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The first images of the Samsung Galaxy S II Plus have surfaced, prompting speculation that the company may launch the handset in the near future. From the leaked images we can see that it has a lot of similarities to the Galaxy S II, and even has the bump at the rear.
The Samsung Galaxy S II Plus I9105 is expected to come with a 4.3-inch WVGA display, an 8 megapixel rear camera and a 2 megapixel front-facing camera. Apart from this, the handset is expected to run on Android 4.1 Jelly Bean and will feature a dual-core 1 GHz processor. The weight of the handset is believed to be 121 gm, while its dimensions are 125.3 x 66.1 x 8.98 mm.
In September, a GLBenchmark leak showed a device with the codename Samsung GT-I9105. The benchmark showed that the device had a display with a resolution of 960 x 540 pixels, but this is now expected to be lower, with the resolution at just 800 x 480 pixels. The other bits of information revealed through the benchmark included a 1.4GHz CPU.
The Galaxy S II Plus will come loaded with a PowerVR SGX 544MP GPU. This information was revealed by the GL Environment tab of the benchmark.
At the time, the benchmark indicated that the operating system loaded on the device was Android 4.0.4 Ice Cream Sandwich and not Jelly Bean. However, this could change when Samsung is ready to release the handset and they may launch it with Android 4.1 Jelly Bean onboard. As of now, there is not much else known about the specifications, but once it launches, the price of this handset is expected to be around Euro 400.
Besides this smartphone, another Samsung handset that's surrounded by rumours is the upcoming Galaxy S IV. It's said to be announced in April 2013 and would be a part of a project by Samsung called Project J. Late last month a benchmark on NenaMark detailing a handset with the model number GT-I9400 was leaked. If the numbering system Samsung has stuck to so far is anything to go by, this may well be the highly anticipated successor of the Galaxy S III.
You might be a little taken aback by the low specifications found in the benchmark, as the resolution of the device's display is shown as just 480 x 800 pixels, and the CPU runs at only 1.2GHz. However, these rumours should be taken with a large dose of salt, and you should definitely not expect these specifications to be associated with the device once it is available for purchase. Prior to the launch of the Samsung Galaxy S III, which had the codename GT-I9300, the handset appeared on benchmarks in December with a display sporting a resolution of 800 x 480 and a dual-core processor. As we know, Samsung did not launch the handset such low specifications, so you can definitely expect the GT-19400 to be launched with specifications as low as this.
After posing for a range of images, the upcoming BlackBerry 10 L-Series handset is now the lead in a hands-on video, where some of the features of the upcoming BlackBerry 10 operating system are showcased along with the hardware.
The video has been captured by the same Vietnamese website that leaked the images of the BlackBerry 10 L-Series handset a couple of days ago, tinhte.vn. The video shows the L-Series handset compared to the Dev Alpha B unit and this new handset appears to be a sleeker, more refined version. In the video we can see the layout of the icons, the various gestures that are now seen with the new platform and also the multitasking capabilities. The website notes that although the OS is still in its beta stage, the functionality of the device is smooth and all the features are present including texting, connecting to the BIS and calling capabilities.
Apart from the interface of the operating system, we once again can see the design of the handset, which should be a huge selling point for Research in Motion when it launches the handset.
Earlier on, the same website had posted a large gallery of images, and unlike previous leaks in the past, this post has high-quality images that let us see all the facets of the handset. The handset looks like it has been designed well and the images show the removable back cover, NFC antenna, location of the micro-SIM and microSD card slots as well as the removable 1800 mAh battery.
The volume rocker has a metallic finish and we can also see the micro-USB and micro-HDMI ports on the handset. Overall, it appears that Research in Motion has ensured the aesthetics of the handset are clean and beautifully designed. The back panel also matches up with the glimpse of the handset that's being displayed on the official BB10 landing page. This indicates that this piece could be the finished product and the first BlackBerry 10 handset will look like this once launched.
Research in Motion announced that it will hold its BlackBerry 10 launch event on January 30, 2013. The event will be held simultaneously in multiple countries around the world. This day will mark the official launch of its new platform, BlackBerry 10, as well as the unveiling of the first two BlackBerry 10 smartphones. Details on the smartphones and their availability will be announced at the event.
BlackBerry 10 will offer a large catalogue of leading applications from across the globe and across categories, including Games, Productivity, Social, Lifestyle and Leisure, Multimedia and Published Content, as well as applications designed for business and enterprise use.
The BlackBerry 10 platform recently achieved FIPS 140-2 certification, which means government agencies will be able to deploy BlackBerry 10 smartphones and BlackBerry Enterprise Service 10 as soon as it is available. The company claims that this marks the first time BlackBerry products have been certified ahead of their launch. In addition, RIM recently announced that BlackBerry 10 smartphones have now entered more than 50 carrier labs with many more entries expected in the coming weeks.
If you've ever had your iPhone stolen, you have have erased it completely using Apple's "Find my iPhone." This feature, which can be accessed online or through another iOS device, allows you to remotely lock your missing device with a four-digit passcode. You can even go so far as to delete your personal data and restore your iPhone, iPad, iPod touch, or Mac to its factory settings.
NEWS: See How Purchases Directly Impact Climate Change
Yesterday, Apple quietly released an update to the app that will show user's a road map to the exact location of a missing iPhone, iPad or iPod. When searching for the device's location on another iOS device, a tiny car icon will show up on the screen and when prompted, will provide directions to the lost device's whereabouts. The feature is only available on Apple device running iOS 6, so if you haven't already, bite the bullet and upgrade, if this kind of thing is important to you.
One would like to think this feature was added to serve as a memory jogger for those who may have left their phone somewhere and not as a tracker for a potential thief. Just be sure to have a cool head if you decide to hunt down your iPhone. It may be best to let the authorities handle it, or bring a big friend.
Swipe Telecom has upped its Android tablet portfolio with the launch of a new product called the Legend. This slate works as a phone, and also has dual-SIM (GSM) functionality. (Be warned though — talking on a tablet can attract some awkward stares!) Like most budget tablets, the Legend's 7" capacitive screen has pixel dimensions of 800x400. It's powered by a 1.5 GHz dual core processor, and has 512 MB of RAM. For those desperate shots, you get a 2 mp rear camera — plus there's a 1.3 mp front camera for voice chat. The tablet comes with Android 4.0 (Ice cream Sandwich), which is pretty much a norm these days. Here's the list of specifications from the Legend's product page:
7" TFT LCD screen with 800x400 pixels.
1.5 GHz dual-core CPU, 512 MB of RAM.
4 GB of internal storage, MicroSD card slot (Supports up to 32 GB).
2 mp rear camera, 1.3 mp front camera.
Wi-Fi, Bluetooth 3.0, GPS.
Android 4.0 (ICS).
Dual-SIM (GSM) with voice calling and 3G support.
FM Radio, Orientation sensor.
3600 mAh battery.
Package Contents: Power adaptor, Data cable, Earphones, OTG cable.
The Legend is available for Rs 12,000, and can be bought from Swipe's official eStore. In a similar price bracket, you can consider Huawei's MediaPad 7 Lite, which comes with a pixel-packed IPS screen and also phone functionality (but not dual-SIM).
This bit of patent-related news comes via The Register, and, as the site says, "This is out of hand now." Earlier this month, Apple applied for a patent on the leaf in its logo. That seems to have been encouraged by their recently granted patent on a rectangle with rounded corners. You can view the screenshot of the Leaf patent application here.
The US Patent Office has seen bizarre applications. What is remarkable here is, Apple's application is for something extremely simple: Two simple geometric shapes stitched together, and tilted at about a 60-degree angle. (As a reminder, this patent application is about only the leaf in the logo.)
You can imagine the chaos order that would ensue if other companies were to do an Apple® imitation™. Think about the Bing logo: If the "n" were trademarked, you'd have to give Microsoft® credit each time you used a simple "n" – or a "u" – in anything of commercial interest.
Apple's patent on the rectangle with rounded corners, and on the leaf shape (if they receive it), might explain some unexpected designs and logos in the near future.
The Internet has sustained some pretty intense assaults in the past couple of years. There was the heavy-handed attempt to stamp out content piracy with SOPA/PIPA, the Federal Communications Commission’s Net neutrality ruling, which many saw as splitting the baby, and that whack job who claimed to own a patent on the World Wide Web.
It is again open season on the Internet in Dubai, where the International Telecommunication Union, a United Nations agency ‑ whose mandate includes global communications ‑ is weighing proposals from many of its 193 member nations. Some of these proposals ‑ such as decentralizing the assignment of website names and eliminating Internet anonymity ‑ would make enormous changes to the organization and management of the Internet.
The ITU meeting, which began on Monday, runs through Dec. 14. Its agenda, and even the fact the proceedings are taking place at all, set off alarms among the Internet’s guardian angels.
Among the most vocal critics are a founder of the Internet, Vint Cerf, and of the Web, Tim Berners-Lee. Theirs is not some misplaced paternal instinct or senior graybeard moment or cry for attention. These guys are worried. And if they are worried, we all should be.
Still not sure this is serious business? The U.S. House of Representatives, which cannot agree on anything, voted unanimously to ban ITU regulation of the Internet before it even happens. The European Union did that last month, before the ITU even met.
Whether or not any policy directive emerges (or is abided by anyone) is not the point. The danger is in allowing any country to entertain the notion that Internet protocols can be put up for a vote.
It’s not as if the ITU is inherently evil. The U.N. agency’s previous convention, in 1988, focused on voice communications at a time when most phone companies were state-regulated monopolies. It took a global body to break up the cartels and ensure that phone service in every corner of the world adhered to global standards. This ensured that the system could work on the international level.
But the ITU has no inherent power to regulate the Internet. Nothing that makes the Internet work, nothing that has made the Internet great, has been the work of the ITU, which is inserting itself into this debate for the first time.
Today’s scenario is the exact opposite of the phone system dynamic The Internet has flourished exactly because it has always been a global standard, and some now want to regulate it at the state level.
There is an element of East-West, First-Third World envy in the proceedings. The Internet Corporation for Assigned Names and Numbers (ICANN), is a U.S.-based organization that controls the distribution of every Web address in the world.
Russia thinks ICANN’s system can be improved upon. It wants countries to “have equal rights to manage their Internet including in regard to the allotment, assignment and reclamation of Internet numbering, naming addressing and identification resources.”
That is a recipe for the chaos ICANN prevents.
Other proposals have a similarly power-hungry bent. One is a call to individually identify all Internet users — ideal for an autocrat’s retribution streak and surely on the wish list of every regime that sees the Internet as a metaphysical threat.
Politics aside, the most insidious proposal is one that nations can try on their own, and yet the countries are still seeking a U.N. imprimatur. It’s a proposal, championed by some African countries and India, that introduces a new revenue stream by imposing what amounts to a tax on Web publishers.
That scheme would have a chilling effect. As it stands, I pay for broadband — the door-to-door Internet pipe that gets, say, a Netflix video to my screen. Under the proposed scheme, Netflix would be subject to a new fee if the amount of data it streams (because I ask for it) exceeds some carrier-set bandwidth limit. That would be like sending Netflix the bill when you go over your smartphone Internet plan. It would definitely cause Netflix to rethink a few things.
Video consumes much more bandwidth than e-mail, for example, but the core concept of “Net neutrality” holds that all Internet traffic is created equal — and for good reason. If carriers can put up roadblocks, they can keep you from gaining access to Web services, or at least make it extremely painful in the pocketbook. They can force customers to use worse alternatives. They can extort … let’s call them “access fees” … from content creators. It would end the Internet as we know it and slow the development of new services.
The power to tax is not the power to destroy, unless it is. If we had taxed elevators ‑ higher marginal rates for the highest floors! ‑ there would be no skyscrapers.
But I am a hopeless optimist. The concerted pushback outside the ITU meeting’s closed doors to anything that might be going on inside will probably be enough to stop anything crazy. And something good may come of all this. The first ITU conference in a quarter century ago is probably the biggest shot that this kind of U.N.-sanctioned, state-sponsored, anti-Internet villainy will have for another quarter century. What’s that they say about what doesn’t kill us making us stronger?
The Apple Maps fiasco has become terribly overblown, if not hysterical.
It started with the fanfare release of the iPhone 5 and its software upgrade in September, which included a big switch from Google Maps to a homegrown alternative from Apple. The upgrade did not go well. Almost immediately, users began noticing that the maps were … unreliable. Not bad enough to slow iPhones sales but bad enough to dominate the news cycle for days.
But the damage was already done. Everyone seemed to be having a field day with Apple’s self-inflicted wound. More than two months later, the drama continues.
This week, Apple fired a senior executive, Map Division head Richard Williamson. Previously, Chief Executive Officer Tim Cook showed Scott Forstall, senior vice president of iOS Software, the door when he wouldn’t go on his own. Cook himself wrote a quick and sincere apology, which seemed to quiet the clamor.
In the tech press, too, things got gleefully hyperbolic. In September, Forbes contributor Peter Cohan wrote of “Apple Maps’ Six Most Epic Fails” — which included bad renderings of three bridges, the lack of Jerusalem, and a route to a Washington airport that, assuming a complete idiot of a driver, might lure a vehicle to a fence near a runway instead of passenger arrivals. Huffington Post’s Britney Fitzgerald described the maps as “pretty ridiculously horrible.” Marguerite Reardon at CNET also left nothing to the imagination: “Apple Maps Stinks.”
There have been voices of reason. Consumer Reports — which did not recommend the iPhone 4 because of a problem with its antenna — said Apple’s maps were “competent enough.” Then there was NBC News digital technology and science editor, Wilson Rothman, whose tongue-in-cheek piece report begins thusly:
The map problem has had no discernible effect on iPhone sales. In its first weekend, Apple sold 5 million iPhone 5’s. The iPhone 5 is selling so well, in fact, that it has restored Apple as the top smartphone spot in the United States, edging out Android. According to research firm Kantar World Panel, Apple’s iOS has a 48.1 percent share of U.S. smartphone sales, while Google Android has 46.7 percent.
The reason is obvious: Smartphones do so many things that even if one important function isn’t perfect, we tend to live with it.
So why so much hate on Apple? And why is Apple hating on itself?
It could be that Apple has become a big, fat target now that it is settling into middle age and is no longer the underdog. It is protecting its turf (the patent wars with Samsung) and consolidating its domination in mobile hardware with iterative products like the iPhone 5 and the iPad mini, and even a full-size, fourth-generation iPad mere months after the previous one.
Apple also deserves demerits for escalating its blood feud with Google by coming up with homegrown maps in the first place. Even worse than the bad mapping is the lack of routing via public transportation and by foot, standard in the Google Maps app that had been part of the iPhone since inception.
Some expectations of Apple are unreal; only 12-year-olds think products like the iPhone and iPad happen every couple of years. But some are not. It’s unlikely Apple will ever be a scrappy company again. And with that, it may have jumped the shark. Apple courted failure to bask in success: it invented things nobody else believed in and reinvented things others had botched. Apple now seems more on defense than offense.
The company seems obsessed with controlling markets. It plans obsolescence with minor, annual improvements to its products rather than unveiling surprises, genuine One More Things. And thus rises the fear that Apple actually is the new Microsoft — not just in market cap but in its approach to business.
It’s not surprising that our relationship with Apple is changing in the post-Steve Jobs era — that was bound to happen. Some tech writers have asserted that the maps fiasco could never have happened under Jobs — as if antenna-gate and the chaotic cloud strategy that tortured us with .mac, iDisk and MobileMe didn’t happen under his watch. Looking at the array of headlines about the maps issue, it’s almost as if the press is resorting to a tired game of WWSD —What Would Steve Do?
Jobs’ first instinct was to not apologize to anyone. After the iPhone 4 had its malfunctioning antenna, Jobs said, “When we fall short — which we do sometimes — we try harder. We pick ourselves up, we figure out what’s wrong and we try harder. And when we succeed, they reward us by staying our users, and that makes it all worth it.” No apology there. (He did tacitly say “sorry” by giving away $30 iPhone covers to help with the problem.) Before that, he had even told a customer the problem was that he was holding the phone wrong.
Clearly, Apple’s taste for unilateralism, its driving force in the Jobs era, has diminished. Forstall didn’t want to make a public display of remorse (sounds an awful lot like Steve Jobs to me). He is now gone. Improvements started showing up a week after Cook’s apologia, but Williamson wasn’t fixing things fast enough. Now he is gone.
It is possible both men were careless, which is less forgivable than failure ‑ experience of which innovators will tell you is essential to eventual success. But, like even the Cook letter of apology, the beheadings seem like a salve to the masses, a public spectacle to manage the message rather than a long-term solution.
In the long run, humility may be the best strategy. But right now it just feels like Apple is losing its way.
Instagram, the mobile photo sharing app that Facebook bought for about $700 million, has been doing something new over the past few weeks. Up until now, one couldn’t see all of a user’s Instagrams online, the way you could, say, see all of a Twitter users’ tweets. But in recent weeks, users’ collections have been uploaded to the Internet automatically (see my profile page as an example). Instagram never bothered to ask for permission. Don’t want people to be able to easily access all your pictures from your Web browser? Too bad.
Between the Instagram change and other more substantive and complex alterations to Facebook’s user-feedback policy this week, the world’s largest social network has a clear modus operandi: What’s good for Facebook is good for you. This is the Facebook Doctrine.
Along with relatively innocuous Instagram changes came word that Facebook intends to eliminate its very modest experiment with democracy. It was a scheme by which members could undo changes (but still not stop them from happening before they took place). The rules Facebook put in place established a transparent process: A policy could be reversed if it received more than 7,000 comments, more than 30 percent of people on Facebook participated in a vote, and if that plurality voted against it.
It instilled at least an illusion of participation. And, of course, it had to go because it might actually have worked — at least in exposing anger and frustration with Facebook in a way sanctioned by Facebook itself. Getting 330 million people to vote on anything might never have never happened. But with 1 billion members, getting 7,000 comments to trigger a referendum is an easy threshold to meet. It’s not hard to imagine such a tiny percentage of the members seeking to put everything to a vote. Andrew Noyes, a Facebook spokesman, told Reuters that two issues had put to a vote under the old rules.
“We found that the voting mechanism, which is triggered by a specific number of comments, actually resulted in a system that incentivized the quantity of comments over their quality,” said Elliot Schrage, vice president, communications, public policy and marketing in a blog post this week.
Yeah, Facebook, democracy sure can be a hassle.
Facebook now has an unprecedented billion members and some momentum on Wall Street — shares are trading in the $24 range, and they actually rallied after last week’s massive lock-up expiration. No wonder it is growing more comfortable in its self-appointed role as beneficent tyrant.
“Facebook now argues that it is too big for democracy, much like the Chinese government might,” Michael Phillips wrote on BuzzFeed. “Call this new regime Facebook with Authoritarian Characteristics.”
Also in Facebook’s new rules is the loosening of restrictions on who can contact you using your @facebook.com e-mail address. Don’t know you have one? Better check; when Facebook unveiled this feature they decided — for your own good, mind you — that it should be listed as your default e-mail on Facebook.
But by far the most egregious and telling Facebook change is to the voting protocol — itself just a fig leaf, which led to not a single policy reversal.
In its stead will be — I kid you not — a suggestion box. Live chats with Chief Privacy Officer Erin Egan. An e-mail blast to all members about a change that will take effect, and a seven-day comment period during which, as the Wall Street Journal reports, “the community can still push the proposal to a vote.”
Good luck with that, community.
Facebook doesn’t have to pretend to be inclusive because the value proposition is pretty clear. For the spectacular price of zero, users get a fairly extensive set of tools to keep in touch with friends, family and their extended network. At the moment, Facebook can afford to be a dictatorship that treats its subjects with some care and kindness as it taxes them mercilessly on the details of their lives and then sells that big data to the highest bidder.
Part of the reason this model works is because of the nanny dilemma. We all like being taken care of, and having some problems and details dealt with for us. (Until, of course, we don’t.)
It comes down to the balance of power. In the long run, Facebook may be able to prove that the membership has no real quarrel with its perspective — that the company is always right. But the exact opposite credo — the customer is always right — has until now been the cornerstone of successful businesses (or at least so they claim).
And it’s true that most other companies make unilateral decisions and then reverse them after a customer outcry. But it’s one thing when the commodity is goods and services and another when the commodity is you.
Change to the Facebook Doctrine may only come when the number of monthly active users drops. But waiting to change course until then may be like trying to stop an avalanche. Since the history of social networks is that they always fail, some genuine respect for the community is simply prudent. The peasants don’t always rise up, but when revolution does come, it’s never pretty.
Good thing Fitzgerald didn’t live long enough to tell that to AOL and Yahoo, which are confounding wet blankets with sparks of renewed life and relevance. The bit of renaissance for these Internet pioneers comes when Google and Apple are in a bit of a rut and Facebook seems to have found its bottom. (The one constant: Groupon and Zynga are still floundering.)
None of these things are related, of course. There is no astrology of technology, aligning the stars in such a way as to favor some and deny others. Tech success isn’t a zero-sum game, especially when valuations aren’t everything. Just look at Apple’s rise and fall and rebirth.
Apple’s trajectory has so far neatly followed a classic theatrical arc. Act 1 was exciting and prodigious. Act 2 was dismal, with Steve Jobs in exile for 11 years and the company near death. But Act 3 brought us the iRevolution. There’s no greater inspiration for AOL and Yahoo than the knowledge that down is not necessarily out — that the same forces that brought you down to Earth can also slingshot you to infinity, and beyond.
The news for AOL and Yahoo has been positive of late. AOL’s revenue didn’t decline last earnings period (for the first time in seven years). Yahoo is trading at a 52-week high despite what some thought was a vague and platitudinous turnaround strategy articulated by Chief Executive Officer Marissa Mayer in September.
There is still so much inherent value and goodwill rattling around these Internet pioneers (despite, say, Yahoo’s broadcast.com acquisition, or AOL’s Netscape buy) that it is no wonder investors think these companies can thrive again. (It helps that some sentimental tech writers just want it to be.) It might also be no accident that these companies are run by two of the most prominent ex-Googlers there are: Tim Armstrong, who took on AOL more than four years ago, and Mayer, who joined Yahoo only a few months ago.
Over the past decade or so, Yahoo tried to morph into a media company, while AOL was slow to innovate, relying too heavily on a doomed-but-not-dead-yet dial-up service — all of which led to both companies’ uninspired second acts. Now, Armstrong and Mayer are trying to transition in time for a happy ending.
With Yahoo, it is a matter of getting back to basics. It had a miserable flirtation with Hollywood under Terry Semel. A botched romance with Microsoft left it for dead. And yet, in traffic, Yahoo properties rank among the very highest on the Web. Driving traffic was Yahoo’s original mission, and in succeeding at that it discovered it could generate its own hefty page views. Google hasn’t made the mistake of assuming that a search engine succeeds when it becomes a media company; it’s the model for succeeding while keeping content creation at an arm’s length.
For AOL to succeed, it’s more a matter of metamorphosis. The company has not been able to wean itself from a dial-up business that broadband should have killed by now. In its most recent earning report, AOL disclosed that subscription revenue for its dial-up services fell 10 percent, to $173.5 million.
The scratchy death knell has long been sounding. AOL is correctly trying to be a media company, chiefly through acquisition of the Huffington Post Media Group and TechCrunch, to name two marquee properties. Patch may not be as successful as it would like, but the battle for local media coverage isn’t over, and to that victor will go many spoils.
Restoring the luster of those simpler, pre-bubble-bust days is a tall order. But it can be done. Yahoo’s Mayer needs to pamper and reward software developers and focus on engineering — her strength at Google and presumably the primary reason she was recruited. AOL’s Armstrong needs to remain strong with a media strategy that looks like it will pay off before AOL has a chance to implode.
It takes realists, but it also takes believers and heroes. I suspect they are all over the place at both AOL and Yahoo.
Good news! For the first time in seven years, AOL’s revenue didn’t shrink! The company said Tuesday morning that it brought in $532 million in revenue last quarter, flat with the same quarter one year ago. Which is to say AOL still hasn’t seen any growth since 2005. Okay… maybe it’s not such great news after all.
But AOL investors are happy. They pushed the stock up as much as 16 percent Tuesday, after AOL reported its earnings and promised a $5.15 a share dividend this December, financed by the $1.1 billion deal to sell and license its patents to Microsoft. AOL also posted a net profit of 22 cents a share, versus a 2-cent loss a year ago. That profit was well above the 17 cents a share analysts were expecting.
After three and a half years as CEO, Tim Armstrong is starting to see some success in turning AOL around. This is a notable accomplishment for two reasons. First, turnarounds in the Web industry are as rare as they are difficult. More often, they result in a company merely treading water and not really reviving. Second, AOL’s turnaround was especially tricky because, for many years, its profits came from the aging dial-up subscription business that was a big business a dozen years ago.
Armstrong is making a lot of shrewd moves this year. He arranged the patent deal with Microsoft, giving AOL enough cash to buy back shares and offer a dividend. That won him the support of shareholders right in time to defeat a challenge by activist hedge fund Starboard Value. Armstrong has also succeeded in cutting some costs at AOL to shore up its profits.
AOL’s stock is up 170 percent so far this year, compared with a 16-percent gain in the Nasdaq Composite. And the stock has a price-earnings ratio of 3.7. So on the surface, things are looking pretty good for AOL.
Things, however, look less good the more you dig beneath the surface. If you factor out the gain that AOL saw from the Microsoft deal last quarter – which would offer a clearer look at AOL’s core business – the net profit over the last 12 months is a much smaller $90 million. Using that figure, AOL’s price-earnings ratio rises to 43. The PE for stocks in the S&P 500 Index is 16.
Then there’s the sticky question of AOL’s subscription business. Although the Internet-access business is declining as people cancel their dial-up and broadband accounts, it has always been highly profitable. AOL doesn’t break down the profits of its different segments, but in a 96-page presentation filed with the SEC, Starboard Value calculated that the access business has profit margins of 80 percent. Starboard argued that those profits were masking losses in AOL’s display-ad sales and in Patch, its local-content initiative.
AOL has been working to stem the declines in its subscription business, with some success. It started bundling antivirus and identity-protection features into subscriptions, and the decline in subscription revenue improved to 10 percent last quarter from 22 percent in the third quarter of 2011. Even so, the business is declining by 10 percent a year, and so is its profit.
Armstrong has managed to reverse several years of declines in advertising revenue, but even here the growth rates lag the rest of the industry. In the first nine months of 2012, revenue from display ads rose 1 percent to $406 million while revenue from search ads were flat at $268 million. Google’s revenue from search and display grew 21 percent in the same period.
AOL said ad revenue from its third-party network grew 20 percent in the quarter to $334 million. Which is impressive, but largely the result of a technicality. AOL jointly owns a Japanese display-ad business with Mitsui & Co. In February it bought a 3-percent stake in Ad.com Japan from Mitsui, enough to give it majority ownership and recognize its revenue as AOL’s own. As a result, revenue from Japan grew to $25 million in the first nine months of 2012 from $700,000 a year earlier.
Meanwhile, projects like Patch, AOL’s network of local news sites, continue to eat up cash. Armstrong said in a conference call that Hurricane Sandy had boosted readership of Patch sites, but he also didn’t see the unit becoming run-rate profitable until the end of next year at the earliest. In the meantime, AOL will keep leaning on high-end video ads and low-end programmatic display ads. But the New York Times learned recently how troublesome programmatic ads can be.
Armstrong deserves credit for his progress in the difficult task of turning AOL around. He’s done an even better job of pleasing investors and buying more time to make AOL a Web content company that can deliver sustained and growing profits. But he’s not there yet. For now, AOL remains a company still dependent on profits from a dwindling Internet-access business. Nobody ever said that making money from online content was easy.
This week Apple faces two significant tablet challengers. The first is Microsoft, which is releasing its long-awaited Surface tablet on Friday. The second is… itself.
Yesterday, amidst the anticipation for the Surface and strong sales for the Kindle Fire, Apple announced a slew of new devices, the $329 iPad Mini the most intriguing among them.
The mobile era has been defined by Apple: iPod, iPhone, iPad, you know the drill. Apple ascended largely unchallenged, facing only a few stunned and weak rivals. By the time it got to tablets in 2010, Apple benefited from an unspeakably large pent-up demand for a device nobody had been clamoring for. Since then it’s sold more than 100 million iPads.
The market has matured in only two years. As Apple got wealthier, the competition got wiser. Unable to counter Apple in the larger tablet space, it started to produce smaller tablets that didn’t compromise on functionality (though, admittedly, they did on apps), some undercutting Apple’s price by 60 percent.
With that success proven — Amazon claims 22 percent for the Fire HD alone — Apple’s competitors started to move in on Apple’s territory — larger tablets. Amazon released the first Fire version 13 months ago, and now comes Microsoft’s Surface. Pre-orders are said to be brisk, but it will take a while to gauge traction. The device is light and portable and solves the one niggling criticism many still have about the iPad: Surface includes a physical keyboard that is cleverly incorporated into the cover. So while the device is a tablet it also doubles as a very small notebook. Not a bad trick.
What will make or break the Surface is whether it will fit comfortably into the world of mobile computing. It’s trying to be a tablet-netbook hybrid, a different vision of mobile computers than Apple.
Apple’s other adversary is itself. In releasing a smaller version of the iconic iPad to compete with Google, Amazon and others, it neglected to even approach their $200 price point. That price has lured some new customers away. By ignoring it, Apple is taking a big risk.
Apple’s betting that, as Henry Blodgett so colorfully put it, customer “lock-in” will persuade existing iPad owners to pony up $130 extra to get a smaller iPad instead of a smaller SomethingElse when it comes time to buy a new tablet. Perhaps, especially since Apple’s installed base has long shown it’s fine paying a premium. (The other reason it costs $329 is, as my most sage Apple aficionado friend puts it, so Apple can upgrade the Mini with a retina display and not have to raise the price.)
But what of the people who already have their seven-inchers, like me? I bought a Nexus 7 (and not a second iPad) when it was time to buy something a few months ago, even though I’m a power Apple user. I’m not sure what I would do today, but I don’t regret my timing or choice. I wrote most of this piece with the Nexus, standing on a moving train. I’m certainly not planning on buying another seven-inch tablet. At least not until this one breaks (or breaks my heart).
The surge of smaller tablets was more of a dilemma than an opportunity for Apple: it had to have them, but it couldn’t risk settling for a smaller profit margin from people trading their iPad…”Maxes?” for iPad Minis. If, as I’ve long suspected, seven-inch tablets become the dominant model, and Apple stopped making as much as a 32 percent margin on tablets (as it does for the large iPads), it would be catastrophic for Apple’s bottom line.
Even so, it’s not clear that the iPad Mini is small enough or cheap enough to be the breakout success that the full-sized version has been. The Mini seems more like a stab at protecting the high-end of the small tablet market rather than a full-throated battle to sew up the whole thing, top to bottom. Indeed, Apple also introduced another full-sized iPad on the same day as the highly-anticipated Mini. Coming only seven months after the last upgrade, it’s clear that Apple’s resources are not entirely devoted to the battle for the seven-inch niche.
Perhaps this is Steve Jobs’ legacy. Jobs was famously against a smaller iPad before he was for it. The official yarn was that he thought a seven-inch tablet’s keyboard would be too small — you’d have to “sandpaper” your fingers to be able to use it. But it’s more likely he knew Apple couldn’t compete on price.
But then Amazon disrupted the disrupter with a credible seven-inch model that the company sells at cost. It has a 20 percent market share, despite a bricks and mortar disadvantage (there are no “Amazon” stores where people can ooh and aah and touch and feel).
And now here comes Microsoft. The Surface will be running Microsoft’s spanking new mobile software, which has received fairly high marks.
The worst case scenario for Apple is this: Microsoft’s $500 Surface becomes the device that bridges the tablet and the ultra-light notebook (especially in the business community), making the iPad increasingly useless. Meanwhile, the seven-inch market continues to gravitate toward the cheaper options, leaving the iPad Mini as a boutique rather than a mainstream device.
Of course, chances are that Apple will sell lots of iPad Minis, but they have set a high bar for themselves. Apple’s stroll into the small tablet arena is cautious and proper, but not breathtaking. With an iterative iPhone 5 and a catch-up in tablets, Apple has me wondering how deep their bag of tricks really is.
