Byte of the Apple - BusinessWeek

Apple's New Video Strategy Coming Into Focus

Peter Burrows — Tue, 24 Aug 2010 21:10:20 -0500

The blogosphere has been buzzing with talk of a radically updated version of the Apple TV set-top box. It turns out Apple plans to unveil the $99 device at an event on Sept. 7, my Bloomberg colleagues and I reported today . But that's not the big video news Apple wants to impart.

Rather, look for CEO Steve Jobs to focus on the ability for customers to watch their favorite TV shows and movies on their iPads, iPhones, and iPod Touches, says a person familiar with the plan. The company will announce that customers can rent many TV shows for 99 cents--the same low-enough price that convinced millions of people to buy iPods to play songs purchased from iTunes (Also, thousands of 99-cent iPhone apps helped make the iPhone a hit, by making it popular for mobile gaming and other things). And Jobs will also show off a new iPod Touch that features a high-resolution screen like the one in the iPhone 4. That's important, because the company can now say that all of its products are capable of near-HD quality video. Rent a TV show once, and you'd be able to enjoy it on your iPhone during the morning commute, on your PC during a lunchbreak, or on your iPad after dinner.

Making Apple TV the tail on Apple's video strategy makes sense. Kaufman Brothers analyst Shaw Wu estimates that Apple has sold fewer than three million Apple TVs since the product was introduced three years ago. Even with the refresh, Jobs isn't convinced the new version will be a mainstream hit, says the person familiar with Apple's plans. Most consumers aren't ready to cut the cord to their cable company, or put up with the tech-nastics required to stream content from the iTunes collection on their PC to their living room big-screen TV. In other words, it's a product that at best will delight some of the "hobbyists" that have always been interested in the product.

Some analysts do have higher hopes. Assuming the new Apple TV will run on the same IOS software that powers the iPhone and iPad, it will be able to run Apps. In that case, Kaufman's Wu thinks it could be a popular, low-cost game console for people who don't care about running the most cutting-edge, graphics intensive games. "I think the Apple TV would have the potential to be a million-unit-a-year seller on the basis of that alone," he says.

Making TV-watching a routine use of its portable devices would still be far more important to the company's stated goal of being the world's leading "mobile devices company." The company could sell as many as 79 million of its iDevices this year, and 102 million in 2011, Kaufman Bros. analyst Wu says. Apple isn't going to give up on Apple TV, but the real innovation is happening inside iTunes, says the person.

My sense is that Apple doesn't plan to overplay its hand, by making too much of this mobile TV opportunity. This isn't another "revolution" in the making. Even if Apple wanted to try for that, studios have all but nullified the possibility by refusing to let Apple sell subscriptions to your favorite shows, to be watched whenever and as many times as you like. That might have appealed to consumers who just like a few shows, and don't want to pay those hefty monthly cable bills.

Instead, the person familiar with Apple's plan say executives see the rental service as useful primarily for "catch-up viewing"--the ability to watch that episode you missed, or on a lark check out some show recommended by a friend. Apple's pitch to studios and networks is that the rental service could ultimately bring in billions of incremental dollars, without threatening the lucrative contracts they have with cable companies.

Still, if the rental service works well, owners of Apple's devices may soon be calling up episodes of "Glee" or "Lost" as routinely as they fire up Pandora's music service or a restaurant review site. That would give millions of current and prospective customers more reasons to buy into Apple's ecosystem--and not into anyone else's.

Patent Filings Show Touch Screens Coming To The Mac: Told Ya!

Arik Hesseldahl — Mon, 23 Aug 2010 16:38:20 -0500

A little less than two years ago I took a great deal of heat from a pack of readers who were irate, nay, irrationally incensed, about a column I wrote. My sin? Arguing that Apple, the company that made the world familiar with the multi-touch interface found on the iPhone and the iPad, was at the time behind the curve with regard to touch technology on the PC. A new touch-friendly HP notebook, I argued at the time, had beaten Apple to that punch.

Today HP offers four desktops and at least one notebook with touch-enabled screens. You may argue the ergonomic merits of raising your arms to touch a screen that's placed before you, and debate whether it's an effective option for an interface. Yet Mathematically speaking, five is more than zero, making HP, by that simple measure, still ahead. Apple has yet to bring touch-enabled displays to the Mac. Yes the glass track pads on the MacBook Pro are , as is Apple's terrific Magic Trackpad.

Now the evidence is mounting that the displays on Macs and MacBooks may soon be getting the touch-treatment. The Patently Apple blog has un-Earthed what it describes as the "Mother Lode" of patent applications: "The iMac Touch."

It's a fascinating application which the blog's author, Jack Purcher, describes like so: "Imagine having an iMac on your desktop one minute and a gigantic iPad the next," meaning you'll be able to switch between running Mac OS X one minute, and iOS4 the next. The stand holding the display is shown with the ability to collapse and flatten allowing the screen to face up in order to more easily allow touching and thus solving that ergonomic issue.

And it's not the only Apple patent filing suggesting touch displays on the Mac. Another surfaced recently pointing to touch displays on the MacBook line.

Previously Apple has been known to dismiss the idea of touching the screen, at least within the context of a personal computer. Touchscreens for notebooks, as CEO Steve Jobs said once in 2008, hadn't "made a lot of sense to us." As has often been his practice, Jobs disparages something only a few years before he embraces it. Examples include video on the iPod and digital books. We know how those turned out. Touching the screen on the Mac appears it could be next.

Four New Patents For Skyhook

Peter Burrows — Tue, 03 Aug 2010 14:47:56 -0500

Skyhook Wireless, which makes location-tracking software used in smart phones and other mobile devices, announced today that it has been granted four new patents to go along with the eleven it already has. The announcement comes days Apple Inc. revealed that it was no longer using the Boston-based company's technology in its new products, including the five-week-old iPhone 4.

[CORRECTION: The original version of this post improperly said that Skyhook announced it had been granted five new patents. The company said it received four new patents.]

The patents, which were all granted within the last month, could prove crucial to Skyhook's ability to deal with increased competition in the coming years, or to possibly force would-be competitors to license its technology rather than face lawsuits.

Apple's decision to rely on its own database of WiFi hotspots rather than Skyhook's isn't likely to have an immediate financial impact on the company, say two people familiar with Skyhook's dealings with Apple. The people, who both requested anonymity because they did not have approval from the companies to comment, say they believe Apple will continue to pay Skyhook through the end of a long-term contract first agreed upon before the iPhone was introduced in 2007, as if it was still using Skyhook's technology.

This might explain the riddle suggested by public comments made by Apple and Skyhook. While Apple spokeswoman Natalie Kerris confirms that "we're not using Skyhook technology anymore," Skyhook CEO Ted Morgan tells Bloomberg Businessweek that Apple "remains a customer of the company."

Still, Apple is one of the Skyhook's largest and best known customers, and was a primary growth opportunity given Apple's rising market share in key mobile device markets. And Skyhook faces potential long-term competition winning business from the other camp that's gaining share: devices built around Google Inc's Android mobile software platform. That's because Google offers its own location-tracking technology to Android licensees. While Skyhook announced contracts with Android licensees Motorola in April and Samsung in July, these and other Android licensees may opt to use Google's homegrown technology in the future. One reason is price. While Skyhook's revenues come from the sale of its technology to handset makers, Google doesn't charge extra for its location service, say the two sources. [UPDATE: Google spokeswoman Katie Watson confirms that Google does not charge for the location service.]

Faced with such competition, Skyhook may need to increasingly rely on its patents to maintain, or protect, any lead in innovation. While Skyhook was the first to send electronics-laden cars out to record the location of Wifi hotspots throughout the United States, Google now has its own fleet of cars, both in the US and abroad. Also like Skyhook, Google makes software that can be embedded into mobile devices; that way, the devices can ascertain their precise location relative to their distance from hotspots listed in the database. (Handsets also use coordinates obtained from GPS satellites and cell towers, but Wifi hotspots tend to be more accurate in crowded urban areas or inside homes and office buildings).

Apple: White iPhone 4 Delayed Again; Case Program Starts

Arik Hesseldahl — Fri, 23 Jul 2010 09:56:17 -0500

Why is it so hard to build a white iPhone 4? Today Apple announced its second delay of the white unit. Its statement in full: "White models of Apple's new iPhone 4 have continued to be more challenging to manufacture than we originally expected, and as a result they will not be available until later this year. The availability of the more popular iPhone 4 black models is not affected."

No hints or clues from Apple as to what the trouble may be. Since the electronics are identical to those on the black model, it has to be something cosmetic. The best theory I've seen on this so far emerged on July 18 when Engadget summarized a report from a Chinese newspaper saying that workers at a glass supplier are struggling with finding the right combination of materials to accommodate manufacturing process while at the same time getting the color just right.

In a related development, Apple got its case program under way. Those who buy iPhones by Sept. 30 get free bumpers or cases. To get it you download an iPhone app, sign in with your iTunes store account or Apple ID, and pick the bumper or case you want. And if you already bought one? You're eligible for a refund.

A Few More Details On Apple's MacPaint Donation

Arik Hesseldahl — Wed, 21 Jul 2010 11:24:52 -0500

I just got an email from Andy Hertzfeld, the member of the original Mac development team who was instrumental in engineering Apple's donation of the MacPaint source code to the Computer History Museum.

Several people wrote in comments wondering about the disk format on the original floppies from which the source code was extracted. Hertzfeld has the answers:

"We used the Lisa to develop the Macintosh system software and original applications because it had a hard disk and enough RAM to run development tools like the Pascal compiler, which the Mac did not. The development system we used was called the "Lisa Monitor," which was a port of the UCSD Pascal system done for the Lisa by Rich Page in 1979, so the disks were in the Lisa Monitor format."

He goes on to say that the Lisa Monitor format didn't use plain ASCII text format because disk and memory space were so precious. Instead it used an encoding scheme to compress the blank spaces in the code at the beginning of each line. This made it difficult to recover the source code from these disks. "When I first extracted the files, they looked messy, with the indentation all screwed up, because I had forgotten about the compression scheme," he writes. "Once I realized what was going on, I wrote a Perl script to expand the compress blanks to correct the problem."

Hertzfeld also corrected a couple of points in yesterday's post. He didn't use a Lisa to extract the files. "I needed a machine with a unique Apple 3.5-inch floppy drive that had motor-speed control to fit more information the disk, so a standard floppy drive wouldn't work, and an Ethernet port to transfer the data to a modern machine," he writes. "I ended up using a 1996 Macintosh that I had that fit the bill."

He also clarified that the panel discussion and the ensuing search that turned up the disks in Bill Atkinson's attic took place during the first half of 2004, which was before he had started at Google in mid-2005.

Apple Donates MacPaint Source Code To Computer History Museum

Arik Hesseldahl — Tue, 20 Jul 2010 00:00:01 -0500

One of the earliest bits of software that made the original Macintosh computer so interesting to use and unusual for its time was a drawing program called MacPaint.

Released in 1984 with the Mac, it is fondly remembered not only by those who used it, but also by computer scientists for numerous first-of-a-kind innovations. Those who spend a lot of time using Adobe Photoshop constantly use such features as the lasso tool for selecting non-rectangular shapes, and the paint bucket for filling closed areas with a pattern, and later, color. Both first appeared in MacPaint. The program was unique at the time for its ability to create graphics that could then be used in other applications.

Apple is today officially donating the source code to the Computer History Museum in ~~San Jose~~ Mountain View, California. You can read more about the donation on the Museum's website here.

How the donation came to happen is a bit of an interesting story in itself, as recounted by Andy Hertzfeld, one of the key members of the original Macintosh development team and author of the Mac history book "Revolution In The Valley". It was in January 2004, at an event honoring the Mac's 20th Anniversary that the respected Stanford University computer science professor Don Knuth called MacPaint "the best program ever written."

Knuth went on to ask a panel assembled for the event if it was possible to get the original source code for MacPaint from Apple, not to run it as an application, but rather to study it under the hood as research for his multivolume book "The Art Of Computer Programming." On that panel was Andy Hertzfeld, a senior member of the development team that created the original Mactintosh. Intrigued at the thought of releasing the source code to the public, he called MacPaint creator Bill Atkinson to see if he had any copies of the original.

Persuaded to dig through his attic, he found a set of original MacPaint floppy disks formatted not for the original Mac, but for the Lisa — a Pre-Macintosh machine — and on top of that in a developmental disk format for the Lisa that had never been released to the world. Eventually a Lisa machine with a network connection was found, suitable, as Hertzfeld put it, "for getting the bits out of the box."

"After that I got to thinking, that if these files were interesting and useful to Don Knuth, they must be interesting and useful to others," Hertzfeld told me. He thought of simply posting them to the Web, but feared a lawsuit from Apple.

He then hit upon the idea of convincing Apple to donate the code to the Computer History Museum. By this time he had taken his current job as a software engineer at Google, Hertzfeld reached out to Donna Dubinsky, a former Apple exec who later went on to be CEO of Palm and Handspring. Dubinsky, who sits on the museum's board of trustees is friends with Nancy Heinen, who was then Apple's general counsel.

Heinen, as Hertzfeld tells it, said Apple would be "delighted" to donate the MacPaint source code for the benefit of academic and historical research. Formal approval, he assumed, would surely come right away. However, Heinen was soon caught up in Apple's stock options scandal and resigned her position before formal approval was given. Ultimately Heinen settled an SEC lawsuit in 2008. Hertzfeld sought approval no fewer than six different times Heinen's various successors with no luck, he said.

Finally in January of this year, Hertzfeld saw Apple CEO Steve Jobs, and told him of the stalled request for the source code. Within 24 hours, Jobs asked Apple's new general counsel, Bruce Sewell to approve it. The files are going live today.

What you'll find are actually two files, one containing the source code of MacPaint itself, the other containing QuickDraw, which Hertzfeld calls "the single most important component of the original Macintosh technology." It was a key enabling technology not only for MacPaint but for the entire Mac interface, and by itself amounts to about one-third of the source code for the original Macintosh operating system, Hertfeld said.

MacPaint was last updated in 1988, and Apple, and later its software subsidiary Claris continued to sell it until 1998. Hertzfeld has much more to say about MacPaint here, on his fascinating Mac-history site Folklore.org. And there are some interesting screenshots of MacPaint in action here.

What Apple Must Say And Do About The iPhone 4

Arik Hesseldahl — Thu, 15 Jul 2010 13:06:34 -0500

You know you've got a problem when your product is ridiculed in David Letterman's Top Ten List.

The CBS late-night funnyman on July 14 set up his "Top Ten Signs You've Purchased a Bad iPhone 4" by telling his viewers there's "something hinky" about the new iPhone, and that "they're not hooked up right," and that "they don't like to be held." From Apple's point of view, it went downhill from there.

It's not the first time that an Apple product has been the butt of the late-night TV jokesmiths. Saturday Night Live's Seth Meyers, late last year, in listing the challenges to the iPhone: "Making phone calls." This one, however, is starting to hurt.

From the day it first went on sale in June, of problems with the iPhone 4 and its tendency to lose signal strength or drop calls entirely when held a certain way seemed like just another tempest in an Apple product launch teapot. And yet the story refused to die, making the leap from enthusiast blogs, to the mainstream media, to Letterman. And at least three lawsuits are already pending. Now my colleagues at Bloomberg New are reporting that Apple senior executives, including CEO Steve Jobs, knew about what's since become known as the "iPhone death grip," as far back as a year ago, and were warned about it by a senior engineer and antenna expert.

Some of this is to be expected. Apple's high-profile products have become a favorite target for irritable consumer advocates, class action lawyers, legislative and regulatory agencies, and the occasional jealous competitor.

This time is proving different. Now Apple is hearing not only from late-night comedians, but at least one U.S. Senator. Among those calling on Apple to make amends is Sen. Charles Schumer of New York, who's released an open letter to Jobs asking for a "clearly written explanation of the cause of the reception problem," and a "public commitment to remedy it free of charge."

Clearly Apple's decade-long run as a reliable consumer electronics hitmaker is at risk. There is still time to get this right. It's next move will be to hold a press conference on Friday, July 16, at which it has promised only to discuss the iPhone 4.

When the complaints first emerged, Apple's first move was to dismiss them. In emails from purchasers, CEO Steve Jobs advised consumers to "hold it differently." The complaints persisted, so Apple investigated. On July 2 it said it was "stunned" to find that the formula the iPhone uses to determine how it should display signal strength was in some cases displaying more bars than it should be. Essentially, the iPhone wasn't losing its signal, it just looked like it was.

Next came Consumer Reports, the gold standard of American consumer quality testing, announcing from atop its mountain that Apple's otherwise wonderful device does indeed suffer from a hardware flaw that will cause it drop calls in places where AT&T's network coverage isn't strong. Apple shares fell $5.49 or more than 2 percent the next day. After increasing in value by 20 percent this year, Apple is down more than 7 percent since the iPhone 4 first went on sale on June 24.

While as yet there's no evidence to support that iPhone 4 sales are being hurt, the time has come for Apple to do what it does so well, and get control of this issue, by doing right by its customers, admitting the full nature of the problem, and taking a few lumps if necessary. Here are some thoughts for what should emerge from Friday's press conference and for some simple moves Apple can make going after that.

Apple's vaunted reputation for product quality comes in no small part from an obsessive attention to detail. Moving the iPhone's antenna to the outer-shell where it would come into contact with the human hand was not a decision arrived at lightly. The implications of so fundamental a shift in the industrial design of the product that brought in more than 40 percent of revenue in its most recent quarter would have been studied and tested ad nauseum for months if not longer.

In that case one of two things are true: The testing failed to detect the problem, or the decision to make the change was made despite the results of testing. Bloomberg's reporting suggests it was the latter, in which case Apple may have misjudged how readily people might have discovered the problem. It's entirely possible that the urgent need for more space to accommodate a larger battery and more chips in the end outweighed the perceived threat of radio interference from the human hand. Whatever the case, admit whatever mistakes were made. That's step one.

Step two is to let customers vent their frustrations and quit pretending they don't exist. Some reports have suggested that Apple has deleted comments from frustrated consumes. If true, that's a very bad idea that only makes Apple look worse.

Do the opposite. Create a forum where Apple employees communicate clearly with affected customers. Giving people the chance to let off steam within reason on know that Apple is listening will prevent them from taking their complaints elsewhere, such as the comment sections of gadget blogs like Engadget and Gizmodo and their ilk, where they're less likely to be polite. It also reduces that chances that those sites keep the story alive with more reader-inspired follow-up stories. People are right to be ticked off that their phone doesn't make phone calls in certain circumstances, regardless of the reason. Within reason, let them have their say.

Step three. Send every iPhone 4 user, whether they've complained or not, a coupon that's good for a free bumper, or a credit toward the purchase of an iPhone case, not only in the Apple store, but any store. Apple's $29 colored bumpers (probably $1 to $2 worth of material and $27-$28 of pure profit) are said to essentially eliminate the problem. If the bumpers do the job, so will practically any case that keeps the hand out of contact with the gap between the antennas. Additionally: Every new iPhone 4 customer walks out with a free bumper in the color of their choice.

Assuming Apple has sold 2 million iPhones so far, it would cost at most $100 million to $150 million to give free bumpers or cases to everyone who's bought one so far. In the worst case, double that to cover another 2 million iPhones. These figures are rounding errors for cash-rich Apple, which has $23.1 billion in cash and short-term investments plus another $18.5 billion in long term investments on its balance sheet.

Step four. Extend the time during which unsatisfied customers can return their phones for any reason for a full refund. By default, it's 30 days. Give everyone affected plenty of time to mull it over. For this model, make it 90 days so long as the phone isn't broken in other ways, and waive any annoying restocking fees.

Step five: Don't recall the iPhone. A recall will only make this situation worse, and needlessly cause a lot of damage to the iPhone brand that will be difficult to repair. As others have observed, the iPhone isn't a Toyota that doesn't slow down when the brakes are applied. Lives are not at stake. Reputations are. Take what reasonable manufacturing steps are necessary to eliminate the problem entirely and apply them to future production runs. It may be necessary to allow early buyers to swap their early-generation iPhone 4s for later ones. Those people will likely be small in number. Grin and bear any related financial hit. It will only hurt a little.

Step six. Book Steve Jobs on Letterman. Millions will watch and forgive Apple as Jobs brings his unrivaled star power is the preeminent business and media personality of the moment to the stage of the Ed Sullivan Theater, and shows late-night TV viewers, a sense of humor, a little humanity, and a little humility. Letterman will do what he always does when people whose star power exceeds his own show up, ask a few probing softball questions, make a few self-deprecating jokes, and maybe pretend to eat an iPhone (again). Soon the great iPhone crisis of 2010 will be a memory.

Apple: iPhone 4 Just Looks Like It's Losing Signal

Arik Hesseldahl — Fri, 02 Jul 2010 09:40:32 -0500

Apple this morning sent out a letter to iPhone users concerning the troubles that some iPhone 4 users have been concerning apparent signal disruptions, when the phone is held a a certain way. It insists that customers are generally reporting that reception on the iPhone 4 is better than on the iPhone 3GS. The glitch has come to be known as the "Death Grip".

On the issue of how one holds the phone Apple says how you hold a phone affects the signal reception on any phone no matter its brand. Yet the whole tempest that has resulted from the tendency of the phone to display fewer bars when the user's hand covers the black metal band near the iPhone's lower left corner has become a persistent public relations irritant and has generated no fewer than three lawsuits.

Apple investigated. The result? The iPhone 4, it says, still has the best reception of any iPhone yet. The problem stems from software. And software is fortunately, easy to fix. Apple says the real problem is how the phone's internal software displays the bars that indicate signal strength. For this they blame having used an incorrect formula to calculate how many bars should be displayed.

"Our formula, in many instances, mistakenly displays 2 more bars than it should for a given signal strength," Appple writes. "For example, we sometimes display 4 bars when we should be displaying as few as 2 bars. Users observing a drop of several bars when they grip their iPhone in a certain way are most likely in an area with very weak signal strength, but they don't know it because we are erroneously displaying 4 or 5 bars. Their big drop in bars is because their high bars were never real in the first place."

A fix is coming, the company says. Apple will now adopt AT&T's recommended formula for figuring how many bars to display. The result, it says will be a more accurate display. The software upgrade will come for the iPhone 4 as well as the iPhone 3GS and iPhone 3G. Apple says to expect it, "within a few weeks."

Verizon To Get iPhone In January 2011

Arik Hesseldahl — Tue, 29 Jun 2010 15:10:34 -0500

My colleagues at Bloomberg News are reporting that Verizon Wireless will start selling Apple's iPhone this January, citing two sources familiar with the matter.

This is big news for many players in the wireless business. As I type shares in Research In Motion, which sells more Blackberry devices through Verizon Wireless than any other wireless carrier, are down about 6 percent. AT&T shares are also down, while Verizon shares are up, and Apple shares are rebounding after falling most of the day.

Such a move will intensify the battle for smart phone users not only between Apple and RIM, but also Apple and Google, whose Android platform has played a big part in Verizon's smart phone strategy in the last year. Just last week, Motorola launched the Droid X with Verizon. It would also bring an end to AT&T's exclusive arrangement to carry the iPhone, which its had since the beginning.

It's also a needed move for Apple, who got to keep the universe of iPhone owners growing. The best way to do that is to widen pool of potential buyers, which means taking a more carrier-agnostic approach.

Motorola's Sanjay Jha Shares His Own Thoughts On Flash

Arik Hesseldahl — Wed, 23 Jun 2010 17:01:14 -0500

Motorola's co-CEO stopped by our offices for an interview today on the occasion of the launch of the Droid X handset that runs Google's Android operating system.

It didn't take long for the discussion to turn to things related to the iPhone and to Apple CEO Steve Jobs' recent public comments about his decision not to support Adobe's Flash technology on the iPhone and the iPad.

Jha said he thinks it's important to deliver a mobile Web-browsing experience that's as close to that of the desktop as possible, and to that end, the Droid X will support Flash 10.1 beginning with the next upgrade of the Android operating system version 2.2 codenamed Froyo. "There are sites, like NASA, and PBSKids, that are really all Flash and if you go to those sites you're not able to get a meaningful experience. We see Web browsing, multimedia, enterprise and social networking as four key applications, that in survey after survey, smart phone users use. And I think the Web browsing is one thing that we want to differentiate on."

Asked to respond directly to the comments Jobs made in his open letter "Thoughts On Flash," Jha said that some of Jobs' criticism, in particular that Flash can be a big draw on a phone's battery life, are valid. "There's some truth to what Steve said. The conclusion that he draws is not the conclusion that I've drawn."

Jha said engineers at Motorola have worked closely with their counterparts from Adobe to make the Flash software work with Motorola's graphics hardware. "I don't have specific measures, and there is no doubt that Flash content, just as video content, consumes battery power, but I think we have managed that incredibly well," he said. "I think the Flash performance will be the best that any smart phone has delivered for Flash so far."

On Apple's "Secret" Snow Leopard Security Fix

Arik Hesseldahl — Mon, 21 Jun 2010 14:05:06 -0500

Last week Apple issued the latest update to its OS X Snow Leopard operating system for Macs. Among the many things fixed were problems with VPN connections, DVD player software. The update also contained Apple's latest Web browser, Safari 5.0. It also contained a security update - one which Apple didn't document -- has got some security software companies criticizing Apple for apparently trying to sweep security problems under the rug.

Most of the changes contained in the update were documented in Apple's an Apple document describing it. Yet in it, Apple makes no mention of the security fix.

It was, instead, discovered by the security software firm Sophos. In the software code, Apple updated a file called XProtect.plist, which contains signatures - essentially detailed descriptions - of Trojan Horse software that's known to target the Mac. By updating this file to include a signature for a Trojan Apple calles HellRTS, Apple is telling Macs everywhere how to identify Trojans and prevent them from being installed on the machine.

Sophos blogger Graham Cluley is criticizing Apple for providing this update so quietly, and not disclosing it openly, suggesting that Apple would rather not admit publicly to the existence of the occasional bit of malware aimed at the Mac.

"Unfortunately, many Mac users seem oblivious to security threats which can run on their computers," he writes. "And that isn't helped when Apple issues an anti-malware security update like this by stealth, rather than informing the public what it has done."

There's no question that HellRTS - Sophos calls it Pinhead-B -- is a potentially nasty Trojan. Both Sophos and another security software firm, Intego, say it can monitor what sites you visit in your browser, and can take screen shots of your activity, especially unsettling if it happens, say, when you're accessing your online banking account. It can also hijack your Mac for the purpose of sending spam.

I agree with the suggestion that Apple should at least be upfront when it adds protection for any kind of security vulnerability, even one so seemingly routine as this. Yet, in the same spirit of openness, I can't get past the fact that Cluely and his employer have a vested interested in making Mac users uncertain about the state of security on their machines in hopes of ultimately encouraging sales of their products. That in mind, I'd argue that Cluely is leaving out certain facts of his own.

How exactly does one get this Trojan? Cluely doesn't say. (I've written him and a Sophos spokeswoman seeking a comment on this and will update this post when and if I get one.) Depending on how you read his post, you might reasonably conclude that this Trojan is just floating around waiting to attack Macs everywhere.

Now let's look at the facts. The very nature of Trojans requires the user to install the software themselves, usually in the mistaken belief that it is something else. A victim of this Trojan would have to physically install it believing they are installing iPhoto.

However, as any Mac owner knows, iPhoto is software that ships with every Mac, and is part of the iLife suite of personal media applications that include iMovie, GarageBand and iWeb. Free updates are issued via Apple's Software Update utility and nowhere else. And when a completely new version of iLife is announced, as last happened on January 26, 2009, getting the new software costs money, in the most recent case, $79.

It's in that second scenario that some people try to avoid paying, and thus turn to file-sharing networks for software that purports to be cracked versions of the real thing. Its here that Trojan troubles with a Mac generally begin. While in some cases, you might find legitimate software that's been cracked so that it can be installed for free, you don't always know exactly what you're getting. You might just as easily be downloading a Trojan disguised to look like the application you want. Where file-sharing sites are concerned, I can't say I like the odds.

Apple didn't respond to my request for comment on this. But as far as I'm concerned nothing has fundamentally changed about the state of security on the Mac since I wrote "On Macs And Malware" last year. There are still many, many more instances of malware targeting Windows than Mac OS X, and a reasonably careful Mac user can in my opinion get by just fine without installing anti-virus software. The last time I saw malware of any kind on a Mac was in 1998, when Macs were still running OS 8, years before the start of the OS X era, which began in 2001.

If you're the type of Mac user who trusts the file-sharing sites as a source for software, then by all means, load up on antivirus protection, as you're engaging in what can only be described as "high risk behavior." While the usual caveat that no one knows what the future may bring, there's still little evidence that Macs are any less secure than they've ever been, no matter what the security software vendors say.

Forrester: Tablets Will Outsell Netbooks By 2012

Arik Hesseldahl — Thu, 17 Jun 2010 09:32:26 -0500

Remember a few years ago how Netbooks were set to become the next big thing in personal computing? You can forget about that, says Forrester Research.

In a new report out today Forrester says that tablets -- including Apple's iPad -- are going to overtake netbooks by market share within two years, and will by 2015 constitute the second-largest product category after notebooks.

Yes, you can debate the finer points concerning the definition of a tablet vs. a PC if you like. Strictly speaking a tablet like the iPad may not be a PC because it doesn't have a traditional keyboard and mouse interface, and when using it you don't generally create and edit files within programs. Still Forrester argues that tablets like the iPad should be classified as a "form of personal computer," and says it's a category that will grow at a compound annual rate of 42 percent between now and 2015. Unit sales, it says, will go from 3.5 million this year -- most of them iPads if sales as of May 31, officially 2 million units, are any indicator -- to 20.4 million by 2015.

That growth in tablet sales, writes Forrester analyst Sarah Rotman Epps, will come at the expense of netbooks, because while they're similar "grab and go" devices, focused on watching video and playing music, and light Web-browsing, while nebooks, she says, tend not to synchronize media with data services like iTunes as readily as as the iPad does. Rotman Epps goes on to credit Apple for "teaching consumers to want this new device."

Ultimately, Forrester sees the PC market breaking down like this within five years:

Notebooks, 42 percent
Tablets, 23 percent
Desktops, 18 percent
Netbooks 17 percent

Apple Updates Mac Mini

Arik Hesseldahl — Tue, 15 Jun 2010 08:53:48 -0500

Apple announced a new version of the Mac Mini today, bringing its design more in line with its siblings, the iMac and the MacBook Pro.

It's nice to see Apple remaining committed to the Mac Mini. The line has been the subject of recurring rumors that Apple was close to killing it over the last few years, only to have its fans lobby Apple to keep it going. It once went an entire 19 months between updates. While It's popular not only among consumers for being easy to connect to a TV. It's also turned out to be a popular small and light server for small businesses. Apple sells a version specifically aimed at use as a server, which sells for a starting price of $999.

The new machine sports a unibody aluminum design similar to that used for the MacBook Pro, and is about 20 percent smaller than the previous Mac Mini. It's less than an inch-and-a-half thick.

However don't take its smaller size as any suggestion that it lacks power. Inside is an Intel Core 2 Duo processor clocked at 2.4 GHz and 2.66 GHz, an Nvidia GeForce 320M graphics processor, giving it twice the graphics power of its predecessor. The standard model comes with a 320 gigabyte hard drive and two gigabytes of RAM. Its starting price is $699.

Other big news is on the back. Like the iMac and MacBook Pro before it, the Mini now sports an SD memory card slot, and for those who use it like a digital media center, an HDMI display port for connecting to TV sets. There are also four USB ports.

Apple has also dubbed this new Mac Mini as the world's most energy-efficient desktop. It bases that claim on how this machine compares to other desktop computers in the Energy Star 5.0 database as of this month. It also meets EPEAT Gold certification status.

A few other interesting notes about the new design. There's a removable panel underneath the body that gives aces to the memory slots, allowing for easy RAM upgrades. It supports as much as 8 GB of RAM.

Heavy digital media users will find a lot to like. While the Mac Mini is a natural for watching movies from within iTunes and the Front Row, the Mini sports a DVD player, and can just as readily be connected to a nice set of stereo speakers, whether the music is coming from an iTunes playlist or a CD, or is streaming from the Web. Install software like Boxee or the Hulu desktop application for the Mac, and you've got a pretty good all-in-one digital media machine.

How The iPad Data Breach Might Yet Get Worse

Arik Hesseldahl — Mon, 14 Jun 2010 12:57:41 -0500

How bad was the AT&T data breach on Apple's iPad? According to AT&T, and the information about affected subscribers was limited to their email address, and a serial number known as an ICCID.

AT&T sent an email apologizing to affected customers, blaming "malicious hackers," for the incident in reference to Goatse Security, a security consulting firm that publicized the vulnerability last week.

Now a wireless security consultant says that an ICCID number, once disclosed, can lead to further vulnerabilities that have been known for more than two years. An ICCID is a 19- or 20-digit serial number printed on a SIM card, the thumbnail-sized chip that gives the iPad and most wireless phones access to the cellular networks on which they operate.

Chris Paget, president and CTO of H4RDW4RE, a Sunnyvale, California-based firm that specializes in wireless security wrote in a blog post that on the AT&T network, the ICCID number directly correlates to another more sensitive and important number known as an IMSI, or International Mobile Subscriber Identity. An IMSI is a unique 15-digit number stored inside a SIM card, and it's the number that a phone to identify itself on the wireless network.

Anyone who understand the correlation between the ICCID and IMSI numbers could use that information to carry out other kinds of attacks against wireless subscribers, Paget writes.

It turns out, that the correlation between the two numbers has already been documented. In a 2008 paper, security researcher Lee Reiber, owner of Boise, Idaho-based Mobile Forensics, Inc., a firm that trains law enforcement in collecting evidence from wireless phones, documented exactly how to extract an IMSI number from an AT&T ICCID number.

With the IMSI number in hand, the potential for trouble-making by an attacker grows much more serious, Paget says. In one scenario, the IMSI can be used to retrieve the subscriber's full name, phone number, and approximate location relative to the nearest cell tower. Additionally, an attacker might be able to listen to their voice mail messages, something that obviously doesn't apply to iPad owners.

In a second, more extreme scenario, a determined attacker could program a notebook PC to mimic a cell tower, and then drive within a few miles of their location, and intercept traffic from their phone or iPad. He describes the scenarios in more detail here and cites more original research in making his case.

AT&T spokesman Mark Siegel declined to comment on Paget's observations in an email.
The list of people whose addresses were exposed include New York Times CEO Janet Robinson and New York Mayor Michael Bloomberg, the founder and majority owner of Bloomberg News parent Bloomberg Businessweek.

Apple: We've Sold A Million iPads

Arik Hesseldahl — Mon, 03 May 2010 08:38:47 -0500

Apple announced this morning that it has sold 1 million iPads after 28 days on the market. The news comes only two days after it released the 3G version of the device.

"One million iPads in 28 days--that's less than half of the 74 days it took to achieve this milestone with iPhone," Apple CEO Steve Jobs said in a statement. He conceded that the company is still straining to keep up. "Demand continues to exceed supply and we're working hard to get this magical product into the hands of even more customers," he said.

Apple also said that iPad owners had downloaded 12 million apps and 1.5 million ebooks from the iBookstore, and that there are 5,000 apps available specifically for the iPad out of 200,000 apps available on the App store.

Separately PiperJaffray analyst Gene Munster said that Apple appeared to have sold 300,000 3G iPad units, based on a survey of sales in the Apple stores over the weekend, equal to the 300,000 Wi-Fi iPads sold on the first day of its availability. He said that 49 of the 50 stores he surveyed on May 2 were sold out. He writes that his estimate that Apple would sell 1.3 million units in the quarter ending in June "may be conservative."