$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.

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."

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.

Apple iPad Mini Review

story first appeared on usatoday.com

Science fiction version: Mad scientists inside Apple's ultra-secretive lab plunge a recent iPad into boiling stew. What emerges is a near identical but considerably smaller and lighter tablet.

Figure Apple relied on more conventional (if no less secret) lab behavior in designing the iPad Mini that reaches stores Friday. But no matter how the downsized tablet came to be, the natural question is how it differs from its bigger sibling and rival tablets with similar-size small screens, such as the Amazon Kindle Fire HD, Barnes & Noble Nook HD, and Google Nexus 7.

The smaller form changes the way you approach the tablet. I've never hesitated to travel with the bigger iPad. It's terrific for reading, watching movies and playing games on an airplane — but given a choice, before a road trip I would now more likely grab the little guy. It's the right size for immersing yourself in a novel. Held sideways, it's simple to bang out an email with your fingers. Battery life is excellent

A tour of the Mini reveals the usual home button on the bottom front, power button and headphone jack on the top, and volume controls on the side. Front and rear cameras are on either side, just like on the bigger iPad. You're greeted by the customary home screen layout with icons for Safari, Mail, Videos and Music parked at the bottom of the display.

You can even exploit the Siri voice assistant. And the Mini runs iOS 6, the latest iteration of Apple's mobile operating system software.

But it is the multitude of apps — 275,000 optimized for the tablet are available in the Apple App store— coupled with Apple's formidable iTunes ecosystem for music, movies and TV shows that represents a major reason why the iPad, big or small, is still the tablet to beat.

That is not to say that the Kindle Fire HD, Nook HD, and Nexus 7 don't pose strong alternatives to the iPad Mini. Those tablets have starting prices of $199 that undercut the $329 starting price of the Mini that has Wi-Fi only and 16 gigabytes of storage.

Amazon, for one, already is running ads comparing Kindle Fire HD with the Mini — bragging about the Fire's impressive high-definition screen and its stereo speakers. The speakers on the Mini are mono. And its screen, though nice, does not afford the beautiful, super-crisp "retina displays" on the latest larger iPads, iPhones or Macintosh computers. But the Kindle is heavier and has fewer apps.

(Update on Wednesday: Amazon is no longer running the ad. Apple confirms that the Mini does indeed have stereo.)

Prices for the Wi-Fi-only Mini climb to $429 for 32GB and $529 for 64GB. The Wi-Fi + Cellular models, available later in the U.S. from AT&T, Sprint and Verizon Wireless, command $459, $559 and $659, respectively. (The unit I've been testing for a week is Wi-Fi only.)

To be sure, the 7.9 inch display on the Mini, vs. 9.7-inches for full-size iPads, gives you a lot less screen real estate to play with. But at a shade under 0.7 pounds and 0.28-inches thick, the paperback-size Mini is 53% lighter and 23% thinner than the newest iPad. It is just wide enough that I was not able to stash it in one inside sport jacket pocket but was able to slip it into another. Compared with the 7-inch screens on some of Kindle, Nook and Nexus devices, though, the iPad Mini is 35% roomier.

Sitting in a cramped airline seat, or lying in bed, I found reading on the Mini to be a generally a more pleasurable experience than reading on the full-size iPad. But though you can now more easily hold a Mini with one hand, I still tended to use two.

Speed: Inside, the iPad Mini has an Apple-designed dual core A5 processor, a version of which powered the iPad 2. But I did detect some sluggishness. At the same time that I was downloading some content in the background, it took several seconds for the screen shots I captured on the device to land in the Photos app. I've never experienced the delay on a bigger iPad.

Cameras: The iPad Mini has two good cameras, including one on the front for doing FaceTime video calls, and a rear 5-megapixel camera that can capture 1080p high-definition video. The quality of FaceTime is related to your network connection, so even in a Wi-Fi environment, I sometimes lost sight of the person at the other end of the call.

Battery life: On the Wi-Fi model, Apple claims 10 hours of battery life while surfing the Web, watching video or listening to music. I was well on my way to confirming that. Nine hours into my test with Wi-Fi on, brightness at 75% and a video playing, I still had about 25% of juice left. But I cut my test short because of a power outage caused by Hurricane Sandy. Apple promises about an hour less battery life on the cellular models.

Connectors: Like the new iPhone 5, and fourth generation iPad announced last week, the Mini makes use of Apple's new Lightning connector. Unless you purchase adapters, you may not be able to use the Mini on some older accessories. Speaking of accessories, Apple has designed a handsome $39 iPad Mini Smart Cover (in one of 6 colors) that magnetically aligns itself to the tablet. It's made with a microfiber lining that Apple says keeps the screen clean.

But in the absence of a USB connector or SD card slot, you'll need pricey $29 Lightning adapter accessories to connect the Mini to a digital camera or to insert a memory card from your camera into the tablet. On older iPads with a 30-pin dock connector camera kit, you got both connectors for $29.

The big picture on the small iPad: Despite a few quibbles and strong competitors in the space, the Mini is a splendid choice for folks who held off buying an iPad because it was too large or too expensive.

Education Use of Apple iPad Growing

Story first appeared on Bloomberg News

Julie Garcia handed Apple Inc. (AAPL) iPads to students in her seventh-grade pre-algebra class on a recent morning before showing the pupils how to use the tablet to graph data, hunt for correlations and record how-to videos.

A math instructor at Innovation Middle School, Garcia is one of the first to use some of the more than 25,000 iPads the San Diego Unified School District bought from Apple this year.

Garcia said it is the "cool factor" as she looks over the room of students tapping energetically on tablets.

For districts around the country, though, it’s the price as much as the cool quotient that could draw them to a new, smaller version of the iPad that Apple will unveil tomorrow at an event in San Jose, California. Apple has long been a leader in education, and schools began embracing the iPad soon after its 2010 debut. Yet as fiscal budget shortfalls crimp spending all the more, schools in growing numbers are warming to the handheld devices as an alternative to more expensive laptops.

Now schools, as well as consumers, are about to get another big price break: The smaller iPad may cost as little as $249, according to Barclays Plc. That compares with $499 to $829 for the current iPad.

Beyond the school market of course, Chief Executive Officer Tim Cook will use the device to try to widen Apple’s lead over Amazon.com Inc. and Google Inc. and fend off a more recent threat from Microsoft Corp. in the market for tablets, which NPD DisplaySearch predicts will more than double to $162 billion by 2017. Cook will unveil an iPad with a 7.85-inch screen diagonally, people familiar with its development said in August. The current iPad has a 9.7-inch screen.

iPad Shift

Yet Apple executives plan to make a point of highlighting the iPad’s educational capabilities at tomorrow’s event, according to a person with knowledge of the planning. Little wonder. Education spending on information technology, including hardware, was about $19.7 billion in the 2010-2011 period, according to the Center for Digital Education.

Educators’ bet on tablets mirrors a trend in the broader consumer-electronics market, where consumers are buying iPads instead of traditional personal computers. PC sales in K-12 fell 8 percent in the U.S. last quarter, the third straight decline, Gartner said.

James Ponce, the superintendent of the McAllen Independent School District in Texas said they are moving away from desktops and laptops to tablet devices.

School Sales

The education push is part of a strategy put in place under co-Founder Steve Jobs, before the iPad was introduced in 2010. While Apple has a history of selling Mac computers to schools, the company realigned its education sales force to emphasize iPads, a person familiar with the changes said.

Innovation Middle School has traditionally used Lenovo Group Ltd. (992) computers because Macs are too expensive, said Harlan Klein, the school’s principal.

The new iPad comes at a critical time for Apple. Its shares have dropped 13 percent since reaching a record on Sept. 19, two days before the company released the iPhone 5. Sales of the smartphone have been constrained by supply constraints. Apple is also facing fresh competition in tablets from Microsoft (MSFT), which on Oct. 26 will release the Surface, its first foray into hardware. Apple had about 70 percent of the market in the second quarter, compared with Samsung Electronics Co., which had 9.2 percent, and Amazon’s 4.2 percent, according to IHS ISuppli.

Courting Educators

To woo educators, Apple’s sales staff meets regularly with school administrators and procurement officers across the U.S. The company has sales staff assigned to work with schools in particular regions of the U.S., and pays for district officials to visit Apple’s headquarters in Cupertino, California, to learn about new products.

The company will need to set the new iPad’s price right to woo cash-strapped districts.

Vineet Madan, a senior vice president at McGraw-Hill Cos. (MHP) education unit said there would be a real aggressive uptake in the K-12 market when tablets get into the $200-$300 range.

To save money, San Diego’s school district bought iPad 2s after Apple dropped the price of that model when the newest version was introduced earlier this year.

Training Teachers

Drawing on funds raised through a voter-approved bond measure, the district spent about $370 on each iPad, which comes pre-loaded with various educational applications, Browne said.

Besides budgetary constraints, a major challenge for schools is training teachers and managing all the new equipment and software. If a teacher wants to use an iPad math application, synchronizing a classroom of devices and monitoring all the students’ work can be time consuming. In San Diego, a team of eight employees helps train teachers and manage new technology.

Touch Screens

In southern Texas, Ponce of the McAllen Independent School District reached out to Apple soon after the district decided to get away from buying laptops and desktops, which he said were expensive to maintain and unappealing for many students. Apple was at the table helping craft the district’s strategy for integrating technology in classrooms, he said.

The work resulted in McAllen buying about 25,000 iPads, paying Apple about $3.5 million a year as part of a financing deal the district worked out with Apple. About half the district’s technology budget is now going to Apple, Ponce said. Students are using iPad applications to test for vocabulary, make presentations and compile class notes.

While some teachers have resisted the new technology, many are adapting because they see students are increasingly fluent with touch-screen-based technology, said Courtney Browne, a technology resource teacher at San Diego Unified School District.

Hack of Tech Journalist Reveals Flaws in Cloud Security

Story first reported from USA Today

SEATTLE – The security community is on alert for hackers who might try to emulate the simple trickery used to breach a prominent technology journalist's Amazon, Apple, Google and Twitter accounts. That hacking caper has rekindled concerns about whether Apple's iCloud, Google Apps, Amazon's Cloud Drive, Microsoft's Windows Live and other Internet-delivered services do enough to authenticate users, security analysts say.

"People are being urged to trust their data to the Internet cloud, but then you find that the operational security is alarmingly lax," says Stephen Cobb, security analyst at anti-virus firm ESET.

Hackers devastated Wired reporter Mat Honan's digital life. In doing so, they highlighted how Web companies have been slow to embrace more robust systems for ensuring that users who log into online accounts are who they say.

Merchants, banks, media companies and social networks require varying amounts of information to open and access online accounts. Many ask for only a few bits of information to make changes, such as resetting a password. That makes it easy for hackers to abuse the prevailing systems, which rely on asking users to answer questions.

Many banks and Google Gmail offer an optional service that sends to your cellphone a single-use PIN code that you must enter at their websites, along with your username and password, before you can complete certain transactions.

Such multifactor authentication systems are considered more difficult for the bad guys to subvert but less convenient for account holders to use. Yet the need for wider deployment of stronger systems is intensifying, argues Todd Feinman, CEO of database security firm Identity Finder.

Honan detailed how hackers tricked an Amazon rep over the phone into revealing the last four digits of his credit card number. Next, they used that information to persuade an Apple rep to reset his Apple ID password, which enabled them to wipe clean Honan's iPhone, iPad and MacBook, destroying all of his files, including irreplaceable photos of his daughter. Apple has suspended its phone password-reset service and launched a security review, says spokeswoman Natalie Kerris. Amazon did not respond to interview requests.

Web firms are unlikely to switch to one-time PIN systems anytime soon. "Many … are expensive and difficult to manage," says Chris Brennan, CEO of security firm NetAuthority. "And companies are concerned they could frustrate the user."

Meanwhile, consumer awareness remains low, says Gregg Martin, FishNet Security's directory of mobile security. Consumers will have to demand stronger authentication systems and be prepared to accept "a slight level of inconvenience," Martin says.

ESET's Cobb argues that Web companies should take the initiative. "Improving security is 100% the responsibility of the cloud service providers because they are the ones trying to sign people up to the cloud model."

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Apple Closing in on All-Time High

Story first reported from CNN.com

 

Remember all the investor disappointment about Apple's latest earnings report? That's no longer an issue. Shares of Apple were up nearly 1.5% Monday to about $625. The stock has rebounded more than 8% since a 4% pummeling the day after it missed forecasts and guided lower. In fact, the stock is now just 3% below the all-time high of $644 it set back in April.

It appears that any lingering concerns about Apple's rare case of under-performing and under-delivering have been replaced by excitement about new products (iPhone 5 is rumored to be unveiled and go on sale next month) and the upcoming dividend payment to shareholders. As such, several traders on StockTwits believe that it would be a mistake to bet against Apple.

Research firm analyzes 6 million social conversations to conclude:"the launch of the
Apple may one day screw up royally and release a product that nobody wants.

But take one look at the share prices of Research in Motion, Nokia, Hewlett-Packard and Dell and ask yourselves if you think any of them will soon make hardware that's sexier than iEverything? (Or that EL James book it seems everybody but me is reading.) Didn't think so.

Sure, Microsoft, Google and Samsung are all fierce competitors too. But Apple deserves the benefit of the doubt ... assuming there still are any doubts of course.

Apple's $2.65 per share dividend will be paid out on August 16 to any shareholders of record as of August 13. So if you are silly enough to be shorting Apple, it makes sense to cover before the dividend is paid. Otherwise you would have to return (i.e. buy back) the shares you borrowed and also pay the dividend on top of that.

I'm still not sure I believe the stock split chatter though ... even though a split could make the shares even more attractive to retail investors and the people who manage the Dow Jones Industrial Average.

It will be interesting to see what Apple's stock does once the iPhone 5 is released. The next milestone for the company would be exceeding $600 billion in market value.  Apple is currently only about 3% below that level. That may seem obscene. But as I've said repeatedly in Buzz columns, videos and over on Twitter -- aka the thing that Apple is never going to buy no matter what the NY Times and other media outlets are reporting --  Apple remains a cheap stock.

Apple is valued at just 14 times fiscal 2012 earnings estimates -- despite its market dominance, stellar growth prospects (forecasts of 20%+ EPS growth on average for the next few years) and squeaky-clean balance sheet with well north of $100 billion in cash. Now you add on the dividend -- which will yield a relatively 1.7% -- to boot?

I had my colleague David Goldman ask Siri if it's a good idea to short Apple stock. (I merely possess a Siri-less iPhone 4.) Her response? "I cannot help you pick stocks, Dave." That was very diplomatic of her. But trust this lowly carbon-based life form. The answer is no.

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Flashback Creators Made Bank on Mac Virus

Story first appeared in The New York Times.

Last month, cybercriminals embarked on what quickly became one of the largest-scale malware attacks on Apple computers to date. Their motive was financial: security researchers now estimate that the infected computers made the malware’s creators $10,000 a day.

The malware, called Flashback, targeted Mac users and infected their machines through a security hole in Java software that Oracle patched last February, but that Apple did not patch until early April. In those six weeks, Flashback spread to over half a million computers.

It spread through particularly nefarious means. Unlike most malware, which typically requires users to click on a malicious link or open a compromised attachment to get infected, Flashback downloaded itself onto its victims’ machines when they visited hijacked Web sites, often compromised WordPress blogs.

Security researchers determined that Flashback used infected computers for click fraud, in which clicks on a Web advertisement are manipulated in exchange for kickbacks. Researchers at Symantec, who studied Flashback’s code, determined that a Google search for “toys”– which would ordinarily send a user to Toys “R” Us — instead redirected the user to a site where the attackers, not Google, would get 8 cents for the click.

With 600,000 computers infected at its peak, Symantec estimates that Flashback generated $10,000 for the attackers each day. Two weeks after Apple issued a security patch, the number of infected users dropped to 140,000 from 600,000. But last week, researchers at Intego, another computer security firm, discovered that a new variant of Flashback, Flashback.S, continues to spread through the same Java vulnerability. Companies using Macs should invest in professional Security Solutions to avoid further breaches.

Intego researchers did not say what the new variant of Flashback was being used for, but researchers at Symantec that analyzed a portion of the variant’s code said that it communicated with the same command-and-control servers as Flashback and that it would be safe to assume the intention with this variant was the same.

To remove Flashback, Apple encouraged users to run their software updates. They can also download a Flashback removal tool on Apple’s support site, which lets users know if their computer was infected.

Security experts predicted in 2008 that when Apple’s share of the PC market reached 16 percent and Windows antivirus software became 80 percent effective, Mac users would become a more frequent target for cybercriminals.

That day is not far off. Apple currently holds 12 percent of the PC market and antivirus software has reached 95 percent effectiveness, according to AV Comparatives, a nonprofit that audits antivirus software.


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Apple Gains Tax Incentives in Texas

Story first appeared on themacobserver.com.

Apple’s major expansion in Austin, Texas, is a step closer to reality now that Travis Country has approved an incentive package that will help the iPhone and Mac maker bring 3,600 new jobs to the city. The approval came Tuesday night with only one of the five Commissioners voting against the deal.

The dissenting vote came from the Commissioner who said she had hoped Apple would’ve been required to promise more in exchange for the incentives, according to the Austin Business Journal.

Apple now stands to get between US$5.4 million and $6.4 million in tax rebates from the county, for a combined $35 million in incentives over ten years from city, county and state. In exchange, Apple will double its workforce in Austin and invest $282.5 million locally in the process.

The county’s approval comes as good news for the Austin job market, especially since the county was the only holdout on approving the incentives package. Had the Commissioners voted against the deal, the state and city would’t be able to follow through on their offers and Apple would’ve likely taken its new jobs elsewhere.

With Travis County’s approval in place, however, Apple can now move forward to the next phase in its expansion plans.


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Apple Fights Mac Targeted Virus Aftermath

Story first appeared in PCWorld.com

It was a busy week for Apple malware hunters fighting the Flashback Trojan horse, which has infected between 270,000 and 600,000 Macs. A bevy of tools to find and remove the malware debuted this week, including several long term security solutions. And two days after promising to release a detection and removal tool, Apple finally offered its own fix.

Now, as the dust settles on what is considered to be the largest Mac malware threat to date, experts have started pointing fingers at Apple as being partially to blame for the scope of the Flashback malware infection. They argue that if Apple were more transparent about security issues--and if it had promptly released a Flashback fix--the extent of the damage could have been smaller. Also contributing to the magnitude of the infections is a boost in the number of Mac OS users, they say.

When the installed base [of an OS] is 10 percent or less, the bad guys don't care. The bigger the user base, the more attractive the target. Web analytics firm NetMarketShare.com estimates that the Mac installed base has jumped to 13 percent in the United States, and research firm Gartner says that Apple has become the fastest-growing U.S. computer maker--overtaking Acer and Toshiba--over the past year.

Apple's Image of Invulnerability--Gone

Perhaps surprisingly, security experts say that Apple needs to look to Microsoft when it comes to handling OS security breaches. For years Apple has mocked Microsoft for its track record in dealing with Windows malware, viruses, and weekly patches. Now the tables have turned.

The Flashback Trojan horse is the final nail in the coffin for Apple's stellar security image. He says that although Microsoft juggles a much larger number of threats, it does a better job of warning customers and delivering fixes.

We have heard dire "Macpocalypse" warnings before. Last year Apple's sterling security image was tarnished with the advent of the Mac Defender malware program. Before that, in 2006, the focus was on the Leap. A virus, the first ever virus for Mac OS X. (For a great short history of Apple Mac malware, check out NakedSecurity.com's timeline from 1982 to 2010.) But this time, security experts insist, Apple's security bragging rights are gone for good.

Mac Security Experts: Full Disclosure

It's worth noting that Mac security software sales jumped as Flashback infections began to dominate tech headlines. That fact has prompted many vocal critics to point out that it's in the self-interest of Mac antivirus companies to be critical of Apple's security measures.

But a brief timeline of Flashback, security experts say, illustrates their point. The underlying Java vulnerability that Flashback exploited was publicly known, and patched by Oracle, in February. On April 3, Apple released a Java security bulletin pointing to the Oracle patch, and declined to disclose, discuss, or confirm the infections. On Tuesday, Apple acknowledged the existence of Flashback and said that it was developing software to detect and remove the malware. On Thursday, it released the Flashback malware removal tool.

What Apple Can Learn From Microsoft Security

First off, there is no disputing that Microsoft, having the dominant OS, faces far more security threats than Apple does. You can argue all day about how secure Apple's flavor of BSD Unix is versus Microsoft's Windows, but the difference is Microsoft's transparency. As PCWorld's sibling publication Macworld puts it: Apple has a good security record, but it still has some work to do in terms of its reputation for security.

Mac OS users unfamiliar with Windows may be surprised to learn that Microsoft regularly schedules the rollout of security fixes on Patch Tuesday, the second Tuesday of each month. But for IT managers and consumers, knowing what's at risk and when a fix will be available is vital for minimizing exposure to threats. Microsoft also issues critical patches as they become available for exploits.

The system is not perfect; coupled with Windows Update, however, it offers a first line of defense against malware, exploits, and viruses.

Mac OS also automatically checks for software updates every week, and you can change that setting for more-frequent updates. But it's Apple's legendary wall of silence and foot-dragging on deploying fixes that have placed it in security experts' crosshairs.

When problems and vulnerabilities exist, Microsoft provides information quickly. Microsoft has been good at communicating, sometimes to the point of being annoying. Apple hasn’t done as much to communicate with its users.

Apple's iron grip on information and the release of fixes has been a nagging issue for years. In 2008, for example, Apple took over four months to patch a DNS vulnerability.

Why Apple did not deploy these fixes before Mac users were victimized by criminals is unclear.

Expect an evolution of threats against Mac users that will largely mirror those that Windows users face: that is, via the exploitation of vulnerable browser plug-ins, such as Adobe Reader, Flash, and most definitely Java.

Apple's Flashback fix, deployed Thursday, mitigates Java flaws. As a security hardening measure, the Java browser plug-in and Java Web Start are deactivated if they are unused for 35 days.

Ignorance Is Not Bliss

The bigger problem, say some observers, is correcting the perception that the Mac platform is invulnerable. That notion has fostered a laissez-faire attitude toward security among Apple customers.

For years Apple has promoted the idea that Macs are far less vulnerable to malware and viruses than PCs are.

Mac users are faced with new threats that require new security precautions.

A system administrator says that many of the student Mac users for whom he provides help-desk services live in denial. An IT manager for several state universities at the Tennessee Technology Center in Shelbyville, Tennessee, says students come to his staff with Mac problems and don't believe that their computers have been infected until shown the evidence.

Over the past few years, Mallard says, he has seen the percentage of infected Macs brought in by students jump from 1 to 15 percent.

Even though the Mac OS is more secure, its users don’t have the awareness. Educating users to the risks that they face is one of the most important things Apple can do, the same way you teach your kid to cross at the green light.

Wireless Market Headed for a Wall

Story first appeared on Bloomberg Business Week

The U.S. wireless market, long the fastest-growing sector in the telecommunications industry, looks like it’s headed for a wall.

Sales of wireless contracts, the most lucrative segment of the business because it locks in monthly payments over long periods, may have shrunk for the first time ever in the first quarter. One big reason for the sharp reversal: Soaring iPhone sales in late 2011 may have satiated consumers’ appetites for wireless plans.

A decline would mark a turning point for the previously rapid-growth business, leaving carriers such as AT&T Inc., Verizon Wireless and Sprint Nextel Corp. fighting over a shrinking pool of customers. A slowdown also forces device manufacturers such as Apple Inc. and Samsung Electronics Co. to battle more intensely for customers.

The huge fourth quarter fueled by the iPhone took all the air out of the first quarter. It’s now a saturated market.

U.S. wireless carriers shed a combined 20,000 contract customers in the first quarter.

The decline forces carriers to seek revenue gains at the expense of weaker players. That may mean increasing promotional activity by carriers who already are selling smartphones at a loss to lure users into two-year contracts, a practice that has reduced profit margins.

To offer the iPhone, for instance, carriers already pay Apple about $600 per phone and then collect $199 from retail customers, subsidizing the difference with revenue from monthly service charges.

These subsidies have narrowed wireless operating income margins at AT&T to 15.2 percent in the fourth quarter, down from 30 percent in the first quarter of 2010.

‘Milestone’

What you’ll see in a saturated market are the forces of consolidation and price pressure. Margins in the U.S. have already been shrinking at a faster rate than any other time in the wireless industry. The possibility that the contract-user number dropped in the first quarter could also be factored in.

The industry is maturing. Given that the pie isn’t growing rapidly any longer, it’s now a game of share-shifting.

IPhone Surge

Within the industry, AT&T and Verizon Wireless probably kept winning users from smaller rivals T-Mobile USA and Sprint Nextel Corp. T-Mobile probably lost 600,000 contract customers and Sprint 125,000 last quarter. Verizon Wireless added 500,000 contract users and AT&T gained 225,000 such customers.

The potential first-quarter drop follows exceptionally strong gains in the previous period, when holiday sales of Apple Inc.’s new iPhone 4S boosted subscriber numbers. The first quarter also is traditionally the slowest sales period for the industry, and contract-subscriber growth may resume after that.

Some analysts say the market may have avoided a contraction in the first quarter. The big four carriers -- Verizon Wireless, AT&T, Sprint and T-Mobile USA -- added 380,000 contract customers collectively.

Sprint, based in Overland Park, Kansas, rose 4 percent to $2.61 yesterday, and AT&T added 0.9 percent to $30.89. Verizon Communications Inc., which owns Verizon Wireless with Vodafone Group Plc, advanced 0.8 percent to $37.74. T-Mobile is a unit of Deutsche Telekom AG. 

Market Penetration

Gains in the prepaid market -- a smaller, faster-growing part of the mobile-phone business -- means the wireless industry as a whole kept adding users in the first quarter. Still, in that market, which includes carriers MetroPCS Communications Inc. and Leap Wireless International Inc., the growth also is slowing.

The number of new prepaid customers added by the industry in the first quarter was an estimated 2.5 million, an 18 percent decline from the year-earlier growth rate.

If you take out every kid under 10 and every adult over 80, you have a market with 125 percent penetration. It’s no surprise the industry is maturing.



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