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I don’t understand the stock market

Posted on July 22nd, 2015 at 10:54 by John Sinteur in category: Apple, Microsoft

Microsoft earnings reports:

$7.6 billion write-off on Nokia, no big deal.

$1 billion Xbox writeoff, no big deal.

$900 million write-off for Surface RT, no big deal.

$6.2 billion write-off for Aquantive, no big deal.

Apple earnings reports:

Record profits, stock price takes a nose dive


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Comments:

  1. It’s a matter of expectations more than anything else. MS did pretty much what people thought, so it’s ok. Apple didn’t earn quite as much as expected (record income and profits be damned), so it gets hammered… Go figure!

  2. Re. Apple. Actually, this is called “an adjustment” in the stock price, as in theory the price is bid up before the announcement in anticipation of results, since investors were expecting better results than they got. So, the result is that the price goes down to, in theory, where the price should be. Hence we have “contrarian” investors. They see people bidding up a stock before the quarterly announcements, figure the company won’t do as well as expected, so they sell short in anticipation of this price drop. The price drops, they cover their shorts, and make a fortune! Often these short positions are in the form of put options. IE, they can sell the stock at the shorted (higher) price and only pay the newer (lower) price. Risky, but potentially very lucrative. If the price goes the right way, they are only out the option costs (10% of the actual stock price when bought) plus brokerage fees. So, you buy puts on 100,000 shares (1000 contracts) at $5 / share – you pay $5000 + costs. The stock drops to $4 / share creating a $1 / share profit. You basically buy the stock at $4 / share and sell it back at $5 – an instant $100,000 profit on costs of about $6000. Works great if you can do it.

    However, if the stock were to go up, say to $6 / share, you may be on the hook for that $100,000! There are mathematical formulae that compute your risks about this stuff, so you can “hedge” your bets, potentially earning less than that $100K, but not at risk of losing that same $100K. I am somewhat aware of this stuff as I used to write risk-analysis software for the options industry market makers and professional traders at the Chicago Board Options Exchange (biggest options trading house in the world). We had to recompute their portfolio exposure when any trades or price changes that may affect their positions had occurred, and within 60ms we had to rebalance their positions and execute risk-offsetting trades for them! This was about 10 years ago. Now, 60ms is about 10x too slow! I recently interviewed for a position at a low-latency trading company in Chicago, and they had engineers to design and build their own FPGA ethernet / TCP-IP chips that handled the trading network connections and filtered the data stream from the various exchanges for the data they were interested in. Normal high-performance network cards and high-end servers could not handle the load at the latencies required. This is indeed the “rocket science” of stock trading!

  3. The high-speed stuff is unfair because only a select few can do it. “Flash Boys” by Micheal Lewis is a great read on the topic.

    Wall St. has never understood Apple – probably because Apple is unlike any other company.

  4. @johno – don’t disagree with the high-speed trading comment. Until there are appropriate regulations in place, and enforced, this will continue to be a decided disadvantage to all other traders who cannot afford such tools. I’m not in that field any longer – the pay is great, but at what cost?

Meet ‘Tox': Ransomware for the Rest of Us

Posted on June 1st, 2015 at 9:23 by John Sinteur in category: Security, Software

[Quote:]

Salient Points:

  • Tox is free. You just have to register on the site.
  • Tox is dependent on TOR and Bitcoin. That allows for some degree of anonymity.
  • The malware works as advertised.
  • Out of the gate, the standard of antimalware evasion is fairly high, meaning the malware’s targets would need additional controls in place (HIPS, whitelisting, sandboxing) to catch or prevent this.

Once you register for the product, you can create your malware in three simple steps.

  • Enter the ransom amount. (The site takes 20% of the ransom.)
  • Enter your “cause.”
  • Submit the captcha.

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Comments:

  1. “What did you do at work today, daddy?”
    “I enabled ordinary people to be mugged and I get a cut!”
    “I want to be a nurse when I grow up daddy.”

Microsoft starts prompting Windows 7 and Windows 8 users to ‘reserve’ their free Windows 10 upgrade

Posted on June 1st, 2015 at 7:39 by John Sinteur in category: Microsoft

[Quote:]

Reddit user p4block spotted the new “Get Windows 10″ message on his Windows 8 computer earlier today. Other users, including those running Windows 7, confirmed they received the message too (shown below).

So let me get this straight. They ARE able to reach everybody to send them a free popup advertisement, but they are NOT able to reach those same people to send them a free upgrade (using the same mechanism) and they need your e-mail address. I can’t help but think that’s shady as hell.


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Comments:

  1. As is the case with many shady *free* installers these days, there is an option to skip the ‘enter your email now’ bit, and continue the free upgrade. It’s in very small print and thus hard to find, and you won’t get the ‘you can upgrade for free now’ msg in your inbox on the day it’s downloadable, but you still get the upgrade for free.
    The more experienced users of *free* software know how to look for the ‘skip this amazing bundled offer of spamware’ or ‘register for perks’ bits, although I admit that even more experienced users never bother with this software in the first place, so I’m not surprised you missed it :)

SourceForge grabs GIMP for Windows’ account, wraps installer in bundle-pushing adware

Posted on May 31st, 2015 at 12:33 by John Sinteur in category: Software

[Quote:]

The GIMP project is not officially distributed through SourceForge—approved releases are only posted on the GIMP project’s own Web page. But Jernej Simončič, the developer who has been responsible for building Windows versions of GIMP for some time, has maintained an account on SourceForge to act as a distribution mirror. That is, he had until today, when he discovered he was locked out of the Gimp-Win account, and the project’s ownership “byline” had been changed to “sf-editor1″—a SourceForge staff account. Additionally, the site now provided Gimp in an executable installer that has in-installer advertising enabled. Ars tested the downloader and found that it offered during the installation to bundle Norton anti-virus and myPCBackup.com remote backup services with GIMP—before downloading the installer authored by Simončič (his name still appears on the installer’s splash screen).

 


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Comments:

  1. The replies in the blog https://sourceforge.net/blog/gimp-win-project-wasnt-hijacked-just-abandoned/ are an excellent read. Bye bye Sourceforgery…

  2. @Mykolas: Just a quick scan for the word “scumbags” gets the drift. Shame.

  3. Since being bought by Dice Holdings, Slashdot has hit the skids too. Many learned geek neckbeards are jumping ship to Soylent News, another tech news aggregation site with an even uglier interface. Getting to the comments on Slashdot now requires scrolling past huge game application ads and auto play videos, loathed by all true geeks, as Dice wrecks the site with maximum monetization. Slashdot is toast.
    Tod

  4. Slashdot was already going down when CmdrTaco left in 2011… haven’t been there in years.

  5. Complaining about the decline of Slashdot was replaced by complaining about Reddit, which has been superceded by whining that HackerNews is no longer as good as it used to be. Keep up, guys!

  6. You forgot to mention Digg

Jony Ive promoted to ‘Chief Design Officer,’ handing off managerial duties July 1st

Posted on May 26th, 2015 at 8:20 by John Sinteur in category: Apple

[Quote:]

Apple’s Jony Ive has served as the company’s Senior Vice President of Design for several years now, but Apple has announced today that the executive is being named Chief Design Officer (a newly-created position). Additionally, Ive and will be handing the managerial reins of both the industrial and software design units at Apple over to two new leaders on July 1st.

 

Next step for Jony: His Royal Highness Grand Emperor of Design, Lord of Edges, Master of Materials, Designator of Textures, Definer of Hues, Defender of Curves.

First of His Name, King of the Andals and the First Men, Lord of the Seven Kingdoms, and Protector of the Realm… Oh wait, wrong fandom.


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Steve Jobs’ vision for Apple realized as iPhones reveal injustice, says Tim Cook

Posted on May 18th, 2015 at 9:47 by John Sinteur in category: Apple

[Quote:]

“His vision for Apple was a company that turned powerful technology into tools that were easy to use, tools that would help people realize their dreams and change the world for the better,” Cook said of Jobs, Apple’s co-founder who died in 2011.“Our products do amazing things, and just as Steve envisioned, they empower people all over the world,” Cook continued. “People who are blind and need information read to them because they can’t see the screen. People for whom technology is a lifeline because they are isolated by distance or disability.“People who witness injustice and want to expose it. And now they can, because they have a camera in their pocket all the time.”

 


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Comments:

  1. …and also because the iMac is just amazingly thin, the unibody Macbooks are machined from a single block of aluminium, and the iPhone comes in “gold”.

  2. He’s not saying “And now they can, because they have an Apple product in their pocket all the time.”

Google’s New Campus: Architects Ingels, Heatherwick’s Moon Shot

Posted on May 14th, 2015 at 20:02 by John Sinteur in category: Google

[Quote:]

The vision outlined in these documents, an application for a major expansion of the Googleplex, its campus, is mind-boggling. The proposed design, developed by the European architectural firms of Bjarke Ingels Group and Heatherwick Studio, does away with doors. It abandons thousands of years of conventional thinking about walls. And stairs. And roofs. Google and its imaginative co-founder and chief executive, Larry Page, essentially want to take 60 acres of land adjacent to the headquarters near the San Francisco Bay, in an area called North Bayshore, and turn it into a titanic human terrarium.

Abandoning thousands of years of conventional wisdom about buildings because you wrote a good search engine once 15 years ago sounds like a good plan to me.


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Poetry by Google

Posted on May 8th, 2015 at 9:04 by John Sinteur in category: Google

wXSUeMZ


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Comments:

  1. Nice!

  2. There, there, Google.
    It’s not like you to be down.
    People like you, really.

The Truth About Smartphone Apps That Secretly Connect to User Tracking and Ad Sites

Posted on May 3rd, 2015 at 19:12 by John Sinteur in category: Google, Privacy

[Quote:]

Vigneri and co began by downloading over 2,000 free apps from all 25 categories on the Google Play store. They then launched each app on a Samsung Galaxy SIII running Android version 4.1.2 that was set up to channel all traffic through the team’s server. This recorded all the urls that each app attempted to contact. Next they compared the urls against a list of known ad-related sites from a database called EasyList and a database of user tracking sites called EasyPrivacy, both compiled for the open source AdBlock Plus project. Finally, they counted the number of matches on each list for every appThe results make for interesting reading. In total, the apps connect to a mind-boggling 250,000 different urls across almost 2,000 top level domains. And while most attempt to connect to just a handful of ad and tracking sites, some are much more prolific.Vigneri and co give as an example “Music Volume Eq,” an app designed to control volume, a task that does not require a connection to any external urls. And yet the app makes many connections. “We find the app Music Volume EQ connects to almost 2,000 distinct URLs,” they say.And it is not alone in its excesses. The team say about 10 percent of the apps they tested connect to more than 500 different urls. And nine out of 10 of the most frequently contact ad-related domains are run by Google.

 


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Comments:

  1. The free market at work…

  2. I guess if you set your volume too high you will see hearing aid ads. If you turn it up to 11 you’ll get ads for metal concerts.

  3. Oudated information. The Android version 4.1.2 still runs on only 15% of the devices now. In later versions of Android it is possible to set exactly what information an App can get access to (Privacy Protection setting).
    Nice to know although what happened in those previous versions.

  4. And these things are so simple and clear to every user they will happily click yes when installing that calculator app that asks for access to everything in your phone.

    So are you going to curate everything installed in your mothers phone for her with these Privacy Protection setting, or do you tell her to go to a curated environment where a calculator app that wants access to your location doesn’t even make it into the app store?

  5. @John – Curated environment – does this exist? If not, want to set one up?

Samsung design copy

Posted on May 2nd, 2015 at 13:25 by John Sinteur in category: Apple

The thing I find most striking is how hard it is to do a good Jony Ive impression. Here, compare with this:


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How to Turn Your Apple Watch Gold

Posted on April 25th, 2015 at 13:03 by John Sinteur in category: Apple


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curl | sudo bash

Posted on April 23rd, 2015 at 22:55 by John Sinteur in category: Security, Software

[Quote]:

System administration is in a sad state. It in a mess.

I’m not complaining about old-school sysadmins. They know how to keep systems running, manage update and upgrade paths.

This rant is about containers, prebuilt VMs, and the incredible mess they cause because their concept lacks notions of “trust” and “upgrades”.

Consider for example Hadoop. Nobody seems to know how to build Hadoop from scratch. It’s an incredible mess of dependencies, version requirements and build tools.

None of these “fancy” tools still builds by a traditional make command. Every tool has to come up with their own, incomptaible, and non-portable “method of the day” of building.

And since nobody is still able to compile things from scratch, everybody just downloads precompiled binaries from random websites. Often without any authentication or signature.


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Comments:

  1. There, there. Worse things happen at sea.

Google Expected to Face Antitrust Charges in Europe

Posted on April 15th, 2015 at 9:12 by John Sinteur in category: Google

[Quote]:

The European Commission is said to be planning to charge Google with using its dominant position in online search to favor the company’s own services over others, in what would be one of the biggest antitrust cases here since regulators went after Microsoft.

Europe’s competition chief, Margrethe Vestager, is expected to make an announcement in Brussels on Wednesday that Google has abused its dominant position, according to two people who spoke Tuesday on the condition of anonymity.

[..]

It also expected the authorities to open an investigation into Android, the Google software that runs a majority of the world’s smartphones.


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Comments:

  1. Android is Open Source right? So what’s there to investigate?

  2. Yes, any $HANDSET_MAKER can pick up the bare Android sources from the repository and create a phone.

    However, if $HANDSET_MAKER wants to have the Google Play app (pre-)installed, or many of the other Google apps, they have to follow certain rules.

    And mind you that matters – I had a good friend return a tablet to a store because Google Play could not be installed on it.

    Its those rules that are under investigation. Not the Android source code.

Apple and the Self-Surveillance State

Posted on April 11th, 2015 at 14:56 by John Sinteur in category: Apple, Privacy

[Quote]:

Like lots of people, I’m paying attention to the Apple Watch buzz, and doing some of my own speculation. Needless to say, I have no special expertise here. But what the heck; I might as well put my own thoughts out there.

So, here’s my pathetic version of a grand insight: wearables like the Apple watch actually serve a very different function — indeed, almost the opposite function — from that served by previous mobile devices. A smartphone is useful mainly because it lets you keep track of things; wearables will be useful mainly because they let things keep track of you.


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Youtube can’t even code a decent version check or feedback

Posted on April 6th, 2015 at 21:40 by John Sinteur in category: Google, Software

Screen Shot 2015-04-06 at 21.36.04

I don’t know how these morons are checking this, but when I try their feedback link at the bottom of the page to tell them I get into an endless loop: “please sign in, ok thanks verify that this information on you is still correct, oh you think it is correct, fine, now please sign in….”


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Quis regexiet ipsos regexes?

Posted on April 6th, 2015 at 10:53 by John Sinteur in category: Software

[Quote]:

/^((?:(?:[^?+*{}()[\]\\|]+|\\.|\[(?:\^?\\.|\^[^\\]|[^\\^])(?:[^\]\\]+|\\.)*\]|\((?:\?[:=!]|\?<[=!]|\?>)?(?1)??\)|\(\?(?:R|[+-]?\d+)\))(?:(?:[?+*]|\{\d+(?:,\d*)?\})[?+]?)?|\|)*)$/


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Comments:

  1. I think, therefor I am, I think. When I see stuff like this, the first inclination I have is to find a brick to bash against my head to stop the pain…

Apple Watch Teardown – iFixit

Posted on April 1st, 2015 at 19:06 by John Sinteur in category: Apple


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Comments:

  1. lol…put it in a blender…

  2. This is an infomercial for Apple. And @Sue, why waste a good blender? A high power shredder will do the trick :-)

  3. @Mykolas: But it’s pretty spectacular in a blender:
    https://www.youtube.com/watch?v=GAuhUTzNwiY

Apple – Privacy

Posted on March 30th, 2015 at 20:31 by John Sinteur in category: Apple

[Quote]:

Finally, I want to be absolutely clear that we have never worked with any government agency from any country to create a backdoor in any of our products or services. We have also never allowed access to our servers. And we never will.

Hmmm… I wonder…


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Intel: PC sales weak as many businesses stick with Windows XP

Posted on March 22nd, 2015 at 8:44 by John Sinteur in category: Microsoft

[Quote]:

One reason the chip giant cited for that weaker demand: a slowdown in companies upgrading from Windows XP systems. What’s particularly interesting about this is that the move away from the ancient OS helped drive some of Intel’s better results in 2014.

What that suggests is a potentially intractable problem for both Intel and Microsoft: businesses that still manage to operate fine, thank you very much, with an operating system that’s nearly 15 years old. It’s the desktop equivalent of the guy who still uses a flip phone and doesn’t care if you have an app that can identify a song on the radio in three seconds or can stream the Super Bowl live on your smartphone.

But it’s even worse, actually, because that inertia isn’t one guy: It’s firms with potentially dozens or hundred of employees that have their productivity disrupted while new systems are installed and training is implemented. Then there’s the issue of the need for an updated OS. What does Windows 7 or 8 (or 10) do that compels these stragglersto upgrade? If they’re fine with whatever version of Office they’re currently using, and have a decent enough web browser, then most workers are set (though maybe not overjoyed).


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Comments:

  1. Presumably this is why MS is giving away Windows 10. And Intel is investing in low power devices.

  2. Since ms ceased security patch updates expect to see millions of zombie xp machines under botnet/NSA control soon. MS is freeing ver. 10 because Linux is free (and better).

  3. Because MS ceased security patch updates, millions of soon-to-be pwnd XP win-systems will join botnets/NSA. No matter, “the cloud” triumph ensures no security at all. Convenient for TLA community.

The newspaper, the marketer, and the Watch

Posted on March 13th, 2015 at 17:41 by John Sinteur in category: Apple

[Quote]:

There was a scathingly daft story about the Apple Watch in the Guardian yesterday where someone who’d never seen it or used it opined about it being a major mistep and, to double-down on the daftness, trotted out the vapidly cliched “this would never have happened with Steve” line.

[..]

The sad part is, Jim Dalrymple of The Loop discovered the writer was actually a marketing consultant for the watch industry


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Comments:

  1. So I guess the obvious message for all “luxury retailers” is that your sector can be disrupted. Watches, cars, handbags (well, perhaps not handbags).

  2. Although, I think the iBag would be kind of interesting :-)

Thousands Have Already Signed Up for Apple’s ResearchKit

Posted on March 13th, 2015 at 9:22 by John Sinteur in category: Apple

[Quote]:

Stanford University researchers were stunned when they awoke Tuesday to find that 11,000 people had signed up for a cardiovascular study using Apple Inc.’s ResearchKit, less than 24 hours after the iPhone tool was introduced.“To get 10,000 people enrolled in a medical study normally, it would take a year and 50 medical centers around the country,” said Alan Yeung, medical director of Stanford Cardiovascular Health. “That’s the power of the phone.”


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Comments:

  1. I’ll be curious to see what gets revealed in the first papers that use data from these studies. I would believe that they’d either reaffirm what we already expected or completely demolish existing conventional wisdom.

  2. @Mudak: lol…you’re not going to make a prediction then? How can we test your hypothesis if you won’t make a prediction? I mean, for Science!

Keep calm and Apple Watch on

Posted on March 12th, 2015 at 12:03 by John Sinteur in category: Apple

[Quote]:

The Apple Watch isn’t an iPhone any more than the iPhone is a Mac. Computing has moved from the server room to the desktop to the laptop to the pocket and now onto the wrist. Every time that’s happened, every time it’s moved to a new, more personal place, those of us who were used to it in its old place have become slightly anxious, we’ve become subject to our own expectational debt.


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Comments:

  1. How typical of the Cult of Apple to act as if they have just broken new ground.

  2. Funny – I post a link to an article basically saying “hmmm this is different from what I expected” and somehow you read it THAT way? I don’t know what you’ve been smoking but I want some of it.

CIA hacked iPhone, iPad and Mac security – Snowden documents reveal extent of privacy invasion

Posted on March 10th, 2015 at 16:47 by John Sinteur in category: Apple, Privacy, Security

[Quote]:

The CIA has spent almost a decade attempting to breach the security of Apple’s iPhone, iPad and Mac computers to allow them secretly plant malware on the devices. Apple announced on Monday, 9 March, that it had sold over 700 million iPhones since the first version was announced in 2007, giving some idea of the scope of the CIA tactics.

Revealed in documents released to The Intercept by Edward Snowden, the CIA’s efforts at undermining Apple’s encryption has been announced at an secret annual gathering known as the “Jamboree” which has been taking place since 2006, a year before the first iPhone was released.


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Comments:

  1. Actually interesting bits:

    While the report details the efforts the CIA undertook to crack Apple’s security measures, it or the documents don’t say how successful the efforts were at undermining the security of iPhones, iPads and Macs.

    and

    the CIA also claims to have developed a poisoned version of Xcode, the software development tool used by app developers to create the apps sold through Apple’s hugely successful App Store. It is unclear how the CIA managed to get developers to use the poisoned version of Xcode, but it would have allowed the CIA install backdoors into any apps created using their version.

    and

    The CIA also looked to breach the security of Apple’s desktop platform, claiming they had successfully modified the OS X updater. If this is true it would allow the CIA to intercept the update mechanism on Apple’s Mac laptops and desktops to install a version of the updated Mac OS X with a keylogger installed.

Apple’s Fork Into Fashion

Posted on March 10th, 2015 at 11:32 by John Sinteur in category: Apple

[Quote]:

Just look at who Apple has hired in the past couple of years. This should be obvious. Not only is Apple not resting on their laurels, they’re pivoting the company in a pretty big way that’s flying under the radar to all but those watching most closely.

And it feels like a smart bet. Because Apple is at a moment of absolute strength, they can use that clout to get the talent on board to change the engine mid-flight. That doesn’t mean it will work, of course. But it sure seems better than sitting back and atrophying as more nimble opponents approach. This is when you take risks.


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The Apple Watch Is Time, Saved

Posted on March 7th, 2015 at 16:41 by John Sinteur in category: Apple

[Quote]:

One user told me that they nearly “stopped” using their phone during the day; they used to have it out and now they don’t, period. That’s insane when you think about how much the blue glow of smartphone screens has dominated our social interactions over the past decade.


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IBM CONTROL PROGRAM OF OPERATING SYSTEM/360

Posted on March 5th, 2015 at 13:39 by John Sinteur in category: Software


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Comments:

  1. Wow, that brings back memories.

Apple Car Seen as Serious Competitor by Auto Executives

Posted on March 3rd, 2015 at 19:53 by John Sinteur in category: Apple, Google

[Quote]:

Automotive executives are taking seriously the prospect that Apple Inc. and Google Inc. will emerge as competitors even as they consider partnering with the two.

“If these two companies intend to solely produce electric vehicles, it could go fast,” Volkswagen AG Chief Executive Officer Martin Winterkorn said at the Geneva International Motor Show. “We are also very interested in the technologies of Google and Apple, and I think that we, as the Volkswagen company, can bring together the digital and mobile world.”

Apple has been working on an electric auto and is pushing to begin production as early as 2020, people with knowledge of the matter said last month. Google said in January it aims to have a self-driving car on the road within five years.

The timeframe — automakers typically need at least five years to develop a car — underscores the aggressive goals of the two technology companies and could set the stage for a battle for customers. The market for connected cars may surge to 170 billion euros ($190 billion) by 2020 from 30 billion euros now, according to a German government policy paper obtained by Bloomberg News.


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Apple officially wants to be recognized as a car maker

Posted on March 2nd, 2015 at 23:49 by John Sinteur in category: Apple

[Quote]:

Whether Apple is actually building a car, or it’s just a controlled leak to show that the company has more planned after the Apple Watch, isn’t known yet. What is sure, though, is that Apple is now legally covered if it wants to slap its name and logo onto an automobile.

Using its regular law firm Baker & McKenzie in Zurich, Apple recently expanded its corporate description to not just include the current array of watches, smartphones, tablets and computers, but vehicles, too. And Apple’s lawyers aren’t taking any chances, either. Apple aircraft, anyone?


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Apple boss: We have a human right to privacy

Posted on February 28th, 2015 at 14:50 by John Sinteur in category: Apple

[Quote]:

“None of us should accept that the government or a company or anybody should have access to all of our private information. This is a basic human right. We all have a right to privacy. We shouldn’t give it up. We shouldn’t give in to scare-mongering or to people who fundamentally don’t understand the details.”

[..]

“Apple has a very straightforward business model,” he said. “We make money if you buy one of these [pointing at an iPhone]. That’s our product. You [the consumer] are not our product. We design our products such that we keep a very minimal level of information on our customers.”

It also means that Apple’s strategy has made it less profitable than it otherwise might have been, at least in the short term (and even though few shareholders are likely to have noticed, given its massive cash pile).

“We don’t make money selling your information to somebody else. We don’t think you want that. We don’t want to do that. It’s not in our values system to do that. Could we make a lot of money doing that? Of course. But life isn’t about money, life is about doing the right thing. This has been a core value of our company for a long time.”


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This might be the worst argument against the Apple Car

Posted on February 26th, 2015 at 20:27 by John Sinteur in category: Apple

[Quote]:

There are dozens of ways in which Apple’s apparent effort to build an Apple-branded car could go wrong, but there’s one argument against the idea that I’m hearing a lot of that really doesn’t make sense. From Henry Blodget to former GM CEO Daniel Akerson to the LA Times to Yahoo Finance people are saying this won’t work because the car industry is a “low margin” business in contrast to the fat margins Apple is used to earning most of all on its workhorse iPhone.

The misperception here is that Apple earns high margins because Apple operates in high margin industries. The truth is precisely the opposite. Apple earns high margins because it is efficient at manufacturing and firmly committed to a business strategy of sacrificing market share to maintain pricing power. If Apple makes a car, it will be a high margin car because Apple only makes high margin products. If it succeeds it will succeed for the same reason iPhones and iPads and Macs succeed — people like them and are willing to buy them, even though you could get similar specs for less.


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Comments:

  1. The shrieking virgins notwithstanding, the car industry isn’t a “low margin” business by any means. The cars may perhaps be sold at a low margin (some models), but the financing, parts, service and leasing etc. make loadsamoney.

    This is one of the good things about our mercantilist system; if a corporation wants to go into a new market they can do it.


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