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Archives for February 2011

Apple's succession plans

Maggie Shiels | 08:50 UK time, Wednesday, 23 February 2011

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For the last couple of years the question of who will succeed Steve Jobs as the boss of Apple has been a thorn in the company’s side. It is as if they do not want to publicly acknowledge that there will be a day when their iconic leader will not be at the helm in some shape or form.

Steve Jobs

The issue will be front and centre when shareholders gather at the firm’s Cupertino HQ in California for the annual boondoggle today amid Mr Jobs’ third medical leave of absence.

Leading the charge to have this extremely secretive Silicon Valley stalwart talk about succession plans is the Central Laborers’ Pension Fund of Jackson, Illinois which holds nearly 11,500 Apple shares worth around $4m.

Given that Mr Jobs is seen as so central to the success of Apple, it doesn’t seem unreasonable that the Fund wants to protect the investment it has made on behalf of its members, who work mainly in the construction industry. Especially given that this time around, Mr Jobs and Apple has said little about his actual state of health and how long he will be on leave for.

His statement last month was short and terse and lacking in such detail unlike that in January 2009 when Mr Jobs clearly stated he would be returning to work.

The resolution put forward by the Fund calls on Apple’s board to adopt and disclose a written “succession planning policy”. Under such a policy, the board would review its succession plan every year, maintain an emergency succession plan and “identify and develop internal candidates”.

This isn’t a case of trying to drive Mr Jobs out of the position as he deals with his latest health issues said the Fund’s corporate governance chief Jennifer O’Dell.

“The last thing we want is for Steve Jobs to step down. His is the classic American success story, coming from nothing to run the second-largest company in the country. We would like him to be there forever, but that is not realistic.”

Apple is not best pleased at the move and in its written response in its proxy statement has said “by publicly naming these potential successors, Proposal No. 5 invites competitors to recruit high-value executives away from Apple.”

In other words, take a hike, we will keep as tight lipped as we always have on the subject.

The issue of “high-value executives” being enticed from Apple is such a red herring as to be laughable because it has so far not happened during any of the times Mr Jobs has temporarily stepped down.

Of course we know that even though he was busy dealing with pancreatic cancer in 2004, a liver transplant in 2009 and other issues today, he has remained in charge on the big issues working from home. He was reportedly spotted on the Apple campus over the last few weeks, looking frail and thin but nevertheless keeping an eye on the company he founded along with Steve Wozniak.

Over the last few years while I have been covering Apple and this issue, analyst after analyst has cited Apple’s “deep management bench” as being well capable of looking after the mother ship while Steve is not there on a daily basis.

They have also underlined how dedicated those top execs are to the Apple cause and to Mr Jobs from Phil Schiller the senior vice president of worldwide product marketing, to Scott Forstall in charge of software for the iPhone and from Jonny Ive senior VP of industrial design to of course Tim Cook, the chief operating officer and the man who has stepped into the breach and taken over from Mr Jobs.

It could also be argued that what really does the Laborers’ Fund need to know when for the third time in a row, Apple has survived and thrived during Mr Jobs’ illness and that the team looking after the shop is so seasoned and skilled at the job in hand. Apple shares dipped in the days following Mr Jobs’ most recent announcement to take time off. They have since recovered and hit an all time high this week at $363.13.

“Of all the years to have this discussion, this is the year,” said the Fund’s Ms O’Dell.

“We need to have a plan in place because we are long-term investors. We are going to be here for the long haul.”

And that is the issue, no one knows how long Mr Jobs will be around given his ongoing medical problems. All the analysts agree that Apple will do well in the short term. The big question is the long term.

Take last year’s launch of the iPad, which to date has sold over 15m. The tablet computer was not an Apple invention, but they did reignite the category and turned it into the big computing story of last year and this year.

The same with the iPhone which changed the way people use phones and the iPod and iTunes which changed the way people consume music.

Will they continue having such huge successes without Mr Jobs? That is a question no-one can answer at this stage.

On the smaller issue of the iPad, its successor is due out next month. The blogosphere is alight with “news” that Apple will take the wraps off the iPad 2 on 2 March in San Francisco.

Will Mr Jobs be there? He made it to dinner with President Obama last week when he came to town to speak to a number of leading Valley CEO’s.

My betting is yes because simply put Mr Jobs is a showman who loves what he does, loves his company, loves his products and would love to cock a snook at those who have counted him out of the game.

'The cult' of Apple: On the frontline

Maggie Shiels | 11:26 UK time, Friday, 18 February 2011

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Apple is expert in the art of controlling the message. One of the reasons for this it seems is because they tell so few people what is going on, including all those guys and gals working in their network of stores. In a wide-ranging interview with Popular Mechanics, an anonymous member of staff has now lifted the lid on life inside an Apple store, from how it can feel like working for a "cult" to how speculating about possible product upgrades and launches could land them in the firing line.

"We are completely in the dark until they do a keynote speech. We have no idea what is coming and are not allowed to openly speculate. You can get into serious trouble if you speculate - especially to a customer. I am asked five times per day about the next iPad or iPhone, and I quite simply don't know.

"If you talk to the press or speculate to a customer about the next iPad? That's the end of you."

Read the full interview here.

The world of cyber threats

Maggie Shiels | 10:20 UK time, Wednesday, 16 February 2011

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The boss of the world's biggest security company said the Stuxnet virus that targeted Iranian industrial facilities last year came as no big surprise.

But Enrique Salem of Symantec admitted the ability of the worm was "unprecedented".

Computer screen at the Department of Homeland Security

 

Speaking to a small group of reporters after his keynote address to the world's biggest security conference, he said "as much as we have been planning and preparing for an attack like Stuxnet, what we saw was a different level of sophistication.

"What we had been anticipating was an attack on critical infrastructure - instead of someone flying over and dropping a bomb they would use cyber warfare to do the attack."

Mr Salem told the RSA event the worm involved a half a megabyte of code with the "ability to disable the kill switch".

The security boss also revealed that talk of such an attack was raised at a panel he attended five years ago with a senior executive from the Department of Homeland Security.

"He said it is not a matter of 'if' but 'when and how' often our critical infrastructure will be attacked."

Microsoft's head of trustworthy computing Scott Charney agreed.

"For people working in the field for a long time, the idea of targeted malware in an interconnected world is hardly surprising. The move from the theoretical to the real is one that has often been talked about."

Mr Salem also added that the day Stuxnet was released was the day the world of cyber espionage changed forever to one of cyber sabotage.

That date was 13 July, 2010.

"Being able to destroy physical property is a real threat. What it creates is a starting point for other attackers."

Mr Salem pointed to the recent attempts to compromise the computer systems of the company that runs the Nasdaq stock exchange as evidence of how the threat landscape has changed and what the future looks like.

"The problem now is that the attackers aren't saying I am going after all companies in New York. They are saying we are going after a specific target, in this case the Nasdaq. They can be very strategic in their attack."

As a result Mr Salem said new technology and new approaches are needed.

"I run the largest security company in the world. I get up and people say I have a vested interest (in pushing this line). But my job is to protect and provide security and when we say critical infrastructure is under attack, it is real."

Mr Salem mapped out a number of strategic steps that need to be taken to guard against the next major cyber attack. They include an early warning system, better intelligence on what attacks could happen, better protection, the ability to anticipate what any threat could look like and the ability to clean up after an attack.

He also pointed to a role for government that might involve a counter attack or strike.

The idea of a kill switch to allow the government to switch off the internet if it is under attack is one he did not seem overly enthusiastic about.

"The ability for us to turn something off like that and not cause other massive disruption would be very hard. We are becoming more and more dependent on the internet. There are better approaches than trying to shut off the internet.

"When I was in the anti-spam business we had to make sure the cure was not worse than the problem. We have to have better soutions than just turning it (the internet) off but sometimes you have to go to extremes," Mr Salem told the BBC.

HP to Microsoft Sayonara?

Maggie Shiels | 09:38 UK time, Thursday, 10 February 2011

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HP made its play for the lucrative mobile market with a number of products that will be powered using its own operating system, sending a message to Microsoft that the clock is ticking for its Windows OS.

HP tablet on display

 

During a two-hour presentation at a disused fort situated by San Francisco Bay, the world's biggest technology company unveiled two new phones and its long awaited tablet computer that will be driven by its webOS. The Veer is tiny, the size of a credit card and the Pre3 is aimed at the smartphone market.

The centre piece of the whole presentation at Fort Mason was the TouchPad. Apart from all the specs, I can't really say how it handles because the demos in the backstage area were done by HP professionals and we mere mortals were not even allowed to touch them.

Early industry word is that the TouchPad will open up the competition in the tablet market. Sure Apple dominates with its iPad, which it got out of the gate months before anyone else. Since April last year the company has sold almost 15m devices.

RIM's Playbook, which should find a solid foothold in the enterprise market, is due out in March for around $500.

Google's Honeycomb

 

Google is putting up a good fight for market share now that it has finally unleashed its Honeycomb operating system to developers, an OS specifically designed for tablet computers.

Morotola's Xoom, which was the darling of the consumer gadget fest CES in Las Vegas last month and is powered by Android's Honeycomb, is due to hit shelves next week. Still no word on price though. However, early rumours peg it at roughly $800. The basic iPad is $499 and a survey earlier in the year by the Consumer Electronics Association said that the sweet spot was between $500 and $700.

Talking of price, there are no figures for HP's TouchPad, Veer or Pre3.

Why? There is no doubt the number crunchers have come up with a figure that works for the company and gives a return they can more than live with given the growth potential of tablets, so why not just put it out there now?

When Apple announces products it tells you how much it is going to hurt your bank account and when they hold a press conference they have real products in the back that you can actually touch and mess around with.

Presentation of HP's webOS operating system

 

At the end of the presentation, HP dropped a bomb on Microsoft by announcing that its laptops and desktops will also be powered by its webOS. No-one would tell me what this means for its relationship with Microsoft and Windows, the de facto OS in most PC's but I did speak to one or two industry analysts about the situation.

Microsoft has nothing to worry about, for now, Charles Golvin at Forrester Research told me.

"It is crucial to underscore that having webOS in a PC does not necessarily mean not having Windows. If you think about it in the way in which a Mac user today can run Windows, the same thing would be true for HP products - having a PC running Windows but also delivering the webOS experience.
 
"At this stage one does not exclude the other. Clearly though the reason HP bought Palm was for the webOS platform - so they could have a software platform that they could control and allow them to design a unique experience across all their devices.
 
"The truth is if they put only webOS in their devices starting tomorrow, they wouldn't be able to sell PCs into the corporate world and that means for the moment Windows remains at the core of the PC experience for all manufacturers including HP."

However Mr Golvin said that situation will undoubtedly change as time moves on.

At the HP event the big focus was tablets and as far as analysts, industry watchers and bloggers were concerned, Microsoft is not even at the races here.

"What is interesting here is that HP chose not to parent with Microsoft but spent over a billion dollars buying Palm and doing it for themselves," said Michael Gartenberg, senior analyst with Gartner.

"No-one is even mentioning Microsoft right now. They are just not overly relevant in the tablet space right now. They have a decent product with Windows 7 but the consumer mass market has not embraced Windows as a tablet platform despite the fact Microsoft has been pushing tablet PCs for ten years. This is not good for the software giant when tablet computing is one of the hottest products generating so much revenue that Microsoft is not even part of the conversation."

Forrester's Mr Golving agrees that Microsoft should be worried that it has been left behind in a market that many forecast will sell as many as 50m tablets this year alone. He said:

"In the broader context of the growing category of connected devices that are increasingly in consumers hands, Microsoft is losing share of that broad market. They have a very weak presence in the smartphone market and virtually no presence in the tablet market.
 
"Given those weak presences in these two fast emerging markets, the strategic challenge for Microsoft is they need a software platform the device manufacturers can count on for delivering a compelling experience across these various platforms and not just on PCs running Windows."

Todd Bradley, executive vice president of HP's personal systems group, noted that by 2014 one in five adults will own a tablet.

There is little doubt that growth potential of tablets is evidence that Microsoft needs to get its head in the game quickly or prepare to cede the market to Apple, Google and perhaps RIM and HP.

Facebook is moving and hiring

Maggie Shiels | 09:20 UK time, Wednesday, 9 February 2011

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A year and a half after cutting the ribbon on its Palo Alto HQ, Facebook has just unveiled plans to quit that complex and move six miles up the road to Menlo Park to a home that will house the social network's expanding employee base.

Sketch of new Facebook headquarters lobby

With a workforce of around 2,000, two-thirds of which are in the Bay Area, Facebook is busting at the seams. That is very evident when you walk around the place with people always milling around, the cafeteria's always brimming with employees and the overcrowded car park.

The world's biggest social network, which celebrated its seventh birthday last week, is growing like a weed and predicts that this year will see their hiring department working overtime to fill new posts.

There are 3,700 parking spaces at the new campus and room for 3,600 people, reporters were told during a news conference to unveil the new premises. When questioned, David Ebersman, chief financial officer admitted the company is planning to "add people". While he refused to be drawn on precise figures he did say "Facebook is growing 50% a year in terms of headcount and our growth plan is to continue hiring in the Bay Area."

Sketch of new Facebook campus

The new digs which were built between 1993 and 1995, was Sun's corporate HQ until Oracle bought it for $7.4bn in 2010. The campus takes up 57 acres, has nine sprawling buildings and totals about one million square feet.

Facebook said it has also purchased an adjacent 22-acre tract that is connected to its new campus by a tunnel for possible future development.

Facebook did not say how much this is all costing but said Menlo Park did not offer any tax breaks to entice the hot Silicon Valley company to its neighbourhood.

Menlo Park Mayor Rich Cline said that while snagging Facebook was a coup, it won't be a walk in the park selling the idea to the locals.

"It is a dynamic company and will bring that dynamic brand to our town" but despite the "great excitement" at Facebook moving to the area there will be a healthy debate going forward.

Sketch of new Facebook headquarters

 

The mayor said that the big problems that need to be ironed out centre around jobs, housing issues, traffic and the impact on schools.

Talking of impact, Facebook is taking on three fellows from the Environmental Defence Fund to map out a plan that will reduce the environmental burden of the project and save money.

"This is not just a feel good thing, this makes good business sense," said Melanie Janin of EDF.

"Embedding these fellows in companies helps embed an understanding of pairing environmental innovation with business sense. You can cut costs and your carbon footprint."

Facebook isn't the only Silicon Valley making real estate news.

Last month, Google announced it was leasing the famous Frank Gehry "Binoculars" building as part of its drive to hire 6,000 new people this year and expand its southern California base.

Rumours have been swirling for weeks that Twitter is looking to leave San Francisco and head to the town of Brisbane.

Seems highly unlikely and if the city by the Bay has anything to do with it, they will pull out the stops to keep this tech company in town. Stories are emerging that the city will offer Twitter tax breaks to stay put.

Of course all this address changing is a clear signal that Silicon Valley is on a major expansion drive and the quest for talent is only going to heat up.

Will HP deliver on tablet dreams?

Maggie Shiels | 09:55 UK time, Friday, 4 February 2011

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Next week all eyes will be on HP as it holds a news conference on 9 Feb to make "an exciting webOS announcement". It is expected that the company will take the wraps off a long awaited tablet device that was expected to go head to head with Apple's iPad last year.

HP logo

After HP bought Palm for $1.2bn last year, the original company that designed the mobile operating system, it had hinted that an iPad rival was on the cards. Instead the company introduced a slate running Windows 7. At the same time there have been new Pre phones with webOS and a new version webOS 2.0. Still no dedicated tablet.

A number of HP execs have refused to talk explicitly about such a device however Phil McKinney, vice president and chief technology officer for HP's personal systems group did not pour cold water over the prevailing view that 9 Feb will put all the talk to rest.

"We have been on the record saying we will ship a webOS slate in the year 2011 and we recently sent out the invites for the press for a Feb 9th event."

While he refused to be drawn on specifics, Mr McKinney said there are a number of things that need to be taken into account when designing a tablet product that will excel in the marketplace. And remember at this year's gadget fest that is the Consumer Electronics Show, there were over 100 slate or tablet devices on display.

"Any slate or tablet device has to be looking at the applications catalogue that is available to it. What is it's connectivity option. How good is that online experience. And then how does it work across the eco system of devices.
 
"It can't be a stand alone data island. It's how does any slate device synchronize with your phone or your pc and how that all plays together. That is what the consumer is interested in.
 
"At HP labs we have been working on a concept called "liquid media" which is this concept of how do I make it feel like all of my files, documents, media, whatever is on all my devices simultaneously without them residing on those simultaneous devices. So therefore you don't think 'oh man that powerpoint is on that laptop and that music is on that phone and it's never on the right device'. How do you make all that synch and come together?"

Like it or not any tablet or slate device that hits the market these days is constantly compared to Apple's iPad which has been credited with reigniting the market with its15m plus sales.

Motorola's Xoom device was hailed as an iPad killer at CES and will really be put under the microscope when it comes out later this month. There was a sneak preview of the device at Google this week, when the search giant unveiled its new Honeycomb operating system for tablets and slates.

HP will also face similar scrutiny.

Mr McKinney clearly thinks it is too early to judge winner and losers in this space.

"I think any new form factor can survive four to five players. We are in the first inning of a nine inning game of what slates and tablets are going to look like."

It also seems that he is pretty sanguine on HP taking its time to deliver a webOS tablet, if of course that is what they do next week.

"From the standpoint of a long term category, there is still a lot of runway left for anyone wanting to come into this space. Long term it's about creating a set of delivery options so the consumer can pick and it's about giving the consumer choice.
 
"For us, we have been very keen on the segment and started our work in the slate tablet space almost four years ago. It's been a long level of research. We could have built a slate tablet device back then but it would have cost $2500.
 
"We are at a unique convergence now. Last year we made the prediction that we felt 2010 and 2011 were going to be the tablet years because we saw this kind of convergence on size, scale, processor performance and software and cost."

So far the industry watchers have said that tablet devices have not cannibalised the market for netbooks or notebook. Mr McKinney said going forward he is not worried.

"Pads and tablets are great from a content consumption point of view. Read a magazine, watch a movie, listen to music etc. They are typically not optimised for content creation.
 
"I have a column on Forbes. I have to crank out my 1,100 words and I am not doing that on a touch screen. I need a full keyboard. So from that standpoint, people will pick and choose.
 
"My prediction is that the average consumer will carry two to three devices. Those are going to be their mainstream arsenal they will use day in and day out. We think the slate tablet is going to be one of those three devices."

For Mr McKinney the number of devices he carries at the moment defies these predictions.

"I carry five phones. All active. Right now my favourite is my Palm Pre 2. The other four include two Palms and two that I can't talk about because they would be classified as 'not yet announced products'."

He also has a "pretty tricked out" HP NV laptop and an HP slate 500 as a tablet. At home, Mr McKinney is equally hooked up with four TV's, including a connected TV and six computers.

Mr McKinney is also a big gamer but is presently addicted to casual games.

"I am a big Angry Birds fan. Peter Vesterback runs Rovio here and is ex-HP. I told Peter he needs to create a 12 step programme for people who are addicted to Angry Birds.

Google and Bing in war of words

Maggie Shiels | 08:37 UK time, Wednesday, 2 February 2011

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All day Tuesday search giant Google traded barbs with search upstart Bing, owned and operated by the world's biggest software company, Microsoft.

At the heart of this dispute is a claim by Google that Bing has been watching what people search for on Google and then taking those results and using them to improve the results that Bing dishes up to users.

"I've got no problem with a competitor developing an innovative algorithm. But copying is not innovation, in my book," Google fellow Amit Singhal told the industry blog SearchEngineLand.com.

"It's cheating to me because we work incredibly hard and have done so for years but they just get there based on our hard work. I don't know what else to call it but plain and simply cheating," said Mr Singhal.

The issue started back in the summer of 2010 when Google said it was looking at search queries for an unusual misspelled query. In this case it was the word torsorophy which should have been spelled tarsorrhaphy - and is in actual fact a rare surgical procedure on eyelids.

Screengrabs of Google and Bing search for torsorophy

In a lengthy blog post, Mr Singhal who oversees Google's ranking algorithm said "Google returned the correct spelling - tarsorrhaphy - along with results for the corrected query. At that time, Bing had no results for the misspelling.

"Later in the summer, Bing started returning our first result to their users without offering the spell correction. This was very strange. How could they return our first result to users without the correct spelling? Had they known the correct spelling, they could have returned several more relevant results for the corrected query."

Google said at that point, it smelled a rat.

"This example opened our eyes, and over the next few months we noticed that URLs from Google search results would later appear in Bing with increasing frequency for all kinds of queries: popular queries, rare or unusual queries and misspelled queries."

Mr Singhal said the company then embarked on an experiment or a sting operation to test out their suspicions that "Microsoft was really using Google's search results in Bing's ranking".

Google created about 100 "synthetic queries" that there was no way on earth users would type. For example hiybbprqag or delhipublicschool40 chdjob or juegosdeben1ogrande - that would be gobbledigook to you and me.

Google said each time it attached a wrong result to these nonsensical queries, Bing delivered the same results.

Hours after a story about the whole issue appeared in SearchEngineLand, Microsoft fired back in retaliation.

In defence, Bing's corporate vice president Dr Harry Shum explained in a blog post:

"[W]e use over 1,000 different signals and features in our ranking algorithm. A small piece of that is clickstream data we get from some of our customers, who opt-in to sharing anonymous data as they navigate the web in order to help us improve the experience for all users.
 
"To be clear, we learn from all of our customers. What we saw in today's story was a spy-novelesque stunt to generate extreme outliers in tail query ranking. It was a creative tactic by a competitor, and we'll take it as a back handed compliment."

So neither an outright admission nor a denial.

At a conference in San Francisco, Google and Bing came face to face at an event organised by Microsoft to discuss the future of search.

During the Big Think Farsight Conference, Google's Matt Cutts and Bing's Dr Shum traded a few insults over the issue.

Mr Cutts levelled the cheating claim at Bing while Dr Shum also went for the jugular accusing Google of profiting from spam sites.

Meanwhile over on Twitter, Microsoft's communication head Frank Shaw cranked things up when he tweeted his view on why Google embarked on the sting operation and why it decided to go public with the results.

The tech blog TechCrunch has them staked up, but in one Mr Shaw tweeted:

"Don't be fooled. Google wants to change the subject because they're under investigation in the US and Europe for manipulating search results."

This contretemps looks like it is destined to get a lot uglier.

Interestingly enough, Rich Skrenta the chief executive of the Blekko search engine, which has been written about here, also took part in the conference. He said this issue pointed to a bigger problem which was that there are only two dominant search engines left on the web and that there should be more options.

With Yahoo's search results now being delivered by Bing, this of course is where Blekko comes in.

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