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Jon Rubinstein Joins Board of Qualcomm, as Mobile Chipmaker Ups Its Silicon Valley Cred

Kara Swisher — Mon, 06 May 2013 20:05:12 +0000

According to sources close to the situation, well-known tech exec Jon Rubinstein will be joining the board of Qualcomm, the San Diego-based chipmaker that has gotten a big boost of late for its role in the explosion of mobile devices.

Rubinstein is an interesting and logical choice for Qualcomm, having been a high-profile player for a long time in the mobile space, beginning with his work on the iPod while at Apple. After he left his last job at Hewlett-Packard last year, though, he has been very low-key.

(Update: Qualcomm confirmed the appointment in a press release.)

For Qualcomm, the selection of Rubinstein to join the board is something to watch, as he is the second exec from Silicon Valley to be tapped by the company recently. In March, Qualcomm hired tech investor Laurie Yoler as SVP of business development, making her “responsible for augmenting existing business relationships in Silicon Valley, as well as developing new strategic business opportunities for Qualcomm in the region.”

Rubinstein has even more experience here and is also familiar with a range of mobile efforts over the years, some of which were successful and others not so much, from his work at Apple, Palm and then HP. He is also a board member of Amazon.

Aside from CEO and Chairman Paul Jacobs, Rubinstein — who has degrees in electrical engineering and computer science — will be the most technically experienced director on the 11-person board.

Qualcomm declined to comment.

Here’s a nice primer on Rubinstein by Arik Hesseldahl, in a report on his leaving HP early last year:

Best known for his work on Apple’s iconic iPod music player, Rubinstein left Apple in 2006 and joined Roger McNamee as a partner in the private equity firm Elevation Partners, following its 2007 investments in Palm.

In 2009 he replaced longtime Palm executive Ed Colligan as its CEO, and oversaw a dramatic restructuring of the company’s products, including a significant rebuild of its smartphone operating system. Gone was the legacy PalmOS that had been used in so many popular devices like the Treo that for a time competed seriously against Research In Motion’s BlackBerry.

PalmOS was replaced by WebOS, which first appeared on the Pre smartphone, then later on the Pixi and Veer devices. After HP acquired Palm, WebOS was also used on the abandoned TouchPad tablet, and is now an open-source operating system overseen by HP.

Rubinstein’s departure is no big surprise. Sources said he hadn’t been seen at HP’s offices following the decision by former CEO Léo Apotheker to get out of the business of making WebOS-based hardware. His future plans have been the subject of speculation for some time.

After HP decided to exit the WebOS hardware business, Rubinstein was assigned to a vaguely described “product innovation role” within HP’s Personal Systems Group during a management shakeup last July. It was an unusual move and one made with little explanation at the time. But sources say it was a preface to Rubinstein’s departure, one intended to lessen its PR impact when he finally left. “That ‘innovation’ gig he was given in July was his first step toward the exit,” said one source, a former Palm exec with close ties to Rubinstein.

Apple Beats Targets, Boosts Dividend

John Paczkowski — Tue, 23 Apr 2013 20:37:53 +0000

If Apple’s recent stock market performance had you thinking 2013 would be a year to forget, you might want to reconsider. The company just turned in an old-school beat.

An expected Apple posted an 18 percent decline in profit and slowing revenue growth for the quarter ended in March, but it also reported earnings of $10.09 per share on revenue of $43.6 billion. That’s above the $9.98 per share on revenue of $42.3 billion analysts had predicted, and at the higher end of Apple’s own range of guidance for the period: Earnings of between $9.23 and $10.23 per share on sales of $41 billion to $43 billion.

Commenting on Apple’s Q2 performance, Ironfire Capital founder Eric Jackson told AllThingsD, “Jiminy.”

And there was plenty more good news where that came from:

Apple sold a ton of iPhones and iPads. This time last year, the company shipped 35 million iPhones and 11.8 million iPads — double the number it sold the year before. During the quarter reported today, Apple sold 37.4 million iPhones and 19.5 million iPads. Analysts were looking for 36.5 million and 18.3 million, respectively. That’s a nice bump in iPhone sales, but it’s a spectacular leap for the iPad. In the year ago quarter, Apple sold just 11 million. As Ironfire’s Jackson said, “The biggest story here is iPads: 19.5 million up from 11 million a year ago. Apple is going to be a screen and service company from here.”
Apple authorized a $60 billion share buyback plan, and raised its quarterly dividend to $3.05 per share.
And it said it would make a “significant increase” in its capital return policy, totaling $100 billion by 2015. That’s a $55 billion increase over the previous plan.

“We are pleased to report record March quarter revenue thanks to continued strong performance of iPhone and iPad,” Apple CEO Tim Cook said in the company’s earnings release, adding that there’s some “amazing new hardware, software, and services” in the pipeline.

The lone speck of disappointing news in an otherwise good report: Apple’s guidance for next quarter, perhaps the most closely watched data point of all today. The company said it expects revenue of between $33.5 billion to $35.5 billion in the June quarter, and gross margins of 36 percent to 37 percent. Analysts had been looking for revenue of $38.6 billion and margins of 38.6 percent.

Still, a good showing overall, and one that the Street seems particularly happy with. Shares of Apple rose 4.6 percent in after-hours trading following the report.

Notes from the call …

Cook: “In the first half of the year our net income was over $22 billion. During that time, we sold 85 million iPhones and 42 million iPads. These are very, very large numbers.”
Cook acknowledges that Apple’s growth rate has slowed and margins have decreased.
Cook: “The decline in Apple stock price has been very frustrating to all of us. … The most important objective will always be creating innovating products.”
Lots to look forward to later this year: “We are hard at work on some amazing new hardware, software and services we can’t wait to introduce this fall and throughout 2014.”
Cook on Apple’s plan to return $100 billion to shareholders by the end of 2015, largely via share repurchases: “We concluded that investing in Apple was the best.”
Oppenheimer on iPad: 65 percent more iPads sold year over year. Sales more than doubled in Greater China and Japan. “We sold significantly more iPad minis in the March quarter than the December launch quarter. The market suggests iPad mini purchasers are first-time iPad customers.”
Yow. iTunes revenue rose 28 percent year over year.
More on iTunes: Quarterly billings over $4 billion.
Cumulative app downloads: More than 45 billion.
iCloud now boasts 300 million users — up about 20 percent from the 250 million the service had in January.
Retail revenue $5.2 billion, up 19 percent year over year.
Oppenheimer says Apple’s cash pile now totals $145 billion, up $7.6 billion sequentially.
On the share buyback program: “This is the biggest by any company. … We believe in Apple strongly and we think this is a great investment.
Cook on China: “This was our best quarter ever in China. Revenue came in at $8.8 billion. That’s up 11 percent year over year. … iPad sales in greater China grew 138 percent year over year. … Our Greater China revenue was up approximately 18 percent, so it’s a bit better than it first looks. … we still see a significant opportunity in China, it’s a great market. We expect to double the 11 stores there in less than 2 years. This number is obviously too low, currently. … China has an unusually large number of potential first-time buyers, and that’s not lost on us.”
Cook on competitive landscape: “We have tough competitors, but we feel we have the best products by far. We continue to invest in innovative products and feel confident about our product pipeline. We have the best ecosystem by far, and we’re just going to keep making it better and better.”
Cook: “We see an enormous number of first-time smartphone buyers coming to market in certain countries around the world. We started last quarter making the iPhone 4 even more affordable, and that has made it more attractive to first-time buyers.”
Cook on the five-inch iPhone: “My view continues to be that iPhone 5 has the absolute best display in the industry. … we always strive to create the very best display for our customers. … Our competitors have made some significant trade-offs in many areas in order to ship a larger display. We would not ship a larger display iPhone while these trade-offs exist.”
Questioned directly about new product categories, Cook said explicitly that Apple is considering them.
Cook on Mac cannibalization by iPad: “It’s certainly true the iPads cannibalized some Macs. But I don’t think it’s a huge number. … It’s probably extending the upgrade cycle. I don’t think the PC market is a dead market or a bad market by any means, and we’re going to keep innovating.”
iPad now being tested or deployed in 89 percent of the global 500.

Apple Settles iPhone Water Damage Suit

John Paczkowski — Fri, 12 Apr 2013 19:26:35 +0000

Apple has agreed to pay $53 million to settle a class action lawsuit claiming it failed to honor warranties on iPhones and iPods. Turns out the Liquid Submersion Indicators built into those devices could be triggered by humidity as well as water damage, and some members of the class may have wrongly been denied repairs or replacements as a result. Wired reports that Apple has agreed to the settlement without admitting wrongdoing. It is expected to be approved in the coming weeks.

Adobe CTO Kevin Lynch Headed to Apple

John Paczkowski and Peter Kafka — Tue, 19 Mar 2013 21:33:53 +0000

Kevin Lynch, Adobe’s CTO and a longtime defender of its Flash technology, is leaving the company to take a position at one of Flash’s biggest critics: Apple.

Lynch tendered his resignation yesterday saying he planned to “pursue other opportunities.” And, according to Adobe, those opportunities are at Apple.

“Kevin Lynch, Adobe CTO, is leaving the company effective March 22 to take a position at Apple,” an Adobe spokesperson told AllThingsD. “We will not be replacing the CTO position; responsibility for technology development lies with our business unit heads under the leadership of Adobe CEO Shantanu Narayen. Bryan Lamkin, who has recently returned to Adobe, will assume responsibilities for cross company research and technology initiatives as well as Corporate Development. We wish Kevin well in this new chapter of his career.”

Apple spokesman Steve Dowling confirmed the hire, and said that Lynch will join Apple as vice president of technology, reporting to Bob Mansfield, SVP of Technologies.

A person familiar with the move said Lynch had aspired to eventually take the CEO job at Adobe, but that Shantanu Narayen isn’t giving that spot up anytime soon. At Apple, he’ll have a much less senior position, but potentially an important one, where he’ll be tasked with coordinating the company’s hardware and software teams.

Lynch isn’t the first Adobe executive to head to Apple — in January 2012, ad executive Todd Teresi joined Apple to run iAd for media boss Eddy Cue. But Lynch is by far the highest-ranking and highest-profile executive to make the switch.

The move is even more striking since Lynch was Adobe’s point man during the war between the two companies over Flash, Adobe’s core video and multimedia technology.

Under former CEO Steve Jobs, Apple moved away from Flash, and none of its iOS mobile devices — iPhones, iPads and iPod — support Flash at all. Lynch was the guy tasked with responding to Apple and Jobs, both in blog posts and interviews like this one he conducted with Kara Swisher in April 2010.

That’s when he described Apple’s moves as a “protectionist strategy,” that was “bad for consumers.” Apparently he’s changed his mind.

[ See post to watch video ]

Relentless

Voices — Fri, 25 Jan 2013 07:59:02 +0000

Eric,
I am told that Googles new cell phone software group is relentlessly recruiting in our iPod group. If this is indeed true, can you put a stop to it?
Thanks,
Steve

– An email from Steve Jobs to Eric Schmidt

Apple CEO: Don't Fear Cannibalization, Embrace It

John Paczkowski — Thu, 24 Jan 2013 00:10:31 +0000

Better to eat your own than have your own eaten by others. That’s Apple’s philosophy on product cannibalization as related by Tim Cook during the company’s first-quarter earnings report.

“I see cannibalization as a huge opportunity for us,” Cook said Wednesday. “Our core philosophy is to never fear cannibalization. If we don’t do it, someone else will. We know that iPhone has cannibalized some of our iPod business. That doesn’t worry us. We know that iPad will cannibalize some Macs. But that’s not a concern. On iPad in particular, we have the mother of all opportunities because the Windows market is much, much larger than the Mac market. It is clear that it is already cannibalizing some. I still believe the tablet market will be larger than the PC market at some point. You can see by the growth in tablets and pressure on PCs that those lines are beginning to converge.”

In short, Apple doesn’t much care about cannibalization as long as it’s another Apple product that’s doing the cannibalizing. And if that product is creating more demand than it cannibalizes, so much the better — particularly if it’s demand for other Apple products.

“If somebody buys an iPad mini or an iPad, if it’s their first Apple product, a percentage of these people wind up buying another type of Apple product,” Cook said. “If you remember what we had termed the halo effect for the iPod with the Mac, we’re very confident that will happen with the iPad as well.”

Apple Earnings: Good, Not Great

John Paczkowski — Wed, 23 Jan 2013 21:39:26 +0000

After a suffering a near 30 percent decline in share price over the past three months, Apple needed an old school top line beat for the holiday quarter to ease fears that its pace of growth is slowing.

But the company didn’t quite manage it. While it beat its own guidance — earnings per share of $11.75 on $52 billion in revenue — it didn’t trounce the Street.

Posting first-quarter financials after market close Wednesday, Apple reported earnings per share of $13.81 on revenue of $54 billion. The first number surpassed Wall Street estimates, the second did not. Analysts had been expecting Apple to post earnings per share of $13.47 on revenue that rose 19 percent to $54.9 billion.

Apple said its gross margins were 38.6 percent. That’s close to the 39.5 percent analysts had been looking for, but not close enough.

Apple said it sold 47.8 million iPhones for the quarter, 22.9 million iPads, 4.1 million Macs and 12.7 million iPods. Wall Street was expecting iPhone sales of 48 million units, iPad sales of 22-23 million units, Mac sales of about 5 million units and iPod sales of 12 million.

“We’re thrilled with record revenue of over $54 billion and sales of over 75 million iOS devices in a single quarter,” Apple CEO Tim Cook said in the company’s earnings release. “We’re very confident in our product pipeline as we continue to focus on innovation and making the best products in the world.”

For the upcoming quarter, Apple expects revenue of $41 billion to $43 billion. Analysts had been looking for $45.6 billion. The company didn’t offer any guidance on earnings.

Apple shares, which had rallied in after-hours trading prior to the company’s earnings release, tumbled on the news. At $489.30, they’re down more than 4 percent.

So: Record iPad sales. Record iPhone sales. Record revenue of over $54 billion. Some 75 million iOS devices sold in a single quarter. And yet the Street’s still disappointed.

For the company’s side of things, check Ina Fried’s liveblog.

New YouTube "Capture" App Lets You Record, Share Directly From iPhone Screen

Lauren Goode — Mon, 17 Dec 2012 20:36:54 +0000

We’ve all been there: You pull your iPhone out to capture your kid doing something ridiculously cute, or record that guy face-planting on the treadmill at the gym, and by the time you’ve fumbled with your phone, you’ve missed the moment. Shoot. (Pun intended.)

No more! Google’s YouTube has just rolled out a new app called Capture that lets users immediately shoot video as soon as the app is opened. Once you’ve stopped filming, you can share the video, and it will upload to your platform of choice even after you close the app.

And even better than the video “enhancements” that promise to make your footage Scorsese-worthy, the app will always record in horizontal format — even if you’re holding your phone vertically. (As a recovering video editor who has had to work with elongated video shot on iPhones, I can vouch for how excellent this feature is, however small it may seem.)

Speaking of iPhones: YouTube Capture is only available on iOS devices to start, despite, you know, the whole Google-Android thing. But Google says that an Android version is on the way.

Is YouTube Capture that much faster than opening your iPhone’s camera roll and sliding the button to the little camcorder icon to record video? We haven’t done a side-by-side yet, but feel free to leave your comments below.

You Know What Else Started Out Like Apple TV? The iPod.

John Paczkowski — Thu, 06 Dec 2012 19:24:51 +0000

Apple TV isn’t just a hobby any more.

For years, Apple defined the device that way, resisting suggestions that television was the next market it planned to disrupt. But as company co-founder Steve Jobs said at our D5 conference in 2007, another Apple creation had similar humble beginnings and went on to become one of the company’s most transformative products.

“I use the word hobby because it’s provocative,” Jobs told AllThingsD’s Walt Mossberg in 2007. “But the iPod started this way. The iPod started off feeling a lot like this.”

And to hear Apple CEO Tim Cook tell it today, Apple TV might be poised for a similar transition. In an interview with NBC, Cook said that Apple’s view of the television market is changing, and hinted that Apple TV may no longer be the hobby it began as.

“When I go into my living room and turn on the TV, I feel like I have gone backwards in time by 20 to 30 years,” Cook said. “It’s an area of intense interest. I can’t say more than that.”

That comment marks a clear departure from Apple’s long-running narrative about its plans for the TV market and the unique challenge it presents, one that Jobs once said would likely be met and overcome by someone else.

“The problem with innovation in the TV industry is the go-to-market strategy,” Jobs said in 2010 at our D8 conference. “The TV industry has a subsidized model that gives everyone a set-top box for free. So no one wants to buy a box. Ask TiVo, ask Roku, ask us … ask Google in a few months. The television industry fundamentally has a subsidized business model that gives everyone a set-top box, and that pretty much undermines innovation in the sector. The only way this is going to change is if you start from scratch, tear up the box, redesign and get it to the consumer in a way that they want to buy it. But right now, there’s no way to do that. … The TV is going to lose until there’s a viable go-to-market strategy. That’s the fundamental problem with the industry. It’s not a problem with the technology, it’s a problem with the go-to-market strategy. …. I’m sure smarter people than us will figure this out.”

Two and a half years later, no one has. But some very smart people are doing some very intense thinking.

Sonos Schools the Dock With New Software Update

John Paczkowski — Wed, 05 Dec 2012 08:01:27 +0000

With the launch of its proprietary Lightning dock connector, Apple pushed a number of accessories designed to work with its iOS devices into obsolescence, and sent their manufacturers scrambling to integrate its new connection standard.

Some manufacturers, anyway. Others have decided that the future of docking doesn’t involve a dock at all. Case in point: Sonos, the company responsible for the wireless multiroom audio system of the same name. After quietly killing off its own wireless dock in September, Sonos is today rolling out an update to its software that serves exactly the same function.

Sonos 3.8.3 transforms the devices on which it runs into networked drives that can stream the music stored on them to a Sonos system. And it gives them the same functionality as a standard Sonos library. In other words, you can play different tracks or playlists in different rooms, or the same ones in multiple rooms. That’s something Apple’s AirPlay wireless streaming protocol can’t do (yet), which is presumably one reason why Sonos isn’t using it (another is Apple’s AirPlay certification program). It’s not using Bluetooth, either. According to a company spokesperson, the app simply reads music off an iOS device and streams it to Sonos players over the network they create — in its native digital format.

Sonos 3.8.3 supports most, but not all, popular audio formats — MP3, AAC and Apple Lossless files, among others. It doesn’t support WAV or AIFF, or any tracks protected by a digital rights management scheme. Obviously, it does not play well with Apple’s iTunes Match music locker service, either.

Still Sonos’ latest software seems an elegant solution for the dock dilemma created by Apple’s move to Lightning, and a far better option than line-in for listening to music from your iPhone — or a friend’s — over a Sonos system.

iTunes Gets an Upgrade Without Missing a Beat

Walter S. Mossberg — Wed, 05 Dec 2012 02:05:03 +0000

[ See post to watch video ]

Apple’s iTunes is the world’s most popular computer program for playing, managing and buying music, movies and TV shows. The company estimates the number of copies in active use to be in the high hundreds of millions. Now, Apple has given iTunes its biggest overhaul since 2003, when the software — originally just a jukebox for Macs — was made available for Windows computers and the built-in iTunes store was added.

I’ve been testing this major new version, called iTunes 11, and I consider it a significant improvement in the look, feel, speed and function of the program, which had become somewhat bloated, sluggish and dense over the years as new features were added.

This new version won’t please every iTunes user. Some familiar ways of doing things have changed and some longtime features have been axed in the name of simplification. People who use iTunes solely to organize and play their media, not to buy it from Apple, will find many more prompts to patronize the iTunes store. There also are a few small flaws Apple is pledging to fix soon.

Overall, however, I found the new iTunes a pleasure to use. The venerable program is now brighter and more colorful, with clever and pleasing new capabilities and faster search. There is tighter integration between the library of media that resides on your computer and media stored in Apple’s online iCloud service. Streaming from the cloud has been expanded. The store has also been made cleaner, simpler and easier to use.

A new feature of iTunes 11, called Expanded view, allows you to click on an album cover to get a matching panel showing all the songs on that album.

I tested iTunes 11 on four computers: two PC laptops, one running Windows 7 and one the new Windows 8; and two Macs, an older desktop iMac and a late-model MacBook Air laptop. On all four machines, it ran well and smoothly, never crashing and properly playing all the local and cloud-based music and videos I tried.

In my tests, I bought a variety of new songs and videos, and they quickly became available on all my devices, including the four computers, an iPhone and an iPad. I also was able to smoothly sync an iPhone, an iPad and even a very old iPod, with no problems.

There are many small changes scattered throughout the program, but a few stand out.

No More Sidebar

The most notable change is that the program no longer uses a long, scrolling text sidebar to switch between displays of the major media types, such as music, movies, TV shows and podcasts. Instead, you select these by clicking on a drop-down button. When you pick a media type, it displays choices at the top. The music mode, for example, shows songs, albums, artists, genres and playlists. Choosing any of these instantly changes the main screen to reflect that choice.

Opening the iTunes Store is now done using a button at the top right. Once in the store, you return to the library using a similar button at the right.

Those who prefer the old sidebar can bring it back and banish the new main buttons.

Expanded View

My favorite new feature is called Expanded view. You can now click on any album cover and the cover image expands into a colorful panel showing all the songs on that album. The panel is in the dominant shade of the album cover and shows a lovely image of the cover that blends into the colored background of the panel.

This Expanded view also works for movies and TV shows, showing relevant information about films and, for TV shows, lists of episodes.

A small arrow next to each song, album, movie or TV show lets you perform actions like adding an item to a playlist, or jumping to the artist page in your library, or going to the item in the store.

What’s Next?

Another nice feature is called Up Next. It replaces a function called DJ and is essentially a queue of songs. You place any song at the top of this queue to play it next and see a history of what has been played earlier. If you like, you can play immediately any song in these lists.

Streaming

For years, iTunes was mainly about downloading media, not streaming it from the cloud. That changes with iTunes 11, now better integrated with Apple’s iCloud service, which stores music and videos you have purchased from Apple, or, if you have the paid iTunes Match service, any song, whether you bought it from Apple or not.

As before, small cloud icons indicate whether an album, movie or TV show is stored in iCloud rather than on your computer. And as before, you can click on these to download them. But now, iTunes lets you stream a song, movie or show without downloading.

Previously, streaming from the cloud was only available for paid users of Apple’s iTunes Match service, and only for songs.

MiniPlayer

The program has long had a MiniPlayer option, which hides the main window in favor of a small oblong player that better coexists with other windows you have open on your computer.

Now, this little player has added functions, such as search, and Up Next.

Drawbacks

Fans of iTunes will notice some omissions and flaws. The long-touted Cover Flow carousel of album covers has been dumped. The company says it found too few users considered it useful. A feature that finds duplicate entries is missing. Apple says it will soon be restored in a minor update of the program.

In my tests, some album covers were missing in album view. Apple says this is a rare bug, but one it has solved and will fix in a minor update soon. Another bug the company says will be remedied prevents owners of Apple TVs from wirelessly streaming cloud-based movies to their TVs.

Also, if you want to see biographical information on an artist, you have to go to the store. I wish it was available in the library, but Apple has no plans to change this.

Bottom Line

Apple has made iTunes better and easier to use, and veteran users who upgrade will gain from the new features, if they take a little time to get used to them.

Email Walt at mossberg@wsj.com.

The Storage Games

Mark Davis — Wed, 21 Nov 2012 20:03:05 +0000

Most of the computerized data you interact with is stored in a corporate data center or the cloud, on a class of device known as enterprise storage. Their capacity is measured in petabytes, or millions of gigabytes. The number of input/output operations per second (IOPS) generated by applications from Excel to Facebook would boggle your mind.

In response, the once-lethargic $20+ billion enterprise storage industry is exhibiting unprecedented innovation. Giants like EMC and Dell are vying with, partnering with and acquiring start-ups for supremacy in a morphing landscape.

It’s a serious game. More than $3.5 billion was pumped into VC-backed storage start-ups between 2007 and 2011, with more than $1 billion in 2011 alone. And $10 billion more has been poured into M&A, with the most recent example being EMC’s $430 million purchase of a company that hasn’t finished developing an initial product. Tectonic shifts come from collisions of forces. There are three major force vectors here.

First is the demand for more scalable, instantly provisionable, faster and higher-capacity storage. Even in an anemic economy, demand for data storage grows more than 50 percent per year.

Storage in a Flash

The second driver is the widespread proliferation of flash memory. Remember when you could feel the hard drive spinning inside your iPod? Today, practically every consumer carries flash memory in his or her pocket or purse.

Flash has been around for years, but was too expensive for broad adoption. Thanks to companies like Apple, which consume enormous amounts of flash, the cost is dropping like an apple from a tree. It’s still much more expensive than rotating hard drives, but its notable physics are compelling. Solid-state flash is faster than mechanical drives, and doesn’t forget everything when the power is turned off. Perfect, right?

Flash in the Pan?

Actually, not so perfect for corporate, governmental or cloud environments. In addition to high cost, flash has some unfortunate features. For example, it wears out in the same way your favorite pair of jeans will become threadbare with use. You’ll never wear out your phone from too much texting. But in an enterprise application, the number of IOPS can be so staggering that flash has to be treated almost like a printer cartridge, a consumable.

Many companies are developing techniques to deal with flash’s inherent limitations to make it suitable for data centers. It’s a gold rush, with vast sums of capital chasing big markets. That $430 million acquisition by EMC? Yup, flash.

Why pay so much for a pre-product company? There were multiple bidders. NetApp made a rich offer, which Dell topped by a lot, which EMC topped by an equally wide margin. There will be more M&A.

Interestingly, this activity is driving breakneck commoditization. This is great for customers, but not for vendors, who will not long enjoy rapacious (oops, I meant healthy) margins on proprietary technology. Ironically, the value in flash-based systems is really in the software that wrests the value from the hardware. Everyone in the industry knows that the days of differentiated flash hardware are numbered.

When Is Storage Not Real? When It’s Virtual.

As if hot, high demand and cool flash aren’t enough, the storage games are impacted by a third force called virtualization. Virtualization has transformed computing. The leading vendor, VMware (not coincidentally, owned by storage company EMC), has built a market capitalization of roughly $40 billion. All by making fake computers.

We call them virtual machines. Your iPhone may be talking to one right now over the Internet. Their magic allows the creation of what looks like a physical computer server. A virtual machine, or VM, appears to embody central processing units, memory and communication networks like physical computers. But it’s a software abstraction. Through this prestidigitation, data centers run scores of VMs on a single server box.

Enterprises can deploy vastly more applications because virtualization from Microsoft, Citrix, Red Hat and VMware saves enormously on capital and operating expenses. And provisioning is so much faster. Just a few clicks and, voila, you have a new server. By the way, you can buy server hardware from anyone. That freedom makes vendors compete harder, which you like if you run an information technology department.

What does this have to do with data storage?

Enterprise and cloud storage still live in the physical age. That is, storage system features are embedded in proprietary hardware. Want a cool software feature? You have to buy hardware to get it. Before virtualization, this was how the server industry worked. But virtualization is stressing traditional modes of delivering storage to applications. Performance problems, high costs and inflexibility cause VM users great pain on a daily basis.

Hello, Storage Hypervisor

The key enabling technology in compute virtualization is called a hypervisor. This core magic remade the server industry for the benefit of all. Until recently, there was no storage equivalent.

Now the storage industry is beginning to buzz about the concept of a storage hypervisor — the analog of the server hypervisor, but for storage. Storage hypervisors promise to increase the effective performance of hardware by an order of magnitude. By virtualizing resources to provide the administrative paradigm needed in virtualized environments — VM-centric management — they provide unprecedented flexibility and efficiency. Naturally, the ideal storage hypervisor leverages flash, just as server hypervisors unleash the power of Intel-based silicon.

Giant publicly-traded storage vendors and ambitious start-ups alike are talking up their offerings. All have differing approaches, but share the goal of giving data-center storage buyers the benefits already bestowed on server customers.

A Serious Game

Today we observe a convergence of forces transforming a multi-billion dollar market. The unending pressure for more data increases demand for high-performance flash-based storage hardware. This in turn is driving the essential requirement for virtualization of storage hardware resources. This confluence will enable vastly larger amounts of storage to be applied to every imaginable use case, all while making the economics not only affordable, but also compelling.

The winners in this game? Corporate and cloud data centers and their users. In other words, you.

Before co-founding Virsto, Mark Davis was CEO of storage resource management vendor Creekpath, where he engineered its acquisition by Opsware (now HP).

Belkin Says It's Lightning Fast With New iPhone Accessories

Ina Fried — Mon, 05 Nov 2012 18:12:50 +0000

Apple’s move to a new connector isn’t just annoying for those of us with a million docks, speakers, car chargers and other add-ons.

It’s also a huge challenge for the companies that make those accessories. Although there are plenty of cases and other non-electrical add-ons for the new iPhones, iPads and iPods, the move away from the dock connector has all but stalled the market for plug-in accessories.

Until now, anyway.

Belkin said on Monday that it will have both a car charger and a dock that work with Apple’s new Lightning connector ready by mid-month. Both will sell for $30, about the same as Apple charges just for a cord that allows older accessories to work with the new connection.

When Apple made the move away from the old 30-pin connection, it said that it would work with peripheral makers to create officially sanctioned Lightning accessories. (Some unofficial ones have already cropped up, but given the highly sophisticated nature of the new connector, buyer beware on those.)

That Belkin is first out of the gate should not come as a surprise to Apple historians. As Belkin itself notes, the company was early with products that plugged into the original dock connector.

“Belkin was the first third-party manufacturer to develop accessories for the 30-pin connector back in 2003, and we are thrilled to be first to market again with solutions for the new Lightning connector,” Belkin General Manager Martin Avila said in a statement.

But Belkin’s history actually predates even that. Belkin helped Apple with the first-ever iPod accessories. Even before there was a dock connector, Belkin helped Apple with a microphone that plugged into the top of the early iPod.

Apple Talks Lower Margins Now, Ginormous Sales Later

Arik Hesseldahl — Thu, 25 Oct 2012 20:58:51 +0000

AllThingsD.com

Apple just reported another one of those uncomfortable quarters where consumers were holding back and waiting for new stuff. And it showed.

Profits on a per share basis at $8.67 were well short of the $8.75 analysts had expected, even though they were up 24 percent year on year. Sales, though ahead of the consensus, were a little light, too, at $35.97 billion.

Obviously, there was a lot of pent-up demand for new iPads, which Apple announced last week, new Macs, and even iPhones in the quarter. That means that having come in a little light this quarter, expectations for Apple to make it up in the first quarter — including the holiday period — will be higher.

The earnings conference call is just about to start. We’ll see what Apple executives have to say about all this.

Update: So the call is over. There were a handful of interesting comments from Apple CEO Tim Cook and CFO Peter Oppenheimer. One came by way of explanation for the lower-than-expected profits and gross margins. All those new products that Apple released this week? They’re a little more expensive to make than the prior generation. And so gross margins are a little bit lower than they otherwise would have been.

Another interesting admission concerned the iPad mini. Its gross margin, Oppenheimer said, is a little “lower than the corporate average.”

But just wait until the first quarter of Apple’s fiscal year 2013, now in progress. That’s the holiday season quarter, and all those products are going to start selling. Oppenheimer said Apple expects to report sales of $52 billion in a single quarter. For perspective: That’s nearly $10 billion more than the revenue Apple reported for the entire year in 2009.

Here’s my rough transcript of the earnings conference call.

2:02 pm: And the call is getting under way. CFO Peter Oppenheimer is speaking.

Oppenheimer: 4.9 million Macs is 1 percent growth, and a record for a September quarter, and is better than the 8 percent market contraction that IDC predicted.

Oppenheimer is now running through the product announcements made earlier this week.

Mac Channel inventory is three to four weeks, below target of four to five weeks.

Now he’s talking about iPod, which is still the top selling MP3 player in the world. Apple sold 5.3 million iPods during the quarter.

iTunes brought in $2.1 billion in revenue. A revamped iTunes is coming. No mention yet of the radio service that was reported earlier today and totally killed Pandora shares.

Oppenheimer: Now speaking about iPhone 5. Demand has been phenomenal, he says. Demand outstrips supply. We ended the quarter with 9.1 million iPhones in channel inventory and that’s below target of four to six weeks channel inventory.

Oppenheimer: Talking about business adoption of iPhones. Canon has given them to its field sales team.

2:08 pm: Oppenheimer: Amtrak uses an in-house app for ticketing; reporters around the world are using iPhones to capture video.

And now he’s talking about iPad. They were ahead of our expectations. Strong sales year over year.

Oppenheimer: Recognized revenue from iPad and accessories was $7.5 billion vs. $6.9 billion. Ended quarter with 3.4 million iPads in inventory, just higher than the target of three to four weeks.

Oppenheimer: Volkswagen has developed in-house iPad apps across the company. Also a Chinese insurance company, the name of which I will not attempt to spell.

Oppenheimer: We will not stop until Maps — the troubled iPhone app — lives up to our standards.

Oppenheimer: Apple finished the quarter with 390 stores.

Oppenheimer: Operating expenses were $3.5 billion. Cash: $121.3 billion up from $117.2 billion last quarter. Increase was net of $2.5 billion worth of dividends paid, which amounts to $2.65 a share. About 82 percent of cash was offshore. Also, in August, Apple said it would buy back some shares.

Oppenheimer: Here’s the outlook. Revenue at $52 billion vs. $43.6 billion. Gross margin 36 percent. Opex $4.05 billion. EPS $11.75.

2:17 pm: Oppenheimer is wrapping up which means its almost time for the Q&A.

Katy Huberty: Asks about the possibility of EPS declines year on year. What’s driving the gross margins down?

Oppenheimer: The change year over year is being driven by the extra week last year. That along with a stronger U.S. dollar and the change in gross margin.

Oppenheimer: As you pointed out, this is the most prolific product period in Apple’s history. New products represent 80 percent of expected revenue. We’ve never before introduced so many new products with new form factors at once, and each one has higher costs. (I’m paraphrasing here.)

Oppenheimer: We’re heading into the quarter with the strongest iPhone line-up ever. Also, the iPad mini is priced aggressively. Its gross margin is significantly below the corporate average. (I guess that answers the critics who said the price wasn’t low enough!)

2:22 pm: Oppenheimer: We will work hard to get down the cost curves and improve our efficiencies. To be in a position to anticipate demand for $50 billion or more in revenue reflects our strength.

CEO Tim Cook is speaking: We’re unwilling to cut corners. This is the reason our customers choose to buy our products. We’re managing the company for the long run and will make great long-term decisions.

Question from Bill Schope of Goldman Sachs: Asking about the supply ramp for the iPhone in the holiday quarter.

Cook: Demand for iPhone is extremely robust. We are in a significant state of backlog right now. Our output has improved significantly. I’m very pleased with the progress. This is the largest volume ramp in Apple’s history. Difficult to predict when supply and demand will balance.

Question from Toni Sacconaghi from Sanford Bernstein. He’s asking again about the ramp of iPhone. Do you expect all 100+ countries this quarter? And will the supply contraints have material impact on cost of goods sold? Will COGS decline?

Cook: In regard to the first question, we still continue to expect to roll out to 100 countries. It is our largest ever, there will be some larger countries in December. With each new product we see learning curves in terms of production. The difference is the number of new products that we have moving at once. This is the most prolific period in our history in terms of new product introductions. We do see all of these costs associated. But I don’t see costs accelerating on a per-unit basis.

2:28 pm: Cook we continue to be confident that the tablet market will surpass the PC market. It is already extremely compelling for many customers to choose a tablet, in particular an iPad, over a PC. There is an enormous opportunity for Apple there. We do think the iPad, mini and iPad 2 will all be an extremely attractive offering in lieu of a PC. We will focus on the future of the iPad.

Question from Shannon Cross: Talk a little about China. Clearly with the revenue guidance it remains strong, but with the economy it’s mixed.

Cook: Revenue was $5.7 billion. IPad was up 45 percent in Greater China. Iphone was up 38, all in all a fantastic quarter in China. That brings us to a full year $23.8 billion in China, which is really phenomenal when you think about it. That’s up $10 billion year on year, and amounts to about 15 percent for all of Apple. We are continuing to invest in our retail stores there. We continue to expand distribution with channel partners there. We see it as an extremely exciting market.

2:32 pm: Cross again: With the launch of Microsoft Surface today, talk about the competitive landscape.

Cook: I haven’t played with a Surface yet. What we’re reading about it is that it’s a fairly compromised and confusing product. One of the toughest things you do with a product is make hard trade-offs and decide really what it should be. I suppose you could design a car that flies and floats, but I don’t think it would do all of those things very well. I think people, when they look at the iPad versus competitors, they will conclude they really want an iPad and they will continue to do that.

2:33 pm: Question from Ben Reitzes at Barclays: Is there more of an education focus with the mini? How do we think about the cannibalization of the form factor vs. the old product?

Cook: The way we look at this is that we provide a fantastic iPod touch, an incredible 4th generation iPad, and mini. The customer will decide what they would like and will buy them. We’ve learned over the years not to worry about the cannibalization of our own product. There’s still 300 million PCs being bought each year and a great many of those will be better off with an iPad or a Mac. Instead of being focused on cannibalizing ourselves, its really an enormous incremental opportunity for us.

Reitzes is asking about AppleTV. We haven’t heard about your hobby lately?

Cook: We sold 1.4 million AppleTVs. That’s more than 5 million during the fiscal year. Almost double the previous year. The business continues to do very well, but if you look at the revenue of the business versus the others, it’s quite small. Still a hobby, but a beloved hobby. We’ll continue to pull the string and see where it takes us.

2:37 pm: Gene Munster asking about the deceleration of iPad sales.

Cook: June to September quarter was 17 million to 14 million. June contained a 1.2 million increase in channel inventory. The sell-through looks different from reported sell-in numbers. The 14 million exceeded what we expected to do in iPad. We expected it to decline. Based on prior results, we would see a seasonal reduction in the September quarter. K-12 schools buy heaviy in the June quarter, versus the higher ed market. That is exaggerated when we announce a new product in March and have enormous demand in June and then a natural phase down. In addition to all that, it’s clear they held back on purchases due to new product rumors. These intensified in September.

2:39 pm: Cook: On a year-over-year basis, because of the year-ago quarter having a channel inventory build, the sell-through grew 44 pecent, so the underlying sell-through was extremely strong. We feel great about how iPad has done.

Munster: Given what we’re seeing in margins, as some of these products get more expensive, would you be willing to pass those costs onto customers?

Cook: It’s a hypothetical question. We think we’ve made great choices here.

Question from Mark Moskowitz: He’s asking about iPhone and iPad comparisons in sequential quarters.

Oppenheimer: We expect large sequential increases.

Moskowitz: Asking about iPhone 5 rollout. Will you have supply contraints in all markets or will there be certain markets where you intend to hit equilibrium?

Cook: What we did initially, we planned the first 30-40 countries, and rolled that across September in two different dates. We planned with an eye toward supply and what we think the demand will be. We do plan these in advance. It is not a precise science. We have to plan them with several weeks of notice. Occasionally it can be different than what we think.

Question from Steve Milunovish of UBS: Asking about pricing philosophy of the iPad mini.

Oppenheimer: When we set out to build the iPad mini, we didn’t set out to build a small cheap tablet. We set out to build a smaller device with the full iPad experience.

2:45 pm: Cook: We try to create a product that people will love for months and years and continue to use it in a robust way. You can really see that by looking at usage statistics. More than 90 percent of Web traffic from tablets comes from iPads. Apple will not make a product that people rarely use once they get it home. (Paraphrasing.)

2:46 pm: Milunovich is asking about the enterprise opportunity.

Cook: We now have almost all of the Fortune 500 who are testing or deploying iPads. We’ve also pushed fairly aggressively in the Global 500 and those are above 80 percent on iPhone and iPad. We’re doing fairly well there. There’s clearly much more to do but I’m felling pretty good about it.

2:47 pm: Question about the component environment (didn’t catch the name of who’s asking).

Cook: In terms of iPad and iPhone, I don’t see a component shortage gating us for the quarter in the numbers we have given you in the guidance. I think we have solved some challenges there and feel good about our position.

In terms of general shortage, the iMac will be constrained in a significant way. There will be a short amount of time during the quarter to build them. We will have a significant shortage there. (Hint: If you want an iMac, order it right away!)

2:50 pm: ISI, Brian Marshall asks about iPhone unit growth vs. revenue growth. He’s seeing a variance between that pattern and the iPad. Is it less accessories or a dollar spend?

Oppenheimer: The iPhone ASP were relatively flat year on year and up slightly sequentially. Ipad ASPs were down year on year in a low-double-digit way. This was reflective of price reduction on iPad 2 and stronger dollar and a little change in the mix. That drove the ASP change year on year. Sequentially, ASP was flat.

Marshall is asking about U.S. iPhone activations being faster than international.

Cook: We launched iPhone 5 during the quarter. I would have expected that versus the rest of the world.

2:52 pm: Question from Keith Bachman, BMO: Will the iPhone 5 launch in China in the December quarter?

Cook: Yes, it will.

Bachman: Will you end the quarter with a backlog?

Cook: I am not projecting whether supply and demand will be in balance. I’m confident we’ll be able to supply quite a few during the quarter. Demand is very robust.

Chris Whitmore of Deutsche Bank asking about the iPad. Specifically asking Cook for his view for emerging model of subsidies on tablets. Like Amazon’s Kindle Fire. How is that impacting the iPad business?

Cook: We’ve seen low-cost challengers before. Ipad beats every product at any price. We’re confident our focus on making the best product is what will win at the end of the day and we will stay true to that.

Whitmore: Asking about suppliers. Is that creating an added layer of complexity and to what extent is that contributing to higher cost structure?

Cook: I would not say there has been a significant change in supplier partners. I wouldn’t describe any change as significant. There hasn’t been one that would drive more cost.

Whitmore: I was asking about LCD screens and Samsung.

Cook: No change in cost, and we continue to have a commercial relationship with Samsung (despite the epic lawsuits).

2:57 pm: Question from someone whose name I didn’t get: Why is the time for iPad mini now right?

Cook: The comment that I think you’re referencing are comments that Steve Jobs had made about 7-inch tablets. We would not make a 7-inch tablet. We don’t think they’re good products. We would never make one. One of the reasons is size. Not sure if you saw our keynote, but the difference in just the real estate size in 7.9 vs. 7 is 35 percent, and when you look at usable area is much great than that, more like 57 percent. IPad mini has the same number of pixels as the iPad 2 does. You have all 275,000 apps that are iPad ready. IPad mini is a fantastic product, it is not a compromised product. It’s in a whole different league.

Sorry, I missed that guy’s second question. Oppenheimer is now speaking about gross margins and the effect on them by the sheer number of products that Apple just announced.

Oppenheimer: We are also going to work to get down the cost curves as we have done in the past. No change in what we try and work on and we’ll report to you in January how we did.

And that’s it. Thanks for being here.

Despite Apple's Modest Earnings Guidance, the Street Expects Big Things

John Paczkowski — Thu, 25 Oct 2012 11:05:14 +0000

Apple’s fourth quarter is typically a slow one for the world’s most valuable public company. And with consumers likely delaying iPhone and iPad purchases ahead of the launch of the iPhone 5 and iPad mini, this one may have been a bit slower than usual.

Certainly that’s what Apple suggested back in July, when it said it expected fourth-quarter earnings of $7.65 a share on revenue of about $34 billion. That was a conservative take, even for a company that is notorious for giving conservative guidance, and it fell well short of the consensus forecast at the time.

So, what can we expect when Apple reports after market close today?

Well … Wall Street is looking for earnings of $8.91 per share on sales of $36.27 billion, which is far in excess of Apple’s lowball guidance. The independent analysts tracked by Fortune are expecting earnings of $10.14 on sales of $38.8 billion, which is even further beyond Cupertino’s numbers. And it’s impossible to say who is likely to come out closest to the mark.

A few things worth noting ahead of Apple’s report:

Apple shares are up more than 50 percent so far this year. But they’re also down 10 percent from the record closing high of $702.10 they hit last month.
Analysts tempered their iPad sales forecast Tuesday after Apple CEO Tim Cook said that the company had sold 100 million iPads to date. Many extrapolated from that number and concluded that fourth-quarter shipments might fall slightly below their expectations of about 17.5 million.
Apple refreshed its MacBook Air and Pro lines in June, and that almost certainly drove Mac sales a bit.
The iPhone will be the major catalyst in the quarter, just as it always is. That said, the iPhone 5 shipped on Sept. 21, and was on sale for just nine full days before the fiscal quarter closed, and while demand for the device was, and continues to be, insatiable, supplies have been constrained. Remember, Apple sold five million iPhone 5s over the handset’s launch weekend, and that was viewed by Wall Street as a disappointment. Analysts figure Apple sold 25 million to 26 million iPhones in the fourth quarter.
Apple’s next quarter is really the one to watch. The company is heading into the holidays with a new iPhone, a new iPad, a new smaller iPad, new iPods, a new iMac and Mac Mini, and the eagerly anticipated 13-inch Retina MacBook Pro. With that in mind, some analysts feel Apple’s fourth quarter is something of a … throwaway.
“Our view is that September quarter numbers do not matter,” J.P. Morgan analyst Mark Moskowitz said in a Wednesday research note to clients. “Apple can miss or beat. It does not matter. … In our view, the two important iPhone and iPad launches set the stage for big numbers to be reported in late January 2013 as relates to December quarter results.”

Apple will release its numbers sometime after 1 pm PT today, with an earnings call to follow at 2 pm. Join us back here for coverage.

With New Sizes and Features, iPods Grow Up

Katherine Boehret — Tue, 23 Oct 2012 22:57:48 +0000

If you missed Apple’s new iPod lineup among the frenzy that surrounded last month’s iPhone 5 announcement, you aren’t alone. But these were the first new iPods from Apple in two years.

This week, I found out how much the iPod family has matured since 2010. I tested the new $299-and-up iPod touch and the $149 iPod nano. These are very different products, but they both carry Apple’s simple touch interface. And both make good gifts because they won’t saddle the recipient with monthly phone bills: The iPod touch runs on Wi-Fi and the iPod nano doesn’t wirelessly connect to the Internet.

[ See post to watch video ]

First things first: What’s new? The iPod touch screen now has the same screen as the iPhone 5: A four-inch Retina display with sharp, bright colors. The previous iPod touch was thin, but at 0.24 inch thick and 3.1 ounces, this new one almost feels like a mock-up of an iPod touch. Its notably improved camera now includes a flash, as well as image stabilization and face detection. And it runs iOS 6, the latest operating system from Apple, so it has features like panorama for photos, full Facebook integration, iMessage and Passbook.

Meanwhile, the iPod nano, which is somewhat of an Apple wild child because of its ever-morphing shape and size, has sloughed off its predecessor’s square shape for a return to the rectangle. A 2.5-inch screen and small Home button take up the face of this 1.1-ounce, seventh-generation iPod nano. It resembles a teensy iPhone that a squirrel could use. A new play/pause button runs along the side between volume up and down. This remains the only iPod with FM radio, which works when connected to EarPods — a redesigned version of the white earbuds that come with all iPods. The nano has Bluetooth for the first time, though it still lacks Wi-Fi. But that is just fine for how most people will use this iPod.

The new iPod Touch has the same 4-inch screen as the iPhone 5. (Photo is not to scale.)

On the downside, Apple’s new EarPods weren’t music to my ears. During a cross-country flight, I had to take them out after just 30 minutes because they hurt so much. When I tried them again during a walk, I had the same reaction. But as Apple’s TV commercials are fond of saying, everyone’s ears are different.

I started small, first testing the iPod nano. This device is ideal for people who aren’t super tech savvy yet want a way to listen to music and track their fitness progress. Out of the box, the iPod nano will play music via an FM radio and will monitor your fitness stats using a preinstalled Nike+ app. (When the app was first introduced years ago, it only worked with a piece that fit into special Nike sneakers.)

You can plug the Nano into a computer to sync with music, photos, videos and podcasts.

The nano’s Nike+ app tracks data like steps walked, as well as calories burned, time and distance during runs. I tapped on the Nike+ icon and entered my weight and height, which helped calculate personalized data. In the morning, I tapped “Walk” in Nike+ before my 15-minute walk to the Metro, and a pedometer started and stopped as I did. You also can upload the data to the Nike+ Web site.

The new iPod nano now has built-in Bluetooth and weighs just 1.1 ounces. (Photo is not to scale.)

The Run section in Nike+ let me choose Basic, Time, Distance or Calorie to determine the goals I wanted to set. If you wear headphones while using this device, you’ll hear audio encouragement in your ears as you go. A History section tracks personal bests and workout totals.

I really liked using the FM radio. I tapped a star icon to save favorite radio stations and hit the skip ahead or back buttons to jump to save stations. I tapped the screen to display controls for pausing and rewinding live radio as far back as 15 minutes.

Battery life for this iPod nano is expected to last 30 hours, according to Apple’s estimate. I used it intermittently for various activities, but never had to worry about charging it.

Speaking of charging, the nano and the touch both use Apple’s new Lightning connector, though neither ships with a wall adapter, like the iPhone. They come with USB cables that let you charge the devices by plugging into a computer’s USB port.

I used the new iPod touch in many of the same ways I use the iPhone 5: Downloading apps I own (thanks to Apple’s iCloud backup service) and playing my iTunes music. I corresponded with friends via email and iMessage, created Photo Streams to share with people and navigated around town with Apple Maps. But I usually had to be in a Wi-Fi network.

The 5-megapixel, iSight camera on this iPod touch is a pleasure to use. Its flash makes it reliable in all situations. And videos I recorded in 1080p HD quality looked like I captured them on an iPhone 5.

The new iPod touch comes in two versions: a 32-gigabyte version for $299 and a 64GB version for $399. Apple is still selling its fourth-generation iPod touch in black and white colors, starting at $199 for the 16GB version.

The new features and slick designs of these new iPods give the category a boost that makes them desirable devices rather than second-tier siblings to the iPhone.

Email katie.boehret@wsj.com

Groupon Adding Point-of-Sale Technology to Its Merchant Offerings

Tricia Duryee — Wed, 10 Oct 2012 13:58:47 +0000

Aiming to create an even deeper connection with its merchants, Groupon is offering restaurants, bars and cafes a point-of-sale solution that it is calling Breadcrumb.

Groupon’s entrance in the point-of-sale business was expected. In May, it acquired New York-based Breadcrumb, which developed the core of what the product is today.

The national rollout this week closely follows the unveiling of Groupon Payments, which enables merchants to accept credit cards using an iPhone or iPod touch. Breadcrumb is complementary, in that it works on an iPad.

Groupon’s goal for both Breadcrumb and Groupon Payments is to cut costs for merchants that are used to paying high prices for low-tech, antiquated systems. In return, Groupon hopes to create a closer bond with merchants that will encourage them — or potentially require them — to run coupons in the future.

“We are not focused on these businesses boosting the bottom line; they don’t need to be wildly profitable on their own,” said Groupon CEO Andrew Mason, in an interview with CNBC about Groupon Payments. “What we are really focused on is using additional services to strengthen the value proposition that we have for our merchants.”

Since profit is not the main motivator, Breadcrumb’s rates start off fairly low. For one terminal, it costs $99 a month; 10 terminals cost $399 a month. Merchants will have to buy iPads, cash drawers, receipt printers and Internet access separately (although Groupon promises that adds up to hundreds of dollars, compared to the thousands of dollars for other point-of-sale systems).

The software also will work closely with Groupon Payments, which guarantees the cheapest rates, or else Groupon will beat it. To qualify for 1.8 percent plus 15 cents per swipe, merchants will have to be existing Groupon users. But, that’s the case with Breadcrumb, likely because it already had hundreds of customers before it was acquired.

Last month, Wall Street reacted positively to Groupon’s entrance into the payments industry. Since then, Groupon has been able to hang on to those gains, with the stock closing yesterday at $5.27 a share. With its second big bet in the payments space being unveiled today, we’ll have to see if investors are equally pleased. It still has a long way to go, and it will have to stay ahead of many other competitors, including Square, PayPal, LevelUp and VeriFone.

Apple's Online Store Is Down, Sending Customer Anticipation Up

Ina Fried — Fri, 05 Oct 2012 04:29:25 +0000

Apple took down its online store Thursday evening, which has often been a sign that the company is ready with new products.

The company is expected to have a separate in-person event later this month for the launch of a smaller iPad tablet, so it’s unlikely to be that. Apple has already announced the iPhone 5 and an update to the full iPod line. But, with the holiday season ready to kick off, it could be a time for the company to make some last-minute changes to its Mac line, as well.

Also, Friday marks the anniversary of Steve Jobs’ death a year ago.

Typically, store outages only last a couple of hours, given that Apple does so much volume via its Web site.

In the meantime, Apple’s store can serve as a language tutor for anyone who wants to know how to say “We’ll be back soon” in a whole bunch of different languages.

Update:
Looks like Apple used this brief outage not to add new product to its store, but to post a text and video remembrance of its late co-founder. You’ll find the video on Apple’s Web site and the letter from CEO Tim Cook below.

A message from Tim Cook, Apple’s CEO.

Steve’s passing one year ago today was a sad and difficult time for all of us. I hope that today everyone will reﬂect on his extraordinary life and the many ways he made the world a better place.

One of the greatest gifts Steve gave to the world is Apple. No company has ever inspired such creativity or set such high standards for itself. Our values originated from Steve and his spirit will forever be the foundation of Apple. We share the great privilege and responsibility of carrying his legacy into the future.

I’m incredibly proud of the work we are doing, delivering products that our customers love and dreaming up new ones that will delight them down the road. It’s a wonderful tribute to Steve’s memory and everything he stood for.

- Tim

Neil Young Still Singing the Praises of Better Quality Digital Music

Ina Fried — Sat, 29 Sep 2012 19:17:46 +0000

It seems like an uphill battle — convincing a generation of people that grew up with white earbuds and MP3 files to pay more for better sound.

But Neil Young knows a thing or two about trying to run counter to the popular culture.

Young, who discussed his quest for better-quality digital audio at this year’s D: Dive Into Media, is moving ahead with Pono, which plans to offer a combination of players and music starting early next year.

The effort, according to Rolling Stone, has the interest of both record labels and artists. Warner Music has converted its library of 8,000 albums, the magazine reports, while musician Flea raves about the improved quality: “It’s not like some vague thing that you need dogs’ ears to hear. It’s a drastic difference.”

Of course, all that uncompressed audio comes at a cost, both monetarily as well as in the time it takes to download the files and the space that the music then takes up.

It’s worth hearing Young talk about the matter. If you haven’t watched it — or haven’t watched it recently — here’s the full video of Young’s January talk at Dive Into Media.

[ See post to watch video ]

Apple's iPhone 5 Event, in Pictures

Eric Johnson — Thu, 13 Sep 2012 10:30:47 +0000

There were only a few surprises at Apple’s iPhone 5 unveiling Wednesday morning. Among the announcements: The new iPhone, iOS 6, updates to iTunes across Apple’s operating systems, and new models of the iPod nano and iPod touch.

AllThingsD was at the event. Here’s a look at the highlights from inside:

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84 Million iPads, 400 Million iOS Devices and More Big Numbers From Apple

John Paczkowski — Wed, 12 Sep 2012 22:00:21 +0000

Apple’s special events aren’t simply showcases for the company’s newest products, they’re state of the union addresses for the company, opportunities to tout its successes in public in a parade of big-number metrics. And the numbers bandied about at this morning’s iPhone 5 unveiling were large indeed.

There are currently 380 Apple Stores.

Today, they are in 12 countries. When a new Apple Store opens in Sweden on Friday, they will be in 13.

Apple’s retail stores collectively had some 83 million visitors last quarter.

That’s nearly 1 million people per day.

7 million Mac users have upgraded to Mountain Lion so far, making it the fasting selling Mac OS of all time.

The MacBook Air and MacBook Pro together have become the No. 1 notebook in the U.S. in the last three months, with 27 percent market share.

The Mac has experienced 15 percent year-over-year growth.

That growth has outpaced that of the PC for six consecutive years.

Apple sold 17 million iPads between April and June. That’s more iPads than any PC manufacturer sold of their entire PC line.

And it sold 84 million iPads through June.

The iPad had a 62 percent share of the tablet market a year ago.

Today it has a 68 percent share.

The iPad is responsible for 91 percent of the Web traffic from tablets.

94 percent of the Fortune 500 are testing or deploying the iPad.

There are 700,000 apps in the iTunes App Store.

250,000 of them are iPad-specific.

90 percent of the apps in the App Store are downloaded every month.

The average customer has about 100 of them.

By the end of June 2012, Apple had sold 400 million iOS devices.

There are 200 million customers using iTunes in the cloud.

There are 435 million iTunes accounts (with associated credit card numbers).

There are iTunes Stores available in 63 countries.

Together they have served up 15 billion media downloads.

Apple has sold 350 million iPods to date.

And it has sold 600 million of pairs of the earbuds which it replaced today with its new EarPod headphones.

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Apple Shows Off Improved iPod Nano, Retina-Display iPod Touch With Siri

Lauren Goode — Wed, 12 Sep 2012 18:40:20 +0000

Apple today unveiled a new line of iPod devices, punching up its popular music-playing hardware with improved battery life, displays and cameras.

Siri is coming to the iPod touch, as well, with Apple’s new EarPod headphones thrown in.

The new iPod nano features a bigger, 2.5-inch multitouch display. Apple showed off how widescreen video can be viewed when the nano is turned on its side. It’s 5.4mm thick, 38 percent thinner than the previous, or sixth generation, nano device. It comes in seven different colors, with the color of the iPod’s interface now matching the color of the device itself.

Fitness features and a pedometer are built into the new nano, too, with Nike+ integration. But most notable is probably the new nano’s oft-requested Bluetooth capabilities.

The new iPod touch has a four-inch Retina display — the same display as the iPhone 5 — and is powered by iOS 6. It features a five-megapixel iSight camera and shoots video in 1080 HD, with a 720p FaceTime HD camera with image-stabilization tech; and has “LE” (low-energy) Bluetooth.

The new devices will hit the market in October, with the 16 gigabyte model of the new iPod nano priced at $149. The new iPod touch, at 32GB, is $299.

The previous generation of the 32GB iPod Touch is $249. A 2GB iPod Shuffle can still be purchased for $49.

Apple last refreshed its iPod line last October, at the same time it announced the iPhone 4S. The new iPod touch shipped running iOS 5, and the nano got a price cut, while oldies-but-goodies like the iPod shuffle and iPod classic remained the same models at the same price.

Apple says it has sold more than 350 million iPods to date. Still, over the past couple of years, Apple has seen sales of its popular iPod decline as more consumers have turned to smartphones — like the iPhone.

This has positioned iPods as in-between devices — offering capabilities beyond just storing and playing music, but not having the cellular calling functions and some other features of smartphones.

In addition to touting the iPod touch as “the world’s most popular music player,” Apple said it was also the world’s most popular portable game-playing device, demonstrating a game of Clumsy Ninja on the device as an example. The new iPod touch will also run on an Apple A5 dual-core processor that the company says will improve gaming graphics.

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How to Become an App Store Millionaire: Make a Hit App, and Don't Make Anything Else

Peter Kafka — Thu, 23 Aug 2012 14:56:36 +0000

Three years ago, Igor Pusenjak and his brother Marko unveiled Doodle Jump, an addictive game that quickly became one of the biggest hits at Apple’s App Store. It turned them into millionaires.

So, what are they doing for an encore?

Nothing.

While most other developers might try to follow the success of one app by rushing out follow-ups, the brothers Pusenjak have been content to ride Doodle Jump as far as that will take them.

Which turns out to be pretty far. Igor Pusenjak says the brothers have sold 15 million copies of the iPhone game, at 99 cents each. And while the game is no longer routinely perched in the App Store’s Top 10 list, he says it is still selling 300,000 copies a month.

And since the Pusenjak’s Lima Sky company is a tiny one — it’s basically the two of them, along with a handful of contractors — that means they are doing very, very well. After you subtract Apple’s 30 percent fee, iPhone/iPod sales alone have netted them $10.5 million.

And they don’t have any venture capitalists or angel investors to share the proceeds with, because they’ve never taken outside money.

They’ve made some very cautious line extensions — there’s an iPad version of the game, for instance, as well as an Android one, and in the future they’ll finally start licensing the game for things like T-shirts and plush toys. Today, the company has updated the original version of its iPhone game, which includes extra goodies like in-game purchases.

But that’s it.

Why not try to sell more games? Or, alternately, why not try to sell the company to, say, big publicly traded acquirers who need hits?

Let’s let Igor Pusenjak explain himself:

[ See post to watch video ]

Apple vs. Samsung Trial Forces Companies to Open Up the Books

Ina Fried — Fri, 10 Aug 2012 00:00:07 +0000

Everyone knows Apple and Samsung sell a lot of phones. Thanks to earnings reports there is even a pretty good sense of how many both companies sell in total each quarter.

However, the Apple-Samsung trial is providing a great deal more detail, including how many of each model both companies are selling, at least here in the U.S. during the time frame at issue in the suit.

Documents filed by Samsung lawyers on Thursday reveal that, from June 2010 through June 2012, Samsung sold 21.25 million phones, generating $7.5 billion in revenue. On the tablet side, the company sold 1.4 million Galaxy Tab and Galaxy Tab 10.1 devices, producing $644 million in revenue.

In terms of individual phone models, the largest in units were the Galaxy Prevail with 2.25 million phones sold, the Epic 4G with 1.89 million phones sold and the Epic 4G Touch variant of the Galaxy S II, which sold 1.67 million units in the U.S. All told, Samsung sold 4.1 million Galaxy S II devices, when all models are included.

On the dollar side, the Epic 4G was the biggest revenue producer, generating 855 million between the third quarter of 2010 and the second quarter of 2012.

The full chart (above, click for larger version) will be of interest not only to those watching Apple and Samsung, but also for those looking for insight into just how well the four major carriers are doing in selling Samsung products. In many cases, the models listed were sold by just one carrier. The Epic phones, for example, are Sprint models, while the Droid Charge is a Verizon model and the Infuse 4G an AT&T device.

The documents filed Thursday show Apple’s phone and tablet sales as well, though the sales are only classified into iPhone, iPad and iPod touch.

From 2007 through the second quarter of 2012, Apple sold a total of 85 million iPhones in the U.S., worth a total of $50 billion in revenue, along with 46 million iPod touches producing roughly $10.3 billion in revenue. From its 2010 launch, Apple sold 34 million iPads, generating $19 billion in revenue.

Lawyers for the companies have been trying to keep as much of this detail out of the public view as possible, but that battle appears largely lost.

The jury will need the numbers, of course, if it finds infringement by either Samsung or Apple of the other’s patents in order to determine damages. As both sides have found, though, suing one another will mean sharing far more information publicly than either would like.

In addition to financial data, the sides have also sought to keep secret their source code, agreements with third parties and other information they believe constitutes trade secrets. Apple has even sought to keep private its internal surveys of iPhone and iPad customers; Judge Lucy Koh has denied that request, though Apple has said it will appeal.

A number of other tech companies have also petitioned the court to keep various bits of information under seal, including Ericsson, Intel, RIM, Nokia and Microsoft. Reuters America is fighting that request, arguing that nearly all information should be made public.

Already the trial has provided a ton of insight into Apple, a company known for its secrecy. Revelations thus far include images of early iPhone and iPad prototypes, testimony about the creation of the first Apple phones and tablets and the kitchen table around which all Apple products are fashioned.

After a break on Wednesday and Thursday, court resumes on Friday with more testimony expected from Apple-hired experts. Naturally, AllThingsD will be in court to bring you the latest.

Apple versus Samsung Full Coverage

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Apple vs. Samsung: Another Patent Slapfight, Another Exasperated Judge

Apple: Samsung Took the Easy Road and Copied Us

Ina Fried — Tue, 31 Jul 2012 15:21:31 +0000

With a jury picked, Samsung and Apple are getting their first opportunity to make their case in the landmark patent infringement trial in San Jose.

Both companies are suing one another for patent infringement, with Apple seeking billions of dollars in damages as well as an injunction against the Samsung phones and tablets it says are “slavishly copying” the iPhone and iPad. Samsung denies those allegations and is countersuing Apple, charging that the iPad, iPhone and iPod infringe on patents it has for core wireless technologies.

Opening arguments are expected later on Monday. First the jury, and the rest of us, will have to sit through what I am sure will be a fascinating 18-minute video from the judicial system providing an overview on patents and patent law.

Among the rulings overnight, it looks like Samsung won’t be able to show exhibits making reference to Sony’s influence on the iPhone, at least as part of its opening argument. That point has been the subject of significant dispute in the case.

The jury is due in around 9 am PT, and AllThingsD will have live updates with the highlights, though we will try to spare you the truly boring stuff (and there is a lot of that).

For those who are just getting up to speed, here’s our handy cheat sheet to the case.

8:56 a.m.: Court is back in session. Judge Koh discussed a variety of rulings, most notably that the testimony of Apple designer Shin Nishibori will be allowed in a limited fashion.

“That will be admitted solely for functionality and no other purpose,” Koh said.

On a separate matter, one of Samsung’s lawyer’s asked the court to hear further arguments over the admissibility of evidence showing that Samsung designs predate the iPhone. Judge Koh denied the request, saying that she had already heard three motions to reconsider the point.

The Samsung lawyer persisted, saying he was begging the court to hear more discussion.

“You’ve made your record for appeal,” Koh said. “Don’t make me sanction you, please.”

Also, one juror is being dismissed after she said she learned her employer would not pay her for the duration of the trial.

9:05 a.m.: Jury now watching 18-minute video on patent cases. “As you probably know by now, this is a patent case,” the video says. Um, yeah …

It’s actually a pretty good explanation of patents. Wonder if it is on YouTube?

Sure enough, it is.

9:23 a.m.: Video over; jury getting a few more instructions from the judge about patents, explaining utility and design patents, since the video only covered utility patents. Apple is suing over both types of patents. I’ll spare you the rest, but it’s fair to say design patents have to do with the way something looks, and utility patents have to do with how something works. I know, you are shocked.

9:33 a.m.: Time for opening statements. Judge reminding jury (and lawyers) that opening statement is only to say what people will testify to, not argue the law.

Apple is starting. They have an hour and a half.

Apple’s lead attorney tells jury there is good news and bad news. Good news is that Judge Koh “has us on a very strict schedule to make sure we don’t waste any of your time.” Bad news is there will be a lot of testimony in a short period of time.

The key argument, Apple says, is how Samsung moved from a place with a lot of different-looking phones to a lot of phones that looked like the modern smartphones. (Apple showed slides of these.) Apple, naturally, traces that shift to the January 2007 introduction of the iPhone.

9:37 a.m.: Apple says that Steve Jobs warned there would be competitors at the iPhone’s introduction, and that Apple had applied for more than 200 patents related to the phone.

9:40 a.m.: Now we’re getting an Apple history lesson, from the original Macintosh to the first iPod.

Apple lead attorney Harold McElhinny notes that Apple wasn’t content, and set to work on its next thing. Initially, the team was working on what later became the iPad. Eventually, though, it decided the world more urgently needed a better phone.

9:45 a.m.: McElhinny painting the iPhone as a huge risk for the company, in which it entered a market dominated by giants like Nokia, Motorola and Samsung. “They were literally betting their company,” he said.

Now he’s showing a bunch of press clips and awards for the iPhone. McElhinny notes an exhibit that was in front of the U.S. patent office showing the importance of Steve Jobs’s inventions, including the iPhone. (Samsung had sought to exclude this mention.)

9:48 a.m.: Samsung is also a big supplier to Apple, McElhinny notes, saying that Apple bought billions of dollars in components from the Korean company.

With the arrival of the iPhone, McElhinny said that Samsung couldn’t continue making the phones it had been producing.

Samsung had two choices: It could accept the challenge posed by the iPhone and out-innovate the iPhone. Or it could copy them.

“As we all know, it’s easier to copy than to innovate,” McElhinny said.

9:50 a.m. McElhinny is promising to show never-before-seen Samsung confidential documents showing their reaction to the iPhone.

The first couple documents show Samsung’s initial analysis of and reaction to the iPhone. A December 2008 study shows that customers like the fun and whimsy of the iPhone, including features such as the “bounce” when you reach the end of a list or document.

Samsung, McElhinny said, decided at its highest levels to copy the iPhone.

Samsung may bring in designers to testify that they didn’t copy the iPhone, McElhinny said.

“The documents that Samsung has provided … tell a much different story.”

9:56 a.m.: McElhinny now diving into Samsung’s product designs pre-iPhone and after its introduction. The real shift, he said, came with the introduction of the initial Galaxy S.

Tablets also at issue, he said, showing the iPad and the Samsung tablets that followed it. He shows the Q1 Windows tablet that Samsung had done in 2006, and compares it to the Galaxy Tab 10.1.

McElhinny is showing a lot of press articles noting the similarities between Samsung products and Apple’s. Samsung had also sought to keep these press articles from being used in the opening.

10:00 a.m.: McElhinny is now showing internal documents comparing Samsung products then in development with the iPhone and iPad. In many cases, the reports suggest making them more like Apple’s products, McElhinny said.

“To be blunt, the testimony is going to show you that Samsung has not been honest about this copying,” McElhinny said.

10:07 a.m.: Apple now going patent by patent through its design patents.

McElhinny told the jury he anticipates Samsung will argue that Apple’s design patents are really functional, and that they represent the only way to do things.

“I think of this as the ‘Devil made me do it defense,’” he said.

10:08 a.m.: Now on to the utility patents at issue, starting with a patent relating to the “bounce back” feature for when one reaches the end of an electronic document, such as a photo, list or Web page.

Next is a patent related to using a gesture (double tapping) to zoom on an image, and then another gesture (another double tap) to zoom in again and re-center.

10:16 a.m.: Next patent relates to how a touchscreen can distinguish between, say, scrolling versus zooming. Apple’s patented means is to use a single touch to scroll and multiple touch-gestures for zooming. McElhinny said Samsung copied this with the Galaxy S II.

McElhinny said that Samsung is likely to describe these things as trivial, but, he says, if that is the case, why do they show up in Samsung’s customer surveys as important and then later in their products?

10:20 a.m.: On to Apple’s other claim in the case, that of “trade dress infringement.”

The iPhone is marked by certain characteristics, McElhinny said, including a metallic bezel around a flat, clear surface, a rectangular product with four evenly rounded corners, narrow black borders at the side, with larger bezels at top and bottom and with icon rows, including at the bottom a dock of icons that don’t change.

Whenever a customer looks at a product with these characteristics, McElhinny said, they think they are looking at an Apple product.

Apple is making a similar claim with regard to the iPad “trade dress” — that is, the way a product is presented to market.

Apple didn’t sit by when Samsung came up with the allegedly infringing products, McElhinny said, saying Apple met with Samsung and asked them to change their products.

10:23 a.m.: He’s wrapping up, saying Apple is seeking a finding of infringement, that the infringement was willful.

“Samsung refuses to stop using Apple’s [technology],” McIllheny said.

Infringement, he said, merits damages, such as lost profits, share of Samsung’s proceeds, royalties or some combination of the three.

Samsung, he said, has sold 22.7 million infringing phones and tablets, resulting in $8.16 billion in revenue and taking $2 billion in profits away from Apple.

10:29 a.m.: Court is taking a short break. Apple is not quite done, but it would appear they have only four minutes left. (Ooops. Bad math — they have 34 minutes left after the break.)

10:55 a.m.: Back from the break, Apple lawyer Bill Lee is now up, addressing Samsung’s counterclaims that Apple infringed on five of its wireless patents.

Some of the Samsung patents at issue, Lee is explaining, are standards-essential patents. Lee likens standards to things like the American outlet, which is the same everywhere and works with all appliances.

The jury, Lee said, will have to decide whether two patents are standards-essential. Apple is actually challenging this, and will produce expert testimony, Lee said, and will argue the technology is not in the standard and isn’t used by the iPhone.

Apple is also making the case that the patents in question aren’t as valuable as Samsung will claim. Plus, Apple is arguing that Samsung didn’t disclose its intellectual property rights to the standard body while the standard body was weighing its standards.

11:09 a.m.: Lee said that five days after Samsung applied for one of the patents in issue, three of the listed inventors attended a standards body meeting and didn’t disclose Samsung’s patent technology. Lee is going a step further and saying that the Samsung employees at the meetings weren’t product designers at all, but rather were workers specifically sent to the standards body to try and see if there was any related technology that the company could use.

Furthermore, Lee argues that Samsung has a responsibility to license any standards-essential patents on what is commonly termed a FRAND (fair, reasonable and non-discriminatory) basis.

Lee says that Samsung wants $12 in damages for the intellectual property on a chip that Apple pays $10 for. In addition, Lee said no company pays Samsung a royalty for the patents at issue (though some companies have cross-licenses with Samsung).

“That’s not fair, that’s not reasonable and that’s not non-discriminatory,” Lee said. As a result, the patents should be found unenforceable.

11:15 a.m.: Apple just got its 10-minute warning from the judge.

The other three patents, Lee said, are of far less monetary value, Lee said, according to Samsung’s own damage requests.

And now we are in typical patent trial speak. Claims, modes. Hmm, wonder what’s going on in the Olympics right now?

11:23 a.m.: Lee making the point that Samsung raised its allegations of infringement only after Apple filed its suit.

In addition, he said, “the evidence will show Samsung has refused to abide by the rules.”

And, with that, Lee is out of time.

Court will resume at 1 pm PT.

Apple versus Samsung Full Coverage

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Apple to Samsung: You Give Us $2.5 Billion and We’ll Give You a Half-Cent-a-Unit Royalty

Apple vs. Samsung: Another Patent Slapfight, Another Exasperated Judge