Now, after passing Pentagon tests, the devices are actually approved for use.

Before authorizing any devices for use in security-conscious military environments, the military requires a very specific and detailed implementation and deployment plan. A large part of that is the creation of policy for approved use as per DoD Directive 8100.02, which says that cellular devices are not allowed into areas where classified information is discussed, stored, or processed without written approval.

And until that happened for the Apple devices, the hundreds of thousands of phones and tablets were in administrative limbo.

“Most of them have not been deployed and are still sitting in a warehouse,” a source I talked to a month ago said. “They haven’t yet been able to build an implementation guide on how to use them.”

Today’s decision, however, paves the way for the U.S. military to actually use the devices in secure areas, and potentially expand their purchase order. It marks a turning point away from BlackBerry devices, which have been considered more secure, and which to date have formed the vast majority of government-issued mobile phones.

The problem with clearing smartphones for use in top secret environments is that they are, essentially, full of radios: Bluetooth, WiFi, cellular.

“With standard consumer devices, there’s no way to prove that the Wi-Fi is turned off,” my source told me.

One solution the DoD had previously implemented for iPads was to hand them off to a second party after delivery from Apple to crack open the cases and “snip the Wi-Fi radio” to disable it, and then close them up again. Apparently, the DoD reached a special agreement with Apple to maintain warranty eligibility, which would normally be voided after opening the case.

Today’s approval, however, is for a version of iOS 6 that has likely been customized by Apple and certified by military technologists to ensure security compliance without actually having to snip wires.

Interestingly, according to Bloomberg, the military plans to create its own app store for military applications, which would allow DOD personnel to use commercial hardware but employ tested and approved applications.

photo credits: The U.S. Army via photopin cc, Devindra Hardawar/VentureBeat

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

BlackBerry managed to squeeze in one surprise announcement during its huge conference keynote this morning: BlackBerry Messenger, the company’s popular messaging app, will finally jump to the iPhone and Android this summer.

This is the first time BlackBerry has brought BBM to other platforms, and it’s something the company’s fans have been begging for over the past few years. It’ll be available on iPhones running iOS 6 or greater and Android Phones running Android 4.0 Ice Cream Sandwich.

“We will make BBM available as the premiere multi-platform IM solution all around the globe,” said Thorsten Heins, Blackberry’s CEO, on stage today during the keynote. “Even better, it’s free.”

Heins boasted that BlackBerry Messenger already has more than 60 million users (not a huge surprise, since it’s a popular feature among the company’s 80 million users) and more than 10 billion messages are sent every day through the service.

“Why are we doing this now? It’s a statement of confidence,” Heins said. “The BlackBerry 10 platform is so strong and support has been so good that the time is right for BBM to become an independent messaging solution.”

He calmed the BlackBerry faithful by confirming that the company will still offer the “premiere and most integrated” BBM experience. Initially, iPhone and Android BBM users will be able to send chats and join BBM groups. But eventually the other platforms will see all of the BBM features out now, including screen sharing and voice and video chat.

Heins also announced BlackBerry Messenger Channels today, which is a way for brands to send messages directly to their fans. Think of it like a Facebook brand page located entirely within BBM. Brands will be able to send news updates to followers as well, so it will function almost like a news reader.

With the launch of channels and the promise of multi-platform compatibility, Blackberry Messenger is increasingly becoming the most interesting Blackberry property.

Photo: BlackBerry livestream

While analysts, Wall Street, former Apple employees, and, yes — journalists — have been raking Apple over the coals for its agonizingly slow product release cycle and lack of response to the growing market for larger screens, Tim “no new products until this fall” Cook has held his fire.

That’s probably at least partly due to the fact that that “growing” market might indeed be growing, but not all that quickly. In fact, according to mobile advertising company Tapjoy, fablets only make up a tiny 4 percent of the market.

“Fablets don’t fill a market need that is most valuable to end users,” Brian Sapp, a director at Tapjoy, told me yesterday. “They fall in a gray area … the device manufacturers want to make larger screens, but most users just don’t care.”

Source: Swipe Telecom

Swipe Telecom’s 5-inch F3 fablet.

Tapjoy is a pretty credibly source of mobile market data — the company’s monetization solutions live in tens of thousands of apps, and thereby on over a billion devices globally, the company told me. That’s a big sample size from which to draw conclusions.

“Users,” Sapp concludes, “want a phone that fits in their pocket.”

This data very likely comes with regional lumpiness to that data, with fablets being more popular in some areas (I suspect Asia, for one). But 4 percent is not a big number, and it’s not the kind of massive market that Apple typically looks for.

In addition, Apple is much more concerned with making great products than flip-flopping in the wind of what’s popular du jour. And usability experts point out that already on iPhone-sized screens, some areas are hard to manage one-handed and to both access virtual controls and initiate standard on-screen gesture motions.

Which, of course, makes fablets two-handed beasts.

One caveat, however.

While fablets may be a small slice of the market, phones that are bigger than iPhone are not. The supersuccessful Galaxy S III and Galaxy S4 are both bigger than iPhone 5. And Samsung, which shipped 400 million phones in 2012 and 82.2 million smartphones, tablets, and notebooks in the first quarter of 2013, knows something about what customers want, too.

“Market share is important and unit share is important,” Cook said on the company’s last earnings call. “But we’re all about customer experience and enriching lives.”

Which means it is very likely that a larger iPhone will be coming at some point in 2013, closer to fall. Just not as big as some pundits might like.

And … it probably will still fit in your pocket.

Since the company already employs 100,000 workers to manufacture components and devices for customers like Apple, Dell, and HP, that translates to 40,000 new workers. And since Apple is widely expected to be releasing not only an updated iPhone 5 but also a cheaper, plastic-bodied iPhone in the fall-to-winter time frame, that translates to speculation that Pegatron is gearing up for big orders.

This fits both with Apple CEO Tim Cook’s announcement during the company’s recent earnings call that Apple would not bring out any new products until the fall and with recent rampant rumors of new iPhone models.

And, says Reuters, Pegatron’s CFO Charles Lin indicated that 60 percent of the company’s 2013 revenue would come from the second half of the year.

Apple needs new products, badly.

Canalys’ numbers for smartphone, tablet, and laptop sales for the first quarter of 2013 show that Apple’s growing only 7.6 percent in smartphone sales, while the industry is growing at a 64.3 percent pace. And while Apple sold 37 million iPhones, Samsung shipped is growing its smartphone shipments by 64.3 percent.

Apple’s not interesting in market share for the sake of market share, but at some point market share has to impact the overall health of an ecosystem. And without a strong app, media, and device ecosystem, smartphone manufacturers are in deep, deep trouble.

photo credit: jurvetson via photopin cc

Once again, Android accounted for 75.6 percent of all smartphone shipments, and once again, Samsung is killing it.

The Korean smartphone king grew smartphone shipments by 64.3 percent year-over-year while shipping 82.2 million tablets, smartphones, and notebooks combined. Meanwhile, mobile rival Apple grew its iPhone shipments by a shockingly low 6.7 percent, hitting single digit growth in a market which has overall growth of 37.4 percent.

Let me say that again: Apple is at single digit growth in a market growing at almost 40 percent.

Source: John Koetsier

Android meets Wall-E.

If there’s any doubt why Apple’s stock in moldering in the mid-400′s after hitting highs last year of over $700, that’s why. And with Tim Cook basically telling Wall Street that Apple won’t ship any significant new products until this fall, or even 2014, the situation is not likely to change.

‘Despite its slowing growth, Apple still shipped over 37 million iPhones,’ Canalys analyst Pete Cunningham said in a statement. ‘But HTC and Samsung have raised the bar with their latest handsets and Apple needs to respond with its next iPhone. The iPhone user interface is now six years old and badly in need of a refresh.”

Tablets are one area of slight comfort for Cupertino.

Apple retains 46.4 percent of the tablet market, Canalys says, shipping 19.4 million tablets. That’s down from 58 percent market share in the first quarter of 2012, and once again, in a market growing at over 106 percent year-over year, Apple grew less than others — about 60 percent growth year-over-year.

‘Spearheaded by Google and Amazon, the commoditization of the tablet market has happened far quicker than that of the wider PC market,’ Canalys analyst Tim Coulling said.

The upshot?

Without significant new Apple products, major new product categories, and a much more intense Apple effort to produce a wider range of phones and tablets that the market is looking for right now, Apple share will continue to drop.

And one other interesting tidbit in the Canalys data:

Calculating operating system share over all “smart devices,” lumping in smartphones, tablets, and laptops does provide interesting insights. With that view of the industry, Microsoft ends up with an 18.1 percent OS market share — a very different proposition than high-90-percent share in the laptop/desktop world.

Image credit: Louish Pixel/Flickr

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Ramping up production in June and July will stock Apple’s shelves for a late summer or early fall launch, when Apple typically sells millions of devices in just a few days. That timetable is in line with Tim Cook’s statements during Apple’s last earnings call, in which Cook warned investors not to expect any major new product launches this summer:

“Our teams are hard at work on some amazing new hardware, software, and services we can’t wait to introduce this fall and throughout 2014,” he said at the time.

Japan Display and LG have long made screens for Apple’s smartphones, while Sharp was added just late last year as Apple continues to diversify its list of manufacturers in an attempt to ensure adequate production capacity — and to limit reliance on any one particular partner.

The most critical point in the report?

The liquid crystal panel of the next model “iPhone (iPhone) 5″ Apple, specification is close to the current and the “iPhone 5.”

In other words, the 5S is the same size and shape as the 5, which means that this particular product is not the iPhone Mini or iPhone Maxi that have recently been rumored. Which doesn’t, of course, mean that Apple is not sourcing components for those potential products from other manufacturers.

According to the report, the factory Sharp will be using has a production capacity of 600 million units a month. Apple will not even need even a reasonable fraction of that, and the factory has been chronically underutilized.

This is good news for Sharp, Japan Display, and Japan in general. Electronics manufacturers in Japan have seen Korean companies like Samsung take their lunch and eat it, too, and have had to cut staff, offload underperforming business units, and cut back expenses.

It’s also good news for Apple fans who are looking forward to some juicy new iTech.

Image credit: Devindra Hardawar/VentureBeat

It’s time for iPhone to “get the family treatment,” former Apple creative director and strategy consultant Ken Segall says.

The former Apple employee writes that public perception is now that “Samsung is now the real innovator,” and that “iPhone has fallen behind.” While, he says, perception is not equivalent to reality, it has actual impact … such as Apple’s stock price, and such as Apple’s reputation.

Fortunately, he’s not suggesting an innovation quick-fix with the application of some paint and lipstick.

But he is saying that, as iPod’s biggest years came after the iconic “MP3 player” bifurcated again and again into multiple models and, yes, multiple colors, iPhone’s biggest years are ahead of it too. If Apple learns the lesson of the past.

That means iPhone mini, a cheaper but not cheap iPhone, iPhone 5S, a new iPhone in multiple colors, and iPhone maxi, a bigger iPhone to compete with the mounting fablet fascination, especially in Asia.

Segall’s not saying he has access to any privileged insider information, although it’s not unlike Apple to quietly leak information to trusted sources. But what he’s saying makes sense:

The smartphone audience has grown exponentially in recent years. The simple reality is that different people have different needs. Creating a family of devices would widen iPhone’s appeal as it squelches the perception that Apple is somehow losing touch.

That would seem to be common sense. And it’s the kind of simple innovation that requires no huge degree of amazing new whizzbang technology, but satisfies actual customer desires — or needs, as you wish — in a very easy way.

So easy, in fact, one is left wondering why Apple hasn’t done it already.

Image credits: Apple, James Pikover/VentureBeat

The Dumasoft application, released by the State Duma’s executive office to streamline the work of the deputies, can only be downloaded to iPhones or iPads, with no Android version available for mobile device users. A few deputies wrote a request addressed to Speaker Sergei Naryshkin, asking him to deal with this inconvenience.

“Dumasoft does not support the Android operating system, while not all deputies are willing to buy iPhones and iPads,” a co-author of the request told Izvestia.

The new software was deployed in the fall of 2012, after Naryshkin had personally insisted that deputies needed to have the ability to work anywhere an Internet connection was available. The Dumasoft application allows deputies to view documents and correspondence, alter bills and comment on their colleagues’ proposals.

Yury Shuvalov, deputy head of the State Duma executive office, confirmed that the administration of the lower chamber was fully aware of the problem and looking for ways to solve it.

“We will certainly issue apps for other operating systems. I think this could be expected before the end of the year,” said Shuvalov.

According to Nikita Kislitsin, editor-in-chief of Hacker magazine, Apple devices are traditionally the choice of the well-to-do. Thus, it is no surprise that the State Duma executive office did not expect any opposition to the gadgets from the Duma deputies, whose average annual income hovers around 2 million rubles ($63,100) per person.

In addition, the State Duma thought that it could go easy on software developers in this case, an expert in Internet technologies, Ilya Knopov, added.

“Apple has just one platform for which new apps can be developed,” said Knopov. “It’s more complicated in the case of Android, so the development would cost more.”

photo credit: jurvetson via photopin cc

This article from Russian daily Izvestia was first published in English in Russia Beyond The Headlines and East-West Digital News.

The confidential internal memo is now public: Video game industry juggernaut Electronic Arts is laying off as many as 1,000 employees. As an EA alumnus and friend of some of the affected employees, this truly saddens me. Even in the fevered pitch of competition, no one likes to see good teams and good people affected by market change.

But you can’t stop evolution. Console game companies are standing on the same ground as others that were disrupted before them. Borders was shuttered by Amazon, Blockbuster buried by Netflix, and Encyclopedia Britannica withered by Wikipedia. When consumers get something faster and cheaper via the Internet, disruption occurs, and the companies that don’t evolve quickly inevitably decline. The cycle of change is rapid and relentless. This is industry Darwinism at work.

Free-to-play game companies have been riding this wave of disruption. It’s a wave analysts believe will generate more than $20 billion in 2015, or almost one-third of worldwide gaming revenue. There is no question that free-to-play games are here to stay.

When I started working in the free-to-play gaming industry in 2007, many of my video game colleagues wondered if the business model had legs. Why would core gamers ever pay for content via micro transactions? How could a game company possibly afford to give their games away for free? These questions may sound out-of-date today, but they were certainly reasonable back when traditional PC video games accounted for $50 billion, or more than 98 percent of the world’s annual gaming revenue.

Today, games on mobile devices make up about half that revenue alone. No one anticipated this even six years ago. When Steve Jobs unveiled the iPhone in 2007, he proudly showed off what you could do with it: Listen to music. Check voice mail. Search the Web. Find directions. Get a stock quote. But there was one thing Jobs did not tout: Play games. Games literally went unmentioned when Jobs introduced the first iPhone. That sort of omission would be unthinkable today.

While no one, not even Steve Jobs, might have called it right six years ago, gaming has inexorably become central to the mobile phone industry. For proof, take a look at the number of games versus other apps on the top grossing charts, where 83 of the top 100 grossing iOS apps are games.

My boss, Kabam co-founder and CEO Kevin Chou, says games represent the “Triple Crown” for mobile devices, with the unique combination of reach, engagement and monetization. As Kevin wrote in Wired, reach is the percentage of people who own a mobile device that engage in an activity such as playing games, checking email, or shopping, and gaming’s reach is 60 percent of all tablet owners. Engagement is the percent of time spent on the device, and 67 percent of all time spent on tablets is spent playing games. Monetization involves capturing the share of wallet, and gaming wins hands-down. More than 80 percent of all revenue generated last year by mobile applications — a $10 billion software industry — was from games, according to Flurry Analytics.

And it’s only going up. The universe of mobile users grows exponentially while the console universe is flat. For example, according to the investment banking firm Jefferies, the installed base for consoles was 240 million in 2012. Compare that with the installed base of 450 million for iPhones. That doesn’t include Android or tablets.

Mobile alone is reason enough for the console industry to go into rapid decline. But there’s more.

New generations of video game consoles come out only every four to six years. Compare that with the timeline for tablets. New tablets and smartphones come out every year with ever-increasing computing power, functionality, and fidelity. It’s only a matter of time before the majority of former console developers focus on free-to-play, leaving the console ecosystem in further disarray.

Consumers, of course, have the final say. They’re voting with not only their pocketbooks but their bags as well. Free-to-play has taught consumers they don’t need to shell out $60 for a game before they even try it.

Free-to-play has changed how we pay for our entertainment. Mobile devices have changed how we play our games. Together, they’re an unbeatable foe for the venerable console games industry.

As hard as it is to watch industry disruption impact so many good people at EA, there is good that can come from this. EA rose to the top of the gaming industry by hiring and training many of the industry’s most talented contributors. Some of these good folks will soon be in the job market for reasons very much outside their control. Now they have the opportunity to embrace change faster than they would have had at EA. I hope many will consider a future in free-to-play gaming.

Andrew Sheppard is president of Kabam Studios, a leading player in the western world for free-to-play core games.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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There’s no rule that says smartphones have to be boring rectangular-ish blocks. And Apple’s latest patent application filings show the company may be looking at some new shapes in its future phones.

The company filed two patents (also here) that show a new battery that’s curved and features an irregular shape. Presumably, Apple is experimenting with the look for a future line of iPhones or iPod Touch devices. And this wouldn’t exactly be the first time the concept has been mentioned. Past rumors indicate Apple was interested in producing a curvier iPhone, which you can see above in the design mockup commissioned by Josh Topolsky back in 2011.

As for the patent filings, both describe different processes for creating a battery with a curved cell that would fit snugly into a more shapely, curved device. The battery would essentially be top-heavy to facilitate the non-rectangular, thin device.

Here’s a description from the filing:

“In some embodiments, the curve is formed to facilitate efficient use of space inside a portable electronic device. For example, the curve may be formed at one or more ends of the battery cell to allow the battery cell to occupy a curved and/or rounded space within the enclosure of a laptop computer, tablet computer, mobile phone, personal digital assistant (PDA), digital camera, portable media player, and/or other type of battery-powered electronic device.”

But regardless of Apple’s tinkering, we’re unlikely to see this type of battery implemented for the iPhone 6 (or whatever the company decides to call its next iPhone).

Via AppleInsider

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July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Starting today, iPhone and iPad owners can finally get their hands on Google Now.

Think of it like an evolved form of Apple’s Siri personal assistant baked within Google’s iOS search app. In addition to receiving voice commands (a feature that’s already been present on on Google’s search app for some time), Google Now also presents useful information without your prompting.

It could, for example, tell you an estimated commute time to your office or the status of your package deliveries.

In my brief testing with Google Now on my iPhone 5 and iPad Mini, I found it to be just as easy to use as on Android. Google Now’s Cards (little boxes that it uses to deliver different types of information) are all located on the bottom of Google’s search app. Typically, the software presents the most relevant cards to you — so since I tested it in the morning, it displayed cards for my work commute and weather.

You can tap a card for more information (typically retrieved through a Google search), or swipe to remove them. At first glance, the biggest difference between the iOS and Android versions of Google Now is the available screen space. It’s a bit different juggling Google Now’s cards on the iPhone 5′s 4-inch screen, as most Android phones are approaching 5-inch screens. I also noticed that the Package Card doesn’t show any images for shipments on iOS — but that’s a fairly minor complaint.

Check out my hands-on video below:

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Google Now is officially invading Siri’s home turf.

Google announced today that an updated version of its iOS search app brings Google Now to the iPhone and iPad. Just like on Android, it’s focused entirely on bubbling up information that’s directly relevant — like warning you if there’s traffic before your next appointment, or if it’s going to rain later in the day.

Unfortunately, iOS users won’t get access to all of the Google Now Cards (each of which offer different functionalities). According to a handy comparison chart provided by Google, the iOS version of Google Now won’t have the following cards: Boarding Pass, Activity summary, Events, Zillow, Fandango, and Nearby events.

On Android, Google Now has access to a lot more information, since it’s a core part of the operating system. Google will likely never be able to give the iOS version of Google Now all of the features its Android sibling has — but Google has managed to bring over most of the core functionality.

It also looks like Google is gearing up to bring Google Now to Chrome on your desktop, according to some recently discovered testing code.

I haven’t had a chance to try out the app yet (look for a hands-on later today), but it’s pretty obvious Google is turning its iOS search apps into a mini-ecosystem. It’s like the reverse of what Facebook Home is doing on Android. With Google Now, you’ll have even less of a reason to leave the Google search app on your iPhone. It doesn’t need specific commands like Siri to retrieve useful information, which could make it an even better digital personal assistant.

As the Cult of Mac reports, Apple’s messaging services deletes the last word of a few key phrases in iPhone-to-iPhone texts. One is “The best prize is a surprise,” and another is “I could be the next Obama.” The only catch?

You have to leave a trailing space after the phrase.

Mac users have noticed that sending certain messages from the Messages app on a Mac to an iPhone causes similar issues, with the cryptic message “man, why are you here?  Two are in testing places” arriving without the trailing “places.” This seams to be a similar type of issue, but though I could make the iPhone glitches work, so to speak, I could not personally confirm Mac-to-iPhone problem.

One Mac user speculated in Apple’s support forums that the problem may be related to word wrapping:

David, I agree with your intuition that it has to do with how Messages wraps words and perhaps bubble size.  I think that’s why adding/deleting words or changing several words can change whether the bug occurs.

There is probably some very simple and silly explanation for this, and I’m asking Apple about it right now. It’s pretty clear, however, that there is not some kind of hidden, devious preprocessing taking place based on the content of messages which affects how they’re delivered: iPad shows the entire messages as they were sent.

Image credit: John Koetsier; Hat tip: The Verge

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

In a global smartphone market that Android has been expanding at a breakneck pace, a bright spot for Apple has been increasing market share in the lucrative U.S. domestic market. A new report from the Yankee Group says that’s going to continue, and that Apple is winning the slow way, via customer loyalty.

The difference, according to analyst Carl Howe, is Apple’s ecosystem.

“Apple’s “black hole” ecosystem captures subscribers who never leave, while Android smartphones are losing one out of every six customers to other manufacturers,” Howe wrote when publishing the study.

That’s iTunes, the App Store, iBooks, iCloud, and the entire physical ecosystem of iPhone-compatible speakers, peripherals, and even cars, which sync and integrate an iPhone with users’ devices.

It seems difficult to believe, given the avalanche of sales Android has captured — led by Samsung. But Kantar Worldpanel data from January supports the Yankee Group’s thesis: Apple briefly captured a majority of U.S. smartphone market share in late 2012. And earlier this month, ComScore said that Apple is growing overall iPhone sales and iOS market share, while Android share is dropping.

Interestingly, Tim Cook said in Apple’s quarterly earnings call earlier this week that a lot of that was due to Apple’ old phones.

“Market share is important, and unit share is important,” he said, adding that the company had reduced prices on the previous-generation iPhone 4 in order to make the phone more affordable to a wider range of people.

The iOS ecosystem is one reason, the Yankee Group report says, that 91 percent of iPhone users plan to buy another iPhone with their next phone purchase, compared to a still-high but clearly lower 76 percent of Android users who plan to switch away from the Android platform. And, in fact, 18 percent of Android owners plan to switch to Apple’s phones.

What that adds up to is the “black hole ecosystem,” as Howe puts it, that grows Apple’s market share slowly but surely.

The question for Apple is whether it can translate that stateside advantage into an international one, where it’s having a much more difficult time capturing huge swaths of market share.

photo credit: NASA Goddard Photo and Video via photopin cc

But it looks like a new iPhone, a cheaper iPhone, a new tablet, an iWatch, or any other new products will have to wait.

“Our teams are hard at work on some amazing new hardware, software and services we can’t wait to introduce this fall and throughout 2014,” Cook said.

That’s basically as close as Apple will come to saying: no new products for you. And that is not what investors want to hear. The lack of new product introductions — not a single new product in this past quarter — is partly what hurt Apple in the stock market, as investors want to see what is new and what is coming.

When an analyst later on the call asked for more details, Cook had this to say: ”I don’t want to be more specific. We have some really great stuff coming in the fall and all across 2014.”

Image credit: Dean Takahashi

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Analysts expect earnings of $10.12 a share on revenue of $42.6 billion, which sounds great for almost any company on the planet but Apple, it seems. Apple’s own guidance was a rather more modest $9.23 to $10.23 per share on earnings of $41 to $43 billion.

The question is whether those results — or better — will push Apple’s brutalized stock up … or down.

I talked to Pace University’s Darren Hayes about Apple, technology, and the stock market. Hayes is a professor at Pace’s Seidenberg School of Computer Science and Information Systems.

VentureBeat: What has driven Apple stock down over the past six months?

Hayes: iPhone 5 sales have failed to impress. There’s been a lack of innovation over the past few years to come up with the next great device, and consumers have failed to see any differentiation. Samsung has captured the market.

VentureBeat: Isn’t the stock undervalued?

Hayes: It’s possible. The short sellers have had a field day, but once the stock starts to rebound, they’ll have to cover.

With the amount of short selling that has been going on, it has been oversold. So with any kind of bump, the short sellers will have to cover, and there’s likely to be some rebound.

Short sellers are happy when the stock is going down … they may even increase their short position. But if there’s a couple of days of increase, short sellers may need to cash in on their profits and buy it back, so instead of it moving $2 it may move $12.

VentureBeat: So if Apple reports good news, the stock could jump significantly?

Hayes: It’s possible it could bump up $50 or $75.

VentureBeat: What does Apple need to do to make that happen?

Hayes: The company needs to look at business alliances. We’ve all heard about BlackBerry’s difficulties maintaining market share. Apple has failed to grasp that opportunity … failed to capture a tremendous business opportunity.

For example, even with servers — Apple had tremendous servers, but never looked to expand their market. They need to talk more about how they’re going expand their reach in corporate markets.

Google and Android have had a very effective strategy — it’s easy for developers to develop for Android, it’s open source, integrated in the auto industry, into appliances — and its adoption rate is far great than Apple’s.

In terms of of security, Apple does have better security, but businesses are going with the cheaper option.

VentureBeat: What is Apple’s biggest challenge?

Hayes: Apple has the market share in terms of tablets and they’ve been able to compete in computers, but what people are really interested in is the smartphone market. Smartphones are the most important thing people are looking at right now. For example, look at HP and Dell — it’s clear people are buying smart devices and not investing in traditional computers.

There’s about one billion smartphones in use, and that’s likely to double by 2014 according to Gartner.

The problem is that the iPhone has really failed to impress – demand has been very soft for iPhone 5.

VentureBeat: What about a cheaper iPhone?

Hayes: That’s definitely a good move, but what’s really important is the incentives they offer to carriers. Apple has already incensed a lot of carriers by offering very, very small incentives, so many carriers feel they’ve been squeezed by Apple and now would rather promote Samsung and Android.

So it’s not just about improved features and better pricing … it’s about carriers.

VentureBeat: Can Apple ever get back to $700 stock price territory?

Hayes: They need to get more hype about their products. And they need to think about the next big device that would really create some interest and buzz. Apple TV is probably not it … there’s not many details about it — they need to come out with something new.

We’ve been spoiled for years by Steve Jobs unveiling some new device year after year.

Image credit: Marco aka MenfiS/Flickr

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Chinese “app store” 7659.com is using Apple’s own bulk enterprise licensing technology to distributed pirated apps to Chinese iPhone and iPad users, completely free.

The site, which is only available within China unless you spoof your location via a proxy server, offers a wide selection of iPhone and iPad apps. In just a few moments, I found Final Fantasy V, a $16 iPad game; Badland, a newish $4 app; Le Vamp, a $2 game for iPhone and iPad, and many others.

Apple’s enterprise app deployment technology enables app distribution to an “unlimited number of iOS devices.” Essentially, enterprise app deployment enables corporations to function as their own app distributor, after getting a developer provisioning profile from Apple. That’s turned out to be a good thing for pirates in China, as over five million Chinese iPhone owners are currently using the site to find and install apps. And it seems to be a good thing for iPhone users, who are now getting free apps.

It is not, however, such a good thing for Apple or for the developers who expect to be paid for those apps.

Thanks to this ingenious enterprise strategy, iPhone owners in China do not have to jailbreak their phones in order to install pirated apps — as Taiwanese blog MicGadget puts it, essentially the same app is being distributed, again and again, with the same license ID. That’s exactly how Apple designed in-house enterprise apps to work, although it’s not likely they envisioned the technology being used this way. Jailbreaking, of course, comes with the increased risks of bricking your iPhone, boosting vulnerability to malware, and blocking updatability to new iOS software.

Source: John Koetsier

Final Fantasy V, a $16 game, for free.

The site is provided by a front company called Kuaiyong, which appears to be owned by Beijing YouRanTianDi Technology Co Ltd. Though English-speaking users cannot connect with and use the service, Kuaiyong provides a short explanation of what it does for foreign Apple users — along with a justification for providing the pirate app store: the apparent difficulty of Apple’s iTunes:

Statistics have shown that a significant amount of Apple users are Chinese based. However, the fact is that in China, a large number of Apple users are not very familiar with the iTunes system and how to effectively manage it.

In order for Chinese Apple fans to download applications securely, Kuaiyong developed its own method of giving users access to thousands of free apps without having to jailbreak their devices. Kuaiyong offers detailed descriptions of apps, free app download trial, IOS device management and visual and audio file backup system. IOS system backup and recovery features will also be released in the very near future.

Our goal has always been about bringing Chinese Apple users with quick, convenient and pleasant IOS experience. Since the introduce of Kuaiyong, the proportion of jailbreak in China has declined dramatically from 60% to around 30%. Kuaiyong will hold on to this goal in the future and we would like to see more support for Apple as well as Kuaiyong.

In other words, the company is clearly providing a valuable public service — and one that Apple should be thankful for.

That valuable public service, of course, is essentially like Amazon pulling a Kindle on Google: replacing the approved Apple iOS app store with a native Chinese service that would enable Chinese consumers to own and enjoy Apple hardware while cutting the cord on Apple’s services, app store, iCloud backup and recovery, and more. Essentially, everything that Apple uses to tie its customers into its services and to monetize them beyond the initial purchase moment.

It’s difficult to see how Apple can remain unaware of what’s going on here. Although apps are being installed — and presumably updated — via Kuaiyong, iPhones have historically phoned home to Apple for many things, including iCloud, location services (which led to privacy complaints and legal action), and, at least in early versions, the capability to see what apps are on a device and remotely kill them.

In all those communications, one would assume that Apple has built in provisions that it can check what enterprise provisioning profile exists on a device, and perhaps more. From there, it should be a piece of cake to find a stunning massive shadow “corporation” in China with five million employees, mysteriously scattered all over the country.

That’s something that Kuaiyong is at some pains for avoid, for obvious reasons. And if you visit 7659.com from outside China, you’ll see a note what seems to be a warning to avoid having your iPhone communicate with Apple in any way:

It is recommended that [you] do not use Apple ID or AppStore to reduce the frequency of repair.

I’ve asked Apple for comment multiple times but have not yet heard back.

One thing is fairly certain however: Apple will be looking for ways, or utilizing methods already available to it, to neutralize this threat and shut down this rogue app store. There’s a challenge in that, however: It’s in China. And China has not been a very friendly place for Apple lately, as state-sponsored media have had Apple in their sights, and Apple CEO Tim Cook was forced to apologize over the company’s warranty and support policies in a country where, according to a source I talked to, few companies accept returns of any products for any reason.

So the situation may require for some extreme delicacy on Apple’s part … and the solution cannot involve bricking five million Chinese consumers’ iPhones. That, more than anything else, would be corporate suicide in China.

More examples of pirated apps here:

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

The booming mobile advertising market grew from $1.4 billion in 2011 to $4.1 billion in 2012, and it’s projected to hit a massive $7.3 billion in 2013.

And almost all of it is spent on Apple’s ecosystem.

There’s a reason that even though Android has almost caught up to iOS in downloads, it’s still way behind in monetization. Partially, it’s because iTunes has a long and successful history of commercial transactions, so people feel comfortable clicking and shopping and buying on iOS. Partially, it’s because Apple was the leader in mobile for so long.

But it’s also because advertisers are simply getting fed up with an Android ecosystem that doesn’t convert very well.

Source: MoPub

Mobile ad spend ballooned in March 2013

“There have been whispers and comments around Google’s Play app store, and some of those concerns were supported when they announced a redesign,” Paul Gelb, head of strategy for MoPub, the world’s largest mobile ad exchange says. “If you have people click on your ad and drive them to the app store and that becomes a breakage point … that will reduce the value of the ad that you want to buy.”

Which is a nice way of saying that ads for app installs aren’t always working, even when the mobile user taps on your ad.

Most advertisers and ad exchange partners don’t want to talk on the record, of course. But off the record, they’ll say that Google Play is just not at the quality level of the iOS app ecosystem. There’s too much crap, too much malware, there’s not the level of quality that iOS has … and there is a missing mass of people on the platform who have confirmed credit card accounts and are, frankly, in the demographic who are willing and able to buy.

That may sound sacrilegious to Android enthusiasts, many of whom are tech-savvy and higher-income, but it’s borne out by the numbers.

Not only are 75 cents out of every mobile ad dollar spent on iOS, but iPhone, iPad, and yes, even iPod touch ad rates are much higher. While Android smartphones draw $.50 CPMs (cost per thousand impressions), iPhones pull in $.65 to $.88 CPMs, iPod Touches do $.74 to $.98, and iPads do between $.82 and $1.16.

Source: MoPub

Mobile ad CPMs for the first quarter of 2013

So while tablets are the highest-revenue mobile ad platforms, Android tablets only account for a skinny single percent of all mobile ad sales.

That’s entirely due to the basic question underlying ad pricing: Do they work? Click-through rates on Android devices are about half as good as those on iOS devices, with under one percent on Android tablets and just over a percent on Android smartphones. Meanwhile, iOS devices such as iPads pull in 2-2.5 percent click-through rates, and iPhone pulls in 1.4-1.7 percent.

Source: MoPub

Click-through rates for mobile ads – first quarter of 2013

All of that adds up to an ad-share spend in which iPad almost eclipses the entire Android ecosystem single-handledly, iPod Touch by itself does about a third to a quarter as much as all of Android, and iPhone owns about double the share of all Android smartphones and tablets combined.

Which brings us to the 75 percent iOS ad share:

Source: MoPub

Mobile ad market share, Android vs iOS devices

Does this matter?

On a certain level, Android users might not really care — after all, who likes advertising? But advertising is increasingly driving mobile monetization strategies for app developers, who must therefore care. And that means the apps and experiences Android users will eventually get from their platform suffer from the Android monetization gap.

Which doesn’t mean the gap will exist forever. MoPub’s Gelb isolated two key factors that need to change for that gap to disappear:

“I think Android tablets need to hit. It’s incredibly important — the larger screen just offers more ad potential,” he told me. “Also, there needs to be a bit more certainty and success around identifying high-value users who are known to have credit cards and disposable income.”

The question, of course, is when that will happen.

photo credit: photo credit: swishphotos via photopin cc

The phone is both taller and wider than Apple’s older iPhone 4, at 120mm high and 65mm wide, or 4.7″ high by 2.55″ wide. That’s both shorter and wider than Apple’s current iPhone 5, which is 4.87 inches high, and 2.31 inches wide. For comparison, the current Android smartphone sales leader, the Samsung Galaxy S III, is 5.38″ by 2.78″, and the next-generation Samsung S IV is just a shade larger at 5.51″ by 2.82″.

A cheaper iPhone has long been rumored by the analysts, even though Apple has done its best to dispel the rumors — or at least the “cheap” part of them. But Topeka Capital Markets analyst Brian White said a week ago that Apple’s cheaper phone would be announced in June and ship in July. White’s pricing analysis suggests the budget iPhone will sell for between $350 and $400.

The new rumor that Tactus has published confirms the plastic shell but shows a flat back similar to the iPhone 4 and 5, not the curved plastic back of the older iPhone 3 and 3GS. It will allegedly have a five megapixel camera, and Apple’s A5 processor, similar to the iPad mini.

And, as rumored a number of weeks ago, it looks like the budget iPhone will ship in multiple colors: black, white, blue, red, and yellow. I’m sure Apple’s names for the colors will be a little more sophisticated.

Rumors are rumors, of course, so that legendary grain of salt is certainly indicated. But where there’s enough smoke, surely there’s fire as well.

And those who have long awaited an iPhone in something other than Apple’s iconic white or black could be very, very happy.

Photo credit: Tactus

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

There’s no more waiting for the hot iOS e-mail app Mailbox.

Mailbox issued version 1.2 of its app today, which dumps its controversial reservation system while also adding some nifty new features.  Notably, it’s Mailbox’s first major update since it was acquired by Dropbox.

“After 10 weeks of around-the-clock hard work, our engineering team has scaled the Mailbox service to deliver over 100 million messages per day (and growing),” the company wrote on its blog today. “We believe we can now confidently handle new users as they sign up, so we’ve pulled down the reservation system.”

Mailbox’s app offers an elegant interface for managing your Gmail account, but what makes it truly interesting is its capability to help you manage mail by quickly swiping or deleting messages as well as delaying messages. The update also brings faster swiping performance, some interface enhancements, and time-sensitive snooze messages.

Mailbox CEO Gentry Underwood told us the company implemented the reservation system to avoid having a complete meltdown on launch day:

We’ve designed the system to be as redundant and fault-tolerant as possible and have done as much load testing ahead of time as we could conceive of doing without real users. The reason we didn’t just ‘switch it on,’ though, is because we don’t know what we don’t know. Even the most advanced services run into problems when they initially scale, and we wanted to maximize the chance that we could keep our service up.

While the wait list made sense at an infrastructure level, Mailbox was also criticized for creating a false sense of scarcity to hype up its app. Also, those lucky enough to snag their reservation just wouldn’t shut up about it. Now that it’s open to everyone, look out for early adopters jumping ship.

After waiting several weeks for my Mailbox app, I ended up giving up on it within 10 minutes. I appreciated the design and interface tweaks, but I’ve become a bit too reliant on Gmail’s Priority Inbox, which Mailbox surprisingly doesn’t support. At this point, Gmail’s iPhone app is still the best e-mail experience on Apple’s platform (though it could use the offline capabilities of its Android sibling).

This sponsored post is produced by StackSocial.

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Topeka Capital Markets analyst Brian White issued a research note today indicating that a cheaper ‘iPhone Mini’ would be announced in June along with the next version of the iPhone 5, the 5S, and shipped in July.

The ‘iPhone Mini’ is not actually expected to be smaller than an iPhone 5 — except in price — but will have a curved back casing constructed with colored plastic, White says, and should be priced somewhere between $350 and $400, as opposed to iPhone 5′s $700 to $900 price tag. Naturally, there will be deals with carriers to get the phones for “free” with wireless plans.

That price point, White says, will be cheap enough for consumers, but also expensive enough for investors:

We believe this price point will provide relief for those investors concerned that Apple would be sacrificing too much margin or brand to serve the lower price band of the smartphone market.

Part of White’s information is in strong contrast to a report from KGI Securities’ Ming-Chi Kuo yesterday, which said that Apple’s iPhone 5, the new cheap iPhone, and the updated iPad Mini would all be delayed until perhaps October/November. This kind of discrepancy is not uncommon as analysts fish for details with industry insiders who may have only small pieces of the full picture. Apple attempts to keep a firm lid on any shipping timetable information or rumors. White is basing his report today on new information from sources in the Chinese consumer electronics world.

The new report also confirms that, in keeping with Apple’s long-standing practice of unveiling similar update models, the iPhone 5S will look almost identical to the iPhone 5, but will have a slightly larger camera, plus fingerprint identification technology for security.

Finally, White can’t confirm any larger-screen iPhone at the moment, although he said that such a development is “inevitable” and, in fact, absolutely necessary for Apple’s success in the size-conscious Asian market:

… we believe it is inevitable that Apple will need a 5-inch to 5.5-inch iPhone or “iPhad” if the Company wants to remain competitive in China and elsewhere in Asia. For example, during our meeting with a leading consumer electronics vendor in Asia, the Company discussed new smartphone launches with screen sizes that are well over 5-inches and meant to be flagship products in this category. This larger screen phenomenon has been a very clear trend during our Asia trip over the past two weeks and one that we hope Apple eventually embraces.

photo credit: Incase. via photopin cc

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

If you’ve ever had an issue with Apple refusing to honor your iPhone or iPod Touch warranty, you could soon have some settlement dollars coming your way.

Apple has agreed to pay $53 million to settle a class action lawsuit in San Francisco, Wired reports.

At issue was Apple’s refusal to cover devices under warranty — either the standard one-year coverage or extended two-year plan — that it believed were water damaged. Warranties for Apple and many other device makers typically cover standard usage malfunctions like cracked screens, but not water damage.

The company relied on white indicator tapes inside of its devices that would turn pink or red upon water contact. But according to 3M, the manufacturer of that indicator tape, humidity can also cause it to turn pink. Now that it’s no longer certain that the tape shows water damage, Apple had no choice but to offer the settlement.

The settlement applies to owners of Apple’s first iPhone up to its 3GS model, as well as the second and third-gen iPod Touch. According to Wired, settlement payouts will be around $200, but could be reduced or doubled depending on how many people make claims.

Photo: Hakan Dahlstrom/Flickr

Note, that’s potential bad news.

KGI Securities analyst Ming-Chi Kuo says that Apple’s iPhone 5S, an as-yet-unannounced low-cost iPhone, and the new version of the iPad mini are all going to be delayed, due to production difficulties.

Originally, he targeted a summer launch for all three products; now, based on manufacturing challenges with integrating a potential new fingerprint sensor in the iPhone 5S, color coatings for the low-cost iPhone, and difficulties fitting a high-res retina display into the second-generation iPad mini, Kuo says that launch dates could be pushed back as far as October/November:

Currently, market consensus for shipments of iPhone 5S, low-cost iPhone and iPad mini 2 is July, July, and August, respectively. But in light of publicly available information and our knowledge of technological trends, we now think all three products will begin shipments later than our previous expectation and market consensus.

This is not what Apple needs right now.

Apple’s domestic iPhone sales are up 11 percent this past quarter, according to one ComScore report, but the international mobile market, already dominated by Android, has been clamoring for a cheaper iPhone. And with Apple’s current stock price woes, anything that even smells of new product delays is dangerous.

If Kuo is correct reading the supplier market and the delays are real, he projects that Apple will see only single-digit year-over-year growth in iPad and iPhone shipments in the coming third quarter, far below analysts’ projections.

Apple, however, has never released a product roadmap claiming the products will be released at any given time, and a summer release would mean that Apple would be shipping the iPhone 5S much quicker than other follow-on models. For example, the 4S lagged the iPhone 4 by 16 months, and the 3GS followed the 3 after about a year. A summer iPhone 5S launch could make a gap of just eight months between the 5 and 5S ship dates.

We’ll know more about what might actually be happening on April 23 when Apple releases its second quarter numbers and issues guidance for the third quarter.

Image credit: ShutterStock/Delayed

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Hon Hai Precision Industry, better known as Foxconn, reported an almost 20 percent drop in earnings in the past quarter. The problem, apparently, is lower than expected iPhone sales.

What does that mean for Apple earnings, coming up in two weeks?

Sixty to 70 percent of Foxconn’s revenue is dependent on assembling Apple iPhones and iPads, Reuters says, and a drop in demand resulted in sales dipping from $33 billion in the fourth quarter of 2012 to $27 billion in the first quarter of 2013.

That’s clearly not great news for Apple, which will be reporting quarterly earnings on April 23.

But it’s also a little surprising, given that according to ComScore numbers released just recently, Apple’s Apple’s U.S. iPhone sales are up 11 percent this past quarter. Which could mean that the international mobile market, already dominated by Android, has increasingly pivoted away from Apple.

Credit Suisse analyst Kulbinder Garcha said recently that competition is heating up and that iPhone sales will be only 38 million units. While that’s up from Q2 2012 numbers of 35.1 million, it’s a massive drop from Q1 2013′s 47.8 million. And DisplaySearch raised an alarm in February that Apple’s iPad sales are shifting massively to the cheaper iPad Mini — which could be disastrous for both Apple’s revenue and margin numbers.

Foxconn’s drop, however, could also mean that Apple is diversifying its supplier list. The company does have 748 suppliers, mostly in China.

The Wall Street consensus projections for Apple’s Q2 are in the $42.5 billion range. Even if Apple hits that, however, it would signal a slowing of the company’s growth rate. And even hitting it would likely be a disappointment for an increasingly unsatisfiable Wall Street, which hit Apple’s stock hard even for its last quarter, in which Apple reported a monster $54.5 billion in revenue and $13.1 billion in profit.

Apple’s earnings in two weeks will tell the tale.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Apple already offers Yahoo weather and finance data pre-loaded on the iPhone, but Yahoo and Apple are reportedly in talks to get more cozy, according to the Wall Street Journal.

Yahoo CEO Marissa Mayer came on to the job in July 2012 with the hope that she could turn the stagnant tech giant around. She had admitted that because Yahoo doesn’t make mobile hardware or a mobile OS, it would need to work on building powerful partnerships. Apple likely considers Yahoo an ideal partner for data because it doesn’t want to rely on Google, which it more directly competes with when it comes to mobile.

The new, deeper partnership could include providing more data to Apple’s voice assistant Siri, which already gets data for sports statistics. Apple also could pre-load content from Yahoo, including Yahoo News stories.

That said, it’s unlikely that Apple will tap Yahoo for search as a replacement for Google. Yahoo’s search results are actually provided by Microsoft’s Bing, due to a 10-year deal that put in place in 2009. Apple and Microsoft also compete on many fronts, so we wouldn’t expect Apple to rely on them in any way.

While the deal isn’t imminent, it does reveal how serious Mayer is about getting Yahoo services and data into more people’s hands. Mayer recently said Yahoo had 200 million monthly visitors to its services through mobile devices. No doubt she’d like that number to grow.

Marissa Mayer photo via Jolie O’Dell/VentureBeat

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Imagine all the things you’ve ever wanted iOS to do.

Quick settings from the lock screen, widgets that let you make changes in running apps without opening them, true multitasking in which you can see and flip through all open apps, multiple desktops, the ability to download files and store them locally in a user-accessible location, and much more.

Now, make an awesome video showcasing all those. That’s just what Federico Bianco did:

What’s certain about iOS 7 is that we’re going to see something new and updated under the leadership of Jony Ive. He’s not a fan of the kind of skeuomorphic design that Scott Forstall favored – design that connects the new to the old with decorative but unnecessary elements. So we’re pretty likely to see something streamlined, simple, and elegant.

The question is: Will Ive edit iOS while leaving the core of the mobile operating system’s design ethic intact, or will he massively revamp it and come with a new overall concept?

And whether it will contain these or similar elements, only those in Apple know.

Image credit: Federico Bianco/Flickr; Hat tip: Cult of Mac