Apple TV: where's the money?

AppId is over the quota

In reaction to last week's technical speculation on the putative iTV, several commenters raised questions about content providers, distributors, and "pipes". Does iTV help or harm NBC, Netflix and Comcast? How does the [one last time: "putative"] iTV make money, and for whom?

Indeed, the column ignored an important – perhaps the most important -- part of the product: the money pump, AKA the business model. While Apple displays a sharp, fulfilling sense of aesthetics and simplicity in the design and implementation of new products, the company didn't reach the pinnacle of high-tech profitability by merely practising l'art pour l'art. Apple isn't deaf to a more practical art form: cash register music.

Starting with pipes, let's look at smartphone carriers as an analogy. When AT&T "won" exclusive iPhone distribution rights in the US, it appeared that it had traded its birthright. The iPhone bore no AT&T customisations, no stickers, no craplets. Worse, the carrier had to let Apple run the content distribution table with iTunes.

As we've since seen, the trade turned out well for AT&T. With more subscribers because it's an iPhone!, and with more revenue per customer, the device yields AT&T a $100 monthly ARPU, much higher than the $50+ industry average.

With this in mind, should we think of an exclusivity deal between Apple and a "TV carrier"? Perhaps another AT&T deal, this time for their TV and internet U-Verse line.

AT&T's network topology – a dedicated set of wires running into each subscriber's home – is ideal for voice and internet traffic. But the company is at a disadvantage when it comes to distributing several hundred TV channels, something a cable provider has no problem with. Comcast simply taps into the coax cable that passes by each house and feeds the same anonymous, multiplexed signal into the set-top box for authorisation and decoding. (This is an oversimplification and ignores the evolving topologies made possible by optical fibre … but we're still far from the dream of Fiber to the Home.

iTV could give AT&T an opportunity to take the lead in 21st century TV, to stop fighting Comcast on its own ground. The resources AT&T deploys today to bring old-style TV channels into markets dominated by cable carriers could be reallocated to the fast internet access that lets several iTV devices run in the same home. (Try asking today's friendly AT&T U-Verse salesperson how many DVRs you can have. "One" is the general answer, as this U-Verse user document cautiously explains. Comcast will let you have – and pay for – as many as you like.) A simpler, more focused life, stealing subscribers from the incumbent, a higher phone plus internet access ARPU… For AT&T, this could be a repeat of the original iPhone deal. Realistic? I don't know if AT&T is bold enough to make such a move.

For cable TV incumbents, the money pump equation is different. By "virtue" of their dominant position, they have more to lose, they have these expensive, inflexible, and tricky channel bundles to protect. What looks like a potential ARPU uptick for AT&T could turn into a subscriber revenue decrease for a cable operator supplying internet access to iTV viewers using apps instead of channels.

This gets us to iTV content. It will either be "free", meaning subsidised by advertising; by subscription, like Bloomberg BusinessWeek on a tablet; or "pay as you go", one show or game at a time. One reader suggested we'd end up paying more than we do with today's bundles. It's a possibility, but we might be happy to pay more in exchange for the freedom to pick and choose, as opposed to today's situation where adding an "extraneous" channel to an existing bundle is a chore that makes you feel like you work for the cable company and not the other way around. Who knows, we might even spend less overall – while giving more money to the better creators.

We now move to content providers. As they ''appify'' their channels, will they be willing to give Apple 30% of the app revenue? If the app is "free", no problem: 30% of zero isn't terribly onerous. But even for a free channel, there's the question of sharing ad revenue: how much for CBS, how much for Apple? This isn't a random example, we just heard Lee Moonves, the chief executive of CBS, say his company turned down a streaming TV deal with Apple because of a disagreement over ad revenue. CBS and others have to see how iTV will make them more money. (The same is true for game developers who could use iTV as a vehicle for living room or networked games.)

Finally, Apple itself. Its emotive talk about the purity of the software architecture, the praise for the elegant kerning of the Garamond Light Condensed ITC font on Keynote slides … such talk is important and relevant, it addresses the very reasons for Apple's success, but we shouldn't forget what rings the big cash register: hardware. The iTV product itself has to generate billions in hardware revenue or stay what it is today, what Jobs felicitously called a hobby, a mere hundreds of millions of dollars of hardware revenue. That's nothing when compared to the tens of billions – soon $100bn – in iOS mobile devices revenue.

How to get there? Recall last week's "no set-top box" configuration:

I've added a twist, one simplification. Why have two devices, one iTV and one Wi-Fi base station or Time Capsule? A unified device saves room, power, the need to have disk storage in two places – and it will help justify a unit price that's greater than the current $99 for Apple TV.

Let's put the price tag of this unified device at $299, the price of today's 2TB Time Capsule. If Apple can sell 10m units, that's $2.9bn in revenue … not bad, but put that number into the context of Apple's overall revenue estimates: $120bn in 2011 (calendar year, not fiscal), $160bn in 2012, and $200bn in 2013. $2.9bn in iTV revenue doesn't get it out of the hobby category. Apple would need to sell 100m units, $29bn in revenue, to really "make a dent in the universe".

What about the revenue iTV will generate through the App Store as users buy apps as channels? Consider iTunes: it made about $2bn in revenue in the 2011 fiscal year ended last September (probably much less in profits as this is a complicated organisation with many revenue streams and an expensive infrastructure). iTunes is hardly a loss leader, but its purpose is to fuel iOS device sales, not the other way around. By analogy, the App Store and advertising revenue share isn't going to make or break iTV.

In last week's Monday Note, I argued against an Apple-made big-screen TV: Too big, can't be brought back to the store for repair, the computer inside would become obsolete much more quickly than the screen itself.

Friends tell me I'm wrong. A big screen might be the answer to the revenue question. At $1,500 or more, an Apple HDTV set might achieve revenue levels in the tens of billions, and, unlike today's TV set industry, it might even be profitable.

(As an aside: Last week, Sir Howard Springer, the courageous Welshman running Sony, let it be known that while his company is – "like Apple" – in the process of reinventing the TV, "Every TV set we make loses money." We also heard about Logitech giving up on Google TV after losing tens of millions in the misadventure. And Adobe decided to stop Flash development for TV. The news from the TV front could be better.)

As a big beautiful flat-screen set, or even as a separate module, an iTV sounds like a great idea. But translating the dream into a viable 21st century TV product looks considerably more difficult. To be successful, the iTV needs to make money for carriers, for content developers, for distributors, and for Apple itself. None of which is self-evident.

Still, the ossified TV ecosystem is ripe for disruption, ready for an annoying innovator.

JLG@mondaynote.com

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Steve Jobs's greatest legacy: persuading the world to pay for content

An Apple store in Taipei, Taiwan. Steve Jobs announced last week he is stepping down as CEO. Photograph: Sam Yeh/AFP/Getty Images

Ten years is, of course, a long time in media. Ten years ago, if you wanted to download some music, your best bet was Napster or one of the filesharing systems such as LimeWire or KaZaA. There were legal services, but they were so dire they wouldn't pass much muster today: there was PressPlay and MusicNet (from rival groups of record companies), which required $15 a month subscriptions for low-quality streaming (when most people had dialup connections, not today's broadband). You couldn't burn to CD. They were stuffed with restrictive software to prevent you sharing the songs.

What happened? Steve Jobs happened, mainly. The hardware and design team at Apple came up with the iPod (initially intended to be a way to sell more Macintosh computers), and then followed the iTunes Music Store – a great way to tie people to Apple by selling music. In 2003 Jobs persuaded the music companies – which wouldn't license their songs to bigger names like Microsoft – to go with him because, he said, Apple was tiny (which it was, at the time). The risk if people did start sharing songs from the store was minimal, he argued. The record labels looked at Apple's tiny market share (a few per cent of the PC market) and reckoned they'd sell about a million songs a year, so they signed up.

Apple sold a million in the first week of the iTunes Music Store being open (and only in the US). It sold 3m within a month. It's never looked back.

Nowadays Apple sells TV shows, films, books, apps, as well as music. We take the explosion in available content for granted. But without Jobs, it's likely we wouldn't be here at all; his negotiating skill is the thing that Apple, and possibly the media industry, will miss the most, because he got them to open up to new delivery mechanisms.

Content companies have been reluctant to let their products move to new formats if they aren't the inventors, or at least midwives. Witness Blu-ray, a Sony idea which wraps up the content so you can't ever get it off the disc (at least in theory); or 3D films. Yet neither is quite living up to its promise, and part of that comes down to people wanting to be able to move the content around – on an iPod, iPhone, iPad or even a computer – in ways the content doesn't allow. Apps downloaded directly to your mobile? Carriers would never have allowed it five years ago. Flat-rate data plans? Ditto. But all good for content creators.

Jobs pried open many content companies' thinking, because his focus was always on getting something great to the customer with as few obstacles as possible. In that sense, he was like a corporate embodiment of the internet; except he thought people should pay for what they got. He always, always insisted you should pay for value, and that extended to content too. The App and Music Store remains one of the biggest generators of purely digital revenue in the world, and certainly the most diverse; while Google's Android might be the fastest-selling smartphone mobile OS, its Market generates pitiful revenues, and I haven't heard of anyone proclaiming their successes from selling music, films or books through Google's offerings.

Jobs's resignation might look like the end of an era, and for certain parts of the technology industry it is. For the content industries, it's also a loss: Jobs was a champion of getting customers who would pay you for your stuff. The fact that magazine apps like The Daily haven't set the world alight (yet?) isn't a failure of the iPad (which is selling 9m a quarter while still only 15 months old; at the same point in the iPod's life, just 219,000 were sold in the financial quarter, compared with the 22m – 100 times more – of its peak). It's more like a reflection of our times.

So if you're wondering how Jobs's departure affects the media world, consider that it's the loss of one of the biggest boosters of paid-for content the business ever had. Who's going to replace that?

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Boot up: Arrington departs, British Airways tests iPads for cabin crew, and more

Arianna Huffington, the co-founder of The Huffington Post and Arrington's boss Photograph: Daniel Barry/EPA

A quick burst of 7 links for you to chew over, as picked by the Technology team

"Arrington will partner with many well-known Silicon Valley venture capitalists - including Digg-founder Kevin Rose, Yuri Milner, Marc Andreessen, Ben Horowiz, and Accel Partners - to invest between $100,000 and $200,000 in fledgling internet firms."

"TechCrunch founder Michael Arrington is resigning as editor of the popular technology blog, and will run a $20 million venture-capital fund backed by TechCrunch-owner AOL Inc. and several venture-capital firms.

"Mr. Arrington "will run the fund and will continue to write for TechCrunch, but will have no editorial oversight," said an AOL spokesman. Erick Schonfeld, who has served as co-editor in New York, will become interim editor while AOL searches for a replacement for Mr. Arrington, the spokesman said. AOL purchased the site last year."

Arrington gets the exit that one suspects he always wanted. Now the interesting times start for Techcrunch and AOL.

Horace Dediu, analysing the comScore numbers for US smartphone users: "In the last 12 months, Android gained 25m users in the US. iPhone gained 9.5m while Blackberry lost 3.2m and Microsoft lost 1.6m. Other platforms had a net loss of 1.2m.
"The total net gain of smartphones was about 29m new users.
"RIM switched from being a consistent net gainer of users to a consistent net loser of users in October 2010. Windows Phone is showing signs of holding the line on user base erosion but share remains below 5% (now at 4.7% vs. 4.6% last month). To put the mountain-sized hurdle in perspective, Android now has 7 times more users in the US while iPhone has about 5 times more. To become the largest mobile platform in the US, as some analysts are predicting, Microsoft has a 12:1 disadvantage that looks to continue to grow.
"Those are some pretty tough odds."

"Add British Airways to the list of airlines putting iPads in crew members' flight bags.

"The U.K. carrier recently began a pilot program that will see some cabin crew members using the tablets to improve in-flight service and replace the paper clutter of the passenger manifests, seating charts and flight timetables they typically carry.
"BA will initially outfit just 100 crew members with iPads. But if that initial deployment is successful, it plans to give them to 1,800 more in the coming months."

Shouldn't we be hearing about RIM, that darling of the enterprise, winning PlayBook contracts some time soon?

Tim Harford, the FT's undercover economist and presenter of the BBC's More Or Less programme, investigates why people give up personal information so easily online.

So true, so very, very, true.

These guys are on a roll.

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Boot up: Apple's iPhone jailbreak hire, ignoring Google+, Twitter Bootstrap and more

Google+ growth chart by Paul Allen: heading towards 20m in July. Now you can ignore and block them too!

A burst of 6 links for you to chew over, as picked by the Technology team

"Nicholas Allegra, better known as 'comex', the creator of the JailBreakMe website which made it child's play for iPhone owners to jailbreak their devices, has been given an internship at Apple. "The 19-year-old from Chappaqua, New York posted the news of his new position on Twitter."
As Eric Schmidt says, we need to up our game. Where are the British 19-year-olds getting hired (rather than, say, arrested and charged) for their hacking skills?

"We want to make sure you can represent your real-life relationships on Google+ -- whether you want to connect with someone or not :-) So starting today, we're rolling out a new option to Ignore people, in addition to the existing (and stronger) option to Block them."
Now, where have we heard of that before?

"Researchers at anti-malware company F-Secure say they have found the actual infected Excel file that was used in the attack on RSA earlier this year, eventually forcing the company to replace millions of its SecurID tokens. The Outlook email message containing the malicious file apparently was uploaded to Virustotal in March and the researchers dug it out this week."
An Excel file with Flash content which Excel executes. As the researchers say, why does Excel need to execute Flash content? Ever?

Good points. It's been clear for years that Steve Ballmer is not a visionary. But does Microsoft need one?

"Bootstrap is a toolkit from Twitter designed to kickstart development of webapps and sites. It includes base CSS and HTML for typography, forms, buttons, tables, grids, navigation, and more."
Er.. thanks.

Some surprises among there, including one which lasted a glorious minus one days.

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Boot up: Windows Explorer gets ribbon, Microsoft launches cloud CRM deal, and more

A quick burst of 6 links for you to chew over, as picked by the Technology team

The fascinating thing in this is how few commands are used most of the time, and the appalling user interface decisions made in the new ribbon: "people use lots of commands, so let's cram them all in there explicitly."

An alternative view: keep the most used commands visible. Put the others in contextual menus. Simplify, don't complicate.

"Microsoft has rolled out a special deal (and new spoof video) for its cloud Customer Relationship Management (CRM) service, in an effort to draw customers away from from Salesforce.com, Oracle and SAP.
"The Redmond company will pay $150 in cash per user seat (minimum 50 seats per company; maximum 500) for customers that switch to its Microsoft Dynamics CRM Online service.
"However, to qualify for the service, businesses must be located in U.S. or Canada, subscribe to at least 50 Microsoft CRM Online licenses, and sign a 2-year licensing subscription for the service."

Interesting how Microsoft's principal business is built around the idea that it's expensive to shift from its products to rivals'. How does it go when the boot's on the other foot?

"Let's say you were given a year to kill Hewlett-Packard. Here's how you do it."

Witty.

Probably the best title for the COTD ever. Now you'll have to click through to understand it.

"One of the several new features in Chrome is the addition of HTTP Strict Transport Security. HSTS allows a site to request that it always be contacted over HTTPS. HSTS is supported in Google Chrome, Firefox 4, and the popular NoScript Firefox extension.
"The issue that HSTS addresses is that users tend to type http:// at best, and omit the scheme entirely most of the time. In the latter case, browsers will insert http:// for them.
"However, HTTP is insecure. An attacker can grab that connection, manipulate it and only the most eagle eyed users might notice that it redirected to https://www.bank0famerica.com or some such. From then on, the user is under the control of the attacker, who can intercept passwords etc at will."

Chrome will start having a preloaded list of must-HSTS sites. Seems like other major browsers should do this too.

A fun open data project in Toronto, Canada: "The City's controversial Core Service Review, a consultant-led examination of which municipal services might be cut or reduced for cost savings, involved public consultations in May and June. Those consultations generated over 13,000 responses from residents who either attended a consultation session, or filled out a form online.
"The City, being the City, crunched all that data into some black-and-white PDFs and posted it on an obscure section of its website. Brian Gilham had other ideas.
"What Toronto Said, a cleanly designed website that Gilham, a professional web designer, built over the course of three weeks in his spare time, provides a search-bar interface for the entire corpus of feedback data. It makes filtering the raw opinions of thousands of Torontonians about as simple as using Google to find a recipe for soup. It launches August 29."

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Boot up: Facebook prepares music offering, and Apple 'loses (another) iPhone prototype in (another) bar'

... And it reportedly happened on Steve Jobs's watch Photograph: Justin Sullivan/Getty Images

A quick burst of 10 links for you to chew over, as picked by the Technology team

"Facebook Inc. is preparing changes designed to make the site a hub for listening to music, watching movies and playing videogames, according to people familiar with the matter, in much the same way people already use the social network to share personal media like photos and videos."

Note: This isn't a music platform. It's not (really) an iTunes-rival.

"In a bizarre repeat of a high-profile incident last year, an Apple employee once again appears to have lost an unreleased iPhone in a bar, CNET has learned."

Photographer Thomas Hawk: "Flickr asked me if I wanted to apply it only to photos going forward, or also to images that I'd already geotagged. I told flickr to go ahead and apply this setting to all of my past and future photos -- which included a thumbnail of the photo I linked. So now when you go to this photo on flickr, indeed, the geotag seems to be removed from the photo page for the image.
"Except that there is one pretty major security hole.
"Although the geotag information is indeed pulled from the flickr photo page, ANYONE can potentially still get your geolocational data simply by downloading the original sized file and looking into the EXIF data.
"This only seems to apply to images that were geotaged at the file level (i.e. by you or your device/phone, etc.) and not photos geotagged using flickr -- but still, with cell phones and software that auto geotag things, you could easily be lulled into a false sense of security on Flickr when you should not be."

Truly, a website design that sticks two fingers up at you from its lair in the mid-90s.

Pointed out to us by John Dowdell of Adobe, the people who make Flash: details how baseball is being changed by the greater access to information about games. Guess how they access it.

Paul Thurrott, whom nobody would describe as an Apple fan, isn't very keen on the new Windows 8 Explorer ribbon idea: "The Microsoft post describing the new ribbon UI goes into great detail about telemetry data, which provides the company with information about what users are really using in Explorer and elsewhere in Windows. And according to that data, the top 10 commands represent over 81% of all commands used in Explorer. The bottom 18% of commands (by usage) include such things as Open, Edit (Menu), View Toggle, Organize, New Folder, Send To, and Edit.

"And yet, looking at a Microsoft screenshot of the new ribbon, what do I see in the default first tab? A bunch of commands - including Open and Edit, by the way - that are not in the 81% most-frequently used commands." Huh?"

He also described Apple's Finder as "much cleaner and less busy". That's really quite scary.

If you were wondering how Hot Spot and Snickometer worked in cricket...

Good graphic, though it obviously assumes that the software costs nothing to produce, and that the marketing and so on happen magically to give the "Apple's slice" element.

From early in August, but still relevant: "'With a large enterprise, you have to assume that people are going to get tricked into installing malware,' iSec CTO Alex Stamos told The Reg. 'You can't assume that you'll never have malware somewhere in a network. You have to focus on parts where a bad guy goes from owning Bob the HR employee to become Sally the domain admin.'
"At the heart of the Mac server's insecurity is a proprietary authentication scheme known as DHX that's trivial to override. While Mac servers can use the much more secure Kerberos algorithm for authenticating Macs on local networks, Stamos and fellow iSec researchers Paul Youn, Tom Daniels, Aaron Grattafiori, and William "BJ" Orvis found it was trivial to force OS X server to resort back to Apple's insecure protocol."

They also did a proof of concept. OSX Server is the weakest link. Then again, a similar flaw in Windows is what led to Google getting hacked in China in 2009.

"The average selling price for Double Data Rate 3 (DDR) in the 2-gigabit (Gb) density--the bellwether DRAM product--is projected to drop to $1.60 in the third quarter, down 24% from $2.10 in the second quarter. The dive would be the biggest decline for the year, following a surprisingly solid second quarter during which pricing fell only 5% from the first quarter. Moving into the fourth quarter, the price could plummet another 22% to $1.25--dangerously close to cash costs for many manufacturers. Only a year ago in the third quarter, pricing stood at $4.70."

There's been a fall in demand, while yields are about to rise. The money now is shifting towards NAND Flash.

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Boot up: Police 'assisted' Apple in lost iPhone hunt, and no US launch for Samsung Galaxy Tab 7.7 or Galaxy note

Ho Kak-yin in Hong Kong ... not the man whose house was searched by police in San Francisco Photograph: AP/Kin Cheung

A quick burst of 9 links for you to chew over, as picked by the Technology team

"...Anyway, I totally understand why Google did this list. It just isn't a well curated list and so I don't want my name associated with it."

For those who doubted the original report was correct: "The bizarre saga involving a lost prototype of the iPhone 5 has taken another interesting turn. Contradicting past statements that no records exist of police involvement in the search for the lost prototype, San Francisco Police Department spokesman Lt. Troy Dangerfield now tells SF Weekly that "three or four" SFPD officers accompanied two Apple security officials in an unusual search of a Bernal Heights man's home."

Police don't get involved in publicity stunts.

An intriguing stack chart of the ever-growing number; the lifespans are interesting to compare.

"For example, you're doing TDD, you write a test, do some coding and hit run test but have to wait 30 seconds+ for it to run. This takes long enough to break your flow, you have a quick think about something else and then you realise the test has run and you need to switch you attention back. You might have a quick chat about something else with your pair.
"We know it's hurting our velocity but without numbers it's difficult to convince management of the true costs.
"So what did we do?
"We took a stop watch, kept it with us all day and recorded all the time that where we were waiting for the computer to do something - from opening apps, running builds and tests, searches and refactorings in visual studio - any time at all where the developer had to wait for the machine to work, be it 5 seconds or 5 minutes the stop watch was running. It took quite a lot of discipline. The results were startling."

Worth buying the fastest possible if the project lasts more than a month.

"The Galaxy Tab 7.7 and Galaxy Note are two devices that are generating quite a bit of buzz here at IFA 2011 in Berlin. There's a lot to like about these devices, but unfortunately you might not be able to buy one stateside. According to Samsung, there are currently no plans to ship either of the devices in the U.S."

Simplifies the questions of whether to stock or not for retailers.

MG Siegler, visiting Seattle, doesn't have pictures but has been trying it out - a 7in tablet with multi-touch.

The 16GB version is $450 (save $50!), the 64GB is $550 (save $150!) and the 32GB version is... $550 (save $50!).

Explanations for this pricing regime where 32GB of Flash memory costs nothing welcomed.

Martin Belam, writing in a purely personal capacity (you understand): "[if you're moderated] ask yourself, "Was I being a bit of a dick?".
"I'd define dick-ish behaviour on a news site as including, but not restricted to: personal attacks, using 'amusing' clichés like EUSSR and Tony Bliar, making the same off-topic point day after day, being rude and grumpy and unwelcoming to newcomers, mocking other people's spelling, bullying and hectoring staff and journalists appearing in the comment threads, asking 'is this news?' on a story you are not interested in and which nobody forced you to read, hate speech, 'ironic' hate speech, anything that might now or in the future potentially land the publisher in legal hot water, and any comment which includes the phrase 'I don't suppose the moderators will publish this but...'"

Three strikes filesharing rule comes into play in New Zealand: "The three-strikes regime is not expected to be widely used by rights holders, however, because of the high $25 fee they must pay to internet providers to forward those warnings to internet users and a $200 fee for bringing cases in front of the tribunal."

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Will Apple launch a TV set?

Not another Apple TV black box but a real 50" flat-screen TV, "Designed by Apple in California" – and made in China, like most Apple products. Or made In Korea, if the company concludes a new pact with its best "frenemy", Samsung, the new king of TV sets, the new Sony.

Rumours of an Apple TV set have been circulating for at least two years. In a May 2010 blogpost, Peter Yared wrote:
"Stylish, high-end TVs is the last consumer electronics frontier for Apple to dominate, and it will make apps as much of a differentiator on TVs as they were on smartphones."

and:
"The TV is the last frontier in Silicon Valley's relentless drive to computerise every screen. With the price of fully internet-enabling a screen at below $300, everything that people see and touch is being turned into a computer: mobile phones, billboards, price displays, and with the iPad even magazines, books, and newspapers."

More recently, Gene Munster, an oft-quoted analyst at the PiperJaffray investment bank, repeated his prediction of an Apple TV set launch in 2012, with Stewart Alsop adding:
"Apple will do to television manufacturers what it did to phone makers with the iPhone …"

The idea is exciting and so obvious it's got to happen. Imagine a true plug-and-play experience. One set with only two wires: power and the cable TV coax. Turn it on, assert your Apple ID credentials and you're in business. The programme guide looks good and is easy to navigate; pay channels are just a click and a password away. The TV runs apps, from games to FaceTime and Skype, it "just works'' with your other iDevices and also acts as a Wi-Fi base station using the cable provider's internet service.

But when we turn to the small matter Of implementation, we see a few obstacles.

First, the TV incorporates a set-top box, with storage for the DVR function. It's feasible: the CableCARD was invented for that very use. The electronics of a set-top box:

Now squeezed onto a card that's inserted in the back of the TV set:

It's an attractive idea, but the implementation failed to meet expectations. Although critics accuse cable carriers of being technically incompetent and lazy, I think there's a more acceptable explanation: Carriers looked at the CableCARD and saw complicated field service calls in their future. A separate, outboard set-top box is easy to diagnose and fix; a card inside the TV set, not so much. It generates a host of hard-to-understand bugs: Is the card working? Is it kind of working but causing the TV to malfunction? Is the TV working but killing the card?... and so on. More calls, more finger pointing, more expensive field techs…

Apple's product culture, its talent for giving birth to nicely integrated devices could overcome some of these problems, but not the field tech issue. Would this new product force Apple to deploy its own Geek Squad, or do we see ourselves carrying a 50" Apple TV set back to the store when something goes wrong?

Then there's the complexity of supporting multiple cable systems. Large carriers, such as Comcast, are known as multiple system operators, MSOs. They're a patchwork of acquired systems that have never needed to be compatible. This would either restrict the TV set to a small number of carriers, or make the product more complicated and prone to more bugs – and more field tech visits.

And there's Moore's Law. In addition to the CableCard, the wonder set contains a little computer running iOS, and enough storage for apps and content that's not hosted by iCloud. Great …but how long will it last? Not in terms of reliability, that's not a problem -- especially with an SSD replacing the DVR's conventional hard disk – but in terms of being competitive with newer hardware.

Conventional TVs aren't really affected by Moore's Law. As long as the electronics work and the display doesn't fail – and today's sets are exceptionally reliable – there's little pressure to upgrade. Once a family shells out for a nice 1080p set, it's difficult to sell them the new improved model next year.

We're willing to upgrade our laptops, smartphones and tablets every year or two because Moore's Law keeps improving the CPU and other electronics at the rapid rate that made the computer industry's fortunes. An integrated Apple TV set wouldn't benefit from better electronics as naturally as an iPhone does … unless, of course, the tiny iOS computer is implemented as an easily accessible plug-in module. This could also solve – or at least mitigate – the field service problem: Bring the module to the store, we'll diagnose and replace it if needed … or sell you this year's model.

In one device we might have something like: a CableCard inside an Apple TV 3.0, itself inside a TV set.

With regard to carriers, there's no need to disintermediate them, no need for Apple to seduce them into giving up content sales the way Jobs did with AT&T. Carriers ought to welcome an Apple TV set as a way to increase their ARPU, but for this to happen much work remains. Try getting a human on the phone when you want to add a channel to your current Comcast bundle. At home, you're connected through a secure device with a known MAC address, so why can't you simply point to a channel and click-to-add? This and other bone-headed commercial practices – such as refusing to suspend your billing when you're between houses – reveals a depth of customer-hostile culture that an Apple or a Google would find intolerable, but might have trouble changing.

I mention Google because they're in the TV/internet/apps integration game as well. The first Google TV wasn't a success, to say the least. My friends at Logitech lost tens of millions of dollars – and a CEO – with the first iteration. And Sony's Google TV implementation didn't fly either.

But the concept remains valid. And now that Google owns Motorola, a company with known expertise in set-top boxes and CableCards, we can expect a next-generation Google TV and, quite likely, a Samsung TV set with an integrated Google TV running Android apps and competing with the putative Apple TV.

I used to think product size, carriers and the rapid obsolescence of the integrated computer made an Apple TV set an impossible dream. I'm not so sure any more.

JLG@mondaynote.com

PS: To help think about this some more, a great counter-example: the Bose Videowave TV set. I use and like other Bose products but, with this one, what are thinking? $5,000, no cable box integration, a separate console box for the "integrated" set. See the setup and owner's guides for more details.

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Boot up: Microsoft Windows 8 tablets, interview with ex-Anonymous hacker, and more

A quick burst of 9 links for you to chew over, as picked by the Technology team

Raises all sorts of questions about how the Windows 8 desktop/hybrid behaviour will be managed. Intriguing.

Inspired by this XKCD strip.

The total BitCoin economy has a value of £39m. At current exchange rates, anyway. Unless someone finds the lost wallet.dat that someone left on an Amazon web instance which got restarted.

Quote from a speech (much more at the post): "What we're seeing in the cloud era is not just hundreds of millions but billions of new users and devices now coming into play. Three years ago over 95% of the devices connected to the Internet were personal computers. Three years from now that number will probably be less than 20%. More than 80% of the devices connected to the Internet will not be Windows-based personal computers."

Obvious, really (think: smartphones) but intriguing to see it put that way. Maritz's real point though is about what becomes important when that is true.

Well, it isn't streaming, except that you can listen to it while it's downloading. And it's only sort of downloaded, as it might be in a cache. Anyhow.

From the conclusion: " the stellar 9900 shows that when its back is against the wall, RIM can produce winners. This phone is the best BlackBerry RIM has ever produced, but against the gigantic technological and marketing forces of iPhone and Android, it's a whisper in the wind. Let's hope that there are enough BlackBerry fans left to support their favorite phone and that the company completes its reboot in time to prevent the 2013 headline, 'RIM R.I.P.'"

Interview with @SparkyBlaze, who is in his 20s and from Manchester (but wants to keep the rest under his to-be-white hat).

"Q: What are some of the biggest challenges you see out there?
"SparkyBlaze: In my mind social engineering is the biggest issue today. We have the software/hardware to defend buffer overflows, malware, DDoS and code execution. But what good is that if you can get someone to give you their password or turn off the firewall because you say you are Greg from computer maintenance just doing testing. It all comes down to lies, everyone does it and some people get good at it."

James Surowiecki, the New Yorker's financial writer, dissects the problem around the virtual currency in typically astute fashion: "many--probably most--Bitcoin users are acquiring bitcoins not in order to buy goods and services but to speculate. That's a bad investment decision, and it also hurts Bitcoin's prospects.
"True believers in Bitcoin's usefulness prefer to deny that speculation is driving the action in bitcoins. But the evidence suggests otherwise.":

And if hoarding, instead of trading, takes over, then nobody uses it, so it becomes useless - trapped in a deflationary spiral where the velocity of the currency is zero.

Ed Bott finds the same thing that we pointed you to a while ago: a real-life crackdown by Russian police, rather than any fiendishly clever piece of technology, is what killed off Mac Defender and various Windows workalikes.

Trouble is, that could mean that more will be along soon, depending on when the next gang gets its act together.

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Politico: what are the secrets of its success?

To cover American politics, Politico deploys an editorial staff of 150. This is more than any news organisation in the US on the same beat. It all started five years ago: a niche website launched by three seasoned political reporters who sharpened their claws in mainstream media. As envisioned by John Harris, Jim VandeHei and Mike Allen, Politico was to start with a kernel of 12 hardcore political reporters who would aggressively run after all the balls.

Four years later, as a new presidential campaign gears up, Politico owns the news cycle, from 4:30am to midnight, on all platforms: web, mobile, television and … print. And it does so in rapid-fire mode.

Last week, I chatted with Bill Nichols, Politico's managing editor. Before Politico, he spent 24 years at USA Today. There, among the many items on his impressive résumé: he covered six presidential campaigns as well as the state department. Bill was in Paris to deliver the inaugural lecture at the Journalism School of Sciences-Po where I happen to have a gig (highlight of the lecture summed up in French on Slate.fr). His talk provided the students with a great start for their year; they were listening to a 50-plus journalist who didn't hesitate to leave the comfort of a great newspaper to jump into the unknown. Even in 2007, going after the Washington media establishment with a website was quite a bold move. Today, Nichols is obviously having a lot of fun – which is the best message to convey to a crowd of aspiring journalists.

The lessons to draw from Politico's success are both journalistic and business ones.

Politico has sliced and diced the news cycle with an array of dedicated products fitting all possible subjects, reading time and formats. Anyone serious in politics or government affairs will begin his day with a peek at the mobile version of the Politico Playbook. Described as " Must-read briefing on what's driving the day in Washington", it is written by Mike Allen, the chief White House correspondent. The site features eight other "tip sheets":
Huddle A play-by-play preview of the day's congressional newsPulse The latest in health care policy every weekday morningMorning Money Political intelligence on the intersection of D.C. and Wall StreetMorning Score A pre-dawn guide to the permanent campaignMorning Tech Daily download of technology news from D.C. and Silicon ValleyMorning Defense A daily briefing from inside D.C.'s national security apparatusMorning Energy The one-stop source for energy and environment newsInfluence Intelligence and analysis on lobbying

The idea is to hook the reader on the day's "must-follow" items. Then, developing stories will be made available in all possible forms: stream of stories as the news dictate, a great deal of support through countless TV appearances (Politico maintains its own studio linked to all networks and all reporters are required to promote their work). Many times a day, breaking news, alerts, warnings are pushed on mobile. Then, to maximise the impact, top stories will be re-edited to feed the eponymous daily. It is published five days a week, only when congress in in session, and its 34,000 (free) copies are distributed at various strategic spots in DC.

Then, the Politico tone. As Bill Nichols acknowledges, Politico's pitch is slightly more tabloidish than mainstream media. It doesn't pontificate, nor does it endlessly circle around a subject. It reflects internal newsroom discussions and the talk of the town. A few days ago, recounts Nichols, the editorial staff was discussing Republican Texas governor Rick Perry's intellectual ability to run for the presidency; instead of going for a convoluted story loaded with nuances, Politico went straight with this headline: "Is Rick Perry dumb?" This treatment was later supplemented by an informative 1,600-word piece about Perry's 2010 book "Fed Up!", itself a great gift to his opponents. (To nail it, Politico published a Nine questions for Perry article listing subjects the candidate will have hard time avoiding.)

That's Politico's way: aggressive, relentless, fun, witty, but also dedicated to providing in-depth, well-reported journalism. Last year, the New York Observer ran an interesting story on how the Atlantic (great magazine, along with an equally great site) was fighting back against Politico on the Washington scene. David Bradley, owner of Atlantic Media company, had this comment:
"It was much happier to do what we were doing until Politico arrived in the world. Politico introduced a whole new standard of, I wouldn't say quality, but I would say velocity and metabolism. I responded way too slowly. (...) They are going to be at the more racy, tabloid end of the spectrum. That seems to be the position they have chosen. I think we'll be more of the authoritative end."

To which Jim VandeHei retorted:
"People come to us because we break news, we are authoritative and we help readers understand how Washington really works. I think Bradley's description is clearly motivated by business interests. That said, we take all competitors seriously."

Business is important as well to Politico and its powerful backer, the Allbritton family. As a privately held company it does not disclose financial data. Even with its large staff of 200 in total, it is said to be profitable thanks to its multi-pronged product strategy:

• The website had an audience of 4 million unique visitors last July, according to comScore (it should triple during the 2012 campaign). This is rather small compared behemoth such as the Huffington Post or the NYTimes that are more into the 50 million UVs range. But the value extracted from each visitor is quite high.

• Around half of its revenue comes from the newspaper, which sells high premium ads. Thanks to the geographical concentration of the Washington elite, the paper does not cost too much to distribute and its pagination and printing costs are adjusted to the advertising load.

• Last November, Jim VandeHei launched Politico Pro, an in-depth paid-for service focusing on three critical (and lobbying-intensive) issues: energy, technology and healthcare. The price is $2,500 a month (story in the Columbia Journalism Review). "Pro" relies on several dozens of reporters and editors integrated with the rest of the newsroom.

• Recently, Politico added an event department: get-togethers with big political names, moderated by staffers. The guests don't pay, but big sponsors do – happily it seems. Events will be organised not only in Washington but on the campaign trail as well.

• Last June, Politico announced an ebook venture with Random House. The concept: quick accounts, 20,000 to 30,000 words (80-120 pages), of the 2012 campaign. Produced at little additional cost, promoted by the brand, these could be pure gravy.

Politico's potential revenue pool is huge. According to the Center for Responsive Politics, the 13,000 registered lobbyists in Washington spent $3.51bn in 2010. This is an affluent market, highly concentrated, both geographically and interests wise.

On the surface, Politico's method of squeezing money from every slice of its market looks logical and reproducible. But its unique ecosystem makes Politico's success difficult to replicate elsewhere.

frederic.filloux@mondaynote.com

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Why HP's purchase of Autonomy is good news for UK startups

Hewlett-Packard is buying Autonomy - and UK startups should be happy. Photograph: Marcus Brandt/EPA

The planned acquisition of British software company Autonomy by US tech giant Hewlett-Packard has stirred up a lot of comment. Shadow business secretary, John Denham, said there might be a case for looking at whether certain strategic industries should be protected from foreign takeover, and criticised financial backers of technology startups who insist on a sale of the business so they can recoup their investment. Tony Burke, Unite's assistant general secretary for manufacturing, claimed the problem with merger and acquisitions is that they do not grow the economy and rarely create jobs.

Have we really come to this? Instead of celebrating a great British success, our reaction is to wring our hands and discuss legislation to make sure such success cannot happen again. Something is very wrong with this picture.

I spent more than a decade in San Francisco and New York working both for startups and for large tech companies such as Apple and Google. Two years ago I returned to the UK, where I'm now CTO of one of London's leading tech startups, Songkick. Much has changed in the UK since I left, but apparently we still have a fair way to go if we're to emulate the success of Silicon Valley.

The UK has several concentrations of startup activity. A number have sprung up in "Silicon Fen" around Cambridge University, Autonomy among them. Another hub is in east London with more than 500 startups based around Shoreditch, in an area fondly known as Silicon Roundabout. Government support for these burgeoning communities is very helpful, but what we really need is a steady flow of money and expertise to fund exciting new companies. These companies are creating thousands of new jobs and are attracting new investment from within and outside the UK.

Any success like Autonomy's is a huge inspiration for those who aspire to run a company. It shows that hard work, and building great products pays off. Mike Lynch, Autonomy's founder, was a penniless graduate when he founded the company in 1991 and now stands to reap the rewards of decades of success. He has a long history of investing in British startups. He and many others now at Autonomy will be ploughing their money and their know-how back into the UK startup scene, creating yet more jobs and, hopefully, more successful entrepreneurs.

So let's look at Autonomy's acquisition a different way. This is not a threat to Britain's future, its a vital component of our future. If we want large, successful technology companies in the UK we first need lots of smaller, successful companies. Autonomy's acquisition will pump vast sums into both the UK government's coffers and into the hands of investors.

Successful startups reach an "exit". This usually comes in the form of an initial public offering – such as Google's – or an acquisition, such as Autonomy's. In either case, the value created by the employees is transformed from a theoretical one into something that you can actually bank, and the employees and the shareholders make a lot of money. In the case of an acquisition, the company (hopefully) becomes part of a greater whole where it can continue to find success.

So, what happens to all the money HP just agreed to pay? A lot of it will immediately flow to the British government, through taxation. The several billion dollars of extra tax revenue will make a small but significant dent in our debts, or could be used to save thousands of vital public sector jobs.

Meanwhile, many individuals will become wealthy. Some may retire to sail around the world. But others will become investors and use that money to fund new startup companies. This virtuous cycle is at the heart of Silicon Valley's success. Each generation of startups creates new wealth that is ploughed back into the next generation through venture capitalists and angel investors – such as the music executive who got Lynch and Autonomy started by loaning him £2,000 in a pub. Wealthy individuals with a passion for, and deep knowledge of, technology help budding entrepreneurs start their own companies. If we can ignite this cycle here in Britain, we can spawn an entire new technology industry to rival America's.

So, let's toast Mike Lynch and Autonomy. Let's welcome the influx of HP's money and all the good things it will bring to the UK. We should be celebrating this very British success, not looking to stifle it.

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HP PSG UK head: what's all this talk about us 'quitting' the PC business?

HP Hewlet Packard UK website. The UK head of its personal systems group says it isn't quitting the PC business. Yet. Photograph: Daniel Law/PA

HP's UK head of the Personal Systems Group – that's the part of HP that Leo Apotheker put on the block last week – has sent around a message for clients and customers, which we'll reproduce here, with our own comments.

A message from Paul Hunter, head of HP PSG UK and Ireland.

There's no denying that it's been a strange week at HP. I've spent 16 years with HP in the UK and I certainly can't remember a time like it. But change happens, and I fundamentally believe that HP and PSG are stronger following the announcements surrounding webOS and PSG.

I'd like to firstly clear up any misunderstanding that has arisen from the earnings announcement around the future of the Personal Systems Group. There have been a number of incorrect stories saying that HP is quitting the PC business.

Let me be absolutely clear in saying that at no stage has HP said it is quitting the PC business. Three options are being investigated, and whether the company is spun off, sold or kept in the HP portfolio, the team in the UK remains committed to creating and supporting great products and services.

Two out of the three options offered there involve HP quitting the PC business (because it wouldn't have a PC business in-house any more). And HP's overall profit margins would improve by about 2%, from 10% to 12%, if it got rid of PSG. Overall, PSG is the least profitable division, in percentage terms (ie profits/revenues) of HP by a substantial margin: its average profitability is about half that of the next-worst division, HP Financial (which does leasing, and is tiny).

Getting rid of PSG would raise the margin, which would raise profitability, which would raise the earnings per share, which would raise HP's share price. "Adding value for stockholders" is how companies are meant to work. Absent a long-term plan for transforming the PSG business (perhaps with tablets? Oh, perhaps not) it's hard to see the justification for keeping it in purely fiscal terms. There could be other justifications - that the experience in designing software or hardware feeds back into other parts of the company, or that winning PC business leads to more profitable services contracts - but the numbers themselves don't speak well.

Hunter continues:

I'd also like to reaffirm our commitment to our UK customers regarding both PC products and those that bought webOS devices. HP is the world's largest PC manufacturer. We are the number one PC manufacturer in UK and Ireland. HP PSG UK is only going in one direction, forwards and that means customers can have confidence that existing HP products will be supported under the terms of their warranties as will any future purchases. Likewise, all webOS products will be supported and HP fully intends to support the future development of the webOS platform, though again how that will be managed is still under discussion.

Clear as mud on WebOS. You can see that HP would be very worried that customers and potential customers might be deserting. I'd be astonished if Dell's sales force weren't on the phones all this week

Obviously the announcement has raised a number of questions outside those mentioned above. We are still working through some of these, but I wanted to try and address as many as I could.

Regarding PSG activity in the UK, it's very much business as usual. Actually, it's more than business as usual. PSG is a $40B annual business. We operate in 170 countries and have more than 180,000 channel partners. Whatever the future strategy, we have a mission and responsibility to all of our employees, customers and partners to continue to deliver fantastic products. To that end, you will see a ramping up of marketing and advertising activity in the UK as we look to raise awareness of our great products ranges like ENVY and TouchSmart for consumer and Elite and ProBooks for business users.

That's PCs, which have an uncertain future.

Another obvious question is why has HP decided to stop supporting webOS hardware devices. Due to market dynamics, significant competition and a rapidly changing environment, continuing to execute our former device approach was not in the best interest of HP and HP shareholders. HP is fully committed to the ongoing support and service of customers who purchased webOS devices.

We hear: for some reason the iPad didn't roll over at the approach of the TouchPad, even though ours was the same price, just slower and with fewer apps. Quite what the "rapidly changing environment" was, we don't know, and HP hasn't elucidated.

I know that questions will remain, and I will do my very best to answer these as and when they arise. I apologize that we have been slow to answer some of the questions around webOS. The sheer scale of interest in the discounted products took us a little by surprise. We are now working on ensuring everyone that owns a webOS device has a positive experience.

Translation: we're waiting for the rest of the stock, which was meant to last until Christmas but sell at a profit, to arrive so we can sell it at a loss. HP management wants this to happen.

And that is my focus now; to ensure each and every interaction with the PSG UK business, be that from a customer, reseller, partner or journalist is a positive one. These are changing but exciting times. My UK team and I are fully committed to leading this world class business to a new and prosperous future.

We're sure he is, and we wish him the best. It's just going to be tricky, that's all.

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Tech Weekly podcast: Steve Jobs steps down as Apple CEO

In a special programme we discuss the career of Apple guru Steve Jobs as he steps down from his role as chief executive. Jemima Kiss, Charles Arthur and Dan Crow of UK startup Songkick share their thoughts on the effect Jobs has on computing and the company that just two weeks ago became the world's biggest (by market capitalisation).

Dan, who worked with Jobs on his return to the company in the mid-90s suggests that Steve may be the greatest marketer of our time, because of his ability to understand products and what people find exciting in them.

Apple co-founder Steve Wozniak also shares a story from a turning point during the early years of the company – the launch of the Mac – and how Jobs's tyrannical reputation was evident even then.

We also discuss Apple's new chief executive Tim Cook, and ask what the future now holds for Apple.

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Boot up: HP's WebOS conundrum, Autonomy sale, and more

A quick burst of 8 links for you to chew over, as picked by the Technology team

Rory CJ: "...while there's a promise that Autonomy will be run as a separate business, with Mike Lynch still in charge, this still looks like a sad day for British technology - and for Cambridge in particular."

"Those options could range from a sale to licensing. What to do with WebOS is just one issue facing HP as it attempts to reinvent itself. Here's a look at the options."

"An insider has given us details from an all-hands meeting HP just held with employees in the webOS Global Business Unit in light of today's announcement that HP will no longer make webOS devices. In the meeting, webOS GBU VP Stephen DeWitt made it clear that HP intends to continue to work on webOS and likely intends to license it. DeWitt was adamant, saying several times "We are not walking away from webOS." He detailed a plan to try to determine what the platform's future will look like within the next two weeks, although he admitted that "Clearly, we don't have all the answers today.""

Quite a lot. Though of course this shows revenue, not profit. The profit graph would be more interesting.

All you need to know about many Anonymous members in a single tweet: age, attitude, achievement.

Handy tips indeed.

Free phone charging? Think again. "Brian Markus, president of Aires Security, said he and fellow researchers Joseph Mlodzianowski and Robert Rowley built the charging kiosk to educate attendees about the potential perils of juicing up at random power stations. Markus explains the motivation behind the experiment:
"'We'd been talking about how dangerous these charging stations could be. Most smartphones are configured to just connect and dump off data,' Markus said. 'Anyone who had an inclination to could put a system inside of one of these kiosks that when someone connects their phone can suck down all of the photos and data, or write malware to the device.'"

Intriguing: "At a news conference following release of its first-half earnings, China Mobile (CHL) revealed Thursday that it has met several times with Steve Jobs to talk about Apple (AAPL) making an iPhone that would support its proprietary 3G standard, Reuters reports"

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Boot up: Steve Jobs steps down, reaction and more

A quick burst of 11 links for you to chew over, as picked by the Technology team

Nice collection.

"Steve Jobs's resignation as chief executive officer of Apple is the end of an extraordinary era, not just for Apple, but for the global technology industry in general. Jobs is a historic business figure whose impact was deeply felt far beyond the company's Cupertino, Calif., headquarters, and who was widely emulated at other companies."

John Gruber: "Apple's products are replete with Apple-like features and details, embedded in Apple-like apps, running on Apple-like devices, which come packaged in Apple-like boxes, are promoted in Apple-like ads, and sold in Apple-like stores. The company is a fractal design. ... The same thought, care, and painstaking attention to detail that Steve Jobs brought to questions like "How should a computer work?", "How should a phone work?", "How should we buy music and apps in the digital age?" he also brought to the most important question: "How should a company that creates such things function?"
"Jobs's greatest creation isn't any Apple product. It is Apple itself."

"The public release of the source code for the infamous ZeuS Trojan earlier this year is spawning novel attack tools. And just as hybrid cars hold the promise of greater fuel efficiency, these nascent threats show the potential of the ZeuS source code leak for morphing ordinary, run-of-the-mill malware into far more efficient data-stealing machines."

"The US Securities and Exchange Commission (SEC) receives thousands of financial documents every day detailing the ins and outs of various publicly traded companies and publishes them on its website. Financial reporters who trawl through these SEC filings can often land a scoop, but it's a tedious and time-consuming task. Now, MarketBrief, a new start-up based in Mountain View, California, promises to publish over 1000 stories per day thanks to its software journalists.
"It's easier than it sounds."

Philip K Dick must be laughing somewhere; he coined the "homeopapes", self-driven journalist robots, which would do the interviews by doorstepping people too.

"Apple's iPad will retain its dominance of the tablet market through at least 2013, research firm IHS iSuppli said today.
"El Segundo, Calif.-based iSuppli upped its iPad sales forecast for 2011 from an earlier estimate of 43.7m to 44.2m, citing Apple's ability to solve its supply issues and the blunders by rivals, including Hewlett-Packard.
"'Apple has resolved the iPad supply issues,' said Rhoda Alexander, senior manager of tablet and monitor research in an interview today. 'It was never a demand problem.'"

In the first two quarters of 2011 Apple sold about 12m iPads, so this would indicate a huge ramp in sales.

There's the feeling of an idealistic thread of thinking running up against Google's deep need to be able to mine personal data in this debate.

Nice animation by @codepo8. HTML5 is coming along.

Interesting take from the DefCon conference about how hacking has been forced to grow up - sort of - and the troubles around Anonymous.

Some so-called infographics actually obscure more than they inform.

Adi Kingsley-Hughes isn't enjoying. (We haven't upgraded from Snow Leopard yet, so can't comment.)

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Boot up: Skype acquires GroupMe, HP's 'long-decade departure', and more

Microsoft CEO Steve Ballmer and Skype CEO Tony Bates (right) discuss the future following the purchase of Skype by Microsoft. Photograph: Kimihiro Hoshino/AFP/Getty Images

A quick burst of 6 links for you to chew over, as picked by the Technology team

"Skype will acquire group messaging service GroupMe, a service that was born at a hackathon at TechCrunch Disrupt in New York in 2010. GroupMe was founded by Jared Hecht and Steve Martocci."

What the Guardian thinks of software patents.

Horace Dediu: "But that's the nature of unforeseeable growth: you cannot foresee what will happen and plans never work out. Data and planning don't help. The lesson is that you need to plan for that which cannot be planned. When you are at your peak you must assume failure is imminent and when you are at the trough you must assume success is inevitable.
"All failures of strategy are rooted in the assumption that outcomes are predictable."

Robert Scoble: "If you want to be a leading platform today you MUST get third-party developers on your side. To rub that in a bit, today I was hanging out with Photobucket's CEO, Tom Munro. I asked him what he thought about the HP news. You can listen in on that conversation here.
"Don't know why Photobucket is relevant? They have nine billion photos. Flickr only has five billion. They just made a deal with Twitter to become the photo sharing system underneath Twitter. Twitter made a deal with Apple to become the official social network for iOS. IE, he's now the official photo sharing guy for Apple's iPhone and iPad.
"Developers like him keep telling me 'Apple is first in my mind, Google is second, and I don't have time for #3, but if I do, looks like Microsoft has the best future.'"

Google has been looking at malware attacks, with a big report: "The report looks at a number of evasion and defensive techniques employed by attackers and malware distributors and concluded that not only are the bad guys quite skilled at adapting to new behaviors by users and browsers, they're also doing some of their own innovation. One of the more interesting findings in the report is that socially engineered malware--the kind that uses various tricks to goad users into visiting a site or downloading a file--make up barely 2% of all malware observed by Google. The volume of socially engineered malware has been rising steadily during the course of the last few years, but Google's engineers said it's still a tiny piece of the overall picture."

From March; worth reading again in the light of HP's withdrawal from the tablet market.

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Boot up: Youth cybercrime linked to peer pressure, SQL injections uncovered, and more

Youth cybercrime ... all about friends' influence?

A quick burst of 9 links for you to chew over, as picked by the Technology team

Showing you how SQL injection is spotted and what tools are used to get it done. The lack of response from the fashion site is concerning, though: this is someone who tried to do all the right things (no customer data leak, advising the site privately).

"Mr Jobs has been described in the past as Apple's best marketing tool. Today's announcement shows that he hasn't lost his ability to steal the headlines.
"Here are some of the stories which would have been interesting news today, if Stevey J hadn't sent that letter to the Apple board."

Your catchup-on-the-catchup service.

Linked by Oxblood Ruffin (see link lower): "Peer influence and low self-control appear to be the major factors fueling juvenile cybercrime such as computer hacking and online bullying, according to a new study led by a Michigan State University criminologist.
"Thomas Holt, assistant professor of criminal justice, said the findings reinforce the need for parents to be more aware of their children's friends and Internet activities."

Quad-core! Great. We think there may be more unreleased Windows slates than ones actually on the market.

"After 14 years and over 15,000 stories posted, it's finally time for me to say Good-Bye to Slashdot. I created this place with my best friends in a run down house while still in college. Since then it has grown to be read by more than a million people, and has served Billions and Billions of Pages (yes, in my head I hear the voice). During my tenure I have done my best to keep Slashdot firmly grounded in its origins, but now it's time for someone else to come aboard and find the 'future'."

Crap. Steve Jobs, OK, but CmrdTaco? (Still, outlasted Digg in usefulness, huh, Rob?)

Note source. But - sharp as a knife.

"Data theft is arguably the game changer.
"DDoSing or web defacements are one thing. Breaking into government and commercial networks is another. Already the clouds are forming. The Danish police wish to ban all anonymous use of the internet. The Indian Government wants real-time monitoring of Twitter, Facebook, and Skype. The OECD is seeking tighter regulatory control of the internet. And the United Kingdom is seeking stricter laws to deal with cybercrime.
"While it would be unfair to say that Anonymous is completely responsible for these reactions, it's certainly part of the problem. And when the whip comes down - and come down it will - Anonymous will have to accept part of the blame when online privacy rights are scaled back even further.
"Hacktivism, real hacktivism, has always managed to get things done without upsetting the apple cart. And even though Anonymous is more decentralised than traditional hacktivist models there's no reason why it can't muster more discipline."

In 1972, Jobs offered the first Apple prototype PC to HP. In a rainy August 39 years later...

Beatiful, timeless interactive of Steve Jobs' technical legacy at one of the world's most valuable companies by market cap.

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HP's problem with PCs, explained in three graphs

The announcement by Leo Apotheker that HP is "exploring options" around its Personal Systems Group (PSG) - might keep it, might spin it off, might sell it - has naturally got people wondering why the world's biggest seller of Windows PCs would want to get out of a market when it's leading it.

The answer's simple, once you delve into HP's financials, which I've examined going back to the November 2004-January 2005 period (officlally, the first quarter of its 2005 financial year). PSG is the worst-performing division in terms of profit margin. It's dragging the rest of the business down.

You can see it here with three graphs. First, here's HP's revenues by division:

HP revenue by division, Q105-Q311: PSG is the green chunk. Amounts in millions.

.

PSG looks pretty good - in fact, by revenue, it's the biggest, with only Services (the blue chunk) coming close.

But now we turn to profits. Here are the profits, in monetary terms (ie millions of dollars):

HP profits by division in monetary terms. Services in blue, Imaging in purple, PSG in green. Amounts in millions.

.

Suddenly it's clear that while PSG generates lots of revenue, it doesn't do the same when it comes to profits. (My calculation is that it sells about 48m PCs per year for an average of $800, on which it makes $40 profit each.) By contrast Services and Imaging & Printing (blue and purple respectively) generate much more profit per dollar of revenue. Perhaps not surprising, because both rely a lot on HP's own in-house expertise - unlike the Windows PCs, which use someone else's software (mostly) and hardware that is commoditised.

The picture becomes even clearer once you look at the percentage profitability of each division - its profit as a percentage of revenue. Now, PSG is not the biggest, but the smallest; an average, over the period, of just 4.6%, compared to 12% for Services and over 15% for Imaging & Printing.

HP divisional profits as percentage of revenue. Services blue, Imaging & Printing purple, PSG green.

.

The upshot of all this is that if HP were to ditch PSG without having any effect on its other divisions (a big proviso, since arguably PCs are sometimes useful to win Services contracts) then its profit margin would improve overall from an average over those 27 quarters of 10.1% to 12.7%.

Doesn't sound much - but when you're a company doing $30bn per quarter, these things add up. True, HP would only be a $21bn per quarter company if it dumped PSG – but it would have better earnings per share, which would mean better dividends, and the stock price would rise. Which is what chief executives are meant to make happen, aren't they? (Ignoring for a moment whether it makes sense.)

No doubt people inside HP know these graphs just as well - and they know how much benefit the PSG brings, or doesn't bring, to other divisions. The motive for sticking with PSG may be there. Perhaps there's a brilliant plan internally to boost the margins from PSG. (Run WebOS instead of Windows?)

But for now, those graphs tell the tale. Even for the biggest PC seller in the world, personal computers aren't a great business.

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Tech Weekly podcast: Has HP indicated the beginning of the end for the PC?

If the future of computer is iPads and smartphones then why is HP cancelling its webOS mobile platform and Touchpad tablet – after just 49 days?

The company also intends to buy the British Autonomy Corporation, and Jemima Kiss, Charles Arthur and Juliette Garside find out about their impressive client list and why that may hold a clue as to why HP are interested in purchasing the company and moving into business services.

Also on this week's Tech Weekly, Aleks Krotoski casts a critical eye on social media, asking what we can learn about ourselves and other cultures by looking at how we use the web.

Facebook's director of policy in Europe, Richard Allan, talks about openness, politics and debate, and how the company intends to keep its platform accessible in territories that want to censor information.

Finally, HP Labs' Bernardo Huberman offers insight into the differences in social media use in China, where 140 million people have signed up for Twitter-alike Sina Weibo. What do the Chinese tweet about?

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Looking for bargain-priced HP PCs

Exiting the PC business could easily take HP 12-18 months, if it ever happens. Photograph: Marcus Brandt/EPA

Now that HP has decided to exit the PC business, to which retailers should we look to pick up bargain-priced HP stock? What usually happens to inventory when tech companies exit a market?
Edward

Hewlett-Packard has not exited the PC business, yet, just the mobile phone and media tablet hardware businesses. In the UK, it knocked out TouchPad stocks via Currys, PC World and Dixons.co.uk. The 16GB version went for £89 (down from £349.99) and the 32GB model for £115 (down from £429.99). Those prices reflected the fact that there isn't very much software for the TouchPad's WebOS operating system, and it's not clear whether more apps will be launched. Also, if a TouchPad breaks or its battery fails out of warranty, could it be repaired?

Exiting the PC business could easily take HP 12-18 months, if it ever happens. HP's Personal Systems Group has an annual turnover of $40.7bn (£24.8bn) and must have manufacturing contracts for the production of tens of millions of HP and Compaq computers. HP is now considering whether to spin PSG off as a separate company, or try to sell all or part of the business to someone else. Either way, PSG is expected to continue trading as normal. Buyers might put a lower value on HP's products, but there is not much chance of a TouchPad-style clearout.

Even if PSG has to dispose of a few million PCs at reduced prices, this might not have a big impact. Most of HP's PCs have well-known Intel or AMD processors and standard screens and hard drives. They also run Microsoft Windows 7 and will run Windows 8, which is intended to require fewer resources. (Windows 8 will also appear on less powerful ARM processors so it will need to be efficient.)

HP's "overstocks" will not be orphans. They will run millions of Windows programs, they will work with all popular websites, and they will be repairable by independent service companies. Buyers will still expect these laptops to last for three or four years, or longer, so they probably won't be offered at fire-sale prices.

Also, HP is a tier-one brand. It can drop its prices slightly and shift the problem to suppliers of second-tier and no-name laptops that sell mainly on price.

Acer, the giant Taiwanese PC supplier, has a problem with unsold stock, having discovered "abnormalities in terms of channel inventory stored in freight forwarders' warehouses, and in the accounts receivables from channels in Spain," and is taking a $150m write-off. Some other companies may also have unsold stock because, according to Gartner research, UK sales of PCs fell by 15% in this year's second quarter to 2,462,000 units. It's a good time to look for bargains but you may not see significant reductions until just after Christmas, when Intel releases new chips.

Sometimes suppliers want to shift a load of PCs quickly, either because they're discontinuing a particular model or because they are bringing out a new range. However, they usually don't want to sell them via their usual outlets (Currys, PC World etc) because that would upset everybody's idea of orderly pricing. These are good candidates for discount websites, or they can be sold as "supermarket specials".

Over the years, I've seen great deals in a variety of places including Aldi, Morrisons, Argos and Staples. These are not places I'd normally look for a new PC.

Of course, buying a laptop that really is a special offer means you won't get much choice of specification or brand.

There are plenty of websites where you can hunt for laptop bargains including Amazon.co.uk, Laptopsdirect, Save On Laptops, Laptopshop.co.uk, ebuyer.com, Misco, and Tesco Direct. Compare prices to make sure the savings are real and, as usual, caveat emptor.

Many online stores sell "open box" products, which means the original customer returned it, possibly because he "changed his mind". There are also "Grade B" products, which means there can be cosmetic damage on a new PC, such as minor scratches. Finally, some sites sell refurbished laptops, which may have been heavily used. The Laptop Centre, Student Computers and Portable Universe have lots of refurbished laptops, as do many other sites.

Dell Outlet sells returned and refurbished Dell PCs, while Apple UK sells Apple Certified Refurbished machines.

When new laptops cost £1,500 to £2,000, there was plenty of incentive for bargain hunting or buying refurbished PCs. Now that you can get a netbook for £200-£250 or a decent laptop for £350-£500, the potential savings are much smaller. If you save £100, that's only £25 per year for four years, or 50p a week. If it means buying a laptop you'll hate rather than one you'd like, it might not be such a good deal.

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Untangling the Web Education

It's the first day of school and you're set for a new academic year: you've got all your supplies jammed into your new school rucksack: the pens and notebooks, coloured pencils and stapler, three-ring binders and textbooks.

Now add your laptop or tablet, a wifi connection, a list of usernames and passwords, account details for blogging platforms, social networks, photo sharing sites, cloud-based research resources, collaboration tools and digital 3D learning environments.

That's one heavy bag.

The Web is the ultimate distributed network of information, so how has it transformed the learning process in the last twenty years? For this fortnight's Untangling the Web, I'm dissecting the beating heart of today's education system to discover how people are using the web in classrooms, at home and in libraries, from nursery to university, and whether it's helping or hindering the education process.

It's an enormous topic, with many vested interests. I'll be focussing on pedagogical theories, online education enablers, novel learning techniques and approaches that the web affords rather than focussing on the following themes (which demand their own columns):

- games and learning
- education regulation and policy
- key stages and Internet safety/citizenship
- disinformation
- specific classroom technologies

Do you have a digital education story to share? Add your comments below, or send an email to aleks.krotoski.freelance@guardian.co.uk. You can also tweet me @aleksk.

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Steve Jobs: the great communicator, though maybe not via email

Many of Steve Jobs's email replies came from his Apple iPhone. Photograph: Kimberly White/Reuters/Corbis

Steve Jobs may effectively be gone from Apple, but he is far from forgotten by those who worked inside and outside with him. His style in dealing with customers could be astonishingly blunt, yet never what you would call directly rude. His email address became known around the web, and people would contact him through it. Those emails began to be collected by various blogs.

And while Jobs might have been known as a great communicator when up on a stage in front of an audience, when dealing through email, "terse" barely begins to describe it. Here's a selection:

September 2010:
Customer: "Steve, Enjoyed the presentation today. But … this new iTunes logo really sucks. You're taking 10+ years of instant product recognition and replacing it with an unknown. Let's both cross our fingers on this…."
Jobs: We disagree.

June 2010:
Customer: "Any reason battery performance on a 3GS running iOS4 should be worse than it was running OS3?"
Jobs: Nope.

June 2010:
Customer: "Mr Jobs, Newsweek just ran an 'obituary' for the Mac saying the mac has been 'relegated to the steaming dung heap of the past'. I hope he's wrong. I believe and hope that the Mac will remain a vibrant, vital part of Apple's future and one of its (admittedly many) product lines. So, as you view it, does the mac have a long and important history ahead of it?"
Jobs: Completely Wrong. Just wait.

May 2010:
Customer: "Do you hate Adobe and their products (Photoshop, Illustrator, etc) or do you just hate their view on Flash?"
Jobs: I respect and admire Adobe. We just chose to not have Flash on our devices.

May 2010:
Customer: "Why no printing on the iPad? What gives?"
Jobs: It will come.

And then there was the entire thread between Jobs and Ryan Tate of Gawker in May 2010, in which Jobs suggested that the iPad and Apple Store combination offered "freedom from porn". (Context: Gawker's parent company faced legal charges over its display of the then-unreleased iPhone 4 prototype, and there had been some police presence at a Gawker writer's house in California.)

Here's how it went. Tate began:
"If [Bob] Dylan was 20 today, how would he feel about your company? Would he think the iPad had the faintest thing to do with 'revolution'? Revolutions are about freedom," Tate wrote after seeing an iPad advert.

Three hours later, Jobs replied: "Yep, freedom from programs that steal your private data. Freedom from programs that trash your battery. Freedom from porn. Yep, freedom. The times they are a changin', and some traditional PC folks feel like their world is slipping away. It is."

There follow an argument about Flash, batteries, Objective-C, porn ("you might care more [about not having it] when you have kids", remarks Jobs), whether Apple has a private police force that kicked in a Gawker person's doors ("You are so misinformed," Jobs retorts. "No one kicked in any doors. You're believing a lot of erroneous blogger reports").

Jobs concludes: "Microsoft had (has) every right to enforce whatever rules for their platform that they want. If people don't like it, they can write for another platform, which some did. Or they can buy another platform, which some did.

"As for us, we're just doing what we can to try and make (and preserve) the user experience we envision. You can disagree with us, but our motives are pure."

And then a final, very Jobs-ish little parting shot:

"By the way, what have you done that's so great? Do you create anything, or just criticise others [sic] work and belittle their motivations?"

Yet Tate himself said that "came away from the exchange impressed with his willingness to engage". Tersely, of course.

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Boot up: spam kingpin mugged, smartphones in Africa, coding kids and more

A man on the phone at an internet cafe in Nairobi, Kenya. Smartphone next time? Photograph: Tony Karumba/AFP/Getty images

A burst of 9 links for you to chew over, as picked by the Technology team

Go on, enjoy the schadenfreude.

Rom Miller: "When it comes to greenfield economies, the fastest way to the Internet is via a cellphone. It's a lot more affordable for a country with little infrastructure to put up some cell towers, and the phones are cheaper than PCs, laptops, and tablets for individual citizens. "That's why it's so interesting that Safaricom, a Kenyan ISP that reportedly has over 17m customers, has decided to get into the low-end smartphone business. And over 350,000 Kenyans have reportedly bought the cheap phones. "The phone itself is the Huawei IDEOS. Click through and have a look. This is not half bad for the money. It runs Android 2.2 and includes WiFi, a camera, and, of course, access to the Android app store. "I can't say how well the smartphone works or how responsive it is. When the Website itself claims 'higher overall performance compared with previous releases,' you can infer that it might not be the highest-quality phone on the planet, but it's not supposed to be."

Interesting roundup of languages to let your ...eight-year-old upwards?.. teach themselves with. (Perhaps with a little help.)

Arik Hesseldahl: " Thus our range is somewhere in the neighborhood of $140 million to $300 million spent on hardware alone, depending on how many units ordered." Where the units ordered are reckoned to be between 500,000 and 1m.

Google+ does browser security the right way: no sniffing, HTTPS only, no framing. Facebook? Not so much.

Jack Schofield again, interesting in retrospect: "Was it a good idea for Hewlett-Packard, the world's biggest computer company, to buy Palm – which now specialises in mobile phones – for $1.2bn?
"The initial response from analysts has been as mixed as you'd expect – see the comments from Forrester, Gartner, IDC, Informa, and Ovum below – but almost everything depends on what HP intends to do with its new company."

Jack Schofield (formerly of The Guardian) thinks Samsung is the only likely buyer because it's so big and would want a big PC division: "Although it hasn't been widely discussed in the west, it looks as though HP has been talking to Samsung for many months. For example, the Taiwan-based Want China Times ran a story in March, Samsung's planned acquisition of HP sparks market concern, which said that 'rumors that HP would sell its PC business have been circulating in the market for some time now.' It adds: 'there are also reports that HP has talked with Hon Hai [Foxconn] and Chinese high-tech giant Lenovo to explore the possibility of a deal.'"
Makes a lot of sense, apart from the penultimate sentence, which says "PSG could be Samsung's Trojan horse in the US market, enabling the innovative giant to take the battle to Apple." Er, what battle, exactly? Mac buyers aren't likely to be tempted by Samsung/HP Windows PCs.

Which is why you should not upgrade to PHP 5.3.7 (or downgrade if you have). Perhaps a new function in 5.3.8, regressiontest() ?

Ryan Block turns out to have been prescient about Colligan shrugging off the threat from the iPhone - two months before it was made visible outside Apple: "No, the iPhone will have its own set of annoying issues, but believe you us, Ed, Apple will 'just walk in', so you'd better have a few and-one-more-thing-s up those sleeves of yours if you're thinking about stopping a mass defection."

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Boot up: China's PC market overtakes US, Windows Phone 7 – the (preliminary) verdict, and more

China's PC market ... now bigger than US's

A quick burst of 8 links for you to chew over, as picked by the Technology team

"PC shipments in the China market have exceeded those of the United States in the second quarter of 2011 (2Q11). Approximately 18.5m units worth US$11.9bn shipped in China during the quarter, compared to 17.7m units worth US$11.7bn in the U.S. China represented 22% of the global PC market's unit shipments compared to the US at 21%."

Nice implementation in HTML5 - though of course you'll need a compatible browser. Code at https://github.com/emmasax/Phone-hacking by Emmasax.

"Look, I recognize that no phone is perfect, no mobile OS is perfect, no technology is perfect, I'm not perfect, all of that. And Mango is, by and large, a good effort. But at this stage in the game, it's got to be on point if Microsoft has any hope of convincing people to turn their adoring eyes from iPhone or pull them away from the massive marketing machine of Android. Mango is good. A lot of people could use it every day and be totally happy with it. But it's not great."

Molly Wood is usually thought of as a Windows fan. (Thanks @Avro for the link.)

"Pretty much ever since Paul Buchheit suggested "Don't be evil" as a corporate values statement (and Amit Patel begun writing it on whiteboards around the office), any time Google does something people don't like, they begin calling it 'evil' and complaining that Google is violating its prime directive.
"But surely 'evil' means something more than just 'wrong' or 'bad'. If the girl across the street peers through your window to watch you undress, we might say that was bad and wrong and awful, but I don't think anyone would try to claim it was evil."

Thoughtful: captures the essence of how Google, and companies that succeed in building loyal customer bases, think, and how it differs from those which don't.

Intriguing investigation of how the ability to build stuff has leaked away across the Pacific: the two companies given as examples make an interesting contrast.

"The series of pie charts shows the sales of various music formats: Thus, you can see cassettes begin devouring the LP, and then CDs devouring cassettes, and then, of course, downloadable MP3s decimating CD sales:"

The trouble though is that it's jerky and less easy to follow than the same data as a straight line graph. Only us?

Includes Michael Dell.

"Robert McMillen, president of Portland, Ore.-based All Tech 1, a security solution provider with a strong mobile security business, said his company wasted no resources on the WebOS software or the TouchPad hardware because neither offered a value proposition for his customers.
"'We never had a single meeting with our staff about supporting [the HP TouchPad] platform,' he said. 'There was almost no information on security for this product. It wasn't built for business, it was built more for consumers. It wasn't even a blip on our radar.'"

And he's not alone. HP has burnt a lot of boats with this move.

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Good news, Mr Jobs - Taiwan's CGI wizards have recapped your career

Your life achievements haven't properly been recognised until they've been rendered into faintly dodgy CGI by the Taiwanese outfit NMA. (Tiger Woods, you were so honoured.)

But we're happy to say that Steve Jobs, who resigned as chief executive of Apple on Wednesday, has been duly recognised. (In fact it's come up so fast that we suspect they might even have had this prepared, which we didn't think they were allowed to do under their "make it look as weird as possible" conditions. To say that it's a figurative - nay, symbolic - rather than literal representation only begins to scratch the surface.

As Bitterwallet points out, "Obviously, it covers all the key points in the life of Jobs – the LSD-fuelled epiphany, that time he gave birth to a computer, the vicious lightsaber fight with Bill 'Darth Vader' Gates and his subsequent bout with the Grim Reaper. It's all there – a fitting tribute if ever we saw one."

To which we'd add that it also has the time he fought off an attack of killer Android bots in his boardroom, upon which he was helped by someone who we can't actually recognise but seems to be wearing a rainbow flowerpot on his head. Mark Zuckerberg? Honestly, it's like Madame Tussauds in there. Anyway, enjoy.

Steve Jobs's life and career, as rendered by Taiwan's NMA

It's like Picasso was writing and reporting the news, isn't it?

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