Portfolio.com: Tech Observer

First Bytes: SEC Eyes Tweets, Waiting on a Verizon iPhone

Megan Barnett — Mon, 27 Apr 2009 13:10:36 GMT

Socially active public companies should carefully watch whether their blogs and tweets violate the SEC's regulations on information dissemination. [Wall Street Journal]

Tired of status updates from your marginal friends on Facebook? Now there's a site that lets you get that same mundane information from complete strangers. [New York Times]

According to insiders, Apple and Verizon could strike a deal that would put Verizon Wireless iPhones on the market by early next year. [USA Today]

No matter what kind of IT security your company installs, chances are good that you'll still do whatever it takes to run the applications you want on your work computer. And now there's a study that proves it. [Ars Technica]

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Last Bytes: A New MySpaceFace, Technological Necessities

Megan Barnett — Fri, 24 Apr 2009 21:22:04 GMT

Survey says a growing number of people consider iPods and broadband more necessary than "old tech" like washers and dryers. This may explain why most bloggers smell the way they do. (Wall Street Journal Digits blog)

It's official. Former Facebook exec, Owen Van Natta was announced as the head of MySpace today, branding him with the unfortunate office moniker MySpaceFace for life. Meanwhile, a former MTV exec is hired to fill his place at music-sharing company, Project Playlist. (New York Times, AllThingsD)

When you call in sick with the excuse that your eyes can't handle a computer screen, don't then check your Facebook account from home. (Reuters)

Roaming cell phone charges add up to a $62,000 movie rental fee for one traveler who downloaded Wall-E, a film about the excesses of lazy humans dependent on technology and constant television entertainment. (Ars Technica)

No roaming charges on one of these babies. Just in time to put the nail in American carmakers' coffin, the world's most popular motorcycle model is re-launched in the U.S. after a 26-year hiatus. (Wired.com)

by Alexandra Fenwick

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What the One Billionth Downloader Won

Megan Barnett — Fri, 24 Apr 2009 18:37:30 GMT

Nine months after Apple began selling apps for the iPhone and iPod Touch, 13-year-old Connor Mulcahey of Weston, Connecticut downloaded the billionth application from the iTunes store.

Poetically, it was a free app.

Mulcahey, barely old enough to have qualified for the contest, will win tens of thousands of dollars in Apple hardware and software for his fateful download of Bump, a free app that lets people exchange contact info by holding iPhones and bumping fists.

He's not the only winner. Bump Technology also stands to gain from having its app mentioned in the first paragraph of an Apple announcement.

The company's free app (paid version soon) is simple but potentially useful. Enter your phone number, address, e-mail address, and photo, and you'll be able to beam any or all of that information to another iPhone or iPod Touch user who also has the app installed with a simple fist-bump greeting gesture. Contact information gets swapped over an encrypted internet connection, not Bluetooth or an ad-hoc WiFi connection, but that could change this summer when Apple enables peer-to-peer connections on the devices.

Apple itself makes 30 cents on the dollar from the sale of paid apps -- about the same rate it commands from recording artists and record labels. (If developers really are the new rock stars, it makes sense that iTunes pays them what it pays actual rock stars.)

Apple, predictably, is celebrating the latest in its long run of iPhone- and iPod-related successes.

"The revolutionary App Store has been a phenomenal hit with iPhone and iPod touch users around the world, and we'd like to thank our customers and developers for helping us achieve the astonishing milestone of one billion apps downloaded," stated Apple senior vice president of worldwide product marketing Philip Schiller. "In nine months, the App Store has completely revolutionized the mobile industry and this is only the beginning."

It's true that the App Store revolutionized the mobile industry. Apple did this by letting developers hawk wares directly to consumers, rather than forcing them to deal with cellphone carriers, who forced them through lengthy approval processes, horded screen space, and generally formed a blockade between mobile developers and users. Now that Apple has broken that deadlock, other smartphone platforms are developing along similar lines.

And it's impressive that iPhone and iPod Touch users have downloaded a billion apps from the store, since (as we confirmed today with Apple) its download tally does not include updates to previously-downloaded apps.

But the road to the billionth download hasn't been entirely smooth.

In the early days of the App Store, developers seemed generally happy with the process of submitting apps (Pandora chief technology officer Tom Conrad, formerly of Apple, told us before the App Store launched that his team preferred developing for the iPhone to developing for the web).

But a flurry of headlines about youngsters making millions by selling apps ranging from the useful (HopStop, Credit Card Terminal) to the inane (flatulence simulators) has stimulated a gold rush that challenges Apple's ability to keep up with the torrent of apps being submitted. The company has already approved over 35,000 apps for inclusion in the store, and as Schiller said, "this is only the beginning."

by Eliot Van Buskirk

App Developer Strikes E-Book Deals With Major Publishers

Apple's Upcoming iPhone Remote App for iTunes Is Really Smart

iPhone Apps Are a Trojan Horse for Music Pricing

Nine Inch Nails' iPhone App Lets You Tap Along to 13 Songs

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The End of Innocence at Apple

Megan Barnett — Fri, 24 Apr 2009 15:25:48 GMT

It seems unthinkable today — but more than two decades ago, when personal computers were still new and everybody listened to music on a Walkman, Steve Jobs was cast out of Apple. The year was 1985. IBM and Microsoft dominated the world of computing. The revolutionary Macintosh, launched with such fanfare just a year earlier, appeared to be foundering. And Jobs, the guiding force at Apple from the beginning, seemed not just expendable but a threat to the company he’d built. In West of Eden — a national best-seller when it was first published in 1989, now updated in a new edition available on Amazon — Wired contributing editor Frank Rose tells how it went down. In an essay excerpted from the introduction to the new edition, Rose recalls the downward spiral Apple fell into after Jobs was dismissed and ultimately how Jobs could be the fall guy one decade and Apple's savior the next.

Read the essay here.

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First Bytes: Social Videos, 1 Billion Apps, Mt. Everest Calls

Megan Barnett — Fri, 24 Apr 2009 14:23:31 GMT

Netflix posts big profits and decrees that the future of video is social. (GigaOm)

Apple hit its 1-billion-apps-sold milestone today, but not with the help of a baby-shaking game pulled after much outrage. (Reuters, AP)

The Harvard Business Review on why the New York Times should buy Twitter and not just because the author thinks the Elmer Fudd-sounding New York Twimes sounds funny. (HBR)

Finally, a cell phone signal on Mount Everest. Meanwhile, my phone drops calls in midtown New York. (Reuters)

by Alexandra Fenwick

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Last Bytes: Microsoft and Amazon, Two Tales of the Economy

Megan Barnett — Thu, 23 Apr 2009 21:40:55 GMT

For the first time in its history, Microsoft reported that revenue fell during the first quarter when compared to the first quarter of last year. Net income fell 32 percent and revenue fell 6 percent, but the software giant met analysts' expectations and shares rose slightly in after-hours trading. [Bloomberg]

Amazon continues to buck current economic trends. The online retailer beat expectations by posting a 24 percent increase in net income and an 18 percent rise in revenues. Bezos said the Kindle continues to surpass its internal expectations. [Reuters]

Remember Geocities? You probably assumed it died a long time ago, but in fact Yahoo just closed it down this month. [Techcrunch]

The judge in the Pirate Bay case evidently didn't disclose he's a member of two pro-copyright groups and now one of the convicted executives is trying to over turn his guilty verdict. [Wired.com]

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Dell's Plastic Surgery

Megan Barnett — Thu, 23 Apr 2009 19:12:54 GMT

Dell has been long been the Ugly Betty of the PC industry--functional, smart but severely lacking in the looks department.

But over the last two years, the company's consumer-targeted PCs have gotten a design makeover that would make Tyra Banks proud. Dell's latest machines offers sleek designs; unusual materials such as fabric, bamboo and leather; and striking covers designed by graffiti artists.

"You are seeing the switch from total utilitarian, speed-and-specs kind of thinking to something that will fit the personality of consumer," says Ed Boyd, vice president of consumer products at Dell. "It's the same transformation you saw in cellphone and the automotive industry."

The former global creative director for Nike, Boyd has helped build Dell's consumer division into a design powerhouse, churning out products that the company hopes will put it ahead of rivals and bring in consumers who want both style and value in their PCs.

The commitment to better design comes at a challenging time for Dell. Dell's personal computer shipments fell 16.7 percent worldwide in the first quarter from a year ago. In the United States alone, Dell shipments fell 16.2 percent, according to research firm IDC. Meanwhile, Dell's rival Hewlett Packard increased U.S. shipments 2.9 percent worldwide and 12.2 percent. Dell now ranks second to HP in terms of overall market share in the United States.

In focusing on design, Dell is making a risky bet. Better design could help rejuvenate consumer interest in the company's products -- or it could add to costs and make its products pricey at a time when consumers are rushing in droves to buy inexpensive netbooks.

Meanwhile, driven by Apple's focus on design, customers are increasingly looking for products that are stylish yet offer value, says Craig Vogel, associate dean and professor of design studies at University of Cincinnati.

"The design of the iPod and the iPhone has driven sales to Apple's computers, which is something that other companies have noticed," says Vogel. "Design is not an option anymore, the marketplace is demanding it."

It took the clout of Dell founder Michael Dell to get the frumpy, utilitarian PC maker more focused on style. Two years ago, Michael Dell stepped back into the CEO seat to take over a company that seemed to be in danger of losing its luster. Dell's much-admired efficient supply chain process no longer seemed enough to put the company ahead of its competitors. Dell's customers were beginning to balk at the company's bulky machines.

"Nineteen months ago, Michael told me the horse that we rode so far wasn't going to take us to the next level," Boyd says. "Design was going to have to play a much bigger role at Dell."

As the first step, Michael Dell brought on Ron Garriques, the former Motorola executive credited with the success of the RAZR phone, as the president of Dell's consumer products.

Garriques, in turn, has attracted star designers like Boyd and helped put together a design team that is growing fast. Five years ago, Dell had just about half a dozen designers on its team. Today the company has 130 members on the team. They include a behavioral and cognitive psychologists, usability experts, former designer from companies such as furniture maker Herman Miller and auto maker GM.

Second Skins

Dell has embraced a variety of new materials for covering its PCs.

Bamboo: The Studio One Hybrid PC comes with a bamboo case.

Fabric: The Studio One 19 touchscreen desktop offers optional fabric panels to frame the display.

Leather: The Studio XPS 13 laptop has a leather panel that runs through the back of the display.

Designs: Dell offers artsy decals for its laptops and a Product Red portfolio from various African artists.

There have also been changes to how Dell has organized its design teams. "Earlier, design reported to engineering and marketing," says Michael Smith, who has been part of Dell's design team since 2003. "But now it is becoming its own entity with equal footing."

The moves have helped Dell get more fashionable, fast. Most conspicuously, the company is experimenting with different materials and finishes. The company's Studio XPS 13 and 16 laptops use leather trims. The Studio hybrid desktop offers an optional bamboo casing, and the Studio One 19 PC -- aka the 'kitchen PC' -- can come with a fabric panel that fits around the display.

Many of the design improvements have to do with the outermost surface of the Dell's computers, and that doesn't go deep enough for at least one industrial designer.

"Dell needs to treat design as something that is not superficial," says Max Burton, executive creative director for Frog Design in San Francisco. "What they have right now is more of applique design -- [it's] more about finishes than real change to the materials and process."

But Dell execs say that their focus on design means more than just looks. For example, a Dell Studio hybrid desktop launched in the last year uses 70 percent less material and power than older desktop models, says Boyd.

Design improvements do not have to come out of the consumers' pockets, says Boyd. It's about making the right tradeoffs. "We can take out the non-value-adding functionality, such as too many connectors, and put value where people find it," he says.

For instance, designers removed an external button for turning Wi-Fi on and off in the Dell XPS 1330 laptop. Now users have to go through the software program to do it. "That's money I save," says Boyd, "and give it back to the customer in the form of lower prices or better finish."

"When we do put more money into the finishes and industrial design, we don't do that arbitrarily," says Boyd. "In those products we see a spike in sales, as in the redesign of the Studio XPS line."

Boyd has also helped the team improve on such things as packaging and accessories, says Smith. Adamo, for instance, comes in a clear package and offers optional accessories such as tote bags from Tumi.

All that may not be enough. Design experts such as Vogel and Burton say Dell needs to take a chapter out of Apple's playbook. For instance, Apple's latest Macbook, introduced last year, has a body whose main part is machined from a solid piece of aluminum. It allows for lightweight, yet sturdy, machines and better design.

"The innovation with the aluminum is a big step ahead in terms of process and design especially when Dell is still using injection-molded plastic in many of its machines," says Burton.

That kind of fundamental change in how Dell approaches design could take much longer. For now Dell is walking a tightrope -- trying to please its flock that is price-sensitive, even as it tries to court the fashionistas. It's a feat not many designers have been able to pull off.

by Priya Ganapati for Wired.com

Photos: Jon Snyder/Wired.com

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Why High Tech Needs the Wall Street Quants

Megan Barnett — Thu, 23 Apr 2009 15:20:43 GMT

Richard Bookstaber, one of the original MIT math geeks gone bad (a.k.a. "quants") and the guy who literally wrote the book on how to destroy Wall St. with computers, has been tracking what he calls the "arms race" in high-frequency, computer-automated trading. If he's correct with his recently floated hypothesis that "the days for high frequency trading are numbered," then this would be pretty bad news for Intel, AMD/ATI, and NVIDIA.

To understand why the demise of high-frequency trading would be bad for these companies, you first have to understand that to successfully develop, fabricate, and sell high-powered number-crunching chips, you need at least two market segments: 1) a high-end, high-margin segment where you can launch your top-tier, most expensive products, and 2) a much larger market where you can sell last quarter's and last year's top-tier parts in order to achieve the economies of scale that enable you to keep producing the high-end parts that perpetuate this trickle-down product cycle.

For NVIDIA, Intel, AMD/ATI, and, to a certain extent, IBM, that much-coveted high-end market segment is made up of a collection of niches, and any journalist or analyst who has sat through a GPGPU or high-performance processor presentation for any of these companies can recite from memory the most popular members of this collection: medical imaging, defense, oil and gas exploration, pharmaceutical research, 3D rendering for movies, and finance. The last item on this list is especially popular, and if I had an ounce of diamond-studded platinum for every time I've seen a Black-Scholes options pricing benchmark result in a presentation, I could out-bling Soulja Boy at next year's BET awards.

The thing that always strikes me about these presentations is that this handful of compute-intensive problem domains is typically listed as "examples" of the sort of profitable niches you can target with a vendor's hardware, the implication being that there are just oodles of other such workload families out there that the presenter could adduce if he or she had enough space on the PowerPoint slide. Except that this isn't really the case. Those six items aren't just examples—they're basically the whole list, and this short list needs to grow, not shrink. This is one reason why lopping finance off that list would be very bad for everyone in the teraflops business.

But it's not just that the end of high-frequency trading would cost the teraflops vendors a small but high-margin niche to sell into; they'd lose something even more critical to a publicly traded company's prospects: a growth story.

NVIDIA in particular is a great example of what I'm talking about. The GPU maker's premium Tesla line of math coprocessors is at present a very small percentage of the company's revenues, but it's a mammoth part of NVIDIA's growth story, and for good reason. Before the meltdown turned "quant" into a four-letter insult, GPU hardware had a real future in high-frequency trading. And it probably still does—the real question is, does high-frequency trading have a future?

Is high-frequency trading really a goner?

Bookstaber's problem with high-frequency trading isn't that he has had some Nasim Taleb-style vision of a Godzillion-Teraflop monster rampaging through Manhattan, destroying markets with a hot blast of twenty-sigma events. Rather, he has a two-part criticism of the practice, the first of which has to do with a high-frequency trader's size and role in providing market liquidity. I'm not qualified to comment on that one, so I'll skip to the second part of his criticism, which is about the "arms race" aspect of these kinds of program trades:

A second reason is that high frequency trading is embroiled in an arms race. And arms races are negative sum games. The arms in this case are not tanks and jets, but computer chips and throughput. But like any arms race, the result is a cycle of spending which leaves everyone in the same relative position, only poorer. Put another way, like any arms race, what is happening with high frequency trading is a net drain on social welfare.

In terms of chips, I gave a talk at an Intel conference a few years ago, when they were launching their newest chip, dubbed the Tigerton. The various financial firms who had to be as fast as everyone else then shelled out an aggregate of hundreds of millions of dollars to upgrade, so that they could now execute trades in thirty milliseconds rather than forty milliseconds—or whatever, I really can’t remember, except that it is too fast for anyone to care were it not that other people were also doing it. And now there is a new chip, code named Nehalem. So another hundred million dollars all around, and latency will be dropped a few milliseconds more.

I once heard from some Intellers about a study that the company had done that determined the number of millions of extra dollars per day you could make on various high-frequency trading strategies by going up a speed bin on their Xeon line. I don't remember the details, but it turns out that (according to Intel, at least) trading houses can make a non-trivial amount of money just by moving up on speed bin, because this puts them a few beats ahead of the next buyer.

Bookstaber's remarks above lend credence to Intel's claim about the returns on those processor upgrades, but his (correct, I think) description of this whole game as a negative sum arms race gives high-frequency trading a distinct air of "this can't possibly go on forever." And as we've all learned over the past six months, things that can't go on forever don't.

I'll be the first to admit that I can't actually envision a particular set of circumstances under which the arms race spontaneously grinds to a halt, and the big teraflops vendors suffer the fate of defense contractors in the immediate wake of the end of the Cold War (pre-Iraq II, of course). Bookstaber doesn't seem to have a particular scenario in mind, either, which is why he ends up (only half-seriously) proposing that everyone should just stop doing it for the greater good. Still, it's hard to escape the feeling that, of the five or so compute-intensive application domains that I listed above, finance is the one that seems the most unsustainable in the long-term (right ahead of oil and gas exploration).

Nonetheless, even in the absence of high-frequency trading, if the market can continue to offer up a major new way to turn compute cycles into dollars at least once per decade, then this might be sufficient to fuel the ongoing development of the kind of high-end hardware that Intel and NVIDIA provide. Biotech is the most likely source of the necessary workloads, as many of its problems are moving from the realm of lab science into the realm of computation and data management (DNA sequencing is one example of this).

by Jon Stokes for Ars TechnicaRelated Links
Intel: Entertainment Company?
First Bytes: Intel, IBM, Twitter, Mark Cuban
First Bytes: $100 Million Tax Bill Edition

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First Bytes: New Blood at MySpace, Steve Jobs Testimony

Megan Barnett — Thu, 23 Apr 2009 13:05:57 GMT

MySpace is getting a new CEO, possibly former Facebook exec Owen Van Natta. Jason Calcanis has written Van Natta's first "to-do" list with the first ten things he should do. [Calcanis.com]

What happens when a total Star Trek virgin goes to see the new prequel? Pure enjoyment. [CNet News]

Three hours of testimony by Steve Jobs in the options back-dating case proves that even Steve Jobs can't make the subject of options backdating anything but mind-numbingly boring. [All Things Digital]

Microsoft will be watched for another 18 months as part of its 2002 antitrust settlement, but government officials believe the company is in "a much better place" with regard to its compliance of the terms. [Ars Technica]

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Last Bytes: Apple Profit Soars; eBay Profit Falls

Mark Stein — Wed, 22 Apr 2009 21:04:52 GMT

Led by booming iPod sales and shrugging off a dip in its Macintosh business, Apple's net income rose 15 percent in the second quarter to $1.21 billion. Revenue increased 8.7 percent, to $8.16 billion. [BizJournals]

EBay's net dropped 22 percent in the most recent quarter as revenue retreated 8 percent. [WSJ]

The iPhone staunched some of AT&T's profit bleeding, as its first-quarter profit dropped 9.7 percent from a year ago, but the results far exceeded Wall Street's expectation of a bigger plunge. [NYT]

In App Store war, BlackBerry and Google are still holding their own. [Reuters]

The old streetlight is getting a "green" makeover. [WSJ]

Hong Kong appeals court blocks telecom firm PCCW's $2 billion buyout by a Hong Kong tycoon. [AFP]

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