Month: January 2019

Kenichi Yamada, Nikkei Asian Review:

Samsung Electronics’ disappointing fourth-quarter earnings report comes less than a week after Apple cut its revenue estimate, underlining the global repercussions of the Chinese economic slowdown.

Both of the South Korean company’s core businesses — memory chips and smartphones — are facing downturns this year. With no other growth business to fill the hole, Samsung finds itself scrambling to trim the fat.

Samsung said Tuesday that operating profit plunged 29% in the three months ended in December, to 10.8 trillion won ($9.6 billion). The preliminary guidance represents the company’s worst quarter since July-September 2016, with the drop exceeding analyst expectations by 2 trillion won to 3 trillion won.

That second quoted paragraph is particularly interesting: Samsung is doubly exposed because it makes its own consumer electronics and sells components for other companies’ products.

Anyway, it wouldn’t surprise me to see reports like these from several other companies in the coming weeks.

Aliya Ram and Madhumita Murgia, Financial Times:

Data brokers mine a treasure trove of personal, locational and transactional data to paint a picture of an individual’s life. Tastes in books or music, hobbies, dating preferences, political or religious leanings, and personality traits are all packaged and sold by data brokers to a range of industries, chiefly banks and insurers, retailers, telecoms, media companies and even governments. The European Commission forecasts the data market in Europe could be worth as much as €106.8bn by 2020. 

“The explosive growth of online data has led to the emergence of the super data broker — the ‘privacy deathstars’, such as Oracle, Nielsen and Salesforce, that provide one-stop shopping for hundreds of different data points which can be added into a single person’s file,” says Jeffrey Chester, executive director of the Center for Digital Democracy based in Washington. “As a result, everyone now is invisibly attached to a living, breathing database that tracks their every move.”

Over the past five years, the data broker industry expanded aggressively in what amounted to a virtual regulatory vacuum. The rise of internet-connected devices has fuelled an enhanced industry of “cross-device tracking” that matches people’s data collected from across their smartphones, tablets, televisions and other connected devices. It can also connect people’s behaviours in the real world with what they are doing online. 

The reluctance in virtually every country to restrict the purchase and sharing of user data without explicit consent is a complete regulatory failure. Nobody would tolerate someone asking them to submit a list daily of everything they’ve bought, every page they’ve seen online, every ad they’ve viewed, and everywhere they’ve been — not because that would be a lot of work, but because it would feel invasive. There shouldn’t be a “data market” at all.

I love this collection of examples by Dr. Drang of how Siri handles date and time questions. In some instances, its understanding of context is remarkably good; in a few, it’s disappointing. The key point, for me, is something Drang writes at the end:

The upshot is that Siri can be good at date and time math, but it needs the right syntax. Not surprising for a computer program, but not how Siri has been promoted by Apple.

I was chatting with a friend about this. Make no mistake: Siri is far better at parsing different variations of sentence construction than traditional voice control systems. But users must still learn some syntactical tricks to ensure Siri understands the precise intention and context of what is being said.

I also wonder how much of this is because of the English language; many other languages create more rigorously-structured sentences.

Joseph Cox, Vice:

Nervously, I gave a bounty hunter a phone number. He had offered to geolocate a phone for me, using a shady, overlooked service intended not for the cops, but for private individuals and businesses. Armed with just the number and a few hundred dollars, he said he could find the current location of most phones in the United States.

The bounty hunter sent the number to his own contact, who would track the phone. The contact responded with a screenshot of Google Maps, containing a blue circle indicating the phone’s current location, approximate to a few hundred metres.

Queens, New York. More specifically, the screenshot showed a location in a particular neighborhood — just a couple of blocks from where the target was. The hunter had found the phone (the target gave their consent to Motherboard to be tracked via their T-Mobile phone.)

The bounty hunter did this all without deploying a hacking tool or having any previous knowledge of the phone’s whereabouts. Instead, the tracking tool relies on real-time location data sold to bounty hunters that ultimately originated from the telcos themselves, including T-Mobile, AT&T, and Sprint, a Motherboard investigation has found. These surveillance capabilities are sometimes sold through word-of-mouth networks.

Dell Cameron, Gizmodo:

The story follows reporting last year by the New York Times, which kicked off after Sen. Ron Wyden, a Democrat and privacy hawk of Oregon, revealed the existence of this dubious location-data trade in a letter to the Federal Communications Commission. Through this, we learned about Securus Technologies, a company that profits off inmate phone calls and secretly provided phone-tracking services to low-level law enforcement without so much as a court order.

Securus and other companies, such as those described in Tuesday’s Motherboard story, rely on loose regulations around the aggregation of location data, which can be bought and sold legally for marketing purposes, among other types of services. Numerous companies appear to be exploiting this loophole to quietly offer location services for unsanctioned uses on the cheap, or are otherwise contributing unwittingly through their own negligence to a prosperous underground market.

Let’s set aside the truly diabolical lack of ethics for a moment because there’s something else nagging at me. For the past couple of years, the general public has started to become wise to the privacy nightmare created by companies like Facebook and Google. Frequently, this is expressed by the claim that these companies are “selling users’ data”. That’s wrong — they’re selling advertisements against enormous dossiers of data points — but it has stuck nevertheless as a symbol of how untrustworthy these companies are.

T-Mobile, AT&T, and Sprint apparently want to be more untrustworthy than Facebook and Google when it comes to user data. They’re not just selling ads; they’re selling the location itself. That’s fucked. I read through T-Mobile’s many end-user contracts today and couldn’t find anything that clearly says you give us permission to sell a third-party the location of your phone in association with its number. Maybe it’s buried in there, translated into some abstruse legalese. But can you imagine having an abject lack of ethics that you could think selling user location is totally fine?

Ina Fried, Axios:

Facebook’s privacy policies reinforce the message that “you have control over who sees what you share on Facebook.” But if you use Facebook at all, you don’t have much control over what Facebook itself sees about you.

I love stuff like this because it puts into plain terms the dizzying scope of Facebook’s entrenchment. The vast majority of the information Facebook collects seems specific to users, but plenty of data points on non-users are also collected without their consent.

Now do Google.

Federico Viticci created an impressive Shortcut to allow anyone to create a personalized report of their year of listening on Apple Music:

When Spotify was my music streaming service of choice, one of the features I really liked was its personalized Wrapped report generated at the end of the year. I’ve always been a fan of geeky annual reports and stats about the usage of any given web service – be it Spotify, Pocket, or Toggl. I appreciate a detailed look at 12 months of collected data to gain some insight into my habits and patterns.

I’ve always been annoyed by the lack of a similar feature in Apple Music; I’m surprised that Apple still hasn’t added a native “Year in Review” option – a baffling omission given how the company is already collecting all of the necessary data points in the cloud. Official “Apple Music Wrapped” functionality would bolster the service’s catalog of personalized features, providing users with a “reward” at the end of the year in the form of reports and playlists to help them rediscover what they listened to over the past year.

This is remarkable, and — as Viticci writes near the end of this — pushes the limits of what Shortcuts will allow. It’s basically a non-interactive app and it is extraordinarily sophisticated. If you’re an Apple Music user, you should give it a shot.

Viticci’s Shortcut reveals a few things that need to be refined in Shortcuts and Apple Music. He details memory and functionality limits in both, but one thing I’ve noticed in my copy of Shortcuts is that the library tab quickly becomes overwhelming on the iPhone because of its fixed two-column grid. I would love to see a better way to organize my library. Also, administration headaches aside, I wish users could submit Shortcuts for the gallery.

Kirk McElhearn:

Hell is freezing over for Apple because the company has finally accepted that it cannot make enough money from its video offerings just with Apple devices (ie, the iPhone, iPad, and Apple TV). This also suggests that the Apple TV has seen its last iteration. If Apple can put the same apps on any smart TV – which is, of course, not complicated – why have a separate device? I suspect we’ll also see an Apple Music app on these TVs before long (as is already the case for Android phones and tablets).

It makes sense to me that Apple would bring its services to other platforms — partly for, as McElhearn alluded to, financial reasons; but, also, because it has the rather lovely side effect of confirming that Apple is becoming a true services company for more than Apple product owners.

But I am not sure that necessarily leads to the end of the Apple TV. I don’t see the company abandoning dedicated hardware just because it has a services business, even for a presently lower-priority product like the Apple TV. It seems to me that it’s more likely that Apple’s TV product may morph to become a full television that they have complete control over. Why not? Most televisions look awfully cheap and are privacy nightmares.

Yesterday, Samsung announced that Apple’s iTunes movies and TV shows apps would be coming to their smart TVs, along with AirPlay 2 and HomeKit compatibility. Vizio and LG followed that up today by announcing that they would also be supporting AirPlay 2 and HomeKit.

Nilay Patel of the Verge asks some good questions about these partnerships:

Is Apple going to allow Samsung’s smart TV tracking to snoop on iTunes viewers? Smart TVs are notorious for tracking what people watch, but Apple’s entire brand is privacy. What usage data will Samsung see from the iTunes app? Update: Answered, for now: Apple tells me that Samsung will not be able to track usage inside the iTunes Movies & TV Shows app. But the press release says iTunes will work with Samsung’s Bixby assistant, search, and guide features, so we’ll have to see how what data powers those things when it ships in the spring.

I’m glad Patel got an answer on this for Samsung. While it appears that the Vizio and LG announcements are limited to their TVs functioning as AirPlay 2 receivers, this is the same Vizio that was (barely) fined for selling user data to advertisers.

Patel’s questions make me wonder what happened to that perennial rumour that Apple was building its own TV set.

Update: A complete list of TV models which support AirPlay 2 — including some from Sony, too — is now available.

The Washington Post editorial board:

Legislators must establish expectations of companies that go beyond advising consumers that they will be exploiting their personal information. For some data practices, this might call for wholesale prohibition. For all data practices, a more fundamental change is called for: Companies should be expected and required to act reasonably to prevent harm to their clients. They should exercise a duty of care. The burden no longer should rest with the user to avoid getting stepped on by a giant. Instead, the giants should have to watch where they’re walking.

There are two main reasons this call is being made: antitrust regulators failed to adequately monitor the growth of privacy-averse tech companies, and those companies have zero incentive to be more responsible largely because of their size.

Since the new iPad Pro models began shipping in November, spurious reports have come in that some units have a bend in the chassis right out of the box. At the end of last month, Dan Riccio — Apple’s VP of hardware — replied to an email sent by an affected user, which MacRumors published, noting that:

Riccio’s email also says that a company statement was not included in the original information disseminated by The Verge, and that Apple will be reaching out to media outlets to comment officially.

The original email was sent late on December 20 and suggested a comment would come “later today,” but that didn’t happen, so it’s not quite clear when Apple will provide more info to the media. We may be hearing an official, more reassuring statement on the 2018 iPad Pro before the end of the day.

No statement has yet been issued. However, today, Apple did publish a marketing page cum support document, which echoes much of Riccio’s email and adds some context about the manufacturing process (emphasis mine):

These precision manufacturing techniques and a rigorous inspection process ensure that these new iPad Pro models meet an even tighter specification for flatness than previous generations. This flatness specification allows for no more than 400 microns of deviation across the length of any side — less than the thickness of four sheets of paper. The new straight edges and the presence of the antenna splits may make subtle deviations in flatness more visible only from certain viewing angles that are imperceptible during normal use. These small variances do not affect the strength of the enclosure or the function of the product and will not change over time through normal use.

First of all, and most importantly: called it.

Secondly, Apple is sticking by its assertion that tolerances for flatness are finer on newer iPads than on older models. But it is equally true that we have not previously seen reports of iPads bent in this fashion.

Perhaps this is as simple as the way in which this particular generation of iPads is showing its bend. Perhaps past iPads did, indeed, deviate from a perfectly flat plane but on a more gradual curve, as opposed to the sharp kink present in these models.

Ryan Christoffel, MacStories:

The iPad Pro’s bending controversy has reached nowhere near the level of attention as that of the iPhone 6 Plus a few years back, but it’s nice to finally receive official word from Apple on the subject. If your iPad is bent enough that it’s obvious and noticeable in daily use, there’s a decent chance the bend exceeds 400 microns, and thus would be covered under warranty. With slighter bends, however, it seems those are a cost we have to pay for enjoying the iPad Pro’s boxy, straight-edged new design.

Apple has previously stated that they do not consider this to be a manufacturing defect. However, presumably, if the bend exceeds 400 microns, it would be a manufacturing defect as it is outside of their tolerances. But how many people are going to measure the deviation from a perfectly flat plane? Hopefully, Apple’s support staff won’t give complainants much grief and will simply replace affected iPads. If you are affected and you have an experience you’d like to share, get in touch.

Also, I disagree with Christoffel that this is something we should tolerate because of this iPad’s design. If there were a manufacturing process that slightly scratched or dented a product, Apple wouldn’t ship those units to customers. Why should customers spending a thousand of their hard-earned dollars accept that their brand new product is bent out of the box?

Jennifer Valentino-DeVries and Natasha Singer, New York Times:

The Weather Channel app deceptively collected, shared and profited from the location information of millions of American consumers, the city attorney of Los Angeles said in a lawsuit filed on Thursday.

One of the most popular online weather services in the United States, the Weather Channel app has been downloaded more than 100 million times and has 45 million active users monthly.

The government said the Weather Company, the business behind the app, unfairly manipulated users into turning on location tracking by implying that the information would be used only to localize weather reports. Yet the company, which is owned by IBM, also used the data for unrelated commercial purposes, like targeted marketing and analysis for hedge funds, according to the lawsuit.

Contra speculation I saw linked from Techmeme, this is not the default weather app on the iPhone; this lawsuit concerns the separate Weather Channel app. However, the Weather Channel is the data provider for the default iOS weather app. After reading the Times article and the suit, it’s still unclear whether users of the default weather app are affected. The iOS 12 user agreement makes no mention of what data is shared with the Weather Company.

Update: David Carroll on Twitter:

A major city, LA, fills in for FTC’s failure to effectively watchdog the data industry. IBM slammed with suit for covertly mining precise location data thru popular Weather Channel app. Ready for a GDPR for the USA yet folks?

There isn’t a set of federal regulations clarifying the conditions under which user data may be used and requiring that users opt into any use of identifying data with fully transparent rationale. The FTC has limited powers and it is squandering even those. There is little incentive for companies to be consumer-friendly when the market for user data encourages the kind of behaviour the Los Angeles city attorney is accusing in this suit.

It was illuminating to read John Gruber’s take on the last time this happened:

But man, delivering bad news was one area where Steve Jobs really shined in a way that Tim Cook just can’t. Look at the tight construction of that message from Apple in 2002. First paragraph: put out the numbers. Second paragraph: it’s an industry-wide problem, but Apple has “amazing new products” coming. And then the kicker, the dagger: “As one of the few companies currently making a profit in the PC business…”.

We’ve got some short term bad news but don’t worry, we have this.” And… out. Short and sweet. Rip off the bad news Band-Aid, express quiet confidence that Apple is in great shape, and that’s it. Message over.

Times — and shareholders’ expectations — change, but this is the thing that absolutely stood out to me when I read Cook’s statement yesterday. If Cook wanted to provide a fuller context, I think that’s fine, but I wish it were attached as a supplement to a more succinct and direct statement.

Ryan Jones on Twitter:

The whole “most of our revenue shortfall occurred in Greater China” seems to be getting lost. By me too.

Other companies’ China reports will be telling, if something is brewing on a global scale.

And Ina Fried in Axios:

Apple will report full results at the end of the month and will likely go into greater detail.

Meanwhile, we will also hear from other smartphone makers as well as others with big business in China.

That should help show how much of Apple’s experience was universal and how much it was uniquely its own.

Given Apple’s positioning, I’m curious about the effect China’s economic situation may have, if any, on other aspirationally-branded companies. That may be more helpful guidance than looking at its effect on other smartphone makers.

MG Siegler:

The iPhone has simply been too good of a business. And it’s hard to see what tops it. Certainly in the near term. If Services is to carry Apple in the future, it will likely be only after years of relatively stagnant iPhone revenue growth mixed with a rising overall market. In other words, time and the broader world will have to catch up. And then Apple can have their “Microsoft Moment” — a services-based resurrection of growth.

This is a great piece.

A memo from Tim Cook to Apple employees:

External forces may push us around a bit, but we are not going to use them as an excuse. Nor will we just wait around until they get better. This moment gives us an opportunity to learn and to take action, to focus on our strengths and on Apple’s mission — delivering the best products on earth for our customers and providing them with an unmatched level of service. We manage Apple for the long term, and in challenging times we have always come out stronger.

Cook’s letter to investors specifically mentioned that one of those actions is “making it simple to trade in a phone in our stores, finance the purchase over time, and get help transferring data from the current to the new phone”. Communicating easier upgrades might help users who are worried, but I’m not sure it will substantially increase sales. How many users hang onto their existing phone because they think upgrading is hard, rather than because they aren’t compelled to upgrade — for whatever reason? I’m curious about other ways that they might respond which would be more in line with the company mission that Cook cites.

Apple posted a statement to investors in its Newsroom today, attributed to Tim Cook:

Today we are revising our guidance for Apple’s fiscal 2019 first quarter, which ended on December 29. We now expect the following:

  • Revenue of approximately $84 billion

  • Gross margin of approximately 38 percent

  • Operating expenses of approximately $8.7 billion

  • Other income/(expense) of approximately $550 million

  • Tax rate of approximately 16.5 percent before discrete items

That compares to forecasted revenue of $89–93 billion, margin of 38–38.5 percent, and “other” income of $300 million, with similar numbers for the rest of the guidance. This also compares to reported revenue in Q1 2018 of a little over $88 billion.

This is the first time since 2002 that Apple has had to advise investors that their previous forecast was too high.

Normally, this sort of thing would not be of great interest to yours truly. The company is still swimming in cash, a 38% margin guidance is ridiculously high, and this is still their second-biggest quarter ever. But I think there’s something to pay attention to in this case so, if you’ll bear with the turgid business speak, I think it’s worth a read.

Here’s how Cook explains it in his statement:

Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline. In fact, categories outside of iPhone (Services, Mac, iPad, Wearables/Home/Accessories) combined to grow almost 19 percent year-over-year.

While Greater China and other emerging markets accounted for the vast majority of the year-over-year iPhone revenue decline, in some developed markets, iPhone upgrades also were not as strong as we thought they would be. While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements.

There’s a lot to unpack there, but I’ve seen plenty of commentators on Twitter attribute this solely to an increase in the base price of an iPhone. But I think there’s far more to it than that; Cook says in his letter that China’s economic growth slowed hard in the second half of the year which, combined with more expensive products,1 hampered sales in one of the company’s critical markets. Perhaps the iPhone should have been priced lower there and in developing markets like India, and Apple could have eaten the difference, but would that be enough to compensate? I have doubts.

There’s a lot that happened in 2018 that might dissuade customers from readily upgrading. For example, the iPhone X stood out next to the iPhone 8 and 8 Plus, but Apple’s current flagship lineup, on its face, consists of three notched rectangles of slightly different sizes, at price points that do not fully correlate with those sizes. Plus, Apple still sells the iPhone 8 and iPhone 7, both of which still do most of the things that people want in a more familiar form factor. And then there’s iOS 12, which Apple promoted in part for how much it makes older devices perform better. Oh, and remember how, at the very end of 2017, Apple confirmed that it was silently reducing peak performance for devices with reduced battery capacity, which led to headlines proclaiming that they were deliberately slowing down older iPhones to make you buy a new one? That spawned the $29 battery replacement that Cook mentioned in his letter.2

So there’s that.

More than anything, though, it’s that smartphones have longer lives before needing to be replaced. That’s not great if a company like Apple is expected by shareholders to sell more of them every year, but it is pretty good news for consumers. In part, this longevity is attributable to the very existence of decisions like iOS 12’s performance focus and the cheap battery replacement program which, sadly, has now ended. These are good moves that should be celebrated, even though they may, perhaps, lead to reduced sales. But it’s also attributable to smartphones becoming a fully-rounded, mature product in hardware terms. My wish list for the iPhone is very long — as it is for pretty much anything I use regularly — but the vast majority of the things I wish it could do better could be delivered in a free software update.

There are clearly a lot of factors that would explain why the company is set to report a year-over-year drop and a guidance miss; Cook cites still more than this in his letter.

What I’m most interested in is where Apple goes from here. Put simply, I want to know whether Apple will react to this report.

They could choose not to; they could choose to stay the course and take potential further hits to sales figures, assuming everything will stabilize in the end. Trade wars suck. Or they could make changes. Some possible choices they could make may be highly beneficial to customers: reduced prices or new, lower-cost options; a simplified lineup; or more incentives to upgrade. But there is always a chance that their reaction could be less customer-friendly, but better for their bottom line. I don’t know that this is likely, but the possibility is there. A relatively minor example of this would be to increase push notifications urging users to upgrade.

This is a hell of a way to start a year. Apple was not the only company advising shareholders today of bad news; Tesla also announced that they were not going to meet expectations. 2019 is going to be very interesting for Apple, I think.

  1. Something I learned today is that Chinese customers pay tariffs, even though the iPhone is made in China. ↥︎

  2. Which, of course, makes it look like a tacit admission that not acknowledging when a battery needed to be replaced and then charging a not-insubstantial sum for the swap was driving sales. That’s not a good look. ↥︎

For Wired, Paris Martineau and Louise Matsakis put together a list of every Amazon house brand, acquisition, and Jeff Bezos side project they can find, and it’s staggering:

The company is known as the “everything store,” but in its dogged pursuit of growth, Amazon has come to dominate more than just ecommerce. It’s now the largest provider of cloud computing services and a maker of home security systems. Amazon is a fashion designer, advertising business, television and movie producer, book publisher, and the owner of a sprawling platform for crowdsourced micro-labor tasks. The company now occupies roughly as much space worldwide as 38 Pentagons. It has grown so large that Amazon’s many subsidiaries are difficult to track—so we catalogued them all for you. This is our exhaustive map of the Kingdom of Amazon.

Much as the web is not — and should not be — a Google product, we should also be wary of Amazon’s dominance. In their case, however, it goes far beyond online properties to the infrastructure of the web and physical trade. These companies (and Facebook) are dominant in ways that ought to be deeply concerning as a matter of reach, influence, and antitrust matters.