Vista's secret sauce

Curse us, beat us, make us write bad checks….we’re suckers for a good headline. And when the article has some valuable insights about Gates the Great, Steve “Micro-Cojones” Ballmer and their band of merry men, all the better.

It's easy to forget what a big deal this is for Microsoft. Deep in the guts of Vista are some pieces of the technology that will play a key part in its longer-term battle against Google et al. They include the drably-named Windows Presentation Foundation (once known by the codename Avalon, and the first overhaul of the Windows graphics technology in 15 years) and Windows Communication Foundation (the subsystem formerly known as Indigo, which lets applications "talk" to each other when they are running on different machines.)

Why does this matter? Well, through the new APIs (application programming interfaces) to these technologies, Microsoft is giving developers the chance to build applications that run smoothly, and look great, even when they are running over a network and working on many different kinds of devices. Remember, Microsoft is first and foremost a platform company, and these are important building-blocks of a Web-based computing platform that extends well beyond the PC. They are showing up first in Vista, but the same building blocks will be embedded in the Windows Longhorn server software when it comes out later this year, and in future Microsoft services over the internet.

Microsoft's bet is that the sort of "computing in the cloud" represented by Google will always be an incomplete picture. Only the company that spans PCs and other "client" devices, servers and services (ie, Microsoft) can stitch it all together. When it comes to the best way to meet a particular need through software, or the best way to charge for it, there will be "many ways to mix and match," Charles Fitzgerald, Microsoft's general manager of platform strategies, tells me: it will depend on the task at hand and how the user wants to pay for it.

"The world will be a giant mash-up of software and services," says Fitzgerald.

We'll see. By finally launching Vista, though, Microsoft has at least been able to make what it considers an important move in the longer-term chess game against Google.

http://blogs.ft.com/techblog/

Vista's legal fine print: The Real Vista Revolution

Sorry people, this is a long, long, one. But we guarantee it’s worth plowing through. Honest.

Vista, the latest version of Microsoft's Windows operating system has made its debut. The early reviews have tended to damn the upgrade with faint praise, however, characterizing it as the best, most secure version of Windows, yet one that contains few, if any, revolutionary features. While those reviews have focused chiefly on Vista's new functionality, for the past few months the legal and technical communities have dug into Vista's "fine print." Those communities have raised red flags about Vista's legal terms and conditions as well as the technical limitations that have been incorporated into the software at the insistence of the motion picture industry.

The net effect of these concerns may constitute the real Vista revolution as they point to an unprecedented loss of consumer control over their own personal computers. In the name of shielding consumers from computer viruses and protecting copyright owners from potential infringement, Vista seemingly wrestles control of the "user experience" from the user.

Vista's legal fine print includes extensive provisions granting Microsoft the right to regularly check the legitimacy of the software and holds the prospect of deleting certain programs without the user's knowledge. During the installation process, users "activate" Vista by associating it with a particular computer or device and transmitting certain hardware information directly to Microsoft.

Even after installation, the legal agreement grants Microsoft the right to revalidate the software or to require users to reactivate it should they make changes to their computer components. In addition, it sets significant limits on the ability to copy or transfer the software, prohibiting anything more than a single backup copy and setting strict limits on transferring the software to different devices or users.

Vista also incorporates Windows Defender, an anti-virus program that actively scans computers for "spyware, adware, and other potentially unwanted software." The agreement does not define any of these terms, leaving it to Microsoft to determine what constitutes unwanted software.

Once operational, the agreement warns that Windows Defender will, by default, automatically remove software rated "high" or "severe," even though that may result in other software ceasing to work or mistakenly result in the removal of software that is not unwanted.

For greater certainty, the terms and conditions remove any doubt about who is in control by providing that "this agreement only gives you some rights to use the software. Microsoft reserves all other rights." For those users frustrated by the software's limitations, Microsoft cautions that "you may not work around any technical limitations in the software."

Those tech limitations have proven to be even more controversial than the legal ones.

Last December, Peter Guttman, a computer scientist at the University of Auckland in New Zealand released a paper called "A Cost Analysis of Windows Vista Content Protection." The paper pieced together the technical fine print behind Vista, unraveling numerous limitations in the new software seemingly installed at the direct request of Hollywood interests.

Guttman focused primarily on the restrictions associated with the ability to play back high-definition content from the next-generation DVDs such as Blu-Ray and HD-DVD (referred to as "premium content"). He noted that Vista intentionally degrades the picture quality of premium content when played on most computer monitors.

Guttman's research suggests that consumers will pay more for less with poorer picture quality yet higher costs since Microsoft needed to obtain licences from third parties in order to access the technology that protects premium content (those licence fees were presumably incorporated into Vista's price).

Moreover, he calculated that the technological controls would require considerable consumption of computing power with the system conducting 30 checks each second to ensure that there are no attacks on the security of the premium content.

http://www.thestar.com/Business/article/175801

Gates the Clueless: Internet to revolutionize TV in 5 years

The Internet is set to revolutionize television within five years, due to an explosion of online video content and the merging of PCs and TV sets, Microsoft chair Bill Gates said yesterday.

"I'm stunned how people aren't seeing that with TV, in five years from now, people will laugh at what we've had," he told business leaders and politicians at the World Economic Forum.

The rise of high-speed Internet and the popularity of video sites like Google Inc.'s YouTube has already led to a worldwide decline in the number hours spent by young people in front of a TV set.

In the years ahead, more and more viewers will hanker after the flexibility offered by online video and abandon conventional broadcast television, with its fixed program slots and advertisements that interrupt shows, Gates said.

"Certain things like elections or the Olympics really point out how TV is terrible. You have to wait for the guy to talk about the thing you care about or you miss the event and want to go back and see it," he said.

"Internet presentation of these things is vastly superior." Like Vista-bloatware 2.0 maybe?

http://today.reuters.co.uk/news/articlenews.aspx?type=technologyNews&storyID=2007-01-27T155927Z_01_L27910975_RTRIDST_0_TECH-DAVOS-INTERNET-TV-DC.XML

Where’s the VC money, honey?

In case you've been tossing and turning at night, unable to sleep, wondering where the money for the next tech generation is coming from, here’s Forbes “Midas” list of the biggest VC contributors on the planet

Rank Name Title* Company

1 Michael Moritz VC Sequoia Capital

2 L John Doerr VC Kleiner Perkins Caufield & Byers

3 Andreas von Bechtolsheim A Sun Microsystems

4 Ram Shriram A Sherpalo

5 David Cheriton A/P Stanford University

6 Ronald Conway A Angel Investors

7 Michael Grimes B Morgan Stanley

8 Lawrence Sonsini L Wilson, Sonsini, Goodrich & Rosati

9 Jay Hoag VC/BO Technology Crossover Ventures

10 Thomas Ng VC Granite Global Ventures

11 Jixun Foo VC Granite Global Ventures

12 Asad Jamal VC Eplanet Ventures

13 David Douglass VC Delphi Ventures

14 Henry Shaw VC AsiaVest Partners

15 Ta-Lin Hsu VC H&Q Asia Pacific

16 David Katsujin Chao VC DCM-Doll Capital Management

17 Bruce Evans VC Summit Partners

18 Timothy Draper VC Draper Fisher Jurvetson

19 Howard Hartenbaum VC Draper Richards

20 Mark Tluszcz VC Mangrove Capital Partners

21 G Felda Hardymon P/VC Bessemer Venture Partners

22 Robert Stavis VC Bessemer Venture Partners

23 Roelof Botha VC Sequoia Capital

24 Annette Campbell-White VC MedVenture Associates

25 Daniel Rimer VC Index Ventures

http://www.wallstreetfolly.com/

Sex, lies and flat panel TVs. What the hell has happened to HP?

In November of 2005, HP struck out at a group of former executives. It alleged in a lawsuit that the employees used HP's intellectual property, research and funds to create a flat panel TV start-up on the side. At the same time, the workers advanced HP's own flat panel TV business, although with less efficiency than their own endeavor, according to HP.

HP remained clueless about the whole affair until the "ring-leader's" wife served the company with a subpoena during her divorce proceedings. She wanted to know what HP knew about byd:sign Inc., and HP became very curious.

One fantastic lawsuit, however, deserves another. "Ring-leader" Karl Kamb returned fire last week with a lawsuit of his own. And what a lawsuit it is.

Kamb's complaint leads with the "I learned it by watching you" charge familiar (video) to anyone growing up during the 1980s.

In its lawsuit, HP knocked Kamb, the former VP of business and development in Japan, for violating the company's code of conduct and various non-dislcosure understandings.

So what? - Kamb asks, having watched HP implode in the public over the past few months as a result of its reporter and executive spy scandal. "HP expects each of its employees to exhibit 'loyalty' and 'a personal commitment' to the company," his lawsuit states. "HP, however, does not adhere to its own rules.

"For the past several months, HP has been embroiled in a scandal concerning its own ethical misdeeds. Headlines across the country have reported that HP engaged in improper attempts to obtain the telephone records of its own board members, its own employees and members of the media."

And then you get the kicker. "Karl Kamb is a victim of HP's use of pretexting."

Kamb's lawsuit claims that HP and its "co-conspirators" used information such as his social security number to weasel phone records out of T-Mobile and Sprint.

Even more titillating, the lawsuit portrays HP as instructing Kamb to pay for intelligence about Dell's entry into the printer market. Kamb contacted a Japanese consumer electronics whiz who obtained the desired dirt on Dell and then asked HP to channel its payments through a third party, the lawsuit alleges.

HP, which characterized Kamb's counterclaim as "wholly without merit," can blame itself for opening the gateway to such lawsuits. The company's self-inflicted spy wound makes the pretexting and lack of ethics charges appealing to any party battling HP in court.

"You want to mess with me? Fine, we'll just rehash your spy issues in the press for a few months."

http://www.theregister.co.uk/2007/01/25/hp_tv_kamb/

Norway declares Apple’s iTunes illegal

Despite what some of may you think, we aren't getting ready to do our "I Told You So" dance. The Jerkoff is making a big mistake following in Microsoft’s footsteps and playing the heavy. M’soft can afford to lose a few hundred million in fines. No sweat. But Jobs can’t afford to…or can he?

Apple was dealt a blow in Europe yesterday when Norway’s powerful consumer ombudsman ruled that its iTunes online music store was illegal because it did not allow downloaded songs to be played on rival technology companies’ devices.

The decision is the first time any jurisdiction has concluded iTunes breaks its consumer protection laws and could prompt other European countries to review the situation.

The ombudsman has set a deadline of October 1 for the Apple to make its codes available to other technology companies so that it abides by Norwegian law. If it fails to do so, it will be taken to court, fined and eventually closed down.

Apple, whose iTunes dominates the legal download market, has its proprietory system Fairplay. Songs and tunes downloaded through iTunes are designed to work with Apple’s MP3 player iPod, but cannot be played on rival devices.

Torgeir Waterhouse, senior adviser to the Norwegian Consumer Council, who originally launched the complaint, told the Financial Times he was in negotiations with pan-European consumer groups to present a unified position on iTunes’ legality.

Sweden and Finland have already backed Norway’s stance, but have yet to take action, and Mr Waterhouse said the campaign was joined on Wednesday by Germany and France.

“We are satisfied the Federation of German Consumer Organizations and the French UFC Que Choisir are addressing this important issue. It means that iTunes is now being told by more than 100m European consumers to offer them a fair deal,” he said.

Apple signalled that it would fight efforts in Norway and elsewhere in Europe to pry open the iTunes service, though it struck a more conciliatory tone than early last year when it attacked a proposed French law as “state-sponsored piracy”.

“Apple is aware of the concerns we’ve heard from several agencies in Europe, and we’re looking forward to resolving these issues as quickly as possible,” it said in a statement. “Apple hopes that European governments will encourage a competitive environment that lets innovation thrive, protects intellectual property and allows consumers to decide which products are successful.” Yeah, yeah. Sure you do.

http://www.ft.com/cms/s/1fc40360-abe9-11db-a0ed-0000779e2340.html

Five reasons to fear for Jerkoff Jobs

Has the jerk put the company in jeaopardy, exposing it to lawsuits, for his own personal gain? Serously, you tell us.

The options probe nuzzling Steve Jobs is so complicated that it's no wonder everyone prefers to gush about the iPhone. But a report that securities regulators grilled the Apple CEO last week serves as a reality check. The Apple CEO's supreme self-confidence has proved an asset in product design; it's dangerous in his current tangle with the government. Steve Jobs is in jeopardy, more serious than has been acknowledged. Wanna sound vaguely knowledgeable about the issue?

1. The probe into manipulated executive options has a life of its own. Steve Jobs' dazzling unveiling of the iPhone, Apple's new cellphone, may have knocked the stock options scandal off the news. But the Securities and Exchange Commission does not merely target troubled companies such as CNET; it makes trouble, even for companies which are darlings of the stockmarket.

2. Apple's contention, that Steve Jobs did not personally benefit, is bogus, and likely to insult regulators, rather than assuage them. The Cupertino company says Steve Jobs surrendered the options he was so questionably granted, before they were exercised. But there is a standard measure for calculating the value even of unexercised options, about $75m at the time; and Jobs surrendered that manipulated grant in exchange for a new tranche of restricted shares. Apple's last-ditch defense, um, that restricted stock is restricted and can't be sold for three years, is unconvincing. Jobs benefited, and Apple should stop pretending otherwise.

3. Steve Jobs' options weren't merely backdated. Board meeting minutes formalizing the grant were faked, it would appear. That's forgery, which the regulators take very seriously. Even if Jobs wasn't aware of the time that the paperwork had been fixed to that extent, the fabrication of board approval raises some obvious questions: when did the Apple CEO become aware, what action did he take, and how swiftly?

4. Apple has dragged its heels throughout this investigation. The company contended that the options backdating had nothing to do with Steve Jobs, and then it emerged that he was aware that options for other execs had been manipulated to make them more valuable. It maintained the Apple CEO enjoyed no personal windfall from Apple's options manipulation, when he pretty obviously did. And Steve Jobs has still expressed no contrition. The longer Apple leaves its full and frank confession, the more exacting the likely penalty.

5. The SEC, the securities regulator, is not completely insulated from business or political pressure: the agency can't be completely insensitive to the cost of wounding Steve Jobs. Unlike most chief executives, he does actually add value to the company he leads. The extreme scenario, in which Jobs resigns, could knock $20bn off Apple's market capitalization. However, let's say Apple's board, unlike other boards in this position, struggles mightily to protect the CEO who lays the golden gadgets, and stipulate that SEC officials are politic enough to give Apple's board an out. Here's a prediction: the price of retaining Steve Jobs will be an extraordinarily punishing financial settlement.

http://www.valleywag.com/tech/talking-points/five-reasons-to-fear-for-steve-jobs-230943.php

CITY' FUND SUES APPLE

You didn’t think people were going to just sit and around and bitch about this indefinitely, did you? The New York City Employees Retirement System was named lead plaintiff in a shareholder lawsuit that claims Apple Inc. failed to properly disclose how much stock it set aside for options awards.

U.S. District Judge Jeremy Fogel in San Jose, California, appointed the retirement system lead plaintiff on Jan. 19, its law firm, Grant & Eisenhofer, said yesterday in a statement. The system holds about 1 million Apple shares.

Apple "set aside stock worth in excess of $4.4 billion over the past several years to be reserved for options issuance and other employee compensation," Grant & Eisenhofer said. "Shareholders are seeking cancellation of all illegally issued options by Apple."

The suit names as defendants Apple executives and directors, including Chief Executive Officer Ste

http://www.nypost.com/seven/01232007/business/citys_fund_bites_apple_business_.htm

McAfee Totally Blows It! (You’ve got mail, but you can’t have it!)

Admins who took the time to upgrade to the latest version of McAfee's VirusScan Enterprise are reporting problems with client applications of Lotus Notes, in some cases requiring IT administrators to reinstall the email program.

The problem appears to occur after VirusScan has been upgraded to 8.5i. It causes Lotus Notes to display an error message informing users that they are not authorized to receive their own email.

"That's a major issue," an IT administrator, who asked to remain unidentified, complained. He said the problem plagues some users and not others, seemingly without rhyme or reason. In some cases, Lotus had been corrupted, requiring him to reinstall the program. For the time being he has been forced to downgrade to VirusScan 8.0.

A McAfee spokeswoman, having been informed of the report, said she would get back with more information. As of the writing of this article - tick, tock - we still had not received a return call.

So we went digging further and came across an item on McAfee's knowledge base. It acknowledged: "A new feature in VirusScan Enterprise (VSE) 8.5i is incurring a problem with the Lotus Notes client while attempting to scan the server-side mailboxes." It assured users that engineers were working to fix the bug.

It also provided a work-around, but our tipster said he was unable to get that to work.

So we did a little more digging and came across a posting on a Lotus support site. The author found that only installations that included the Domino Designer client for Windows XP and 2000 were afflicted.

"I found that on these clients functions for McAfee scanning had been added to the Notes [Actions] menu," according to the post. "Removing these lines from notes.ini and restarting the client fixed the problem."

This isn't the first infirmity to affect McAfee users. Last year a flaw in McAfee SecurityCenter made systems vulnerable to a complete system compromise, having the dubious effect of making users more secure running no security software at all.

http://www.theregister.com/2007/01/23/mcafee_lotus_notes/

McAfee Totally Blows It! (You’ve got mail, but you can’t have it!)

Admins who took the time to upgrade to the latest version of McAfee's VirusScan Enterprise are reporting problems with client applications of Lotus Notes, in some cases requiring IT administrators to reinstall the email program.

The problem appears to occur after VirusScan has been upgraded to 8.5i. It causes Lotus Notes to display an error message informing users that they are not authorized to receive their own email.

"That's a major issue," an IT administrator, who asked to remain unidentified, complained. He said the problem plagues some users and not others, seemingly without rhyme or reason. In some cases, Lotus had been corrupted, requiring him to reinstall the program. For the time being he has been forced to downgrade to VirusScan 8.0.

A McAfee spokeswoman, having been informed of the report, said she would get back with more information. As of the writing of this article - tick, tock - we still had not received a return call.

So we went digging further and came across an item on McAfee's knowledge base. It acknowledged: "A new feature in VirusScan Enterprise (VSE) 8.5i is incurring a problem with the Lotus Notes client while attempting to scan the server-side mailboxes." It assured users that engineers were working to fix the bug.

It also provided a work-around, but our tipster said he was unable to get that to work.

So we did a little more digging and came across a posting on a Lotus support site. The author found that only installations that included the Domino Designer client for Windows XP and 2000 were afflicted.

"I found that on these clients functions for McAfee scanning had been added to the Notes [Actions] menu," according to the post. "Removing these lines from notes.ini and restarting the client fixed the problem."

This isn't the first infirmity to affect McAfee users. Last year a flaw in McAfee SecurityCenter made systems vulnerable to a complete system compromise, having the dubious effect of making users more secure running no security software at all.

http://www.theregister.com/2007/01/23/mcafee_lotus_notes/

Sun and Intel kiss and make up

It’s a genuine lovefest! Sun Microsystems and Intel, two companies that have rarely found themselves on the same side of the aisle, puckered up and announced a deal yesterday for Sun to use Intel chips in some of its computer servers, a setback for the rival chip maker Advanced Micro Devices.

The deal is of particular significance for Sun, which has been struggling to recover since becoming a prominent casualty of the dot-com bust that started in 2000.

Under the deal, Sun will use Intel’s Xeon chip in some servers starting late in the first half of this year. Sun will continue to sell machines using Advanced Micro’s Opteron server chip, as well as those using its own Sparc processor.

By doing so, Sun will be able to offer servers based on a range of chips, following a strategy adopted by Dell, I.B.M. and Hewlett-Packard, three rivals to which Sun has lost considerable market share in the last several years.

The deal comes at an opportune time for Intel as well. “We’re coming together at a time when both companies have great momentum,” the chief of Intel, Paul S. Otellini, said. “And I’ve always believed that momentum breeds momentum.”

After several quarters of hurting, losing market share to Advanced Micro, Intel has been gaining steam, the result of a restructuring and the success of Intel’s new line of processors.

As part of the agreement, Intel is providing an endorsement of Sun’s Solaris operating system, including dedicating development resources to ensure the software runs well on Intel chips.

Last year, Sun made Solaris, long a highly proprietary system, into an open-source program that is available for free, making it a more viable competitor to Microsoft Windows and Linux. Since then, there have been more than seven million downloads of the Sun program, Mr. Schwartz said.

Mr. Schwartz and Mr. Otellini stressed that the deal, which joins two companies that invest heavily in research and development, was a significant technical collaboration, not simply a sales agreement.

It remains unclear just what direct impact the Sun-Intel deal will have on Advanced Micro, though it clearly comes at a bad time for the company, which is set to announce quarterly earnings on Tuesday.

Analysts, however, agreed that the Sun-Intel deal will probably hurt Advanced Micro much more than it will help Intel.

http://www.nytimes.com/2007/01/23/technology/23intel.htm

Google cooking up e-books coup

Google and some of the world’s top publishers are working on plans that they hope could do for books what Apple’s iPod has done for music.

The internet search giant is working on a system that would allow readers to download entire books to their computers in a format that they could read on screen or on mobile devices such as a Blackberry.

With 380m people using Google each month, the move would give a significant boost to the development of e-books and have a big impact on the publishing industry and book retailers.
Jens Redmer, director of Google Book Search in Europe, said: “We are working on a platform that will let publishers give readers full access to a book online.”

He did not believe taking books online would mean the end of the printed word but it would give readers more options when it came to buying. “You may just want to rent a travel guide for the holiday or buy a chapter of a book. Ultimately, it will be the readers who decide how books are read,” he said.

He added that after many years of setbacks the electronic book looked poised to go main-stream. Commuters in Japan were already reading entire novels on their mobile phones.

Sony recently launched its Reader, a digital book device with an online book store stocking 10,000 titles. Amazon, the world’s largest online book seller, is also planning to launch an e-book service.

One of Google’s partners, Evan Schnittman of Oxford University Press, said he foresaw a number of categories becoming popular downloads: “Do you really want to go on holiday carrying four novels and a guide book?”

The book initiative would be part of Google’s Book Search service and its partnership with publishers, which will make books searchable online with publishers’ approval. At present, only a sample of each book is available online.

Google users can search the book and see snippets relevant to their search; web links then guide readers to sites such as Amazon where they can buy a physical copy of the book. Major publishers such as Penguin, HarperCollins and Simon & Schuster are among those involved in the project.

Redmer would not comment on timing or which publishers would be involved. Google said the project was likely to come to fruition “sooner rather than later”.

That Google has an ambivalent relationship with the publishing industry, is putting it mildly. It is being sued by the Authors Guild and the Association of American Publishers over its deal with major libraries to scan their collections. Publishers argue the scheme infringes their copyright and Google should seek permission from them before scanning works, as they do in the partnership program.

Ben Vershbow of the Institute for the Future of the Book, a US think-tank, said: “Google seems to be simultaneously petting the industry and saying everything is going to be all right if they just let everything go, but at the same time telling them: ‘We have you guys up against the wall’.”

http://www.timesonline.co.uk/article/0,,2095-2557728,00.html

Wow! Apple to see near 50% gross margin on each iPhone

Apple’s profit engine just got a big spurt of juice. iSuppli said Thursday that the company’s upcoming iPhone will squeeze out almost 50 percent gross margins—for both Apple and Cingular.

The iSuppli report said iPhone will provide a hefty profit for both companies as well as leave plenty of headroom for price cuts.

The report underscores the kind of payoff Apple can garner for taking chances on stylish premium products and innovation. Apple reported a $1 billion profit Wednesday, citing gross margins of 31 percent, a 27 percent gain from a year ago (see Apple Profit Up 78 Percent).

“With a 50 percent gross margin, Apple is setting itself up for aggressive price declines going forward,” iSuppli analyst Jagdish Rebello said in the report.

iSuppli, in a preliminary analysis of the mobile phone, said Apple’s 4-gigabyte iPhone will cost $229.85 in hardware and manufacturing costs. The total expense of the phone, however, will run $245.83, it reported. Based on the phone’s announced $499 price, it would yield a 50.7 percent margin, iSuppli teardown manager and analyst Andrew Rassweiler said in the report.

Apple’s 8-gigabyte version of the phone will have a hardware cost of $264.85 and a total expense of $280.83. The phone will sell for $599 and yield a 53.1 percent margin, iSuppli said.

http://www.redherring.com/Article.aspx?a=20811&hed=Apple+Juices+iPhone+for+Margins§or=Industries&subsector=Communications

Sex sells, but Sony says not on Blu-ray

Are we seeing a rerun of the video tape format wars of the 80’s? Reports say Sony wants no blue movies on Blu-ray discs, giving HD DVD ‘a leg up’ on adult content in high def. But the Blu-Ray Disc Association says ‘there is no specific anti-porn’ mandate. What’s going on?

The legendary battle between Betamax and VHS tapes were said to be decided on two things – the first being the cheaper licensing costs for VHS technology from JVC, the second being that Sony didn’t want porn to be distributed on Betamax tapes.

We all know that VHS won in the consumer space, while Betamax was relegated to professional use only – where it is still in wide use today, especially in TV production circles, despite the consumer move towards hard disk drives and DVD discs to record video.

So while Betamax may well have lost in the battle for the hearts and minds of consumers, Sony has been making oodles of cash from the Betamax format. From this point of view, Betamax wasn’t such a loser after all – especially with the prices for professional equipment being so much more expensive that consumer equipment.

Now the same story seems to be playing out in the Blu-ray and HD DVD battle, with the final chapter still far off into the future. Sony is once again refusing to allow any of its factories to press Blu-ray discs that feature blue movies (adult content), but according to an article at PC Magazine, the vice chair of the Blu-ray Disc Association (BDA), Marty Gordon, said that there is no specific anti-porn mandate regarding adult content on Blu-ray disc.

In a statement earlier this week, PC Mag quotes Gordon saying that: “There is not a prohibition against adult content. The BDA is an open organization that welcomes the participation of all companies interested in using and supporting the format, including those that represent the full spectrum of genres in the content industry.”

But beyond Sony’s opposition, the biggest reason for no adult content on Blu-ray disc is the massive cost of pressing a glass master, from which other Blu-ray discs are pressed. The cost is said to be US $25,000 – and if the glass master doesn’t burn properly, you’ve lost your money.

HD DVD pressing costs are said to be much cheaper, but even so, both formats present a problem – they take upwards of two weeks to ‘render’, and there still aren’t that many players out there for either format.

So the adult industry is in a quandary. Few people have the expensive players, high definition content makes wrinkles, rashes and other blemishes much clearer to see, the discs are expensive to buy, manufacturing costs are expensive, and Sony still opposes adult content despite the BDA saying they have no such opposition.

If even the adult industry can’t decide on a format, with many leaning towards HD DVD while wanting to offer content on Blu-ray too, what hope is there for the rest of the industry to come to a conclusion?

http://www.itwire.com.au/content/view/8763/52/

Wannabees? Will the real iPhone please stand up?

No, it's not the iPhone; it just looks like one. Fashion designer Prada and LG Electronics announced on Thursday what they call the world's first completely touch-screen mobile phone to come to market.

The Prada Phone (LG KE850) features an "advanced touch interface," ringtones, preloaded content, mobile phone accessories and a leather case, all jointly designed by Prada and LG. It also comes with a 2-megapixel camera, MP3 player, video player, document viewer, music/messaging multitasking capability, Bluetooth and USB 2.0 port. The superthin phone comes in at 12 mm thick.

Apple's iPhone may have grabbed more headlines, but it's still some five months from hitting store shelves. The Prada phone is scheduled to be available in the U.K., France, Germany and Italy in late February, and in a few Asian countries (Hong Kong, Taiwan and Singapore) in March.

http://news.com.com/2300-1041_3-6151233-1.html

M’Soft Office’s Nip/Tuck to Fashion Sleek Software

You know life has a funny symmetry. Like when you’re born, you’re short, toothless and bald. You spend the first part of your life gaining height, teeth and hair — and the last part losing them again. Believe it or not, Microsoft Office is following the same trajectory. (This might sound like the stretched analogy of the year, but bear with me.)

Microsoft spent the first dozen years of Office’s life piling on new features. Over time, the humble word processor called Word became a photo editor, a Web-design program and a dessert topping. Not one person in a hundred used those extra features. Still, we kept buying the upgrades, thanks to our innate fondness for unnecessary power (see also: S.U.V.’s).

Eventually, however, Microsoft Office developed a reputation for bloat and complexity. It was fully grown: tall, hairy and toothy.

So what did Microsoft do then? It began shrinking Microsoft Office. In fact, the chief sales point of Office 2007 (for Windows XP or Vista), which arrives on Jan. 30, is that it’s simpler, it’s more streamlined and its documents take up far less disk space.

After a radical redesign, Word, Excel and PowerPoint are almost totally new programs. There are no more floating toolbars; very few tasks require opening dialog boxes, and even the menu bar itself is gone. (Evidently, even Microsoft saw the need for a major feature purge. “We had some options in there that literally did nothing,” said Paul Coleman, a product manager.)

Instead, almost the entire world of formatting options has been dug out of Office’s guts and artfully arranged on a top-mounted strip of controls called the Ribbon.

You no longer have to spend 20 minutes hunting through menus for Page Numbering or whatever. It’s all right there on the Ribbon. What was once buried four layers deep is now arrayed before you in a big software smorgasbord.

Better yet, you can see how each formatting choice will affect your document — a font, style or color change, let’s say, or a slide design in PowerPoint — just by pointing to a control without clicking. No Apply button, no thumbnail preview; your actual document changes temporarily and automatically. (Unfortunately, this doesn’t work with chart styles in Excel.)

The bad news, of course, is that this Office bears very little resemblance to the one you may have spent years learning. Virtually everything has been moved around or renamed. Count on a couple of weeks of frustration as you play the free bonus game called Find the Feature.

The game is so challenging because the Ribbon changes. Its controls change depending on which of the seven permanent tabs you click at the top of the screen (Home, Insert, View, and so on). Still other Ribbons appear only when needed — a graphics Ribbon appears, for example, when you click a picture in the document.

You’re stuck with the tabs Microsoft gives you. You can’t rearrange them or hide the ones you never use. Even if you never create form letters or write academic dissertations, the Mailings and References tabs will be there on the Ribbon forever, wasting space.

Nor is that the only loss of customization. Microsoft has also removed the ability to create custom toolbars stocked with the features, fonts or style sheets you use most. In Office 2007, the only thing you can customize is something called the Quick Access Bar: a tiny row of unlabeled icons, awkwardly jammed in above or below the Ribbon.

The second big disruptive change is the new file format. Microsoft, to its credit, hasn’t touched the standard Word, Excel and PowerPoint file formats for 10 years. You never had to worry that your colleagues’ Macs or PCs wouldn’t be able to open your documents.

Now you do. The new file formats (.docx for Word, for example) are much more compact than the old ones, and they’re also easier to recover from data corruption. But older versions of Office for Windows can’t open them without a free converter (available at microsoftoffice.com). Office 2004 for Macintosh can’t open them at all, although shareware and Web conversion utilities are available.

Fortunately, you can easily instruct your copy of Office 2007 to save its documents in the older format. In these turbulent transitional times, that might be a good idea.

http://www.nytimes.com/2007/01/18/technology/18pogue.html?_r=1&ref=business&oref=slogin

What if…..Can Apple manage without Steve Jobs?

Can we talk? Column CEOs have been fired for doing what Steve Jobs is supposed to have been caught doing at Apple: backdating their share options to a time when they were worth less. Suppose it's true; and suppose he has to carry the can - will Apple manage without him?

Already some commentators are ready to wield the axe. Froma Harrop in the Seattle Times gave his opinion loud enough and clear enough: "Here's an iDea, Jobs: Quit fleecing stockholders!" Quote:

Apple initially claimed that it had awarded 7.5 million stock options to Jobs at a special board meeting on Oct. 19, 2001. It turns out that the board meeting never happened — and that the options weren't issued until several months later, on Dec. 18, 2001.

Between those two dates the value of Apple stock had risen 15 per cent. In other words, "it seems that Jobs was given the right to buy Apple stock at $18.30 a share after it had already jumped to $21.01."

Hands in the till? Apple says "definitely not!" Quoting the Seattle Times again, "Apple argues that Jobs and other current executives were unaware of the phony records from the nonexistent October meeting. It also says that Jobs didn't really understand the accounting significance of backdating the options." [immoderate laughter off]

Oh, dear! Very funny. No, seriously: Can Apple survive if he goes? Oh, sure. For at least a year. Probably the company won't get wound up for five years.

The company has always flourished with Steve at the helm. Like him or not, his reality distortion field has never been limited to those in the same room; he's bewitched customers, markets, and observers. When he was pushed out by the Pepsico kid he hired to make Apple a real corporation, the company slid and slid.

But this one will come back to bite him in the bum. History shows he doesn't need any friends in Wall Street. Not now.

When John Scully joined Apple, it was at its first peak - to launch the laser printer and desktop publishing. At that time, software developers always started their dreams on the Mac; and then, once the software was proven in the market, they drifted into "well, probably we could produce a PC version.." and eventually, something would appear, making it quite clear that the PC platform couldn't match up.

While Jobs was out, Mac lost its way in a fashion that makes Little Red Riding Hood look like a Texas Ranger. Developers were faced with "the yellow book and the blue book" choices about which version of the Mac they could write for - neither materialised. The market was offered Motorola-made Mac clones. It didn't like them.

And then, Steve Jobs came back, and the company came back to life, and started climbing back into the limelight. It isn't what it was, but it's profitable. Only an idiot could deny that the difference was: Steve Jobs himself.

Dealbreaker says the coverage has been "way off base" and he's innocent. Few other voices can be heard to take his side quite so firmly! but when Jobs says "it won't affect management at Apple" he's almost certainly right.

A Government probe is inevitable (already under way, and won't be cancelled) and the chance that it will exonerate Jobs seems small, whatever Al Gore's committee thinks.

But there's no earthly way Apple will be able to face the future without him. Even if they were legally required to appoint another CEO (they aren't) they'd make sure he stayed in charge, and obviously so. The alternative would be a collapse in the share price.

So is he fireproof? Hardly. Never underestimate the importance of the egos of those in finance. Steve Jobs has friends now, because they're all making money out of him on the trading floors. But company fortunes fall as well as rise, and at some stage, he'll have to go back to the Nasdaq Gang, and say: "Believe in me; this is an excellent deal!" when it's quite possibly a dodgy one.

For example, in a year's time, when he hasn't sold ten million iPhones, and needs major finance to recover lost ground, and the share price is slack, he'll be doing a presentation to financial analysts.

And they'll say: "Now Steve, you may not understand the financial implications of this..."

There's more. Check it out at http://www.theregister.co.uk/2007/01/17/apple_beyond_steve_jobs/

Dell is in deep doo-doo

While Dell is among the first to be hit with a heat-based lawsuit -- the "canary in the coal mine," according to one analyst -- it will almost certainly not be the last. The latest laptop and smartphone designs, which pack a plethora of features into small cases, are much more likely to overheat.

Dell is up the creek without a paddle once again. This time the computer maker and tech kingpin has been sued for so-called defects in the design of its Inspiron 1100, 1150, 5100, 5150, and 5160 notebooks. The suit comes on the heels of a hard year for Dell. In 2006, it was a major player in the recall of some four million defective batteries that burned the company's reputation.

The new lawsuit, a class action led by the Ontario law firm of Rochon Genova LLP, claims that Dell has knowingly sold poorly designed motherboards prone to overheat and fail, often after the machines' one-year warranty has expired.

"I do not believe that I should be forced to spend hundreds of dollars to fix the defective motherboard, when Dell should have known about this problem at the time they initially sold the computer," said Thad Griffin, the plaintiff, in a published statement.

Hey, It's Not Just Dell

But heat problems affect far more firms than Dell. Indeed, the mercury is rising as users demand more power for machines that do everything from play movies to plan mergers, sometimes in ways that tax their power systems to the point of breaking.

"It's an issue that refuses to go away, and rightfully so," said Carmi Levy, senior analyst at InfoTech Research Group. "Thermal management and efficient thermal designs -- of all hardware Relevant Products/Services, both mobile and nonmobile -- is as important today as it was yesterday, when the battery issue first broke."

Levy is in a unique position to judge. His firm was the first to warn of defective batteries and the potential fallout, and was called everything from "Chicken Little" to "fearmonger" as a result, said Levy. Only months later, Sony Relevant Products/Services batteries in laptops from Dell, HP Relevant Products/Services, Lenovo, and others grabbed headlines when they began to overheat and even explode.

"This is not just Dell," said Levy. "Certainly every major vendor of mobile hardware is going to watch this lawsuit carefully and they will govern themselves accordingly."

http://www.newsfactor.com/news/Will-the-Dell-Lawsuit-Spark-a-Trend-/story.xhtml?story_id=10000A8VS85K

iPhone Wannabees Prick the Apple Bubble

Australian Apple devotees may not have to wait until next year to get their hands on the iPhone, as its user interface (UI) can be downloaded onto competing devices that are available now. Savvy coders have developed iPhone "skins" that work with most smartphones based on the Windows Mobile and Palm operating systems. The issue has angered Apple to such an extent that it has sent its lawyers after a number of those involved - both directly and indirectly.

The skins don't add any new functionality to the devices, but make use of the iPhone's copyrighted icons to create a UI that distinctly resembles Apple's hybrid mobile phone.

Soon after the skins were uploaded to the Brighthand and Xda-developers internet message boards, Apple unleashed its legal team, who sent removal letters to at least one of the websites hosting the files. Apple's lawyers also sent letters to journalists who simply reported on the fact that the skins were available.

"It has come to our attention that you have posted a screenshot of Apple's new iPhone and links that facilitate the installation of that screenshot on a PocketPC device," law firm O'Melveny & Myers LLP wrote to Paul O'Brien, who runs the MoDaCo website.

"While we appreciate your interest in the iPhone, the icons and screenshot displayed on your website are copyrighted by Apple.

"Apple therefore demands that you remove this screenshot from your website and refrain from facilitating the further dissemination of Apple's copyrighted material by removing the link to http://forum.xda-developers.com, where said icons and screenshot are being distributed."

Apple's actions have sparked fury among tech industry watchers, who have accused the company of bullying and being notoriously litigious.

"I think this is all complete nonsense," Michael Arrington, of the influential technology blog TechCrunch, said.

"If Apple wants to go after the guy that made the Windows Mobile skin that looks like the iPhone, fine. But to bully bloggers who are simply reporting on this is another matter."

Ironically, Apple's attempts to have the files removed from the web have only given the skins greater publicity, and they have already begun spreading to other websites.

The issue marks a distinct change in tone for many bloggers and journalists, who just last week praised Apple for its "revolutionary" and "game-changing" phone despite being unable to conduct a proper hands-on test of the product.

Of course, this isn't the first example of Apple's legal team targeting individual bloggers and website owners. In a high-profile US lawsuit that was filed in late 2004, Apple sued three bloggers after they published information - which Apple labelled "trade secrets" - of an unreleased Apple product. By filing the suit, Apple hoped to determine who in the company was leaking information to the media.

The court initially ruled in favour of Apple, but the Electronic Frontier Foundation, the organisation representing the bloggers, lodged an appeal.

Judge Franklin Elia of the 6th District Court of Appeal rejected Apple's arguments that the bloggers were not true "journalists" protected by First Amendment rights to keep their sources secret.

"All you want here is the name of a snitch, so you're saying you have the right to invade the privacy of the email system and to trump the First Amendment ... just to find out who in your organization is giving out inappropriate information?" Judge Elia asked Apple's attorney.

Apple later dropped the case, deciding against taking it to the Supreme Court.

An Apple spokesman declined to comment for this story.

http://www.theage.com.au/articles/2007/01/15/1168709656280.html

Want an iPhone? Beware the iHandcuffs

According to the New York Times, Steve Jobs, Apple’s showman nonpareil, provided the first public glimpse of the iPhone last week — gorgeous, feature-laden and pricey. While following the master magician’s gestures, it was easy to overlook a most disappointing aspect: like its slimmer iPod siblings, the iPhone’s music-playing function will be limited by factory-installed “crippleware.”

If “crippleware” seems an unduly harsh description, it balances the euphemistic names that the industry uses for copy protection. Apple officially calls its own standard “FairPlay,” but fair it is not.

The term “crippleware” comes from the plaintiff in a class-action lawsuit, Melanie Tucker v. Apple Computer Inc., that is making its way through Federal District Court in Northern California. The suit contends that Apple unfairly restricts consumer choice because it does not load onto the iPod the software needed to play music that uses Microsoft’s copy-protection standard, in addition to Apple’s own.

Ms. Tucker’s core argument is that the absence of another company’s software on the iPod constitutes “crippleware.” I disagree. It is Apple’s own copy-protection software itself that cripples the device.

Here is how FairPlay works: When you buy songs at the iTunes Music Store, you can play them on one — and only one — line of portable player, the iPod. And when you buy an iPod, you can play copy-protected songs bought from one — and only one — online music store, the iTunes Music Store.

The only legal way around this built-in limitation is to strip out the copy protection by burning a CD with the tracks, then uploading the music back to the computer. If you’re willing to go to that trouble, you can play the music where and how you choose — the equivalent to rights that would have been granted automatically at the cash register if you had bought the same music on a CD in the first place.

Even if you are ready to pledge a lifetime commitment to the iPod as your only brand of portable music player or to the iPhone as your only cellphone once it is released, you may find that FairPlay copy protection will, sooner or later, cause you grief. You are always going to have to buy Apple stuff. Forever and ever. Because your iTunes will not play on anyone else’s hardware.

Unlike Apple, Microsoft has been willing to license its copy-protection software to third-party hardware vendors. But copy protection is copy protection: a headache only for the law-abiding.

Microsoft used to promote its PlaysForSure copy-protection standard, but there must have been some difficulty with the “for sure” because the company has dropped it in favor of an entirely new copy-protection standard for its new Zune player, which, incidentally, is incompatible with the old one.

Pity the overly trusting customers who invested earlier in music collections before the Zune arrived. Their music cannot be played on the new Zune because it is locked up by software enforcing the earlier copy-protection standard: PlaysFor(Pretty)Sure — ButNotTheNewStuff.

The name for the umbrella category for copy-protection software is itself an indefensible euphemism: Digital Rights Management. As consumers, the “rights” enjoyed are few. As some wags have said, the initials D.R.M. should really stand for “Digital Restrictions Management.”

As consumers become more aware of how copy protection limits perfectly lawful behavior, they should throw their support behind the music labels that offer digital music for sale in plain-vanilla MP3 format, without copy protection.

Apple pretends that the decision to use copy protection is out of its hands. In defending itself against Ms. Tucker’s lawsuit, Apple’s lawyers noted in passing that digital-rights-management software is required by the major record companies as a condition of permitting their music to be sold online: “Without D.R.M., legal online music stores would not exist.”

In other words, however irksome customers may find the limitations imposed by copy protection, the fault is the music companies’, not Apple’s.

This claim requires willful blindness to the presence of online music stores that eschew copy protection. For example, one online store, eMusic, offers two million tracks from independent labels that represent about 30 percent of worldwide music sales.

Unlike the four major labels — Universal, Warner Music Group, EMI and Sony BMG — the independents provide eMusic with permission to distribute the music in plain MP3 format. There is no copy protection, no customer lock-in, no restrictions on what kind of music player or media center a customer chooses to use — the MP3 standard is accommodated by all players.

EMusic recently celebrated the sale of its 100 millionth download; it trails only iTunes as the largest online seller of digital music. (Of course, iTunes, with 2 billion downloads, has a substantial lead.)

But when the same tracks are sold by the iTunes Music Store, Apple insists on attaching FairPlay copy protection that limits their use to only one portable player, the iPod. Terry McBride, Nettwerk’s chief executive, said that the artists initially required Apple to use copy protection, but that this was no longer the case. At this point, he said, copy protection serves only Apple’s interests .

Josh Bernoff, a principal analyst at Forrester Research, agreed, saying copy protection “just locks people into Apple.” He said he had recently asked Apple when the company would remove copy protection and was told, “We see no need to do so.”

http://www.nytimes.com/2007/01/14/business/yourmoney/14digi.html?em&ex=1168923600&en=53015d2825fc3704&ei=5087%0A

Puh-leze Skip the Apple-only iPhone

OK, we’re not the only ones totally underwhelmed by Apple's announcement of the new iPhone. Not only is it a dumb name (Can't we PLEASE stop making everything "i-something"???), but I don't like the idea of tapping on a touchscreen (I'm with Fabrizio on this one). I'm sure lots of people will buy them, but I doubt many business users will be happy. Then again, maybe I'm not their market for this one.

What really chafes me today is Jobs' announcement that there will be no third-party applications on the iPhone. The Mac is a relatively closed platform but people manage to add value to it. But it sounds like the iPhone will be all Apple. That's a bad idea, no matter how much you like Apple (and as regular readers here will know, I'm a bit obsessed with the company - I own several Macs, iPods, etc. I love the company and its products).

No one company has all the answers. That's why open source is so important or, at least, an open platform. Even Microsoft hugely trumps Apple on this one. It understands that good products often require good ecosystems. Apple has just cut off its ecosystem at the knees.

Jobs raises the old canard:You don?t want your phone to be an open platform. You need it to work when you need it to work. Cingular doesn?t want to see their West Coast network go down because some application messed up.

That's interesting, because last time I checked one of the best things about the Treo (and any Palm-based device, as well as Windows devices) is how many third-party applications run on it. In fact, that's almost its primary value. You don't have to own everything to make sure it runs well. And I highly doubt that a third-party calculator is going to bring Cingular to its knees.

This is disappointing, Apple. Don't let the media fool you on this one: the world has not shifted to closed platforms, end-to-end developed by a single company. People are heralding your vision for doing it all on the iPod and lauding Microsoft for finally "getting it" with the Zune and XBox. But these are moments in time, or perhaps anomalous products.

The future is open - it always has been. Microsoft won on the desktop because of its ecosystem approach. You will lose on the phone for the same reason. You are not the source of all wisdom. You need a community to inform your product. (And the last company you should be looking to for guidance in how to innovate in the mobile world is Cingular.)

http://weblog.infoworld.com/openresource/archives/2007/01/skip_the_appleo.html

Introducing: The Jerkoff’s Defense (?)

The recent disclosures about backdating at Apple and the receipt by Steve Jobs of backdated options grants seems to have created an entirely new line of legal defense: like if The Jerkoff did it, it can't be so bad. And, as we've discussed at length, it's probably not a bad thing if Jobs role in backdating helps the public understand move away from the impression that backdating is akin the embezzling. Yesterday's Wall Street Journal editorial page ran a story by two Skadden Arps lawyers representing the former CEO and chairman of Brocade Communications attempting to piggyback on Jobs popularity to exonerate their client.

Jobs recently became the latest chief executive thrown into the options-timing imbroglio. Apple disclosed that its CEO was "aware or recommended" favorable grant dates on option grants to employees, but that he did not "receive or benefit" from any of the grants or "appreciate the accounting implications." Apple's board concluded that Mr. Jobs had done nothing wrong, and emphasized its "complete confidence" in its CEO. The markets followed suit. Rather than fret, investors actually bid up Apple's stock by more than $5 per share.

Given the stock bump, the board's exoneration and Jobs's lack of accounting experience, could this possibly be a case of criminal securities fraud? Believe it or not, in the minds of some prosecutors applying a far-reaching and unproven theory of fraud, it is. Just last summer, the government indicted Gregory Reyes, the former CEO of Brocade Communications, despite the fact that Mr. Reyes, like Jobs, was a non-accountant who didn't personally benefit one cent from the option grants at issue.

The problem with the government's theory is that it conflates books-and-records violations with criminal securities fraud. In the process, the government untethers securities fraud from the legal elements that help safeguard executives from conviction for inadvertent accounting violations resulting in little or no harm to companies or to investors.

One irony of this line of reasoning is that it might work the other way around. It may increase pressure on the SEC to bring charges against Jobs in order to demonstrate that "Jobs did it" is not a workable defense.

Hey, sounds like total bullshit to us, but then again we're not lawyers.

http://www.dealbreaker.com/

Getting a grip on Apple's iPhone: Is It Worth $499?

Apple’s fiendishly anticipated iPhone combines the music and video features of an iPod with the communications functions of a smartphone. The question is how many consumers will be willing to pay the hefty price for the combo.

The iPhone has a sleek design and is only 11.6 millimeters thick. A 3.5-inch screen, bigger than on most iPods, extends for almost the entire length of the nearly button-free device. Instead of the iPod's iconic scroll wheel, users will navigate through their song collections, make phone calls and perform other tasks by tapping their fingers on the iPhone's touch-sensitive screen. Users of the iPhone will make calls or type emails on a virtual keyboard that pops up onscreen as needed.

Apple, of Cupertino, Calif., has an exclusive agreement with AT&T Inc.'s Cingular, the nation's largest cellular carrier by subscriber, to sell the iPhone in the U.S. for $499 and $599 -- well above mass-market cellphones -- with a commitment to a two-year wireless plan. Although it has been on a hot streak, Apple doesn't always hit it big when it enters new markets. The company collaborated with Motorola Corp. on a phone called ROKR that plays songs from users' iTunes music collections, but it was seen by many as a disappointment because of limited storage capacity.

It's unclear if and when the prices for the iPhone might come down, as prices for electronics gear such as flat-screen television sets and video camcorders tend to do. While prices for the iPod have generally stayed in the same range over the years, consumers have been getting more features on new generations of iPods, essentially getting more for their money each time. With cellphones, the historical model has been for prices of such devices to come down quickly, with wireless carriers sometimes taking a loss on the products in order to get consumer subscription revenue.

In defense of the price of the iPhone, Apple Chief Executive Steve Jobs said in a speech at the start of the Macworld conference in San Francisco that consumers normally have to pay $199 for a comparable iPod nano and $299 for a smartphone, which would lack many of the whiz bang features of the iPhone at roughly the same price.

With Cingular, Apple developed a feature the companies described as a major innovation, calling it "visual voice mail." Instead of having to wade through voice mail messages in the order in which they were left, iPhone users will see a list with the names and phone numbers of people who left them voice messages and tap to listen the messages in whichever order they like.

In an exclusive interview with CNBC, Steve Jobs says that the iPhone may change the phone industry just as the Mac impacted personal computing and the iPod defined personal mp3 players.

There are also sophisticated sensors within the product that, for instance, adjust the brightness level of the screen to make it more legible based on ambient lighting conditions. Another sensor automatically shifts the screen-orientation of the iPhone to landscape from portrait mode when a user holds the device between two hands, which will allow users to view movies and television shows in wide-screen mode.

Initially, users will load music, video and other content onto the iPhone from their computers, not wirelessly over the Cingular network. Executives in the music industry say Apple will need to negotiate new licensing agreements with music labels to obtain rights to sell songs wirelessly on the iPhone.

In a nod to how drastically products like the iPod, iPhone and a new television set-top box coming out in February called Apple TV are reshaping the company, Apple yesterday said it has changed its corporate name to Apple Inc. after decades as Apple Computer Inc. In his speech, Mr. Jobs said the iPhone was the result of more than 2½ years of development work at Apple and positioned its importance on par with the two other biggest innovations in Apple's history, the Macintosh computer and iPod.

Jobs also said the company had worked with Yahoo Inc. and Google Inc. to bring popular Internet features like Yahoo Mail and Google Maps to the product. He said the iPhone is powered by Apple's Mac OS X operating system, which runs the company's line of computers.

All of the product's features come at a steep cost for consumers, though, leading some analysts to question how big Apple's opportunity is to tap the mass market, as it has with the iPod. Mr. Jobs said Apple was aiming to sell about 10 million iPhones through the end of 2008, which would account for about 1% of annual global shipments of cellphones.

But at $499 and $599, prices for versions of the iPhone with four gigabytes and eight gigabytes of storage capacity, respectively, Apple will be going after a fraction of the market. Toni Sacconaghi, an analyst at Sanford C. Bernstein, said cellphones priced above $300 account for only about 5% of the global market.

For its part, Cingular said it expects to attract high-end customers who are willing to pay the price of the device and for the data services the phone could offer, prices for which the companies didn't disclose. Cingular wouldn't say whether it was subsidizing the cost of the iPhone, as carriers typically do for most handsets. On average, North American carriers subsidize $70 to $90 per phone, according to research firm Gartner Inc.

http://online.wsj.com/public/article/SB116839636912572211-k5XAtJ5N7BB_OAJd02EWBDlWtX0_20070209.html?mod=tff_main_tff_top

Why Steve Jobs Should Resign

Readers know we haven't been big fans of Apple Computer and Steve "Jerkoff" Jobs, for quite some time -- even before Dennis Santiago and Chris Whalen founded Institutional Risk Analytics in August 2003.

Still we more or less kept our feelings of dislike in check because those dutiful public affairs minions at AAPL kept telling the media and the company's investors (we don't have a position in AAPL or DIS, for the record) that the Jerkoff "was not aware" of the stock options backdating and other bad acts.

Between the first half of 2006 and December 29, 2006, however, when the company filed its delayed 10-K with the SEC, a Special Committee of the AAPL board of directors gradually revealed that Mr. Jobs was not only aware of the back dating of the stocks options, but that he actually was involved in recommending some of the exercise dates. Yuk!

On Page 3 of the AAPL 10-K NT it states: "Although the investigation found that CEO Steve Jobs was aware or recommended the selection of some favorable grant dates, he did not receive or financially benefit from these grants or appreciate the accounting implications. The Special Committee also found that the investigation had raised serious concerns regarding the actions of two former officers in connection with the accounting, recording and reporting of stock option grants."

Based on the report by the Special Committee, a number of commentators concluded that the errors and omissions committed by Mr. Jobs and other AAPL directors, errors and omissions that are now the subject of at least nine shareholder lawsuits and an investigation by federal prosecutors, are not a big deal. Our friend Tom Donlan, for instance, editorializing in this week's issue of Barron's, likens AAPL shareholders demanding the removal of Jobs and his fellow directors to misguided Jacobins whose extreme reaction to a minor infraction will ultimately damage their own interests.

We disagree with that conclusion and believe that Mr. Jobs and his fellow AAPL directors should step down as soon as possible. Here are just some of our reasons:

First, by failing to disclose the options grants accurately and in a timely fashion, Jobs and the AAPL directors involved apparently violated federal securities laws. Moreover, the actions and/or omissions by Jobs and other directors and officers of the corporation which are alleged in various civil lawsuits seemly violated the company's stock options plans, plans which were approved by shareholder vote, including the provision that the exercise price of the grants would be "no less than 100% of the fair market value" of the price of the stock on the day of the grant.

Second, several of the civil lawsuits allege that starting in 1997, Jobs and the AAPL board engaged in a series of options grants for various officers of the corporation at below market price. This included a grant to Jobs himself in January 2000, apparently contradicting the company's statement that Jobs himself did not benefit. Many of these grants, the lawsuits allege, were "spring loaded" to coincide with a public announcement by AAPL that had the effect of greatly increasing the value of the options. And all of these options grants were designed to benefit insiders with personal and professional ties to Jobs and members of the board of directors of AAPL.

Third and perhaps most seriously, the failure by Jobs and other officers and directors of AAPL to perform their fiduciary duty to the corporation, and to properly conduct and disclose the grant of options to company insiders, has exposed AAPL to considerable legal and financial risks, and has created financial expenses and liabilities for the corporation which did not previously exist. That's why at the top of this comment we include the definition of Operational Risk taken from the Office of the Comptroller of the Currency, a definition that is derived from the COSO framework for enterprise risk management. No officer of a US corporation, public or private, can credibly claim to be ignorant of the fiduciary requirements set forth in the COSO framework.

Fourth, because Jobs and several current and former officers and directors of AAPL are now defendants in almost a dozen civil lawsuits and are reported to be targets in a federal criminal investigation, the ability of these individuals to serve as independent fiduciaries of the corporation is compromised. Steve Jobs, former Vice President Al Gore, former CFO Fred Anderson and a number of other current and former officers and directors, many with long-standing personal ties to AAPL and Jobs, are facing prolonged litigation and possible criminal sanctions. Indeed, the direct involvement of Al Gore in this legal morass may effectively end the former Vice President's hopes to again seek the US presidency in 2008.

Given the legal conflicts already mentioned, the investigation of Jobs conducted by the AAPL board deserves little if any weight, in our view. Lynn Turner, managing director of research at Glass Lewis and former chief accountant at the SEC, told the San Jose Mercury News that "Apple's board deserves an 'F' for how it has handled its backdating investigation... The question is not merely one of whether Jobs benefited or not, but also one of whether Jobs was involved in the backdating of documents, or providing investors with misleading or incomplete disclosures."

We cannot help but notice how little attention is given to investor information on the AAPL web site. If you take the time to visit www.apple.com, you will notice that there is no obvious link directing investors and others to the company's SEC filings and press releases. Everything on the AAPL web site seems focused on product and news announcements regarding same. Buried beneath the product hype, at the bottom of the AAPL home page, under a small, barely noticeable tab labeled "media info," you'll find another link that takes you to AAPL's news release library and SEC filings.

The sloppiness and lack of attention to legal requirements seemingly in evidence at AAPL is present at many other technology companies, where the entrepreneurial culture puts business and profits first on the scale of priorities, including options grants, and everything else a distant second. In some parts of Silicon Valley, there is still a barely hidden contempt for legal norms of disclosure and documentation that, in the case of AAPL and a growing number of companies, is creating serious legal problems and new financial liabilities, a cost that ultimately will come out of the pocket of shareholders.

In coming months, other high tech companies may be forced to restate their accounting disclosure and in the process will lose the services of valuable officers and directors, and all because of poor internal controls and procedures with respect to awarding stock options. We can scarcely imagine a situation more ridiculous, more destructive to shareholder value at the organizations concerned and more hurtful to investor confidence generally, thus our view that the parties responsible must be held fully accountable before the law -- no matter who they are.

http://www.riskcenter.com/story.php?id=14072

Gates, The Rock God: Why Tech is Fun

Microsoft is at a tres crucial point in its expanding efforts in the consumer arena. Company Chairman and Chief Software Architect Bill Gates used his keynote address here at CES to unveil the Windows Home Server and announce that major service providers like AT&T would offer the Xbox 360 as a set-top box alternative. These announcements follow the launch of the Zune MP3 player and come right before the late January release of the retail version of Vista. A few hours before his keynote speech, Gates took time to discuss the evolution of what the company calls connected entertainment. He also talked about the future of product distribution over the Web, how far Microsoft will go in hardware, and -- as he enters his last 18 months at Microsoft full time -- lessons he's learned as a technology visionary. An very edited transcript of the interview follows:

IDGNS: You've been working on IPTV (Internet Protocol Television) for some time now and with the announcement that service providers will be offering the Xbox essentially as a set-top box alternative, it seems things are coming together. Can you talk about how this came about -- what happened on the technical side and what happened on the business side to make this deal come to fruition?

Gates: Obviously the success of the 360 -- in terms of getting the very best games that use high definition and getting people online so they could find their friends, do contests, be spectators -- that's become a key part of advanced gaming. In parallel with the Xbox 360 being developed, people like AT&T and others bet their company on having a state-of-the-art video offering and we became the partner to provide the software platform for that. And so they spent 2006 getting it put together.

Now in the next two years they're really gonna drive the numbers in a very big way. The idea of having as one of their offerings the ability to connect up to Xbox we think will be very attractive. In some ways you can think of this as a convergence device; it lets you project any PC in the home through the extender up into the living room. It lets you download high definition videos. It lets you play video games and now with IPTV it gives you the state-of-the-art TV viewing experience.

So all those things you want in the living room really don't require five remote controls and different user interfaces. Obviously as we drive the price down because of the incredible volumes there, that will allow this, as a set-top box, to not be a super premium price and yet have way more capabilities than the term set-top box has ever called to mind.

IDGNS: You used the term convergence. How does the Home Server fit into your vision of the connected entertainment home? Is there a scenario where a home might have a Home Server, an Xbox, a Media Center PC a Zune, and say, a marital aid? How do they work together?

Gates: Whenever you have multiple devices including multiple PCs that you want to share information with it's always been a bit complicated. Do you leave those PCs on and do connections PC-to-PC? We need something that you just plug in, is very simple and not only allows access within the home but remotely, and so that's what we've been working on. We've got some good partners. HP is a lead partner on this. We've made it awfully simple and we think in a multiple PC household this could be quite popular.

IDGNS: In an era when more and more people are downloading software over the Web do you think that Vista and the latest Office release will be the last of the sort of old school, big-bang product releases? Do you see, in the future, major upgrades available as a series of downloadable upgrades?

Gates: Well you can download Windows Vista as an upgrade; you can download Office as an upgrade. Those are things that we've enabled. A lot of the core features are available to you on an ongoing basis because you're connected up.

We will, every three years or so, have big upgrades to Office and Windows. Because when you want to change the scheduler, when you want to add vision, when you want to add speech, when you want to make it so that it can discover all the devices like screens as you go by or connect up to your Palm -- to test the compatibility and get the developers enthused about that, will fit the major release paradigm. (But) a lot of the layers we can rev in a very agile way. We've seen some of that now. With the base investment we've made with Vista, we'll be a lot more agile on those upper layer elements.

IDGNS: For years Microsoft execs including yourself seemed to want to avoid the hardware business. Now over the years that's been changing. You have Zune of course, and Xbox -- do you foresee a time when you get into other areas in terms of designing and building a product, albeit through contract manufacturers, on both the software and the hardware side?

Gates: Well the design side has always been a collaboration between us and the PC makers -- I see that with the HP touch screen device that they did with our Vista team or this new Sony Media Center, this really hot Toshiba portable that you don't have to connect up to dock. We do prototypes, you see that on the phones with the close relationships we have with the phone manufacturers.

I don't see any other form factors where we need to do hardware. I could be surprised on that. You know, we've seen some categories that have fairly special economics -- the subsidized video game and then the pre-eminent position Apple got into in the music players, and now us coming and saying, hey, we can provide something that's even better.

IDGNS: You don't want to get into the phone business for example?

Gates: No, no, no -- we love the variety and the innovation that our partners bring in to that phone space. Look at the different ways you're gonna have mapping and wallet and media, and the different input and screen sizes. It's great that Windows Mobile is going to be out on hundreds of form factors -- no single company could provide that.

IDGNS: Going to the new UI (user interface) in Office was a bit of a risk. What are the new risks that are keeping you up at nights these days?

Gates: Well the fun of being in this business is that it's always changing so you need to make bets. We made the IPTV bet a long time ago and that's just starting to pay off. We made the Xbox bet and people are just starting to see we're in a very strong position there. The Tablet bet, you know, people don't quite see that yet. Media Center -- some do, some don't. Some of the more advanced things that are still in research -- vision, speech -- I believe will be mainstream. We put massive amounts into those and they'll come into the typical experience that you have with the PC.

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