Tim Cook on Charlie Rose

You may have previously caught snippets of Tim Cook on Charlie Rose, but now the whole interview is available on Hulu, and it’s a good watch.

Significance of iCloud

John Gruber wrote an excellent piece on the importance and impact of iCloud.

David Auerbach on Slate suggested that we should not trust iCloud with our data:

Whether or not this particular vulnerability was used to gather some of the photos — Apple is not commenting, as usual, but the ubiquity and popularity of Apple’s products certainly point to the iCloud of being a likely source — its existence is reason enough for users to be deeply upset at their beloved company for not taking security seriously enough. Here are five reasons why you should not trust Apple with your nude photos or, really, with any of your data.

Gruber pointed out Auerbach’s flawed argument:

Over the years I’ve received numerous emails from past and former Genius Bar support staff, telling similar stories of heartbreak. Customer comes in, their iPhone completely broken, or lost, or stolen, and they had precious photos and videos on it. The birth of a child. The last vacation they ever took with a beloved spouse who has since passed away. Did they ever back up their iPhone to a Mac or PC with iTunes? No. In many cases they don’t even know what “iTunes on a PC” even means. Or maybe they connected the iPhone to iTunes once, the day they bought it and needed to activate it, and then never again.

This happened to thousands of people. It’s why Apple made cloud-based backups one of the fundamental pillars of iCloud. It still happens, today, to people who haven’t signed up for iCloud and enabled iCloud backups. It’s heartbreaking in most cases, and downright devastating in some. I’ve heard from Genius Bar staffers who eventually left the job because of the stress of dealing with customers suffering data loss. Once it is determined that the photos and videos are irretrievable from the device and have never been backed up, the job of the Genius staffer turns from technician to grief counselor. Bereavement is not too strong a word.

I know of many friends and relatives who lost their data simply because they never backed up any of the data. Contacts, photos, videos. All gone. And this is not just on iPhones. There are Android and Windows Phone users too. It is not a lack of backup capability in their phones. Rather, it is a lack of awareness of the benefits of backing up and pure laziness. Even when automatic backup has become a standard smartphone feature, many people still do not make use of it. You simply need to enable the function instead of having to manually connect your phone to your computer to back it up.

This brings us to the dilemma on hand:

This is, like almost everything in tech, a trade-off:

  • Your data is far safer from irretrievable loss if it is synced/backed up, regularly, to a cloud-based service.
  • Your data is more at risk of being stolen if it is synced/backed up, regularly, to a cloud-based service.

As a pharmacist by profession, it is a situation I encounter daily:

  • Your condition or symptoms are improved or treated if you take a medication.
  • You are more at risk of developing an adverse drug reaction if you take the medication.

So what do we do? We weigh the benefits and risks. If the benefits outweighs the risks involved, then it makes sense to administer the medication. The same goes for the dilemma of a cloud-based backup. Having a backup to restore your device in the event you lose your phone data is an insurance that can have broad-ranging impact. Let’s consider a photographer who shoots solely on his phone travels around the world to shoot materials for a photobook. Just as he is about to finish the trip, he loses his phone. If he backed up his phone daily, he would only have lost photos he shot on the day he lost his phone. Would he be worrying about his the risk of his phone being stolen or would it be more important for him to be able to back up his data?

Gruber comes to a similar conclusion:

Further, I would wager heavily that there are thousands and thousands more people who have been traumatized by irretrievable data loss (who would have been saved if they’d had cloud-based backups) than those who have been victimized by having their cloud-based accounts hijacked (who would have been saved if they had only stored their data locally on their devices).

Likewise, I believe there are more people who have found long-lost friends on Facebook, or met new friends they would never have without Facebook, than those whose Facebook accounts have been hacked. There are several precautions that you can take to protect your Facebook accounts, such as 2FA, strong passwords, avoid reusing passwords, and being careful with who you add and what you share. However, it is generally those who are tech savvy that would be familiar and comfortable with these. A look at the worst passwords gives you an idea of most people’s attitudes towards digital security.

It is wrong and irresponsible to suggest that people should not to back up their data. The reaction to the possible iCloud breach should be one that generates awareness of how hackers can use social engineering to guess login details, and to encourage good practices to minimise the risk of being hacked.

Analyst: Samsung sets Apple up for easy victory this fall

AppleInsider reported on Samsung’s ‘rushed,’ ‘half-baked’ announcements.

Analyst Brian White:

“In our view, this strategy was ill-advised because we found the event ‘half baked’ with no details around the price points, launch dates a bit fuzzy, limited technical specifications, and ‘gimmicky’ features,” White said in his note, a copy of which was provided to AppleInsider. “With the potential threat of this event now out of the way, we believe this just made Apple’s ‘Fab Fall’ launch a lot easier because the company’s #1 competitor does not appear well prepared to take on Apple’s new iPhones this fall.”

The point of rushing their announcements before Apple’s event is to steal the limelight and put a dent on Apple’s new products. Either they are ill-prepared or they are waiting for Apple’s move before they innovate on the features and match the prices.

Samsung’s cutting edge innovation

The Verge reported on the Galaxy Note Edge.

It’s an odd idea, turning this vertical rail into essentially an always-on secondary display. Is it best-suited as a ticker? A notification center? A quick-launch taskbar? Samsung doesn’t seem entirely sure, and in a few minutes of using the Galaxy Note Edge it was clear that while well-implemented and useful the whole idea isn’t necessarily fully formed.

It seems like the plan is to throw gimmicks and see if they stick. Successful ones are touted as a feature while those that are panned will quietly be canned.

Samsung’s sixth smartwatch

Android Central reported on the Samsung Gear S.

So here we are with Samsung’s sixth — yes, a full half-dozen — smartwatch in a little more than the space of a year. To wit: The Samsung Galaxy Gear, Gear 2, Gear 2 Neo, Gear Fit, Gear Live and, now, the Gear S. That’s a whole lot of Gear.

Instead of trying to be first in the market after picking up rumours of an Apple wearable, I believe Samsung would have packed a bigger punch if it took the time to refine their smartwatch before launching it.

They are punishing early adopters and also dissuading potential buyers from getting a smartwatch. With Samsung very likely to release yet another smartwatch in a few months time, would you want to spend your money on it?

I wrote about Samsung executive David Eun commenting on the Galaxy Gear:

“What we’re dealing with is small green tomatoes,” he said of the Gear’s first-generation growing pains. “And what we want to do is take care of them and work with them so they become big, red ripe tomatoes. And what you want to be sure of is that you don’t pluck the green tomato too early and you want to make sure that you don’t criticize a small green tomato for not being a big, red ripe tomato.”

Samsung is doing exactly what he says they shouldn’t. They are plucking their green tomatoes and pushing them to the consumers.

Amazon wrongly cites George Orwell

The New York Times wrote about Amazon’s letter to readers in its Readers United campaign.

Amazon wrote that George Orwell was against paperback format:

The famous author George Orwell came out publicly and said about the new paperback format, if ‘publishers had any sense, they would combine against them and suppress them.’ Yes, George Orwell was suggesting collusion.

What he actually said:

Here is what the writer said in the New English Weekly on March 5, 1936: “The Penguin Books are splendid value for sixpence, so splendid that if the other publishers had any sense they would combine against them and suppress them.

But wait, what he said back then actually argues against the model that Amazon is pursuing:

But Orwell then went on to undermine Amazon’s argument much more effectively than Hachette ever has. “It is of course a great mistake to imagine that cheap books are good for the book trade,” he wrote. “Actually it is just the other way about … The cheaper books become, the less money is spent on books.”

Instead of buying two expensive books, he says, the consumer will buy two cheap books and then use the rest of his money to go to the movies. “This is an advantage from the reader’s point of view and doesn’t hurt trade as a whole, but for the publisher, the compositor, the author and the bookseller, it is a disaster,” Orwell wrote.

Amazon’s argument on Readers United is flawed.

Moreover, e-books are highly price elastic. This means that when the price goes down, customers buy much more. We’ve quantified the price elasticity of e-books from repeated measurements across many titles. For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000. The important thing to note here is that the lower price is good for all parties involved: the customer is paying 33% less and the author is getting a royalty check 16% larger and being read by an audience that’s 74% larger. The pie is simply bigger.

Emphasis by Amazon. Notice how it emphasised the conclusion that it jumped to.

Amazon said that for each ebook sold at $14.99, it would sell 1.74 copies at $9.99. Where did that figure come from? Magic. Amazon could have had studies or market research that backed up its claim but for some reasons they choose not to cite any references.

Let’s assume that the price had no impact on the demand for ebooks:

  • 100,000 copies at $9.99 would bring in $999,000.
  • 100,000 copies at $14.99 would bring in $1,499,000.

By selling at $9.99 instead of $14.99, the author would see a 33% decrease in royalties paid.

It seems that George Orwells agree that price has no impact on demand:

“If our book consumption remains as low as it has been,” he wrote, “at least let us admit that it is because reading is a less exciting pastime than going to the dogs, the pictures or the pub, and not because books, whether bought or borrowed, are too expensive.”

Microsoft’s loss of $1.7 billion on Surface

CITEworld wrote about Microsoft losing $1.7 billion on Surface so far.

total loss for FY2014 was then $680 million ($2.192 in revenue minus $2.872 in cost of that revenue).

But that was small potatoes compared to what Microsoft lost on the Surface the previous fiscal year. Using Microsoft’s stated revenue of $853 million and some arithmetic to backtrack to the FY2013 cost of revenue, Computerworld concluded that the cost of revenue for the 12 months starting July 1, 2012, was $1.902 billion.

The total loss for FY2013 was thus $1.049 billion ($853 million minus $1.902 billion in cost of revenue and adjustments).

Since Microsoft started selling the Surface nearly two years ago, it has lost $1.7 billion on the line. (Microsoft, SEC filings.)

Viability of a cheap iPhone

Benedict Evans discussed about how cheap iPhones would fare.

The narrative generally splits the market into four rough segments:

  • $50-100 smartphones: currently these are dominated by companies you’ve never heard of using off-the-shelf chips from Mediatek, Spreadtrum and others, and though they run Android and have 3G they often have only 256 meg of RAM, which makes for a pretty poor experience. And the build quality and screens are not great.
  • $100 to (say) $200 – this is where the branded companies start playing. At this price devices like the Lumia 520, the Xiaomi Hongmi and the Motorola X provide an experience that you would not, actually, be unhappy with. I describe these phones as like driving a Toyota or a VW: you know you’re not in a BMW (or a Bentley), but there’s nothing wrong with them at all and some of them are pretty cool.
  • Then, $200-450 (or thereabouts) counts as mid-range, and
  • $450-500 and up counts as premium. Arguably there’s a super-premium segment further up.

So what is the cheap iPhone that people like to talk about?

When people talk about whether Apple should do a ‘cheap phone’, it’s important to be clear about which of these segments you’re really talking about. When people say ‘Apple is missing out on the next x billion people’ – that is, the portion of the market that’s still on feature phones – they’re actually talking about the first category. Even Samsung doesn’t really play here, nor Xiaomi. This is is the land of the $200 PC – very low margin commodities with a poor user experience.

Where a cheap iPhone might come in:

However, the second and third categories are rather more interesting. Apple says, over and over, that the objective is not to sell the most phones, but to make phones that it can be proud of. In 2007 the iPhone was an MVP lacking industry standards like 3G and a decent camera, yet it still needed to be $600 or more to deliver the vision. Today Apple could perfectly well make a phone it could be proud of at $300. Indeed, there’s nothing that it would be ashamed of in the Lumia or Xiaomi at $150 and below.

Yes, if you were wondering, the existing iPhones are in the fourth segment.

The reliablity of IDC & Gartner data

AppleInsider reported on how Apple’s double digit growth contradicts estimates by IDC and Gartner that Mac sales fell.

Earlier this month, IDC (above) reported that Apple’s U.S. Mac unit sales in Q2 (Apple’s fiscal Q3, the quarter ending in June) fell by 1.7 percent, while Gartner (below) reported a drop in Mac unit sales of 1.3 percent.

Globally, Apple reported that Mac sales jumped from 3.75 million to 4.41 million year-over-year for its fiscal Q3, a unit increase of 18 percent and a new June quarter record.

18 percent increase is a big difference compared to a drop of 1.7 percent.

Shocking? Not if you’re aware of how these analysts portray data:

IDC, Gartner and Strategy Analytics have a long history of presenting carefully contrived data in press releases clearly designed to flatter their clients and denigrate their clients’ competitors, with Apple being a common target.

In addition to excluding iPads from their PC sales (while counting Windows tablets and including every other new form of PC device), IDC has also (like Strategy Analytics) radically revised its tablet figures after the fact, inventing, for example, Samsung tablet shipments that retroactively disappeared in the next year’s figures.

At the same time, IDC inflated its year ago estimates of the number of tablets attributed to unnamed “other” vendors by nearly ten million units, creating unflattering market share numbers for Apple in 2012, followed by unflattering market share growth figures for Apple in 2013, all coaxed from shifting numbers presented without any verifiable source. Apart from Apple, no other significant tablet vendor reports its unit sales.

IDC has also obscured the reality of Apple’s iPad sales by comparing them to kids tablets and toys, in order to water down Apple’s “market share” and imply that iPads are falling out of fashion—while distracting all attention away from the fact that nobody is selling premium tablets in volumes like Apple with margins like Apple.

Earlier this year, IDC was found to have added Windows 8.1 “2 in 1” PC notebooks into its reports of tablet shipments, another effort to portray Apple’s “share” of the “market” as diminishing, and a direct reversal of IDC’s staunch policy of not counting iPads as PCs, ostensibly because they are completely different product categories with no perceivable market impact on each other.

A former IDC researcher spoke to Fortune:

So, the mantra became, preserve the growth rates; to hell with the actual numbers. Even the growth rates are fiction. The fudge is in the “others” category, which is used as a plug to make the numbers work out. In fairness, we did do survey work, calling around, and attending white box conferences and venues to try to get a feel for that market, but in the end, the process was political. I used to tell customers which parts of the data they could trust, essentially the major vendors by form factor and region. The rest was garbage.

Microsoft’s Samsung action

Microsoft made a statement regarding its filing of legal action against Samsung.

We don’t take lightly filing a legal action, especially against a company with which we’ve enjoyed a long and productive partnership. Unfortunately, even partners sometimes disagree. After spending months trying to resolve our disagreement, Samsung has made clear in a series of letters and discussions that we have a fundamental disagreement as to the meaning of our contract.

Samsung and Microsoft are both large and sophisticated companies. In 2011, after months of painstaking negotiation, Samsung voluntarily entered into a legally binding contract with Microsoft to cross-license IP – an agreement which has been extremely beneficial for both parties. Samsung had been complying with the contract and paying to use Microsoft’s IP.

So what changed? Since Samsung entered into the agreement, its smartphone sales have quadrupled and it is now the leading worldwide player in the smartphone market. Consider this: when Samsung entered into the agreement in 2011, it shipped 82 million Android smartphones. Just three years later, it shipped 314 million Android smartphones. [Source: IDC, WW Quarterly Mobile Phone Tracker – 2014 Q1, Published: May 2014] Samsung predicted it would be successful, but no one imagined their Android smartphone sales would increase this much.

After becoming the leading player in the worldwide smartphone market, Samsung decided late last year to stop complying with its agreement with Microsoft.

How much is at stake? Microsoft reportedly makes $2 billion from Android patents.