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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