Thursday, April 11, 2013

Hacker says phone app could hijack plane

Story originally appeared on CNN.

Could this be the deadliest smartphone app ever?

A German security consultant, who's also a commercial pilot, has demonstrated tools he says could be used to hijack an airplane remotely, using just an Android phone.

Speaking at the Hack in the Box security summit in Amsterdam, the Netherlands, Hugo Teso said Wednesday that he spent three years developing SIMON, a framework of malicious code that could be used to attack and exploit airline security software, and an Android app to run it that he calls PlaneSploit.

Using a flight simulator, Teso showed off the ability to change the speed, altitude and direction of a virtual airplane by sending radio signals to its flight-management system. Current security systems don't have strong enough authentication methods to make sure the commands are coming from a legitimate source, he said.

"You can use this system to modify approximately everything related to the navigation of the plane," Teso told Forbes after his presentation. "That includes a lot of nasty things."

Hugo Teso told a crowd at an Amsterdam conference that he spent three years coding the tools he used.

He told the crowd that the tools also could be used to do things like change what's on a pilot's display screen or turn off the lights in the cockpit. With the Android app he created, he said he could remotely control a plane by simply tapping pre-loaded commands like "Please Go Here" and the ominous "Visit Ground."

Teso says he developed SIMON in a way that makes it work only in virtual environments, not on actual aircraft.

"His testing laboratory consists of a series of software and hardware products, but the connection and communication methods, as well as ways of exploitation, are absolutely the same as they would be in an actual real-world scenario," analysts at Help Net Security wrote in a blog post.

Teso told the crowd that he used flight-management hardware that he bought on eBay and publicly available flight-simulator software that contains at least some of the same computer coding as real flight software.

Analyst Graham Cluley of Sophos Security said it's unclear how devastating Teso's find would be if unleashed on an actual airplane.

"No one else has had an opportunity to test this researcher's claims as he has, thankfully, kept secret details of the vulnerabilities he was able to exploit," Cluley said. "We are also told that he has informed the relevant bodies, so steps can be taken to patch any security holes before someone with more malicious intent has an opportunity to exploit them."

Teso said at the summit that he's reached out to the companies that make the systems he exploited and that they were receptive to addressing his concerns. He also said he's contacted aviation safety officials in the United States and Europe.

"From the sound of things, this researcher has got himself a lot of media attention, but still believes in responsible disclosure, rather than potentially putting aircraft and passengers at risk," Cluley said.

Teso isn't the first so-called "white hat" hacker to expose what appear to be holes in air-traffic security.

Last year, at the Black Hat security conference in Las Vegas, computer scientist Andrei Costin discussed weaknesses he said he found in a new U.S. air-traffic security system set to roll out next year. The flaws he found weren't instantly catastrophic, he said, but could be used to track private airplanes, intercept messages and jam communications between planes and air-traffic control.

Friday, April 5, 2013

HP chairman quits as fallout over Autonomy sale rolls on

Story originally appeared on the Guardian.

The chairman of Hewlett-Packard has stepped down and its two longest-serving independent directors are to leave the board as the fallout from the firm's disastrous acquisition of British software firm Autonomy continues.

Two weeks ago at HP's annual meeting, chairman Raymond Lane and directors John Hammergren and Kennedy Thompson scraped through a vote on their re-election with the slimmest of margins.

They were rebuked for mistakes at the world's largest maker of personal computers, including the ousting of two chief executives in as many years and admissions that recent acquisitions are worth billions of dollars less than their purchase price.

Lane has been replaced as chairman on an interim basis by activist investor Ralph Whitworth, who has sat on the HP board since 2011, but will remain a director. Hammergren and Thompson, who have served for eight and seven years respectively, will stay only until the May board meeting and a search is underway for their replacements.

"After reflecting on the stockholder vote last month, I've decided to step down as executive chairman to reduce any distraction from HP's ongoing turnaround," said Lane. "I'm proud of the board we've built and the progress we've made to date in restoring the company. I will continue to serve HP as a director and help finish the job."

Lane, a former executive at leading software firm Oracle, was in charge when the previous HP chief executive Léo Apotheker was given the go-ahead to spend $11.7bn (£7.7bn) acquiring Autonomy, then listed on the London Stock Exchange.

HP's attempts to move away from the low margin PC business into more profitable software sales failed to convince investors, and after a 40% drop in the share price and less than a year in the top job, Apotheker was forced out.

Lane held on, helping to install fellow HP board member and Ebay's former chief executive Meg Whitman as Apotheker's successor. But 41% of shareholders opposed his re-election last month, while 46% voted against Hammergren and 45% against Thompson.

A spokesman for one of the largest North American pension funds, the California Public Employees' Retirement System (Calpers), took the floor at the annual meeting to express "extreme concern with HP's path in recent years".

HP's new interim chairman has a reputation for building small stakes in troubled companies in order to fight his way on to the board and agitate for change. Whitworth's previous scalps include Robert Nardelli, whom he helped oust as chief executive of retailer Home Depot, and mobile network Sprint Nextel's Gary Forsee. His firm, Relational Investors, owns $800m of HP shares.

"Ray, John and Ken are terrific leaders, and they're passionate about doing the right thing for HP," said Whitworth. "Meg is leading a Herculean turnaround, so most of all, we must build and maintain the best possible leadership structure for Meg and HP's entire team to succeed."

Friday, March 29, 2013

Dell: What do Blackstone, Icahn actually see?

Story originally appeared on Market Watch.

SAN FRANCISCO (MarketWatch) — With Dell Inc. now waiting for official takeover offers from the Blackstone Group and Carl Icahn, most investors seem to be assuming that the higher bidder will simply win out, and that Michael Dell and Silver Lake will have to raise their original offer.

Since billionaire investor Icahn and the private equity firm Blackstone expressed interest in the struggling computer company, its shares have popped. Dell DELL -0.07%   is now trading more than 5% above the $13.65 per share offer that Dell and Silver Lake made in February to take the company private.

But investors need to think about what may happen to Dell, in the event one of these other bids succeeds, and what the motivations of the other suitors might be.

One element to consider is that both Icahn and Blackstone are offering deals that involve retaining some form of public stock commonly known as a “stub.” This flies in the face of Dell’s founder Michael Dell, who has determined that he needs to take the company fully private to truly make it over.

“Remember that Dell wanted to take the company private so he could do some things, and keep it out of the public eye,” said Roger Kay, president of Endpoint Technologies Associates Inc., a consulting firm. He believes that Dell wants to turn the company into a serious rival to IBM Corp. IBM +1.14%  , with more focus on technology services and software, but that it will still need its PC business, albeit a much smaller one.

“If it has half the revenue it had before, that would cause a lot of discomfort and likely hammer the stock price,” Kay added. “It’s the IBM template. Cycle out the low-margin businesses, cycle in high-margin ones. But the difference is that IBM sold the PC company to Lenovo before people started losing interest in PCs”

It doesn’t help that Dell has virtually no presence in mobile devices such as tablets or smartphones, which are growing rapidly at the expense of PCs. In recent years, the company has instead focused its acquisitions on storage, software and services.

There are not any likely buyers for the company’s PC business as a stand-alone entity, especially since rivals such as Lenovo and Hewlett-Packard Co. HPQ +1.10%   have not made any official overtures. Private equity firms such as Blackstone typically look for businesses to carve off or sell — fueling the belief among some that the aspiring buyers might want to break Dell apart.

So far, the only thing known about the Blackstone offer, as reported by the Journal, is that the company may want to sell Dell’s financing arm. Michael Dell reportedly does not support such a move.

“I doubt anyone else can execute on Dell’s plan,” said Robert Enderle, principal analyst with the Enderle Group. “He is going to massively restructure the company, and turn it into much more of a cloud services entity, to compete much more sharply against Amazon’s AWS.”

Both Kay and Enderle fear that if Blackstone prevails, and part of Dell is left public, the company won’t be able to do some of the housecleaning necessary to morph itself into a mini IBM.

One thing it probably wants to do behind closed doors is whittle down its PC business while keeping part of it. It’s not clear what Blackstone or Icahn would want to do, or who they would put in place to deal with this struggling business, which still is a cash generator. Icahn’s proposal, which some on the Street appear to be taking less seriously, would involve issuing about $5.2 billion in new debt.

Dell called Blackstone’s offer “management friendly,” even after reports surfaced that Blackstone had approached the former CEO of H-P Mark Hurd and Michael Capellas, who was once CEO of Compaq, among his other jobs, for the possible gig. On Tuesday, though, Hurd said at an Oracle event in Tokyo that he was not interested in the job.

On Wednesdaythat Blackstone is open to keeping Michael Dell as the company’s CEO, although it is not clear whether Dell himself is open to the idea. Blackstone also made the case that with Dell on board its proposal, it could be an ally against Icahn, who has warned that he will instigate a proxy fight.

So what exactly do the billionaires on Wall Street want out of a Dell deal? Icahn likely wants a quick return on his approximately $1 billion investment in the company. Blackstone, which is not really know for tech deals, clearly sees some benefit, whether that is immediate or down the road.

“We believe there is significant upside in the Dell business,” wrote Chinh Chu, president of the Boulder Acquisition Group, the Blackstone entity that wants to pay $14.25 a share, in a letter to Dell earlier this week.

While wanting to make money is understandable, it’s not clear yet that the investors with the latest bids have the right ideas on what to do with Dell. The battle for the company that Michael Dell started in his college dorm room is likely just beginning.

Tuesday, March 26, 2013

With Acquisition, Apple Looks Indoors for Future of Maps

Story originally appeared on the New York Times.

It appears Apple is thinking seriously about what the mobile maps of tomorrow will look like, not just fixing the maps service it has today.

The company has acquired WiFiSlam, a start-up company that helps to improve the accuracy of indoor maps and other services by locating the user’s position inside a building more accurately. Indoor maps look like they could become a new battleground between big companies seeking a cartographical edge on their rivals.

Google is pouring resources into an indoor maps initiative to make it easier to find stores, bathrooms and other landmarks inside shopping malls, airports, large department stores and transit stations. The company says it has indoor maps for 10,000 locations worldwide already, including airports, Ikea stores, hotels, libraries, museums and one of the most bewildering kinds of labyrinths known to man — Las Vegas casinos.

WiFiSlam could give Apple some of the smarts it needs to make iPhones better navigation devices when they are under a roof. WiFiSlam says its technology can pinpoint the location of a mobile device to “2.5m accuracy using only ambient WiFi signals that are already present in buildings.” Locating a mobile user precisely on a map indoors can be tricky because the GPS signals that help with navigation don’t usually penetrate walls and windows.

The Wall Street Journal first reported news of the Apple deal over the weekend, saying the acquisition was worth about $20 million. Steve Dowling, a spokesman for Apple, repeated the statement that Apple typically releases when news surfaces of its acquisitions, most of which are so small that they don’t trigger set off disclosure rules: “Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans.”

Apple’s maps service was widely criticized for inaccurate addresses, mangled aerial images of landmarks and other glitches when the company released it in September, leading to a rare public apology by Tim Cook, Apple’s chief executive.

Mr. Cook vowed to improve the service over time, and it looks like the company has fixed a number of problems with the service through steady updates to its maps. Marcus Thielking, co-founder of Skobbler, a mobile navigation service that competes with Apple Maps, said the aerial imagery of landmarks like the Statue of Liberty has become much better in his use of the Apple service.

“I do think they have improved,” Mr. Thielking said. ”I think they’ve put a lot of effort into it.”

Although he doesn’t believe the acquisition of WiFiSlam will help Apple much with its continuing effort to improve its outdoor maps, Mr. Thielking said it shows that the future of maps is on Apple’s mind. “This is about them taking the next step,” he said.

Monday, March 25, 2013

Deal to Sell Dell May Be About to Face Competition

Is Michael Dell's attempt to gain more control over his company about to turn into a financial tug-of-war?
The answer could come Friday. That's the end of a 45-day period that Dell Inc.'s board of directors set to allow for offers that might top a February 5 deal to sell the personal computer maker to CEO Michael Dell and a group of investors for $24.4 billion.
With the deadline looming, buyout specialist Blackstone Group is emerging as the most likely candidate to trump the current bid of $13.65 per share.
Blackstone is so intrigued with the prospect of owning Dell that the firm has been courting former Hewlett-Packard Co. CEO Mark Hurd to run Dell if it decides to mount a hostile takeover attempt, according to a person familiar with the situation. The person asked not to be identified because the discussions between Blackstone and Hurd are considered confidential.
Several other buyout scenarios tying Blackstone to Dell have been leaked to the media this week, another indication that the New York firm is mulling a bid that could scuttle the debt-laden deal that the company reached with Michael Dell and Silver Lake Partners.
Dell Inc. says Friday's deadline for competing offers could be extended if its board believes other suitors would benefit from more time to examine Dell's books and hash out other details. The company, which is based in Round Rock, Texas, has promised to provide extensive details about the sales process in regulatory documents that are supposed to be filed next week.
Many investors are convinced a higher bid is in the works. That's why Dell's stock price has remained above $14 for the past two weeks. The shares fell 19 cents Thursday to close at $14.14. Some analysts have even predicted Dell ultimately will be sold for $15 to $16 per share.
Southeastern Asset Management, Dell's second largest shareholder after Michael Dell, has asserted the company is worth closer to $24 per share.
For its part, the four-member board committee that negotiated the current deal maintains it's selling Dell at a fair price, one that reflects the dimming prospects for the PC industry as more technology spending shifts to smartphones and tablet computers.
The upheaval is siphoning revenue away from both Dell, the world's third largest PC maker, and HP, the top PC maker. Both companies are trying to adapt by making more tablets and diversifying into more profitable areas of technology, such as business software, data analytics and storage.
The rivalry between Dell and HP makes Blackstone's flirtation with Hurd a tantalizing twist.
HP widened its lead over Dell during Hurd's five-year reign, but the company parted with its former CEO under acrimonious terms in August 2010. Hurd resigned after facing allegations of sexual harassment against an HP contractor. HP found no evidence of harassment, but concluded that Hurd had filed inaccurate expense reports. Since Hurd's departure, HP has struggled and its stock price has been cut in half in a slide that has erased about $45 billion in shareholder wealth.
Hurd, 56, began working as president of business software maker Oracle Corp. shortly after leaving HP. He is given every indication that he is happy with his current job, which could lead to a promotion to succeed his close friend, Larry Ellison, as Oracle's CEO. Ellison, 68, hasn't set a timetable for stepping down. Analysts nevertheless see Hurd and Safra Catz, Oracle's chief financial officer, as the leading candidates to replace Ellison.
Oracle declined to comment Thursday. Blackstone didn't return phone calls.
Blackstone is only interested in bringing Hurd to Dell if it can't negotiate a deal on friendly terms, should it decide to pursue a bid, said the person familiar with the situation. The easier path would require Blackstone to win the cooperation and financial participation of Michael Dell, who is contributing about $4.5 billion in cash and stock to the deal that he worked out with Silver Lake. Under that agreement, Michael Dell would remain CEO of a company that would become privately held for the first time in 25 years.
Blackstone also has discussed the possibility of Southeastern Asset contributing its 8.4 percent stake in Dell to a competing bid, according to The Wall Street Journal, which cited anonymous people familiar with the matter.
Other Blackstone maneuvers under consideration would focus on buying just a part of Dell. Blackstone might try to buy Dells' financial services division in a partnership with TPG, another buyout firm, or General Electric Co.'s lending arm, according to the people who talked to the Journal. Dell's financial services division lends money to customers who buy its products.
Another Dell shareholder, billionaire investor Carl Icahn, is pressing the board to forget about selling the company and pay a one-time dividend instead. In a letter to Dell's board earlier this month, Icahn proposed a dividend of $9 per share that would require Dell to take on billions of dollars in additional debt. Shareholders would profit further if Dell is able to engineer a turnaround that drives up the stock price.
Michael Dell believes he will be in a better position to overhaul the company if he no longer has to worry about Wall Street's focus on profit fluctuations from one quarter to the next.

Monday, March 4, 2013

Blackberry 10 says goodbye to 'Home' Icon

Story first appeared on -

As Research in Motion is geared up to bring its all new Blackberry 10 out of the closet with the next-generation Operating System, the question crops up whether users will relish the avant-garde experience that the smart phone company has been claiming. The sleek, trendy phone which is about to get launched on the 30th of March has let go of one of the most significant aspects which reigned the cellular cosmos till now- the Home Icon.

The first look at the Blackberry 10 software gives a peek into its transformed countenance in a plethora of ways, while delving deeper into the technology unveils a distinguished element which had remained an enigma to its users.

Donny Halliwell of RIM at a recent discussion on the Blackberry blog quipped about its cutting-edge User Interface which, contrary to the Android and iOS does not embrace any Home button. According to Halliwell, why go back when you are always encouraged to move forward in life? This forms the very quintessence of the new technology of purging out the Home Button’s essential function of taking you back to the central Home screen which entails all functions brought under one roof from any other location of the Operating System.

So what substitutes the Home function? It is the “Flow” interface, a maverick creation which enables users to get to all important applications directly with all the icons readily available in a minimized state. Hence, just like the Web Operating System, you will enjoy the convenience of having all the opened tabs that you visit frequently in a minimized windows manner, thereby doing away with the need of going back to the Home Screen to go to some other destination. As Halliwell puts it, the Flow interface is similar to the flow of life which moves systematically forward and does not allow you to return to the days or bygone times. Therefore, with the “Flow”, you can get a peek into other opened applications seamlessly without returning to the Home Page or leaving the application you are browsing.

A number of features embrace the new “Flow User Interface” which has been designed in a way to encourage multi-tasking. The unique features include a combined Inbox for general as well as social media messaging, a tab “Peek” which gives you a peek into your personal information and “Cascades” which denotes a premier User Interface aspect. The last feature comes quite close to its web Operating System counterpart.

So the world waits with bated breath for the launch of the two next-generation smartphones designed by RIM’s creative clout in the form of Blackberry X10 and Blackberry Z10, along with their all new counterpart Blackberry OS 10, this January 30th. It is true that all the above features appears quite promising and enticing as well, but it remains to be seen whether mobile buffs will actually find the Flow user-friendly and convenient to make the much coveted Blackberry 10 a matter of pride for RIM and encourage developers and designers to don their creative hat and write new applications for the new mobile platform.

$450M Cut from Samsung's Debt to Apple for Patent Infringement

Story first appeared on ABC News -

The two biggest — and bitterest — rivals in the smartphone market will have to endure another bruising trial after a federal judge ruled that jurors miscalculated nearly half the $1 billion in damages it found Samsung Electronics owed Apple Inc. for patent infringement.

U.S. District Judge Lucy Koh wiped out $450 million from the verdict and ordered a new trial to reconsider damages related to 14 Samsung products including some products in its hot-selling Galaxy lineup jurors in August found were using Apple's technology without permission. Koh said jurors in the three-week trial had not properly followed her instruction in calculating some of the damages.

She also concluded that mistakes had been made in determining when Apple had first notified Samsung about the alleged violations of patents for its trend-setting iPhone and IPad.

"We are pleased that the court decided to strike $450,514,650 from the jury's award," Samsung spokeswoman Lauren Restuccia said.

Koh didn't toss out the jurors underlying finding that two dozen Samsung products infringed patents Apple used to develop its iPad and iPhone products. The new jury will be tasked with only determining what Samsung owes Apple.

Apple declined to comment on the Koh's ruling, which still did leave Samsung with a bill to just under $599 million. The judge said the tab will probably increase after the appeals of both companies are resolved.

Apple is seeking more damages and Samsung a complete dismissal of the case in the U.S. Court of Appeals for the Federal Circuit, the Washington, D.C.-based court that handles all patent appeals. The new trial to recalculate the damages could also increase the award.

Still, the ruling was the second significant setback in Koh's courtroom since the headline grabbing verdict was announced.

In December, Koh refused to order a sales ban on the products the jury found infringed Apple's patents. She said Apple failed to prove the purloined technology is what drove consumers to buy a Samsung product instead of an Apple iPhone or iPad. Samsung says that it is continues to sell only three of the two dozen products found to have infringed Apple's patents.

After a three-week trial closely followed in Silicon Valley, the jury decided that Samsung ripped off the trailblazing technology and sleek designs used by Apple to create its revolutionary iPhone and iPad. Jurors ordered Samsung to pay Apple $1.05 billion.

Apple filed another lawsuit last year accusing Samsung's newer line of products of continuing to use technology controlled by Apple. Koh has scheduled trial in that case for early next year. She has implored both companies on several occasions to settle their difference with little success.

Apple filed its patent infringement lawsuit in April 2011 and engaged legions of the country's highest-paid patent lawyers to demand $2.5 billion from its top smartphone competitor. Samsung Electronics Co. fired back with its own lawsuit seeking $399 million.

The jury found that several Samsung products illegally used such Apple creations as the "bounce-back" feature when a user scrolls to an end image, and the ability to zoom text with a tap of a finger.

Samsung has mounted an aggressive post-trial attack on the verdict, raising a number of legal issues that allege the South Korean company was treated unfairly in a federal courtroom a dozen miles from Apple's Cupertino headquarters. Samsung alleges that some of Apple's patents shouldn't have been awarded in the first place and that the jury made mistakes in calculating the damage award.

Samsung has emerged as one of Apple's biggest rivals and has overtaken it as the leading smartphone maker. Samsung's Galaxy line of phones run on Android, a mobile operating system that Google Inc. has given out for free to Samsung and other phone makers.

Apple and Samsung have filed similar lawsuits in eight other countries, including South Korea, Germany, Japan, Italy, the Netherlands, Britain, France and Australia.

Tuesday, February 26, 2013

For companies cutting IT costs, the cloud is the place to be

Story first appeared on USA Today -

Data storage shift helps companies' bottom line

Cloud computing is exploding and growing faster than a swirling funnel crossing the Oklahoma plains. The next generation of computing lowers information technology costs while increasing corporate profits at the same time. And what's not to like about that?

That one-two punch was revealed in a study obtained by USA TODAY conducted by England's Manchester Business School. The study, which was commissioned by San Antonio-based hosting company Rackspace, is expected to be released Wednesday.

The Manchester study indicates that cloud computing allows U.S. businesses to slash information technology costs by about 26%. What's more, 62% of those same American companies say that deploying in the cloud improved their bottom lines.

"The results are finally showing what we've known all along," says Rackspace Chief Technology Officer John Engates. "It's not just about moving workloads from your data center to our data center."

The rise of cloud computing has much bigger ramifications. It's a tectonic shift in how we work, live and play. iTunes is in the cloud. Ford's cars are connected to the cloud. Google's Gmail is based in the cloud. But those are largely consumer examples; now corporate computing is also shifting to the cloud.

"The move to the cloud can't happen fast enough for some companies," says Engates, who has been on the ground floor of the cloud computing movement.

Cloud computing has myriad definitions, but in the most general sense it means devices linked to data centers located just about anywhere over a combination of wireless and wired networks. There are "private clouds," where companies own and control the data centers, which are usually centrally located in lower-cost geographies. And then there are "public clouds," in which companies use computing power delivered from servers they don't own, which are usually shared with other corporate customers.

Big companies tend to use a combination of private and public clouds, reserving their high-security functions and digital record keeping for the data centers they control. But the growing acceptance of public clouds foreshadows a trend in which computing power will be delivered similarly to the way electricity is distributed by utility companies. In fact, tech geeks refer to the long-term public cloud concept as "utility computing."

We are a long way from when most companies no longer own servers, or operate so-called on-premise data centers, and rely solely on public clouds. There are a number of reasons, including security concerns, control and reliability. But the Manchester survey suggests that enterprise computer customers are embracing the shift enthusiastically.

In addition to the cost-efficiency of cloud computing, the study found that 68% of U.S. firms are plowing the cash they saved back into their businesses. They are using the cost savings to improve and expand product lines, services and other offerings. More than 60% of the companies surveyed say they are using the money to hire new employees, give raises and offer bonuses. Employment at the American companies surveyed increased 28%.

While existing companies are transitioning to cloud computing at their own pace, start-ups unsurprisingly are totally embracing the change -- especially software and social-media concerns and online retail outfits.

More than half of the start-ups surveyed said they wouldn't have been able to afford on-premise data centers at the time of their launch.

Of course, it is self-serving for a cloud-service provider to hire a study that supports its case, but the numbers are the numbers, and Manchester interviewed some 1,300 companies in both the U.S. and the United Kingdom.

Intel's general manager of cloud computing, Jason Waxman, isn't surprised by the findings. Server, storage and networking sales have been booming at the chip giant in recent years. Intel pegs the compounded growth rate for servers at about 25% to 30% a year based largely on expansion of private and public clouds.

"The more companies can save on computer infrastructure, the more they can spend on infrastructure," Waxman says. "All of these new opportunities represent a huge build-out."

Waxman thinks that public cloud providers, including Rackspace, Seattle-based (yes, that Amazon) and San Francisco-based GoGrid, could grow as much as 70% a year.

Gartner, the industry research consultant, predicts that the total public cloud market could swell to more than $206 billion in 2016, roughly double what it is now.

Says Intel's Waxman, "It's an astronomical opportunity."

Monday, February 11, 2013

Dell Buyout Opposed by Investor

Story first appeared on USA Today -

Dell now faces a shareholder battle in opposition from its largest outside investor over its buyout agreement formed this week.

Michael Dell on Tuesday agreed to a $24.4 billion leveraged buyout of his namesake PC brand, the largest concession to date of a battered personal computer industry. Experts say Dell is in slow retreat from the low-margin PC business and needs to lever up to refocus its business.

Southeastern Asset Management, which holds roughly 8.5% of Dell's outstanding shares, has filed documents with the Securities and Exchange Commission in opposition to the deal. The major outside investor objects to the $13.65 per share offer to shareholders, saying that Dell's value should be set closer to $24 per share.

"This obviously exceeds the $13.65 offer and does not even take into account Dell's strong product distribution capability, especially in the small to medium size business space (SMB)," Southeastern Asset Management said in a statement.

A Dell spokesman declined to comment on the opposition to the deal.

CEO and founder Dell, who holds 14% of the company, has agreed to put in his ownership stake of the company plus cash in the deal that will keep him at the helm.

The deal's figure of $24.4 billion represents a 25% premium over Dell's closing share price January 11, the day before rumors emerged of it going private.

Private equity player Silver Lake Partners and MSD capital agreed to help fund the deal along with a $2 billion loan from Microsoft and debt financing from BofA Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets. The agreement allows for alternative proposals to be offered.

The PC industry is under heavy assault by tablets. Personal computer sales worldwide slipped 6.7% in the fourth quarter compared with a year ago, according to preliminary results from Gartner. That downturn comes as tablet sales worldwide grew 75% in the same period, according to early results from researcher IDC.

Thursday, February 7, 2013

Amid Rising Losses, Alcatel-Lucent CEO Leaving

Story first appeared on US News -

Alcatel-Lucent CEO Ben Verwaayen is leaving the loss-making French-U.S. telecommunications gear maker after a failed four-year bid to turn the business around.

Verwaayen said in a statement Thursday that it was "clear to me that now is an appropriate moment" for Alcatel-Lucent to seek new leadership. Investors cheered the news, with shares jumping 7.7 percent in early trading to €1.40.

The Dutchman's surprise departure comes as Alcatel-Lucent reported losing €1.37 billion ($1.85 billion) last year, compared with a €1.1 billion gain a year earlier.

No details on Verwaayen's replacement were provided. He has agreed to stay on as caretaker until a successor can be found. Alcatel-Lucent said it will look at candidates both internally and from outside the company.

Verwaayen joined Alcatel-Lucent in 2008 after the ouster of the previous management led by American Patricia Russo. Russo and her French counterpart Serge Tchuruk had masterminded the $11.6 billion merger of Lucent of the U.S. and Alcatel of France. The combined company has racked up many billions of euros in losses since its creation in 2006, something Verwaayen has spent four years trying to reverse.

Alcatel-Lucent supplies telecom operators and corporations the technology for building global communications networks. It has suffered from repeated rounds of costly layoffs and restructuring, as well as intense competition from the likes of Ericsson of Sweden, China's Huawei and Nokia Siemens Networks, a Finnish-German joint venture.

The Franco-American company is in the middle of a €1.25 billion restructuring program aimed at cutting 5,500 jobs, ending unprofitable contracts and leaving or reorganizing operations in poor markets.

Verwaayen said Thursday the company has "seen progress" on the plan announced last July, and pointed to growth in its order book as a sign of customer confidence.

Alcatel-Lucent had aimed to raise its profitability from the 3.9 percent adjusted operating margin achieved in 2011, but abandoned that target halfway through the year. It finished 2012 with an adjusted operating margin of only 2.9 percent.

Last year's earnings were hit by a further €1.4 billion charge as Alcatel-Lucent continued to account for the falling value of past acquisitions and its own fixed assets.

Verwaayen was lauded on arrival in October 2008 after for transforming BT Group from a troubled, loss-making phone operator into a profitable and aggressive leader in broadband Internet access. But Alcatel-Lucent proved to be a tougher challenge than expected. Sales slid 5.7 percent last year to €14.4 billion and the group continued to burn cash, recording a seventh-consecutive year of negative cash flow.

Whoever steps in to replace Verwaayen will have to uncover a fresh path to profitability, after seven years of restructuring failed to achieve goals set out at the company's creation.

The Alcatel-Lucent tie-up was designed to boost margins through cost and research and development savings, while improving the joint company's pricing power with telecom operators, its largest customers.

The combination was seen as creating the critical mass needed to compete with the likes of China's Huawei Technologies Co. and Ericsson AB of Sweden.

But intense competition in the telecoms industry has meant many of the savings have been used on discounts passed to customers, and analysts said Alcatel-Lucent has not coped as well as some of its competitors.

Monday, February 4, 2013

Java on Macs - Blocked by Apple

Story first appeared on USA Today -

Some Mac users were taken by surprise Thursday as their computers stopped running programs written using the Java programming language after Apple blocked Java due to security problems.

Java allows programmers to write a wide variety of Internet applications and other software programs and run them on most computers, including Apple's Mac. However, earlier this month the U.S. Department of Homeland Security recommended disabling Java in Web browsers to avoid potential hacking attacks. Oracle, which owns Java, has issued updates that fix known vulnerabilities, but the DHS expects that there are more flaws in Java's coding.

Apple sends out virtual "blacklists" to Internet-connected Macs, instructing them not to run certain programs. Apple is blocking the latest version of Java from running on the most recent versions of its Mac operating system, and blocking an older version, Java 6, from running on the older version of its Mac system, called Snow Leopard. The blocks affect programs and online games that use Java in Web browsers.

Oracle had no immediate comment on Apple's action.

Among those Java users inconvenienced by the unannounced block was the photo department of The Associated Press, which relies on a Java application to manage and distribute photos.

"The situation caught us by surprise and a number of our machines could not operate for a time, but we had enough capability to work around the problem in the meantime," said AP spokesman Paul Colford. "We expect the affected machines to be operating by day's end."

Thursday, January 31, 2013

RIM hits the reset button on BlackBerry

Story first appeared on USA Today

Research In Motion is no more.

RIM, the struggling Canadian phone maker that introduced the world to the notion of 24-hour work e-mail, hit the reset button on its identity and operation Wednesday by overhauling its product lineup and changing the name to its more commonly known brand, BlackBerry.

BlackBerry CEO Thorsten Heins took the stage in New York and revealed the BlackBerry 10 line, including a new mobile operating system and two new smartphones that are aimed at competing with Apple's iPhone and other high-end devices that run on the Android or Windows operating systems. BlackBerry Z10 is a 4.2-inch touch-screen smartphone, while Q10 comes with a physical keyboard that BlackBerry loyalists are reluctant to give up.

The new products are the result of a company resuscitation strategy undertaken by Heins, who was hired about a year ago, to ensure its viability. With bearish investors fearing that it may not survive, its stock has plummeted 74% since the beginning of 2011.

"We have definitely been on a journey of transformation," Heins said. "I know innovation is at the heart of RIM."

In changing its name to BlackBerry — a long overdue move, as most already associate RIM with the catchy brand name — the company will change its stock ticker symbol from "RIMM" to "BBRY" on Monday.

BlackBerry 10, which now becomes the fourth major mobile operating system in the U.S., has features that are familiar to users of Android and Apple's iOS, including icon tiles for apps.

But it also introduces an array of unique tools. BlackBerry Hub is the central interface for receiving all types of messages, including e-mail, Facebook updates and Twitter messages. BlackBerry Peek is a feature that allows users to swipe the screen to quickly check e-mail or social media while watching a video.

BlackBerry Balance lets businesses keep work data separate and secure from home data. BlackBerry Remember is a series of folders for managing content. BlackBerry Story Maker is for combining photos and video to create personalized films.

BlackBerry will have to hustle to catch up to competitors in content. BlackBerry World, its content store, currently hosts 70,000 apps vs. hundreds of thousands in both iOS and Android. The company pointed out that many popular apps are now available or coming soon, including Skype, MLB, Dropbox, Angry Birds Star Wars and Where's My Water?

Heins says all eight major studios and major music labels have signed on to add music and video to BlackBerry World.

"They delivered on the promises that Heins made," says Gartner analyst Michael Gartenberg. "There's more than enough here for consumers to be satisfied. They have to continue that momentum and overcome the perception that there might be an app missing."

Z10 will be available on three major U.S. wireless carriers — AT&T, Verizon Wireless and T-Mobile — starting next month.

Only Sprint has committed to selling the Q10 so far. BlackBerry said the model will be available in April. The decision to add a keyboard to Q10 — with a 3.1-inch AMOLED touch-screen display — was driven largely by consumer reaction. "We heard you loud and clear," Heins said. "We built this for all those people (who) said we just have to have a physical keyboarding experience."

To enhance its hip quotient, BlackBerry also named singer Alicia Keys as its global creative director. "We're exclusively dating again, and I'm very happy," she said.

Friday, January 25, 2013

Record quarterly profits reported by Samsung

Story first appeared on Mercury News

Samsung Electronics reported Friday forecast-beating results for the fourth quarter of 2012 as profit from its mobile business more than doubled from a year earlier.

Samsung's October-December net income reached 7.04 trillion won ($6.58 billion), a 76 percent surge of 4.01 trillion won a year earlier. Analysts expected 6.95 trillion won in income according to FactSet.

Sales and operating income were slightly higher than its earlier preview. Sales rose 19 percent over a year earlier to 56.06 trillion won and operating income jumped 89 percent to 8.84 trillion won.

Increased sales of smartphones were the key source of its stellar profit. Samsung, which overtook Apple Inc. (AAPL) as the top smartphone maker last year, said its operating profit from the division that makes and sells smartphones and tablets more than doubled to 5.44 trillion won in the fourth quarter, from 2.56 trillion won a year earlier.

The company's component divisions that make semiconductor products and display panels also benefited from a rise in demand for smartphones. Sales of mobile processors that power popular devices such as Apple's iPhones and Samsung's own Galaxy smartphones boosted the bottom line.

The recovery in the display panel division was also led by strong sales of advanced mobile-phone screens called OLED, which are mostly found in high-end Samsung smartphones. The display division posted 1.11 trillion won in profit compared with a small loss a year earlier.

Analysts said Samsung will likely to see a continued rise in smartphone sales this year, especially in low- and mid-priced models where it sees no competition from Apple. Analysts forecast Apple, which keeps its iPhone price high, will sees iPhone sales plateau in coming years as more consumers snap up cheaper phones and more variety in screen sizes. Bullish analysts forecast Samsung smartphone shipments to rise as much as 50 percent this year from 2012.

Market researcher ABI Research said last month Samsung's 2012 smartphone market share topped 30 percent. In comparison, it said Apple's market share will peak at 22 percent in 2013 and remain flat through 2018, seeing a widening gap with Samsung.

Still, Apple's business has been more profitable because of the high price of the iPhone, which generates a larger profit per sales. Samsung, which makes dozens handset models a year and customizes them for mobile operators, also sells cheaper smartphones and spends about three times more on the expense called selling, general and administrative expense that include marketing and advertising costs for to promote its Galaxy brand.

Samsung's SG&A expense amounted to 12.67 trillion won ($11.84 billion) in the fourth quarter, 23 percent of its sales. Apple's SG&A expense was $3.85 billion in the same period, just 7 percent of its sales.

Thursday, January 24, 2013

Turbulence! Apple’s speeding profit rocket slams into air pocket

Apple's multi-year profit-building streak hits air pocket as holiday earnings go flat -

Apple's blockbuster revenue growth is slowing drastically, as iPhone sales plateau and the company finds itself lacking revolutionary new products.

The company's warning, issued Wednesday as part of its financial results for the holiday quarter, sent Apple Inc.'s stock plunging by more than 10 percent, wiping out a year's worth of gains.

Analysts said the warning suggested Apple can no longer sustain its growth without some completely new products. Its last revolutionary creation, the iPad, was launched in 2010. Co-founder Steve Jobs, who was the engine behind the creation of the iPod, iPhone and iPad, died in 2011.

"It has been an overriding concern with Apple that they would not be able to generate revenue growth just rolling out new versions of old products," said Jeff Sica, president and chief investment officer of SICA Wealth Management. "Now they've proven it in their numbers."

On a conference call with analysts, Apple CEO Tim Cook rebutted that idea, but as usual, gave no details.

"We're working on some incredible stuff. The pipeline is chock full," he said.

Before he died in 2011, Apple co-founder Steve Jobs told biographer Walter Isaacson that he had figured out how to create a groundbreaking, easy-to-use TV set. Since then, company watchers have been waiting for the company to bring out something in that vein to re-energize sales. Cook said the company was still working on it.

"I tend to believe that there's a lot we can contribute in the space, and so we continue to pull the string and see where it leads us," he said.

Apple said it expects sales of between $41 billion and $43 billion in the current quarter, which ends in March. That would usually be little cause for concern, even though analysts were expecting $45.6 billion, because Apple usually lowballs its forecasts. But Chief Financial Officer Peter Oppenheimer said the company is changing its practices and providing a reasonable range rather than a single, easily achievable number.

That means Apple is looking at sales growth of about 7 percent from last year's January to March quarter, a striking number for a company that's posted double-digit increases in every quarter except one since 2008.

Apple's stock fell $55.58 to $458.43 in extended trading, after the release of the results. The shares are down 35 percent from their all-time high, hit Sept. 21, when the iPhone 5 launched.

Fueled by earlier versions of the iPhone, Apple's market capitalization decisively overtook that of Exxon Mobil in early 2012, making it the world's most valuable company. With Wednesday's drop, Apple is worth just 5 percent more than Exxon.

Apple's enviable profit growth also hit a wall in the October to December quarter. It said net income in the fiscal first quarter was $13.1 billion, or $13.81 per share, flat with a year ago. That still beat expectations, as analysts polled by FactSet had forecast earnings of $13.48 per share.

Revenue was $54.5 billion, up 18 percent from a year ago. Analysts were expecting $55 billion. Sales were held back by the fact that the latest quarter had 13 weeks, one less than the corresponding 2011 quarter.

Apple shipped 47.8 million iPhones in the quarter, about 1 million less than analysts were expecting, and 22.9 million iPads, also about 1 million short.

Most surprisingly, Mac sales were also 1 million short, at 4.1 million. That's a 22 percent drop from shipments a year ago. Oppenheimer said this was because Apple couldn't get the new iMac desktops out before December.

Cook said iPhone supplies were short too, and the company could have sold more of both the iPhone 5 and older iPhone 4 if it had been able to make more.

Most technology companies would be ecstatic if they posted 18 percent sales growth and $13 billion in profit for a single quarter, but Apple is held to a high standard, set by the shocking, iPhone-propelled success of the last few years.

"Apple has been growing tremendously and that level of growth can't be sustained by any company," said Sarah Rotman Epps, senior analyst at Forrester Research.

Investors have already been concerned that Apple's strategy of keeping the price of the iPhone high means it's losing out on sales, particularly overseas. Consumers are instead opting to buy cheaper smartphones running Google Inc.'s Android software, which has propelled South Korea's Samsung Electronics to the world's largest maker of smartphones. The average wholesale price of the iPhone is $640, hundreds of dollars more than smartphones with comparable hardware.

There's speculation among company watchers that the company will produce a cheaper iPhone, but that would cut into its profit margin and could tarnish the company's image as a purveyor of premium products.

Apple had warned that the holiday quarter's profits would be lower than Wall Street was initially expecting, because it had so many new products coming out, including the iPhone 5 and iPad Mini. New production lines are more expensive to run and yield more defective products that need to be redone or thrown out rather than sold.

Monday, January 21, 2013

Is Java Safe?

Story first appeared on USA Today

Q:  Why is Java on our browsers if it so vulnerable?  What does even do?  If it is “disabled” what will I no longer be able to do on my computer?

A: Once again, Oracle's Java software is in the news as a hazard to your Mac or PC. Six days after the discovery of a severe vulnerability led Oracle to rush out a patch, on Wednesday security writer Brian Krebs reported a different such "zero-day exploit" that could be used to attack this widely-deployed program.

This is not what people, myself included, hoped when Sun Microsystems released the first versions of Java in the mid-1990s. Back then, the idea was to make the Web more than a way to display words and pictures; you could instead embed a small Java program in a page, and anybody with Sun's Java virtual-machine software installed could run that "applet."

But three funny things happened along the way to that future.

Java's promise of cross-platform compatibility — "write once, run anywhere," as Sun's pitch went — didn't pan out either, leading to Web developers joking about "write once, debug everywhere" and shying away from the software.

Those same developers figured out how to make complex, interactive Web pages without using Java or any other plug-in software. You can edit a spreadsheet in Google Docs, crop a photo in Yahoo's Flickr, and manage your e-mail in Microsoft's using nothing more than a modern browser.

Malware authors, meanwhile, realized that Java's extensive deployment — Oracle, which bought Sun in 2009, estimates that it is on more than 850 million personal computers — made it a tempting target. That has led to attacks such as last spring's Flashback, which took advantage of Java's cross-platform compatibility to hijack Macs as well as Windows PCs.

That's why I advised turning off Java last year. Fortunately, it's now easier to do that: In Oracle's current release of Java, its Windows control panel and Mac System Preferences pane have an "Enable Java content in the browser" option under a "Security" heading. Click to clear that checkbox, and you're done worrying about hostile Java applets.

If you don't see that, you may need to update your Java first; check your version at Unfortunately, Oracle has continued Sun's abusive practice of bundling third-party junk in the Java installer. You'll need to opt out of it adding an browser toolbar and changing your search default to that site.

(On a Mac, you may only have Apple's older Java software, which should already be disabled in Safari but may require some manual configuration in Mozilla Firefox and Google's Chrome.)

Uninstalling Java outright through the Windows control panel will make you even safer, but some desktop programs — for example, the Minecraft game, TiVo Desktop and the open-source Microsoft Office alternative LibreOffice — may require it for some features. I can see keeping Java around for those cases, but I can't justify anybody at home keeping it active in the browser, and I certainly can't endorse any Web developers continuing to use it on their sites.

Years after competitors rolled out this feature, Yahoo quietly added an option to its Yahoo Mail service that will encrypt your use against snooping attempts — not just while you send your username and password, but even as you read and write e-mail.

This encryption — called both HTTPS, short for "hypertext transfer protocol secure," and SSL, for "Secure Sockets Layer" — became an option at Gmail in 2008 and the default there in 2010. Microsoft's various mail services added this choice in 2010 as well. Yahoo, however, contented itself with encrypting only your login; a hostile network, such as a rogue Wi-Fi hot spot, could have still read your e-mail.

Yahoo hasn't made much of a fuss about this change, aside from a Twitter reply by CEO Marissa Mayer: no press release, no posts on its corporate or mail blogs.   Currently, there is only one help file with an explanation of how to enable it: Log into your Yahoo Mail account,  click the gear icon at the top right, select "Mail Options" and click the checkbox next to "Turn on SSL."

Friday, January 11, 2013

Gadget Watch: Electronic fork nags you on eating

originally appeared in The Associated Press:

If you've always wanted a fork that spies on your eating habits, you're in luck: A company has developed a utensil that records when you lift it to the mouth.

The electronic fork is one of the gadgets getting attention this week at the International CES in Las Vegas, an annual showcase of the latest TVs, computers and other consumer-electronic devices.

WHAT IT IS: The HAPIfork is a fork with a fat handle containing electronics and a battery. It's made by HapiIabs, which is based in the land of slow, languorous meals - France.

HOW IT WORKS: The fork contains a motion sensor, so it can figure out when it's being lifted to the mouth. If it senses that you're eating too fast, it warns with you with a vibration and a blinking light. The company believes that using the fork 60 to 75 times during meals lasting from 20 to 30 minutes is ideal.

Between meals, you can connect the fork to a computer or phone and upload data on how fast you're eating, for long-term tracking.

The electronics are waterproof, so you can wash the fork in the sink. If you want to put it in the dishwasher, you have to remove the electronics first.

WHY YOU'D WANT IT: Nutritional experts recommend eating slowly because it takes about 20 minutes to start feeling full. If you eat fast, you may eat too much. The fork is also designed to space your forkfuls so that you have time to chew each one properly. It's like having your mom in a utensil!

WHAT IT DOESN'T DO: The fork has no clue about the nutritional content of your food or how big your forkfuls are. It can't tell if you're shoveling lard or stabbing peas individually.

AVAILABILITY: The company is launching a fundraising campaign for the fork in March on the group-fundraising site Participants need to put down $99 for a fork, which is expected to ship around April or May. Those forks will connect to computers through USB cables.

Later this year, the company plans to start selling Bluetooth-enabled forks to the general public. No price was disclosed for that version.

Friday, January 4, 2013

FICO moves headquarters to San Jose

originally appeared in The San Jose Mercury News:

FICO, the company that invented the credit score, is moving its headquarters from Minneapolis to San Jose to be closer to Silicon Valley's engineering talent pool.

The company's spokeswoman confirmed the move Thursday. The company already has 90 people in San Jose.

The move is another testimonial to the drawing power of the valley's expanding base of companies involved in cloud computing and "big data" -- the analysis of large troves of data collected by computers. There's a brisk competition for employees skilled in those fields.

With the big boom around big data analytics and a significant talent pool in Silicon Valley, this is really a great place to be headquartered, she said.

FICO's president and chief executive officer joined the company last January and already works at the San Jose office.

Operating from our base in Silicon Valley, we can more readily build upon our company's deep talent pool, collaborate with other big thinkers in the world's premier technology hub, and provide our customers worldwide with powerful innovations that will help them compete more effectively in the era of Big Data, according to their president.

A new headquarters is under construction near Mineta San Jose International Airport. The company said the office, which will be completed in February, will become an innovation and development hub in the heart of Silicon Valley.

The company is returning to the area where it was founded more than 50 years ago. We view this move as a homecoming, he said.

FICO was started in 1956 as Fair, Isaac by engineer Bill Fair and mathematician Earl Isaac, who met while working at Stanford Research Institute in Menlo Park. Its first headquarters was in San Rafael, where there is still an office, but the headquarters was later moved to Minneapolis.

While the name FICO is associated with the credit score by that name, the company is not a credit-rating agency. Instead, it licenses its credit scoring algorithm and formula to other credit rating agencies.

The company says its decision management technology is used by thousands of companies in more than 90 countries to target and acquire customers and to reduce fraud.

A FICO product, Falcon Fraud Manager, is used by credit card companies to screen for payment fraud. A separate product, Insurance Fraud Manager, screens for fraudulent insurance claims. The analytics are used to determine whether a claim or charge is legitimate.

About 2 billion credit and debit cards are protected by Falcon, according to the company. Falcon screens about 9,000 transactions per second or about 24 billion transactions per month.

A leader in the growing field of analytics, FICO exemplifies the type of innovation that makes San Jose the capital of Silicon Valley. By returning to its roots in Silicon Valley, FICO will have greater access to talent as well as global business and technology partners, San Jose' Mayor said in a statement.

FICO went public in 1987 and is traded on the New York Stock Exchange.

The company has 2,300 employees worldwide.

Wednesday, January 2, 2013

Tech Giants Brace for More Scrutiny From Regulators

originally appeared in The New York Times:

Silicon Valley lobbied hard in Washington in 2012, and despite some friction with regulators, fared fairly well. In 2013, though, government scrutiny is likely to grow. And with this scrutiny will come even greater efforts by the tech industry to press its case in the nation’s capital and overseas.

In 2012, among other victories, the industry staved off calls for federal consumer privacy legislation and successfully pushed for a revamp of an obscure law that had placed strict privacy protections on Americans’ video rental records. It also helped achieve a stalemate on a proposed global effort to let Web users limit behavioral tracking online, using Do Not Track browser settings.

But this year is likely to put that issue in the spotlight again, and bring intense negotiations between industry and consumer rights groups over whether and how to allow consumers to limit tracking.

Congress is likely to revisit online security legislation — meant to safeguard critical infrastructure from attack — that failed last year. And a looming question for Web giants will be who takes the reins of the Federal Trade Commission, the industry’s main regulator, this year. The director of the commission’s Bureau of Consumer Protection, has resigned, and there have been suggestions that its chairman would step down.

The agency is investigating Google over possible antitrust violations and will subject Facebook to audits of its privacy policy for the next 20 years. Its next steps could serve as a bellwether of how aggressively the commission will take on Web companies in the second Obama administration.

Now that the election is over, Silicon Valley companies each are thinking through their strategy for the second Obama administration, according to a law professor at Ohio State University and a former White House privacy official. The F.T.C. will have a new Democratic chairman. A priority for tech companies will be to discern the new chair’s own priorities.

In early 2012, an unusual burst of lobbying by tech companies helped defeat antipiracy bills, which had been backed by the entertainment industry. Silicon Valley giants like Facebook and Google feared that the bills would force them to police the Internet.

At the end of the year, Silicon Valley also got its way when the Obama administration stood up against a proposed global treaty that would have given government authorities greater control over the Web.

The key to the industry’s successes in 2012 was simple: it expanded its footprint in Washington just as Washington began to pay closer attention to how technology companies affect consumers. Privacy and security became top-tier important policy issues in Washington in 2012, accordion to the director of security policy and global privacy officer at Intel.

Industry has realized it is important to be engaged, he continued, to make sure government stakeholders are fully informed and educated about the role that new technology plays and to make sure any action taken doesn’t unnecessarily burden the innovation economy while still protecting individual trust in new technology.

At the end of 2012, tech companies were on track to have spent record amounts on lobbying for the year. In the first three quarters, they spent close to $100 million, which meant that they were likely to surpass the $127 million they spent on lobbying in 2011, according to an analysis by the Center for Responsive Politics, a Washington-based nonpartisan group that tracks corporate spending. Even the venture capital firm Andreessen Horowitz hired a lobbyist in Washington who was a former mayor of the city.

Technology executives and investors also made generous contributions in the 2012 presidential race, luring both President Obama and Mitt Romney to Northern California for fund-raisers and nudging them to speak out on issues like immigration overhaul and lower tax rates.

In a blog post in November, the center said Silicon Valley’s lobbying expenditures have ballooned in recent years, even as spending by other industries has fallen.

Facebook more than doubled its lobbying outlay in the year, reporting close to $2.6 million through the third quarter of 2012. Google spent more than any other company in the industry, doling out more than $13 million in the same period and more than double its nearest competitor, Microsoft, which spent just over $5.6 million in the same period.

Among Google’s advocates on Capitol Hill is a former Republican congresswoman, Susan Molinari, who heads Google’s office in Washington.

Google has particular reason to be engaged. It faces a wide-reaching antitrust investigation by the Federal Trade Commission, just as Microsoft did a decade ago. At issue is whether Google’s search engine results favor Google products over its rivals’.

Although the agency was ready to settle that case before the holidays, without harsh remedies, late last month it shelved the inquiry and put stronger penalties back in play. A resolution is expected in January.

The commission has already fined Google on a separate matter. In 2012, the company paid $22.5 million to settle charges that it had bypassed privacy settings in Apple’s Safari browser to track users and serve them targeted advertisements.

Facebook has vastly expanded its Washington presence in recent years. It has set up a political action committee, hired a stable of seasoned, well-connected insiders from both parties and offered tips to lawmakers in an effort to make its site indispensable to politicians seeking re-election.

Facebook scored a win on Capitol Hill in late 2012 when it nudged Congress to amend a 1988 law, the Video Privacy Protection Act, that had protected the privacy of Americans’ video rental records. Facebook and its partner, Netflix, the video streaming service, advocated for changes in the law so that movies watched on Netflix could be shared on Facebook. That kind of data can be valuable for behavioral advertising, a principal source of revenue for Web services like Facebook.

The company also attracted increased scrutiny from the F.T.C. The agency negotiated a consent order with Facebook to settle charges that it had engaged in unfair and deceptive practices when changes in its settings revealed personal information that Facebook users had regarded to be private. As part of the settlement, Facebook agreed to audits of its privacy policies for 20 years.

Facebook faced renewed public outcry last month when its subsidiary, Instagram, proposed to deploy users’ pictures to serve targeted advertisements. The company has backtracked on that proposal, but the outcry, say consumer privacy advocates, is an indication of public sentiment.

Yes, the industry managed to hold off privacy legislation this year, according to the executive director of the Electronic Privacy Information Center. But if the end-of-year protests over the Facebook and Instagram changes are any indication, users will be pressing for better privacy protections in the next Congress.

Silicon Valley’s lobbying efforts are also likely to expand across the Atlantic in 2013. Both Facebook and Google have faced off with European regulators over privacy issues. Now, the European Parliament is weighing an overhaul of data protection laws that apply across the Continent.

One of the proposed changes requires Web companies to ask European Union citizens for their explicit consent before collecting personal data for targeted Web advertising. Web companies vigorously oppose that and other proposals.