Technology News and IT Business Intelligence

After a Reuters report on Friday cited China’s Industry and Information Minister, Li Yizhong, as having told an indeterminate parliamentary body that the government was in talks with Google over its claims of having been hacked in early February by a Chinese malicious source, a vice minister for the same government agency issued a statement through China’s Xinhua news agency denying any negotiations have taken place at all.
The denial was covered by Reuters as a request by the ministry for more information, so that China could prosecute Google’s complaint. The Xinhua report itself (not a Google English-language translation of the report) states the Ministry of Industry and Information Technology’s position that Google never filed a complaint in the first place.

Last Tuesday, Xinhua quoted a spokesperson for a key Chinese political advisory body, Zhao Qizheng, as strongly denying Google’s allegations of Chinese malicious hacking, specifically the implication that the government was involved. But being consistent, Qizheng and the Xinhua report were careful not to call Google’s accusation a “charge.”
If one reads the Xinhua reports at face value — putting aside Reuters’ interpretations of them — they could represent China’s attempt to call Google’s bluff. Ever since the incident, the state-run news agency has reiterated that Google has threatened to pull out of the country, but has not done so. And a political cartoon published by Xinhua last Friday, entitled “Google and the Spooks,” depicts the political association it would prefer Chinese citizens draw in their minds. It shows the familiar Google search page, with the logo embellished with Nixonian eyes and an American flag necktie bearing a National Security Agency seal.
The prevailing theory, put forth last month in The New York Times, is that the perpetrators of the alleged incident may have been vo-tech students of a certain Ukrainian professor who has been suspected of online mischief before. While on the surface that might appear to exonerate the Chinese government, the Times’ source, a noted intelligence research analyst, warned readers not to draw that conclusion too quickly, saying the Chinese “have a different model” for exploiting targets. That source may have helped the Times uncover that Google had been working with the NSA to determine the source of the incident.

“Who will buy?” is the question to ask now that Apple has turned on the advertising spigot. I saw the first iPad commercial three times during yesterday’s Academy Awards program. No one should underestimate the power of Apple marketing for generating millions of initial iPad sales. Advertising will differentiate iPad from ebook reader or tablet competitors.
For years, Apple advertised iPod unchecked. Competitors simply didn’t aggressively advertise their MP3 players. So from about 2002 through end of 2004, iPod owned media player advertising — at least in the United States. For a short time, Creative had a campaign, then nothing after 2005. No wonder so many people bought an iPod — it seemingly was the only choice.

What other competitor will offer another choice to iPad through such aggressive marketing? You tell me. The first commercial is very benefits oriented, putting common PC-like functions in the lap instead of on the tabletop. Apple should be wary of consumer confusion. Some potential buyers might not easily understand the difference from iPhone or iPod touch. Whom that might be will become more apparent in a few paragraphs.
I predict that within a few months of release, unless there is a shortage of storage cards, Apple will reconsider the 16GB model — as it did the original 4GB iPhone; 16GB is the new 4GB, but for different reasons. From the start, summer 2007, 8GB iPhone quickly outsold the lower-cost 4GB model. Buyers wanted more storage. At $499, I expect the 16GB iPad to easily outsell the $629 16GB 3G or 32GB WiFi model. But in short order, many iPad buyers will find that 16GB storage is inadequate. They’ll want more storage, which they didn’t get at first because of price — how affordable is $499 compared to $629. There are reasons why retailers use prices like $19.99 or $599. The six in $629 seems so much more than $499. I expect Apple to make price adjustments by summer. Latest. But only after an iPod touch price reduction or introduction of 128GB model at $399.
All this meandering finally leads to the question posed by this post’s title: Who should buy iPad? With no backing data — but a good sense about marketing — I’ll predict early iPad sales will skew across four consumer demographic groups (ignoring institutional segments like education or training) that also likely wouldn’t fit nicely into analysts’ survey spreadsheets:
People Steve Jobs’s age or older. The iPad is first and foremost a device for the old. Apple’s CEO may run a company producing hip products, but Jobs is middle aged. Jobs turned 55 on February 24. He’s a Baby Boomer, and iPad is for his generation and that of his parents. It’s computing made easy, with all the basics covered in a device simply and comfortably handled.
Yesterday, a friend asked if his 85 year-old dad should buy an iPad. “Absolutely,” I said. He was surprised because of my post “12 reasons why I won’t buy an iPad.” The iPad will get the dad on the Web with email and other connected features, serve up ebooks and provide applications that are easily chosen, purchased, installed and used.

Apple’s tablet isn’t right for me, or many other people comfortable with technology and used to multitasking. In its first iteration, iPad is more a single-task device, which is right pace for many older folks (Hey, this isn’t agism just the reality of aging). Among the Boomer-plus set, I expect iPad will appeal most to digital immigrants, meaning those people who didn’t grow up with computers and aren’t all that comfortable with them (Gen Xers tend to be digital resident aliens and the Millennials digital natives).
The iPad as a device for the old (55 and older) could be quite good for Apple. According to a recent AdMob report, 65 percent of iPod touch users are 17 or younger. By comparison, 72 percent of iPhone users are between 18 and 54. Neither device has much pull with those 55 or older, 14 percent and 5 percent, respectively. The 55 and over crowd is a desirable market segment. Marketers assume this group has more discretionary spending because of savings and less pull by outside factors — children, for example. Then there is the large number of Baby Boomers (in the United States about 77 million still living out of 309 million total population, according to Census data). The oldest Boomers reached retirement age in the Noughties.
The Mac faithful. It’s often called the cult of Mac for a reason. Anecdotally, this group can be relied on to buy pretty much anything new with an Apple logo.
Mac wannabes on a budget. From a marketing perspective — looking at Apple computing products as a range of features and prices — iPad fills a gaping hole in the Mac product line between the $399 iPod touch and $999 MacBook. More importantly, iPad lets people pining for a portable Mac get one for less than $500. Suddenly, the cheapest, functional Mac portable is $499. The average consumer doesn’t care about the operating system, whether iPhone OS 3.2 or Snow Leopard. Mac wannabes will care more about what the device can do for them. Apple has packed most of the basic, most appealing functions of the Mac portable — including iWork — into iPad. Then there’s the App Store offering loads of fun applications that are cheap and easy to install.
Niche buyers. Singly, niche buyers won’t amount to much. Combined, they could be a sizable buying segment. Among them I see people interested in ebooks, gadget collectors (especially those obsessed with geek envy) and artists.
To many artists, iPad should be a desirable canvas. Anthropologically, used together, the mouse and keyboard are an unnatural user interface. Human beings are tool users. We experience and interact with the world through five senses. The best tools are really extensions of the hands; the mouse and keyboard UI is neither. Hands, fingers and touch are especially important for experiencing and manipulating objects or surroundings — and for artistry. Apple’s tablet is the canvas for which many artists’ hands will create. What will the hand and finger create on the touchscreen? Who knows, the answer might be a future iPad commercial.

The dispute between Cablevision, the United States’ fifth largest cable company, and New York ABC affiliate WABC-7 was tentatively resolved yesterday evening in time for the Academy Awards telecast, and the ABC blackout for Cablevision subscribers did not last 24 hours.
“ABC7 and Cablevision have made significant progress and have reached an agreement in principle that recognizes the fair value of ABC7, with deal points that we expect to finalize with Cablevision. Given this movement, we’re pleased to announce that ABC7 will return to Cablevision households while we work to complete our negotiations,” a statement from WABC-TV said yesterday.

Though resolved for the time being, this heated disconnection and re-connection is another example of the much larger-scale fight between content owners, local station affiliates, and the cable monopolies.
There are many who believe this fight will only result in all of our cable bills going up.
Broadcasters want to brace their weakened advertising revenue and shrinking viewership by negotiating higher retransmission fees from cable companies. These fees are frequently expressed as a per-subscriber charge, and the negotiating price thus far has been $1 per month per viewer.
That’s the retransmission price that Fox tried to get from Time Warner Cable late in 2009, and reportedly the same price WABC sought from Cablevision. On New Year’s day, Fox and Time Warner reached an agreement on the fees, but the amount of money was not disclosed.
Analysts at the time said the deal opened the door for a $5 billion increase in overall cable fees.
According to the Federal Communications Commission, “Every three years, broadcast stations must decide whether to demand carriage on local cable systems without receiving compensation or elect to negotiate a retransmission consent agreement. In return for allowing a cable system to carry its signal, a television station may require the payment of a fee or other consideration (for instance, carriage of another programming service or advertising time). Any new or additional costs incurred as a result of retransmission consent agreements may be passed through to cable subscribers.”
Over the weekend, when it still appeared the Oscars would be blacked out for some New Yorkers, President and CEO of the American Cable Association Matthew Polka issued a statement, reading in part: “The Federal retransmission consent regime is a badly broken system that permits signal pulling and flagrant price discrimination against smaller cable companies that consumers should not be forced to tolerate.”

Because removing porn from the App Store wasn’t enough, now Apple’s taking aim at software that helps iPhone, iPod touch and, soon, iPad users find Wi-Fi hotspots. Forgive me for cynically choosing to disbelieve the company’s excuse — that all of these apps use undocumented or private APIs and consequently must be removed for the sake of the platform’s future. If Apple actually had a workable, believable strategy for approval, it wouldn’t have approved any of these apps in the first place.
The apps are — or, rather, were distributed under the trade names Sekai Camera, Wifi-Where, and yFy, among others; and they made it easier for owners of such devices to find Wi-Fi networks and thus avoid using their more costly and often congested 3G connections. In the bad old days of wardriving, we simply walked or drove along a public thoroughfare and constantly refreshed our network lists to identify convenient and often free hotspots. The process was manual and tedious, and these packages automated the process of discovery just in time for Wi-Fi to become table stakes on handheld devices. With more end users than ever before seeking safe havens to avoid busting their carrier-imposed 3G data caps, Wi-Fi finders, scanners, and stumblers had finally hit the big time.

Herding the subscriber sheep
It doesn’t take a rocket scientist to conclude that Apple and its carrier-partners weren’t particularly pleased with this trend. I’m going to assume the wizards at AT&T didn’t much appreciate the potential long-term thinning of subscriber revenue, and quietly encouraged Apple to squash it before it became rampant. I’m singling out AT&T because it’s such an easy target of consumer discontent, but this may as well apply to any other carrier in any other country. They’re all cheering Apple’s move because it tilts device traffic back onto their own wireless networks.

Never mind that developers have been begging Apple to open up the API so that they don’t have to get in through the back door. Never mind that tech-savvy consumers now have another reason to jailbreak their devices. Never mind that this is yet another example of near-Draconian (or maybe full-on Draconian) control over a platform that, despite its extreme popularity, remains a prime example of the risks of leaving too much control in the hands of one provider.
What’s to stop Apple from summarily choosing another category next week, or next month, or whenever, as a candidate for pruning? What’s to stop Apple from deciding that developers, whose only option up to then was to creatively work around deliberately baked-in limitations in the SDK to bring consumer-friendly offerings to market, have gone too far and need to be taught a lesson?
To be blunt, no one can stop Apple from doing whatever it wants. I’ve said before that this is Apple’s playground, which means it can make the rules, interpret them as it sees fit, and change them on a whim. And developers and other stakeholders have no say in any of this. They simply have to hope that the elephant they chose to sleep with doesn’t roll over in the middle of the night and crush them.
I don’t say this with malice or anger. It simply is what it is, and despite the platform’s overwhelming success over the better part of the past three years, it leaves consumers and developers with a choice to either put up with Apple’s model or seek alternatives.
Please hold that thought for a second.
A case of non-coincidental timing
All this comes just as Apple gets set to begin shipping iPads to an adoring public. Retail availability in the US is now set for April 3, and sometime toward the end of April in Canada. This means potential buyers are already deciding how much hard-earned cash to bring along when they wait in line overnight to buy one. Will they cheap out for the basic Wi-Fi version, or will they go full-on for a 3G-enabled iPad?
The timing of the latest app takedown is no coincidence: Apple and AT&T clearly want to influence potential buyers to stretch for a 3G-capable version to at least hold out the potential of ongoing subscription-based revenue. Think of this latest move as a scorched-earth strategy for wannabe-Wi-Fi-only iPad users. I’m betting that around this time next month, Wi-Fi-only iPads will be only slightly more difficult to find than two-headed Lincoln pennies, as Apple’s carrier-friendly/consumer-unfriendly supply chain strategy snaps into focus.
Which brings us to the alternatives. As Microsoft is painfully learning, no platform remains dominant forever. Sooner or later, the conditions that allowed the market leader to become the leader in the first place will shift, and in so doing, will allow challengers to lay down roots and eventually outflank them. The incumbent’s vulnerability to defeat in this manner can be influenced by how it treats its market. Do so with cooperative partnership and you stand a better chance of getting stakeholders — namely developers and consumers — to stick with you a bit longer. Do so with a cynical sense of arrogant protectionism, and they’ll happily dance on your grave.
The crack in Apple’s foundation?
Does this mean Apple’s latest App Store move will lead to its ultimate demise? No. But does it shift a few more grains of sand in a different direction? I strongly believe that it does. And we all know how massive tectonic market shifts can begin with a few simple moves. It could be years before the rats begin to abandon any sinking ship with an Apple logo on it, but don’t think for a second that seemingly small acts like this won’t play an eventual role.
The iPhone/iPod touch/iPad universe remains the place to be if you’re looking to build mobile apps. Google’s Android is a distant second fiddle, and RIM is barely out of the gate. But Google’s approach — open source and decidedly less school marm-ish in its definition of what developers can and cannot do — may yet be the kind of landscape that developers will target if Apple’s mercurial form of relationship building becomes too onerous. Apple’s Wi-Fi move is pushing things with this sensitive audience yet again. At some point, they may yet decide enough is enough.

Today, New York’s ABC affiliate WABC-7 has pulled its programming from Cablevision, just hours in advance of the 82nd Academy Awards show.
It was no surprise, though. Earlier this month, WABC said it would be pulling its programming from Cablevision if the cable company didn’t increase its payments by 20%. Cablevision did not see this as fair, as network television has always been available free over the air and nothing new had been added to warrant the increased cost.
“It is wrong for ABC to demand $40 million in new fees to help pay the salaries and bonuses for top ABC executives,” a statement from Cablevision said. “In these difficult and challenging economic times, it is not fair for ABC to force Cablevision and its customers to pay what amounts to a new TV tax for the same programming that is available today for free over the air and on the Internet.”
The cable company started an extensive campaign to rally its subscribers against ABC, including an email writing campaign, a facebook page, and a toll free “No TV Tax” number.
“The FCC is in contact with representatives of both companies and is monitoring the situation closely. Consumers should not suffer due to the inability of these two companies to successfully negotiate a deal. We urge both parties to quickly reach a resolution for the benefit of viewers,” Media Bureau Chief of the Federal Communications Commission, William Lake said today.
But for Cablevision subscribers who just want to watch the Oscars tonight, they are going to have to tune in over the air. For customers who may not have a DTV-compliant antenna or who are just sore from the whole thing, Cablevision is also offering all of its iO TV customers the opportunity to choose from its entire slate of on demand movies for free, including 10 movies that are up for Academy Awards tonight.

Barcode and QR code reader applications are now standard fare for smartphones and can be commonly found for free in any of the major app stores. But far less common are comprehensive services that let users make their own QR codes for free.
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In New York City last night, Samsung gave a sneak peek at three new laptops that are headed to Best Buy for later this week, and also showed a prototype of an all-in-one PC that might or might not turn into a product.
Set to be sold through Best Buy starting this weekend, Samsung’s new “Red” laptops include the 14″ R480, 15″ R580, and 17″ R780. The R480, priced at $729.99, and R580, priced at $829.99, will be sold in Best Buy stores, while the R780 will be available only through BestBuy.com.
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Two years ago, during a private premiere event entitled “Heroes Happen Here” held at the same Nokia Theater in Los Angeles where the Emmy Awards are now staged, and introduced by none other than Tom Brokaw, Microsoft rolled out a truckload of new server software product lines to help cement the company’s new prominence in businesses and enterprises. One of the “heroes” that day, as Microsoft phrased it, was Essential Business Server, an effort to market a ready-from-the-get-go three- or four-server database and mail management package for businesses that have a few dozen employees, but may not yet be enterprises.
It was a solid idea. But today it was left to EBS’ own product managers to announce on their team blog this morning that Microsoft has made a decision to cancel the product. The excuse they gave was especially disheartening, as it essentially caved in to the arguments naysayers used against EBS’ viability from the beginning.
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Apple’s iPad, which was unveiled at the end of January, will be available in US retail on Saturday April 3, the company announced today; and pre-orders will begin on March 12.
The first iPads available will not be equipped with 3G radios, and will be Wi-Fi only, these models go for $499 for 16 GB, $599 for 32 GB, $699 for 64 GB. The AT&T 3G-enabled models will be available in late April for $629 for 16 GB, $729 for 32 GB and $829 for 64 GB. At that time, the device will also launch internationally in Australia, Canada, France, Germany, Italy, Japan, Spain, Switzerland, and the UK. More countries are expected to follow later this year.
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At the end of February, Senators John Kerry (D – Mass.) and Richard Lugar (R – Indiana) introduced the Startup Visa Act of 2010, which will let immigrant entrepreneurs earn a two-year visa if they get at least $250,000 in venture capital investment, and then earn them legal US residence if that startup creates five or more new jobs, gets a second round of funding of over $1 million, or nets $1 million or more in revenue.
“Global competition for talent and investment grows more intense daily and the United States must step up or be left behind,” Sen. Kerry said in introducing the bill. “Everywhere Dick Lugar and I travel for the Foreign Relations Committee, we see firsthand the entrepreneurial spirit driving the economies of our competitors. Creating a new magnet for innovations and innovators to come to the United States and create jobs here will offer our economy a double shot in the arm — robust job creation at home and reaffirmation that we’re the world’s best place to do business.”
This week, a group of Silicon Valley entrepreneurs and venture capitalists led by former PayPal executive turned startup investor and advisor Dave McClure will be heading to Washington DC to promote the bill to legislators in hopes of showing the power that this bill holds.
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