially subsidized by its competitors buying those same parts from that provider – the part is now commoditized so the factory is allowed to produce them for all buyers, but Apple gets special pricing.

Apple is not just crushing its rivals through superiority in design, Steve Jobs’s deep experience in hardware mass production (early Apple, NeXT) has been brought to bear in creating an unrivaled exclusive supply chain of advanced technology literally years ahead of anyone else on the planet. If it feels like new Apple products appear futuristic, it is because Apple really is sending back technology from the future. Once those technologies (or more accurately, their mass production techniques) become sufficiently commoditized, Apple is then able to compete effectively on cost and undercut rivals. It’s a myth that Apple only makes premium products – it makes them all right, but that is because they are literally more advanced than anything else (i.e. the price premium is not just for design), and once the product line is no longer premium, they are produced more cheaply than competitor equivalents, yielding higher margins, more cash, which results in more ability to continue the cycle.

(click here to continue reading How Apple became a monopsonist – Apple 2.0 – Fortune Tech.)

That is pretty ingenious, I think.

Google Lackadaisical Over App Security

Seth Anderson0 comment

Do Not Overreach

Google needs to do a lot more to protect its users. The internet is a wild and wooly place, and Google knows better1 than to trust every developer is honest.

A major software attack on mobile phones has put pressure on Google Inc. to do more to secure its online store for smartphone applications.

The company behind the now ubiquitous Android operating system came under fire after computer-security experts last week uncovered more than 50 malicious applications that were uploaded to and distributed from Google’s Android Market.

Some security experts said the incident shows Google, which doesn’t inspect Android apps before they are published, needs to do more to try to ensure the apps are safe before they are offered to smartphone users.

Google largely relies on users to rate apps and raise the alarm about any problems with them. It also requires consumers to give their consent for an app to access their personal data. But that approach isn’t enough, according to Chris Wysopal, chief technology officer of computer-security firm Veracode. “App stores need to get serious about vetting code before it is available for customer download,” Mr. Wysopal wrote on his blog.

Google has said 58 malicious apps were uploaded to Android Market and then downloaded to around 260,000 devices before Google removed the affected apps last Tuesday evening. It isn’t clear how many users activated the applications, a Google spokesman said.

(click here to continue reading Google Takes Heat Over App Security – WSJ.com.)

Google doesn’t like to invest money in these sorts of human dimensions, preferring to let people self-help. Remember the Nexus phone debacle? No live tech support was even planned. Customers of Google are supposed to use web forums for all issues, including I guess spreading the word about malicious apps in the Android Market.

Cell phone-iphile

There are problems with the Apple App Store model2, but fearing that malicious apps will compromise users’ data is not one of them. I have zero fear that an iPhone app will give root access to my phone, for example.

Footnotes:
  1. or should know better [↩]
  2. mostly based on how successful the Apple App Store is – takes a long time to get an app approved, or updated, because there are just so many damn apps! From my admittedly non-developer perspective, seems like Apple needs to hire more staff, but maybe they’ve gotten better [↩]

links for 2011-01-22

swanksalot0 comment
  • Brian Marshall, Broadpoint AmTech   7.0
  • David Bailey, Goldman Sachs           6.2
  • Kathryn Huberty, Morgan Stanley     6.0
  • Shaw Wu, Kauffman Bros.              5.0
  • Mike Abramsky, RBC Capital Markets   5.0
  • Gene Munster, Piper Jaffray           3.5
  • Ben Reitzes, Barclays Capital           2.9
  • Keith Bachman, BMO Capital         2.5
  • Jeff Fidacaro, Susquehanna           2.1
  • Chris Whitmore, Deutsche Bank       2.0
  • Scott Craig, Merrill Lynch               1.2
  • Peter Misek, Canaccord Adams       1.2
  • Doug Reid, Thomas Weisel             1.1
  • Yair Reiner, Oppenheimer             1.1

…

Apple sold 14.8 million iPads in 2010.

Goldman Vs. Apple

Seth Anderson0 comment

Apple Blues

John Cassidy, of The New Yorker, writes:

Contrary to appearances, I’m not obsessed with Goldman Sachs, and this will be my last post on the subject for a while. But the Wall Street firm issued its latest profit report today, and I thought it would be interesting to compare its results to those of Apple, another iconic American business, which yesterday published its own profit figures.

Many people are put off by financial accounts, but they provide an invaluable window into what is really going on in a given corporation, and to how much it is contributing to society. I may be weird, but sometimes I actually like poking around in 10-Qs, 8-Ks, and other disclosure forms that public companies have to file with the Securities and Exchange Commission. One word of warning, though. What follows should be considered a process of me thinking out loud, and pointing out some things that strike me, rather than reaching any definitive conclusions.

As everybody knows, Goldman and Apple are both making tons of money (although Goldman’s latest results disappointed investors somewhat). In the final quarter of 2010, the bank generated net profits of $2.39 billion on revenues of $8.64 billion. Apple, which has a much bigger turnover, made profits of $6 billion on revenues of $26.4 billion.

…

Another way to gauge a firm’s performance is to take everything it possesses—its buildings, its machinery and other equipment, its product designs, and its financial holdings—and look at how much profit it generates for each dollar of assets on its books. In my opinion, this measure, which is known as return on assets (ROA), is the best way to judge a business, because it excludes the amplifying effect of leverage. Now let’s apply it to Goldman and Apple.

According to its latest filing with the S.E.C., Goldman ended 2010 with assets of $911 billion, which means its ROA for the year was roughly .91 per cent. (Yes, that is less than one per cent.) Apple ended 2010 with total assets of $86.7 billion, which means it generated an ROA of about 20.3 per cent.

To summarize: Apple isn’t merely generating a higher return on the capital it employs than Goldman; it is more than twenty times as profitable! How can this be?

(click to continue reading Rational Irrationality: Goldman Vs. Apple: Who Generates the Highest Economic Return? : The New Yorker.)

Maybe I’m irrational, but I have less than zero interest in working for Goldman Sachs, and would love to even be an outside vendor for Apple, Inc., even though Goldman employees are paid much, much more than Apple employees:

Another thing that differentiates Goldman from Apple is how much it pays its employees. In 2010, Goldman’s 35,700 employees took home an average of $430,700. Apple doesn’t publish much information about its labor costs. According to the jobs Web site Simply Hired, the average salary at Apple is $46,000. Another Web site, Salary List, quotes a substantially higher figure—$107,719—but that doesn’t appear to include people working at Apple’s more than three hundred retail stores. Whichever number is more accurate, the basic message is the same. Apple employees earn a lot less than their counterparts at Goldman despite the fact they generate a much higher return—private and social—on the capital they use.

 

links for 2010-12-29

swanksalot0 comment
  • The Unbearable Inevitability of Being Android, 1995 « counternotions
    As business models go, there are currently two dominant ones: either people like your product enough to purchase it or they don’t care enough to buy it but will overlook its deficiencies if it’s “free” in exchange for their personal browsing and purchasing info sold to advertisers. The former model is Apple’s, the latter is Google’s. Apple sells emotional experiences. The price is what users pay to be delighted by Apple’s stream of innovations and to be free of the lowest common denominator burdens and the pervasive harvesting of their personal info. Google sells eyeballs. To be more precise, the clickstream attached to those eyeballs. Thus scale, indeed dominance, is absolutely crucial to Google’s model.
    phone+heads.jpg
    (tags: google iPhone Apple)
  • 80% Of All US’ Antibiotics Given To Farm Animals : TreeHugger
    Even for someone who follows sustainable agriculture and animal welfare issues, this is pretty astounding: New analysis by the Center for a Livable Future shows that 80% of all antibiotics sold in the United States go to farm animals (Wired). The last time that stat was calculated, a decade ago by the Union of Concerned Scientists, it stood at 70%.
    all-you-can-eat_25.jpg
    (tags: health agribusiness)
  • How Many Documents Has WikiLeaks Published? : NPR
    In recent weeks, NPR hosts, reporters and guests have incorrectly said or implied that WikiLeaks recently has disclosed or released roughly 250,000 U.S. diplomatic cables. Although the website has vowed to publish “251,287 leaked United States embassy cables,” as of Dec. 28, 2010, only 1,942 of the cables had been released.
    (tags: wikileaks cablegate)
    anti propaganda hemp anslinger marijuana-girl-reefer-madness-poster.jpg

CTA Apple Station A No Bid Process, So?

Seth Anderson0 comment

Apple Blues

The CTA accepted Apple’s offer, as presented, without soliciting other bids, probably because no other corporation was offering anything. Why would there be a bidding war for the (formerly) decrepit North & Clybourn El stop? Theoretical money isn’t the same as the actual money Apple spent.

The Chicago Transit Authority announced last month that it is looking for a consulting firm to help develop a “revenue-generating corporate sponsorship program” — a plan to sell private companies the naming rights to CTA train lines, train stations and bus routes.

The consultant will determine which of the agency’s assets might attract sponsorships and what the naming rights would be worth, according to a request for proposals issued by the CTA. Public bidding would be central to the consultant’s work, the CTA said, to assure “transparency and increased competition.”

But there was no such bidding last year when the CTA agreed to let Apple spend nearly $4 million on renovation of the North and Clybourn train station. The CTA agreed to let Apple turn an unused bus driveway into a plaza and to renovate the inside of the station to the company’s specifications. In return, Apple was given the rights to lease the plaza space for no charge for at least 10 years, to advertise anywhere in the station at rates set by the CTA, and to purchase station naming rights if the agency ever sells them.

(click to continue reading Competition Wasn’t Part of CTA’s Apple Deal – NYTimes.com.)

Now that Apple was so successful in refurbishing a station in their chosen manner, future similar CTA station deals will have more public bidding processes, I don’t have a problem with that. I also don’t care if private businesses adopt other train stations, and clean them up in exchange for naming rights or whatever. What’s the harm? The oft-criticised parking privatization sold off future Chicago revenue streams to a for-profit corporation for 99 years, the Apple CTA station is a quite different scenario.