The New

Quick Change in Strategy for a Bookseller

2010-08-11T20:43:00.000-07:00

In the movie “You’ve Got Mail,” Tom Hanks played the aggressive big-box retailer Joe Fox driving the little bookshop owner played by Meg Ryan out of business.

Twelve years later, it may be Joe Fox’s turn to worry. Readers have gone from skipping small bookstores to wondering if they need bookstores at all. More people are ordering books online or plucking them from the best-seller bin at Wal-Mart.
But the threat that has the industry and some readers the most rattled is the growth of e-books. In the first five months of 2009, e-books made up 2.9 percent of trade book sales. In the same period in 2010, sales of e-books, which generally cost less than hardcover books, grew to 8.5 percent, according to the Association of American Publishers, spurred by sales of the Amazon Kindle and the new Apple iPad. For Barnes & Noble, long the largest and most powerful bookstore chain in the country, the new competition has led to declining profits and store traffic. After the company announced last week that it was putting itself up for sale, Leonard Riggio, Barnes & Noble’s chairman and largest shareholder, who has declared his confidence in the company’s future, hinted that he might make a play to buy the company himself and take it private.

For readers, e-books have meant a transformation not just of the reading experience, but of the book-buying tradition of strolling aisles, perusing covers and being able to hold books in their hands. Many publishers have been astounded by the pace of the e-book popularity and the threat to print book sales that it represents. If the number of brick-and-mortar stores drops, publishers fear that sales will go along with it. Some worry that large bookstores will go the way of the record stores that shut down when the music business went digital.
“The shift from the physical to the digital book can pick up some of the economic slack, but it can’t pick up the loss that is created when you don’t have the customers browsing the displays,” said Laurence J. Kirshbaum, a literary agent. “We need people going into stores and seeing a book they didn’t know existed and buying it.”
Carolyn Reidy, the chief executive of Simon & Schuster, said in an interview that e-books currently made up about 8 percent of the company’s book revenue. She predicted that it could be as high as 40 percent within three to five years.
“E-books are moving faster and faster all of the time, which makes things look harder for bricks-and-mortar stores,” said Mike Shatzkin, founder and chief executive of the Idea Logical Company, which advises book publishers on digital change.
Iris Reeves, a 53-year-old administrative assistant in East Texas, is one of the bookstore holdouts. Nearly every weekend, she and her husband drive 60 miles to the nearest Barnes & Noble for a long browsing session. She buys several paperbacks (thrillers, science fiction and paranormal romance) and he buys nonfiction (with a few auto magazines thrown in).
She has watched with alarm as dozens of bookstores, both independents and chains like Crown Books, have disappeared. Beyond Barnes & Noble and Borders, the only other retailers nearby that sell new books, she said, are religious bookstores.
“I don’t want to lose the option of actually going into a bookstore and handling a book,” Ms. Reeves said. “I like going up and down the aisles, seeing what’s there. If I had my druthers, it would be paper books all the way.”
Whoever ends up in control of Barnes & Noble’s 720 retail stores will have to grapple with the fundamental changes in the industry — and if the shift to e-books continues, prove that Barnes & Noble can be as successful on the digital side of bookselling as it has been for print.
William Lynch, the chief executive, said in an interview on Friday that the chain was retooling its stores to build up traffic, add products like educational toys and games, and emphasize its own e-reader, the Nook.
“We think we’ve got the right strategy,” Mr. Lynch said. “The growth in our e-books business is about nine months ahead of our plan.”
It is a rare moment of uncertainty for the company. In the 1990s heyday of the superstore, Barnes & Noble reigned supreme, expanding its reach rapidly and dazzling customers with an enormous array of books and steep discounts that smaller, independent stores could not match. Mr. Riggio, a tough and innovative figure, was hailed as the most powerful man in the book business.
“As Barnes & Noble grew, there was a lot that was very good for publishers and authors,” said David Steinberger, the chief executive of the Perseus Books Group. “They were energetic, they were aggressive, they were terrific on author events. They were terrific at broadening the selection available.”
But recently, Barnes & Noble has had to contend with Amazon.com, which has led on e-books and whose vast selection of print books is available online. The release of Apple’s iPad in April only increased interest in e-books.
“This company is going to go through a really fundamental existential struggle,” said Peter Osnos, the founder and editor at large of PublicAffairs, an independent publisher. “What you have is this aggregation of factors — the changes in the way book buying is taking place, the general sluggishness of the economy, the management issues at Barnes & Noble. All of those things together create a set of problems which are really quite striking.”

At the expansive Barnes & Noble store in Manhattan’s Union Square, the changes sweeping the company and the industry are on full display. Shelves have been stripped bare to make room for toys and games, as a sign dangling from the ceiling cheerfully announces.
“I’m in favor of anything that brings traffic in the store,” said Ms. Reidy of Simon & Schuster. “If it’s toys or games that brings a family into the bookstore, then I say fine.”
The company is also taking significant steps to capture the digital market. In September, it will begin building 1,000-square-foot boutiques to showcase the Nook in all of its outlets.
Samantha Robinson, a 24-year-old student, paused outside the Union Square store last week, a newly purchased Nook in her hand.
“I’m going to buy as many books as I can on the e-reader, because they’re less expensive,” Ms. Robinson said.
And if she stopped buying print books altogether? “I wouldn’t miss it,” she said.
In a twist straight out of the movies, some publishers speculated that many of the independents that survived the big chains over the last 15 years might be in an unusually stable position. By the American Booksellers Association’s count, there are more than 2,000 independent bookstores in the United States.
“Being small and privately held allows us to be more nimble,” said Chris Morrow, owner of the Northshire Bookstore in Manchester Center, Vt. “Our competitive advantage has been the curation aspect — knowing our customers and picking the right books.
“We still have that competitive advantage,” he added. “Barnes & Noble doesn’t have that.”

Web Plan Is Dividing Companies

2010-08-11T20:40:00.000-07:00

In an emerging battle over regulating Internet access, companies are taking sides.

Facebook, one of the companies that has flourished on the open Internet, indicated Wednesday that it did not support a proposal by Google and Verizon that critics say could let providers of Internet access chip away at that openness.
Meanwhile an executive of AT&T, one of the companies that stands to profit from looser regulations, called the proposal a “reasonable framework.”
Most media companies have stayed mute on the subject, but in an interview this week, the media mogul Barry Diller called the proposal a sham.
And outside of technology circles, most people have not yet figured out what is at stake.

The debate revolves around net neutrality, which in the broadest sense holds that Internet users should have equal access to all types of information online, and that companies offering Internet service should not be able to give priority to some sources or types of content.
In a policy statement on Monday, Google and Verizon proposed that regulators enforce those principles on wired connections but not on the wireless Internet. They also excluded something they called “additional, differentiated online services.”
In other words, on mobile phones or on special access lanes, carriers like Verizon and AT&T could charge content companies a toll for faster access to customers or, some analysts worry, block certain services from reaching customers altogether.
Opponents of the proposal say that the Internet, suddenly, would not be so open anymore.
“All of our life goes through this network, increasingly, and if you can’t reach your boss or get to your remotely stored work, or it’s so slow that you can’t get it done before you give up and you go to bed, that’s a problem,” said Allen S. Hammond IV, director of the Broadband Institute of California at Santa Clara University School of Law. “People need to understand that’s what we’re debating here.”
Decisions about net neutrality rest with the Federal Communications Commission and legislators, and full-throated lobbying campaigns are already under way on all sides. The Google-Verizon proposal was essentially an attempt to frame the debate.
It set off a flood of reaction, much of it negative, from Web companies and consumer advocacy groups. In the most extreme situation that opponents envision, two Internets could emerge — the public one known today, and a private one with faster lanes and expensive tolls.
Google and Verizon defended the exemptions by saying that they were giving carriers the flexibility they need to ensure that the Internet’s infrastructure remains “a platform for innovation.” Carriers say they need to be able to manage their networks as they see fit and generate revenue to expand them.
AT&T said in a statement Wednesday night that “the Verizon-Google agreement demonstrates that it is possible to bridge differences on this issue.”
Much of the debate rests on the idea of paid “fast lanes.” Content companies, the theory goes, would have to pay for favored access to a carrier’s customers, so some Web sites or video services could load faster than others.
That would be a big change from the level playing field that content companies now enjoy, Mr. Diller, who oversees Expedia, Ticketmaster, Match.com and other sites, said last month. Speaking of the telecommunications carriers, he said, “They want the equivalent of having the toaster pay for the ability to plug itself into the electrical grid.”
These fast lanes are fairly easy to understand when it comes to wireless Internet access. But what confused many was the suggestion by Google and Verizon that future online services that are not part of the public Internet should also be exempt from equal-access rules.
These services would be “distinguishable from traditional broadband Internet access services,” the two companies said in a joint blog post. “It is too soon to predict how these new services will develop, but examples might include health care monitoring, the smart grid, advanced educational services or new entertainment and gaming options.”
Some experts were puzzled as to what these services might be and why such an exception might be necessary.
“Broadband that’s not the Internet? I don’t know what they’re talking about,” said David A. Patterson, a professor of computer science at the University of California, Berkeley. “They seem to have an idea of something other than the public Internet as a way to ship information, but by nature, to have value it has to go to a lot of places, and right now, that’s the packet-switched Internet.”
Josh Silver, chief executive of the nonprofit group Free Press, said the exemptions amounted to “the cable-ization of the Internet,” in that cable subscribers pay extra for premium tiers of service and for certain channels. Mr. Silver’s group is promoting a petition to the F.C.C. titled “Don’t Let Google Be Evil.” Silicon Valley investors have expressed trepidation that the new rules, if adopted, could put a damper on innovation, particularly for mobile start-ups.
The wireless Internet is quickly emerging as the dominant technology platform, said Matt Cohler, a general partner at Benchmark Capital, a prominent venture firm in Silicon Valley that has invested in start-ups like Twitter. “It is as important to have the right protections in place for the newer platform as it is for the older platform.”
Facebook sounded a similar note on Wednesday, saying in a statement that it supported net neutrality principles for both wired and wireless networks.
“Preserving an open Internet that is accessible to innovators — regardless of their size or wealth — will promote a vibrant and competitive marketplace where consumers have ultimate control over the content and services delivered through their Internet connections,” the company said.
Technology companies like Amazon and eBay also expressed concern with Google’s compromise, but have been less vocal.
Some start-ups see possible advantages in tiered access. Danny Stein, the chairman of eMusic, a music download service, said there needed to be Internet service that remained open and neutral, “but that doesn’t mean there can’t be premium options to appeal to some amazing consumer experience outside of the garden of net neutrality.”
The silence of big media companies like Comcast and the News Corporation on the issue has been noticeable. Media companies’ traditional business models have been about controlled pathways to the customer, and they may see benefits in restoring some of that control.
Mr. Diller asserted that the Google-Verizon proposal “doesn’t preserve ‘net neutrality,’ full stop, or anything like it.” Asked if other media executives were staying quiet because they stand to gain from a less open Internet, he said simply, “Yes.”

Profit Climbs at Cisco, but Sales Forecast Falls Below Expectations

2010-08-11T20:39:00.001-07:00

Cisco Systems, the computer networking equipment maker, reported stronger quarterly earnings on Wednesday as its customers continued to catch up on delayed purchases, but its chief executive said the company was seeing signs of the economic recovery slowing down.

Shares in the company fell in after-hours trading Wednesday as revenue missed Wall Street expectations.
The Cisco chief executive, John T. Chambers, also offered a sales forecast for the new quarter that came in below expectations.
Cisco’s sales are heavily dependent on capital spending at large corporations, phone companies and government agencies across the world, and an uncertain economy means those customers may spend less.
“We’re seeing a large number of mixed signals,” Mr. Chambers said. “We think the words ‘unusual uncertainty’ are an accurate description of what’s occurring.”
Cisco said both net income and revenue bounced back from last year’s recessionary levels. Still, analysts were expecting even stronger results after a couple of quarters of Cisco exceeding its own expectations.
The company earned $1.9 billion, or 33 cents a share, in its fourth quarter, which ended July 31.
That was up 79 percent from $1.1 billion, or 19 cents a share, in the quarter a year earlier.
Revenue rose 27 percent, to $10.8 billion, just under analysts’ forecasts of $10.9 billion. Cisco had projected revenue of $10.7 billion to $10.9 billion. Revenue in the quarter a year earlier was $8.5 billion.
In extended trading after the release of the results, Cisco shares fell as much as $1.89, to $21.84. That came on top of regular-session losses of 58 cents to close at $23.73.
Excluding one-time charges and the cost of stock-based compensation, the company, based in San Jose, Calif., earned 43 cents a share. Analysts polled by Thomson Reuters expected 42 cents, on average.
Mr. Chambers said he expected revenue in the current quarter to rise 18 to 20 percent from the same period a year earlier, which works out to $10.65 billion to $10.83 billion.
Analysts were expecting $10.95 billion, on average.

Tech Talk Podcast: Net Neutrality

2010-08-11T20:38:00.002-07:00

On this week’s New York Times Tech Talk podcast, Brian Stelter, a Times media reporter, drops by to chat about Internet access regulation with J.D. Biersdorfer and Bettina Edelstein. The so-called net neutrality plan of Google and Verizon would exempt wireless and some other online services from rules for maintaining open access to the Internet, and Mr. Stelter says that while the two companies appear to be staking out their ground now, other wireless carriers and media companies are watching and waiting as the Federal Communications Commission looks at ways of regulating broadband.

Meanwhile, in BlackBerryland, there’s been a brouhaha over recent efforts by the United Arab Emirates and Saudi Arabia to restrict use of the service for e-mail and other messaging. Ms. Edelstein speaks with Miguel Helft, a Times technology reporter, about what’s going on there and in other countries. Mr. Helft points out, while R.I.M. says that its corporate customers should not fear their messages are compromised, the company also says it complies with regulatory requirements around the world.
Venturing out for some summer fun in Times Square, Ms. Biersdorfer and Pedro Rafael Rosado test a solar-powered boombox, the Etón Soulra, amid the neon lights and constant hubbub.
Ms. Biersdorfer’s news roundup includes the Droid 2 smartphone for Verizon, featuring the new and faster Android 2.2 operating system and Flash 10.1; malware attacking Android mobile devices; free Wi-Fi at 500 Sam’s Club stores; and Microsoft’s latest salvo in its platform war with Apple. Her tech tip of the week: how to clean up duplicates in your iTunes Library.
To find more information about the podcast and the links to the show’s topics, go to the Tech Talk page.
For help in finding particular segments of the show, use these time codes:
Tip – 31:36
News – 28:41
Brian Stelter – 22:31
Etón Soulra – 13:47
Miguel Helft – 08:29

TwitPic’s Creator Has a New Project, Heello

2010-08-11T20:38:00.000-07:00

Before Noah Everett started TwitPic, a photo sharing service for people who use Twitter, he had bigger plans in mind: he wanted to build tools that made the Web an easier place to work.

Two years and 12 million TwitPic users later, Mr. Everett is finally getting to that project.
On Tuesday, Mr. Everett announced via Twitter a new company called Heello, pronounced HE-low, that hopes to “make communication easier.” If you’re wondering what that means, I was too, so I called Mr. Everett to find out more.
“We are tackling communications with groups, and we’ll be building services that help bring teams together online,” explained Mr. Everett with some trepidation. “I don’t really want to explain too much right now, but we plan to launch the products by the fall.”
Mr. Everett said he hoped to solve the kinds of problems companies face when building new products — the same struggles he went through when building TwitPic and previous projects.
He also said Heello was being financed by the money TwitPic was generating through online advertising, and he did not plan to seek venture capital in the near future. “Twitpic is fantastic; it continues to grow. We’re adding 35,000 new users a day, and we just hit 12 million total users,” he said.
The team working on the new project will also cross paths with TwitPic. Mr. Everett said that TwitPic had grown so quickly that he had hired his parents to help run the company. “Dad’s the account and tax guy, and Mom does customer service,” he said. “But we’re still growing. We’re trying to double if not triple our team size by early next year.”
Mr. Everett assured me that Heello wasn’t going to compete with any other services on the Web today, including Twitter, but would offer a solution to problems that have not been solved yet.
“We love Twitter, we love all these other services, we’re just really excited to start this new project,” he said.

Facebook Breaks With Google on Net Neutrality

2010-08-11T20:36:00.001-07:00

When Google teamed up with Verizon on Monday to announce a set of proposed rules to govern Internet access, Google’s former allies in the years-long campaign for net neutrality were among its most vocal critics.
A slew of public interest groups that, along with Google, are part of the Open Internet Coalition, slammed the company for putting together a proposal that they said betrayed net neutrality principles. Other Internet heavyweights that are part of the coalition, like Amazon and eBay, appeared to be concerned with Google’s compromise, but were less vocal about it.

On Wednesday, Facebook became the most prominent Internet company to part ways with Google. In a statement, Facebook, which is also part of the coalition, suggested that exempting wireless networks from net neutrality rules, as proposed by Google and Verizon, was the wrong approach.
The company said: “Facebook continues to support principles of net neutrality for both landline and wireless networks. Preserving an open Internet that is accessible to innovators — regardless of their size or wealth — will promote a vibrant and competitive marketplace where consumers have ultimate control over the content and services delivered through their Internet connections.”
On Monday, I spoke with Matt Cohler, one of Facebook’s earliest employees and now a venture investor at Benchmark Capital. His concerns were broader than just wireless networks, which he said should be protected, too. Mr. Cohler said he was disturbed by the division that Google and Verizon seemed to have drawn between the public Internet, which would be subject to net neutrality principles, and new “enhanced services,” which would be free of such rules. “It is certainly concerning to me that there is language being used about the ‘public Internet,’” Mr. Cohler said. “That begs the question about what is not the public Internet.”
Google has vehemently rejected the notion that its joint proposal with Verizon betrays net neutrality principles. Eric E. Schmidt, the company’s chief executive, said that Google continued to believe that an open Internet, where broadband providers cannot prioritize the traffic of certain companies, remained essential to preserve innovation on the Web. “The next two people in a garage really do need an open Internet,” he said.
The proposal by Google and Verizon has its supporters. A series of legal and technology experts have been laying out arguments for and against it in an online debate on nytimes.com.
The other large Internet companies that have spoken out on the Google-Verizon proposal have been more oblique than Facebook in laying out their concerns.
In a statement, eBay said that it “believes that openness on the Internet is the right policy for Internet businesses and Internet users, and that two-tier networks with corporate toll lanes would stifle ground-up innovation and benefit dominant businesses at the expense of smaller competitors and entrepreneurs.” It added: “We will review the recent suggestions from Google/Verizon while remaining focused on supporting the openness of the Internet so that it continues to promote innovation, entrepreneurship and empowerment for all.”
Paul Misener, vice president of global public policy for Amazon, said in a statement: “We’ve long supported net neutrality, and although we agree that network operators should be allowed to offer additional services, we are concerned that this proposal appears to condone services that could harm consumer Internet access.”

Netflix to Pay Nearly $1 Billion to Add Films to On-Demand Service

2010-08-10T21:19:00.000-07:00

At a cost of nearly $1 billion, Netflix said on Tuesday that it would add films from Paramount Pictures, Lions Gate and MGM to its online subscription service.

It was a coup — albeit a costly one — for Netflix, which knows it needs to lock up the digital rights to films as customers stop receiving DVDs by mail and start receiving streams via the Internet. The deal will start Sept. 1.
Ted Sarandos, the chief content officer for Netflix, said he was essentially taking the “huge pile of money” that Netflix paid in postage for DVDs by mail — about $600 million this year — “and starting to pay it to the studios and networks.”
Wall Street analysts estimated that Netflix would pay about $900 million over the course of five years to Epix, a fledgling competitor to HBO that holds the rights to the film output of Paramount, Lions Gate and MGM. Those payments are expected to help the money-losing Epix break even in the next fiscal year.

The Epix deal will add new releases like “Iron Man” and “The Curious Case of Benjamin Button” to Netflix’s catalog, greatly enhancing the streaming service that the company markets to subscribers as part of an $8.99 package that also includes DVD deliveries. It was the second film deal for Netflix this summer, coming a month after a pact with Relativity Media, the firm run by Ryan Kavanaugh.
Netflix’s open checkbook demonstrates that Internet streaming is clearly coming to the forefront in Hollywood, but in a carefully controlled manner. Mr. Sarandos said in an interview Tuesday that the content deals were part of “our continued commitment to making streaming a better and better proposition for our subscribers.”
Netflix’s future depends largely on cutting financial deals that keep those streams in place.
The company first took on the likes of Blockbuster with DVDs by mail. Then, in 2007, it set its sights on online streaming, but existing deals with pay TV operators like HBO made it impossible to stream many of the biggest film releases. These deals preserve what is called the pay television window, which opens up about a year after a film is first released in theaters and gives HBO, Showtime or Starz about 18 months of screening (and, more recently, Web streaming) time.
Pay TV arrangements are important contributors to the bottom lines of Hollywood studios, helping them wring more money out of both blockbusters and flops. These arrangements rely on cable and satellite carriers to collect monthly payments.
Accordingly, the movies that were initially available on the streaming service were mostly ones “you’ve never heard of,” Mr. Sarandos said. But in 2008 the company cut an important deal with Starz that allowed access to widely known films from Sony and the Walt Disney Company. The payments to Epix will add more films.
In doing so, it is essentially creating a new window for movie viewing, one that does not depend on cable or satellite carriers. “If you own content, you want to sell it to as many people as possible without blowing up your existing revenue streams,” said the Morgan Stanley analyst Benjamin Swinburne.
At the same time, having Netflix in the marketplace puts pressure on cable and satellite providers “because you’ve got another bidder out there,” he said.
The two-year-old Epix is invisible to most consumers because some big companies like DirectTV and Comcast don’t carry it. But it is preserving the deals it does have by carving out a three-month TV window for films before they are available to Netflix subscribers.
Jon Feltheimer, the chief executive of Lions Gate, told analysts Tuesday that “by creating this groundbreaking new window for their streaming service, we both protect our traditional M.S.O. customers and create a significant and guaranteed new revenue stream for our service.” M.S.O., or multiple system operator, refers to cable and satellite carriers.
Netflix says it prefers to be a distributor for pay TV — not a competitor to it — and wants to license content from HBO and Showtime. HBO has the rights to Fox, Universal and Warner films for at least the next four years.
Asked about the giant amount of content that Netflix was lacking because of HBO’s deals, Mr. Sarandos seemed to take a long-term view. “Every deal expires,” he said, “and every deal has to be renewed.”

Malware Infection Hits Russian Android Phones

2010-08-10T21:17:00.000-07:00

The adage “Be careful what you wish for” has a modern-day counterpart: “Be careful what you download.” Especially on your mobile phone.
On Tuesday several mobile security companies were analyzing a Trojan horse that appeared on phones running Google’s Android software in Russia.

The malicious software, which was discovered by Kaspersky Lab, an antivirus software company, is said to take advantage of Android phones after users install what appears to be a “harmless media player.” Once the file is installed the Trojan horse begins sending text messages to premium-rate phone numbers “without the owner’s knowledge or consent, resulting in money passing from a user’s account to that of the cybercriminals.”
Lookout, a security company specializing in mobile antivirus software, said in a blog post that the malicious program was the first Trojan horse developed exclusively for the Android platform. But it said the program would not affect Android phone users outside of Russian cell networks.
Security experts also noted that the infected application was not available in the Android Marketplace, the store used to download applications for the Android platform. Phone owners must explicitly change a setting on their phone to permit the installation of non-Marketplace applications.
Jay Nancarrow, a Google spokesman, said Android applications must get permission from the user before doing things like sending text messages or making phone calls.
“We consistently advise users to only install apps they trust,” Mr. Nancarrow said in a statement. “In particular, users should exercise caution when installing applications outside of Android Market.”

A Tool for Activists Is Simplified for the Less Tech Savvy

2010-08-10T21:16:00.000-07:00

Software that has been hailed as a powerful tool in response to crisis has become accessible for low-tech activists. Ushahidi, a technology which allows users to create maps from data drawn from messages from cellphones, news reports and the Web, is now available through a Web-based application called Crowdmap.

Ushahidi was built in the violent aftermath of the 2007 Kenyan elections, after a group of developers responded to a call for a platform that would allow people to post accounts of violence anonymously. (The name means testimony in Swahili.) The platform plots reports it receives on a map, drawing attention to individual accounts and giving an overall sense of the situation.
The platform has been used to track damage from the oil spill in the Gulf of Mexico and to map election irregularities in Sudan. Perhaps its most notable moment followed January’s earthquake in Haiti. There, a number was established where people could send text messages with information about trapped earthquake victims. The calls were plotted on a map, which was then monitored by volunteers in the United States. The volunteers then relayed information about those in need of help to rescue workers on the ground.
The organization now supports its 11-person staff primarily through funding from the Omidyar Network, the foundation of eBay founder Pierre Omidyar.
Ushahidi’s open-source software has always been available free, but it was not designed to be installed by those without technical skills. The idea behind Crowdmap was to create a simple way for anyone to start their own projects.
“It’s not that an average computer user couldn’t do it, but it’s intimidating,” said Brian Herbert, a developer with Ushahidi who worked directly on the Crowdmap project. “It’s not just, ‘double-click this icon to install.’ ”
Crowdmap, by contrast, is a Web interface that provides immediate gratification to would-be crisis mappers, hundreds of whom had signed up within the first 24 hours. A new user can begin building maps within minutes, after establishing a “deployment” through a process that is about as involved as creating a blog on WordPress.
Mr. Herbert said that he expected many of these projects to branch away from the group’s current uses of natural disasters and troubled elections. But he could not say what, exactly, these projects would be.
“That’s the exciting thing,” he said. “We don’t really know what people are doing with it.”

Saudis Back Away From Threat to Block BlackBerry

2010-08-10T21:14:00.000-07:00

BERLIN — The Saudi government backed away Tuesday from a threat to shut down the BlackBerry corporate messenger service in the country, citing progress in talks with operators and the maker of the device, Research In Motion,
over the ability to monitor encrypted messages for national security reasons.
In a statement released through the state-run Saudi news agency, the Communications and Information Telecommunications Commission said it had obtained unspecified commitments from operators and R.I.M. that would aid in the country’s plan to monitor encrypted traffic on BlackBerry smartphones.
“In light of the positive developments in completing part of the regulatory requirements from the service providers, the regulatory authority has decided to allow the continuation of the BlackBerry Messenger services,” the ministry said.
R.I.M. and the three mobile operators in Saudi Arabia — Saudi Telecommunications; Mobily, owned by Etihad Etisalat of Abu Dhabi; and Zain KSA of Kuwait — had faced a deadline of midnight Monday to comply with the regulator’s request or have a service used by 500,000 people in Saudi Arabia curtailed.
The regulator said it would continue working with the operators and R.I.M. to fulfill other requirements, but it did not elaborate. R.I.M., which is based in Canada, declined through a spokeswoman in London to comment.
Governments in Saudi Arabia, the United Arab Emirates and India have recently expressed concern about R.I.M.’s reluctance to provide them with access to its encrypted e-mail traffic — an information flow that R.I.M. itself says it has no way of decoding.
The governments, which are fighting domestic terrorism, have accused R.I.M. of using a double standard by denying them access that it routinely grants to governments in North America and Europe.
The United Arab Emirates has threatened to curtail BlackBerry’s corporate service in October unless an agreement is reached.
R.I.M. executives have denied that the company has cut any deals or would compromise the security of its system. A former BlackBerry executive, who did not want to be identified because the person was not authorized to speak for the company, said last week that R.I.M. had never disclosed encrypted contents of communications to any government in the Middle East or elsewhere.
Nick Jones, an analyst in London with Gartner, said it was more likely that R.I.M. had provided legal intercepts of its encrypted information to certain governments but had not helped the authorities to decrypt the information.
“Most governments reserve the right to access communications,” Mr. Jones said. “But it would be difficult for R.I.M. to decrypt and disclose private communications and then lie about it, because security is everything to R.I.M.”
The situation has brought unwelcome public scrutiny to R.I.M., the world’s second-largest maker of smartphones, after Nokia. The company’s success in corporate e-mail is largely built on the security features of its delivery system. The traffic is encrypted and travels primarily through R.I.M.’s own data centers in Canada, Britain and around the world.
European governments generally require operators to provide them with “legal intercepts” as a condition for doing business, said Paul Conway, the director of compliance operations at ComReg, the Irish telecommunications regulator.
But the requirement does not oblige an operator to decrypt confidential information, said Mr. Conway, who is an alternate member of the board that oversees the European Network and Information Security Agency, a group based in Greece that advises the European Commission.
“I think such a requirement would actually violate European data privacy law,” Mr. Conway said, by disclosing the communications of E.U. citizens.
Alberto Pamias, a managing partner in charge of Middle East business at Delta Partners, a telecommunications advisory and investment firm based in Dubai, said he thought the negotiations between R.I.M. and Saudi Arabia could produce a model for the region, averting the widespread shutoff of BlackBerry services.“Saudi has been very strict with its demands for compliance of legal interception,” Mr. Pamias said. “Nothing makes us believe that other regulators in the region will be stricter than the Kingdom of Saudi Arabia.”

Advertise on NYTimes.com South Korean Police Raid Google Office

2010-08-10T21:13:00.000-07:00

SEOUL — The South Korean police raided the offices of Google Korea on Tuesday as part of an investigation into whether the company had illegally collected and stored personal wireless data.
The U.S. search titan is already facing lawsuits and investigations in several countries in connection with private wireless data collected for its Street View service. Street View, which was started in 2006, allows users to view panoramic street scenes on Google Maps and take virtual walks through cities.

From late last year until May, Google Korea dispatched cars topped with cameras to cruise around the country to photograph neighborhoods before the planned introduction of Street View there this year.
The police suspect that those cars might have illegally captured and stored personal data from wireless networks while they were mapping streets, the Cyber Terror Response Center of the Korean National Police Agency said in a statement.
“We will investigate Google Korea officials and scrutinize the data we confiscated today” to see whether the company has violated the country’s laws on communications and privacy, it said.
“We intend to find out what kinds of data they have collected and how much,” the response center said. “We will try to retrieve all the original data illegally collected and stored through domestic Wi-Fi networks from the Google headquarters.”
Google, based in Mountain View, California, said, “We will cooperate with the investigation and answer any questions they have,” Bloomberg News reported.
Google said previously that the collection of personal data in other countries had been unintentional and the company would cooperate with investigations.
Google has had a hard time in South Korea. One domestic search engine, Daum, already runs a popular service akin to Street View.
Google said Tuesday that it would introduce Street View in Germany before the end of the year, The Associated Press reported from Berlin.
Google said the feature would be available for the 20 biggest German cities and people could ask to have the photographs of their houses removed from the database starting next week — an offer aimed at dispelling privacy fears.

Web Plan From Google and Verizon Is Criticized

2010-08-09T19:32:00.000-07:00

SAN FRANCISCO — Google and Verizon on Monday introduced a proposal for how Internet service should be regulated — and were immediately criticized by groups that favor keeping the network as open as possible.

According to the proposal, Internet service providers would not be able to block producers of online content or offer them a paid “fast lane.” It says the Federal Communications Commission should have the authority to stop or fine any rule-breakers.
The proposal, however, carves out exceptions for Internet access over cellphone networks, and for potential new services that broadband providers could offer. In a joint blog post, the companies said these could include things like health care monitoring, “advanced educational services, or new entertainment and gaming options.”
The two companies are hoping to influence regulators and lawmakers in the debate over a principle known as net neutrality, which holds that Internet users should have equal access to all types of information online.
This principle is crucial for consumers and for fostering innovation among Internet entrepreneurs, Eric E. Schmidt, Google’s chief executive, said in a call with reporters. “The next two people in a garage really do need an open Internet,” he said.

But some proponents of net neutrality say that by excluding wireless and other online services, Google and Verizon are creating a loophole that could allow carriers to circumvent regulation meant to ensure openness.
The plan “creates an Internet for the haves and an Internet for the have-nots,” said Andrew Jay Schwartzman, senior vice president and policy director at the Media Access Project, an advocacy group in Washington and a member, along with Google, of the Open Internet Coalition. “It may make some services unaffordable for consumers and access to those services unavailable to new start-ups.”
Ivan Seidenberg, chief executive of Verizon, said the proposal excluded cellphone networks because the companies were “concerned about the imposition of too many rules” that could slow the growth of the wireless Web.
The proposal also excludes services that broadband providers may create. These services, the companies said, would have to be “distinguishable from traditional broadband Internet access services and are not designed to circumvent the rules.” Mr. Seidenberg said that, for example, the Metropolitan Opera might decide to stream its performances in 3-D through such a service because it would otherwise require too much bandwidth.
Mr. Schmidt said Google had no plans to develop these types of online services.
But some expressed fears that this exception could let companies bypass open-access regulations. For example, an online video start-up could create a competitor to YouTube that did not run on the public Internet and would pay for faster connections to viewers. As those types of payments grew, the access companies might have less incentive to invest in Internet capacity, pushing more content providers to these special services and creating alternative networks that look similar to cable TV.
Jason Hirschhorn, a former president of MySpace and a former executive at MTV Networks, said more questions about the proposal needed to be answered, since the exceptions for new services could be interpreted as “just another way of going against net neutrality.”
“Imagine a world where ABC, Comedy Central, MTV, any of these brands, were on some other network, and then there was this open Internet,” he said.
Google and Verizon stressed that their plan was not a business deal, but was a policy proposal that both companies intended to follow and that they wanted the Federal Communications Commission to review. The F.C.C., which since June had been convening meetings of Internet companies, carriers and public interest groups to try to come to an agreement on access issues, called off the talks last week after reports that Google and Verizon had come to a private agreement.
One F.C.C. commissioner came out against the proposal. “Some will claim this announcement moves the discussion forward. That’s one of its many problems,” the commissioner, Michael J. Copps, said in a statement. “It is time to move a decision forward — a decision to reassert F.C.C. authority over broadband telecommunications, to guarantee an open Internet now and forever, and to put the interests of consumers in front of the interests of giant corporations.”
Jen Howard, a spokeswoman for the F.C.C., said that it would not immediately comment on the proposal, and that the views of commissioners did not reflect those of Julius Genachowski, the F.C.C. chairman.
Mr. Genachowski said last week that “any deal that doesn’t preserve the freedom and openness of the Internet for consumers and entrepreneurs will be unacceptable.”
In a speech at the Brookings Institution late last year, Mr. Genachowski addressed the wireless issue, saying that “it is essential that the Internet itself remain open, however users reach it.” But he seemed to show some flexibility on other services.
“I also recognize that there may be benefits to innovation and investment of broadband providers offering managed services in limited circumstances,” he said, adding that such services “can supplement — but must not supplant — free and open Internet access.”
Rebecca Arbogast, a telecommunications analyst at Stifel Nicolaus, predicted that the F.C.C. would probably demand that any net neutrality rules cover wireless, and that the details of any exceptions for specialized online services be made clear.
Silicon Valley companies seemed wary of the proposal. EBay said it would review the suggestions. Paul Misener, vice president for global public policy at Amazon.com, said that although the company agreed that network operators should be able to offer additional services, “we are concerned that this proposal appears to condone services that could harm consumer Internet access.”
Groups and companies opposed to open-access regulation also had guarded reactions. AT&T said that it would examine the proposal closely, and that “the Verizon-Google agreement demonstrates that it is possible to bridge differences on this issue.”
Gregory L. Rosston, a former deputy chief economist at the Federal Communications Commission and deputy director of the Stanford Institute for Economic Policy Research, said keeping wireless networks free from regulation made sense, because of good competition among wireless providers. “The more competition you have for broadband access, the less need you have for net-neutrality-type regulation,” he said.

Hewlett Took a P.R. Firm’s Advice in the Hurd Case

2010-08-09T19:30:00.000-07:00

SAN FRANCISCO — As the career of Hewlett-Packard’s chief executive Mark V. Hurd hung in the balance, a public relations specialist convinced the company’s directors that H.P. would endure months of humiliation if accusations of sexual harassment by a company contractor against Mr. Hurd became public.

But even after following the specialist’s advice, the company has not escaped criticism.
According to a person briefed on the presentation, the representative from the APCO public relations firm even wrote a mock sensational newspaper article to demonstrate what would happen if news leaked. The specialist said the company would be better served by full disclosure, even though an investigation had produced no evidence of sexual misconduct.

H.P.’s board, according to the person briefed on the presentation, took this advice, disclosing the unsupported accusations against Mr. Hurd. The company said Friday that Mr. Hurd had falsified his expense reports and that because it was enforcing the same code of ethics it would apply to any employee, he resigned.
But in ousting Mr. Hurd, the directors set off a media scrutiny they had hoped to avoid. Some in Silicon Valley said the technology giant had overreacted in ousting a chief executive who has been one of the most successful in corporate America in recent years. Other corporate governance experts think the company acted admirably.
“What the expense fraud claims do reveal is an H.P. board desperately grasping at straws in trying to publicly explain the unexplainable; how a false sexual harassment claim and some petty expense report errors led to the loss of one of Silicon Valley’s best and most respected leaders,” Lawrence J. Ellison, the chief executive of Oracle and a close friend of Mr. Hurd, said in an e-mail to The New York Times.
However, Jeffrey A. Sonnenfeld, an expert in corporate governance and senior associate dean at the Yale School of Management, said Hewlett-Packard’s directors deserved credit. The company “stands apart from other companies that have been scandalized in the headlines this year,” he said, referring to BP and several Wall Street firms. “They made a courageous call.”
He said that there have been, and continue to be, plenty of companies that would rationalize expense-report misdeeds as a gray area and figure out how to keep a successful chief in place. At such companies, he said, “there may not be a legal issue, but there is still a moral issue.”
Some management scholars said that Hewlett-Packard appeared to be putting a great deal of faith in the counsel of APCO. Others remain perplexed by the way the whole affair was handled. “There is a missing piece here because it doesn’t make sense,” said Shane Greenstein, a business professor at Northwestern University’s Kellogg School of Management.
At a presentation to the directors of H.P., the public relations specialist from APCO cited recent sexual imbroglios like the one that diminished Tiger Woods. The specialist cautioned that only 20 percent of top executives survive these types of allegations and then they usually end up leaving because of the weight of negative publicity.
He also warned that Gloria Allred, the celebrity lawyer representing Mr. Hurd’s accuser, would thrust H.P. and Mr. Hurd into a media nightmare.
An APCO spokesman said the company has a policy against discussing counsel given to clients. Based in Washington, APCO handles a range of media issues, like branding and open research. The 500-person company does not have a particularly strong reputation for crisis management or technology expertise, although it has worked for other technology giants like Microsoft and the chip maker Intel.

Advertise on NYTimes.com Skype, Going Public, Hopes for $100 Million From First Offering

2010-08-09T19:28:00.001-07:00

PARIS — Skype, the popular Internet telephone service, said Monday that it hoped to raise $100 million in an initial public offering of stock.
The announcement — which came a few days after news of the initial offering by another Internet company, Demand Media — could help revive the market for technology offerings. Analysts have speculated that Skype’s sale, planned for the Nasdaq market, could be the biggest initial offering in the technology sector since Google went public in 2004 and raised $1.67 billion.

Skype, which offers free or low-cost voice and video calls over the Internet, has grown rapidly since it was founded in 2003 by two entrepreneurs, Niklas Zennstrom and Janus Friis.
In a regulatory filing, the company, which is based in Luxembourg, said it had an average of 124 million users a month worldwide. In the first six months of this year, those users made 95 billion minutes worth of calls, the company said. But only 8.1 million Skype users are paying customers, who are charged for calls when they are made to conventional landlines or mobile phone numbers, rather than to other Skype accounts.
“They are a company that has, in terms of the product, executed extremely well for a number of years,” said Ian Fogg, an analyst at Forrester Research. “The challenge for Skype in the future is how to develop new business models for video and other new technologies.”
Video calling already represents 40 percent of total calling time on Skype, and analysts say this could grow further as the proliferation of smartphones enables more people to place such calls while on the go.
Skype, which is mostly used by private individuals, has also been trying to move into the corporate market, where potential customers have had security concerns.
The changes of ownership have been a distraction. Skype was acquired by eBay for $2.6 billion in 2005. But eBay struggled to integrate Skype, and last year it sold a controlling stake to an investor group led by the private equity firm Silver Lake, in a deal that valued Skype at $2.7 billion.
Mr. Zennstrom and Mr. Friis have regained a 14 percent stake in Skype, acquired when they settled a lawsuit against eBay and the investor group.
Unlike some technology companies that turn to the market to raise money, Skype is profitable, reporting net income of $13 million, on revenue of $406 million, in the first six months.
The offering will be underwritten by Goldman Sachs, JPMorgan Chase and Morgan Stanley.

In a Video Game, Tackling the Complexities of Protein Folding

2010-08-09T19:26:00.000-07:00

In a match that pitted video game players against the best known computer program designed for the task, the gamers outperformed the software in figuring out how 10 proteins fold into their three-dimensional configurations.
Proteins are essentially biological nanomachines that carry out myriad functions in the body, and biologists have long sought to understand how the long chains of amino acids that make up each protein fold into their specific configurations.
In May 2008, researchers at the University of Washington made a protein-folding video game called Foldit freely available via the Internet. The game, which was competitive and offered the puzzle-solving qualities of a game like Rubik’s Cube, quickly attracted a dedicated following of thousands of players.

The success of the Foldit players, the researchers report in the current issue of Nature, shows that nonscientists can collaborate to develop new strategies and algorithms that are distinct from traditional software solutions to the challenge of protein folding.
The researchers took pains to credit the volunteers who competed at Foldit in the last two years, listing “Foldit players” at the end of the report’s author list and noting that more than 57,000 players “contributed extensively through their feedback and gameplay.”
Zoran Popovic, a computer scientist at the University of Washington who was a lead author of the paper, said, “If things go according to plan, not too long from now, such massive author lists should be commonplace.” Foldit begins with a series of tutorials in which the player controls proteinlike structures on a computer display. In the game, as structures are modified, a score is calculated based on how well the protein is folded. Players are given a set of controls that let them do things like “shake,” “wiggle” and “rebuild” to reshape the backbone and the amino acid side shapes of a specific protein into a more efficient structure.
A list of top scores for each puzzle is posted so that players can compare their results. Players may also collaborate in teams, tracking progress on a separate list of group scores.
The protein-folding problem can be solved by computers using statistical and related software algorithms, but it takes an immense amount of processing power.
“The problem is that these proteins are far, far more complex than a robotic arm, and can ‘fold’ in time frames measured in billionths of a second,” Duke Ferris, founder of the GameRevolution Web site, wrote recently. “It’s like trying to solve a million-sided Rubik’s Cube while it also spins at 10,000 r.p.m. And that’s for just one ‘fold.’ ”
In a comparison involving 10 separate protein-folding puzzles, video game players matched the results generated by software solutions in three of the puzzles, outperformed them in five cases and found significantly better solutions in two others, according to the scientists.
In addition to the acuity of human pattern-recognition skills, the researchers noted that players outperformed the best software tools in other ways as well, writing: “Humans use a much more varied range of exploration methods than computers. Different players use different move sequences, both according to the puzzle type and throughout the duration of a puzzle.”
The Foldit project was inspired by the volunteers who were contributing the downtime on their home computers to power a protein-folding program called Rosetta@home. The computer donors could see the progress of the program on their screens, and they began to note inefficiencies in the software’s folding approach. That led the scientists to look for ways to systematically harness the skills of the human volunteers.
The University of Washington researchers have now received a $14 million grant from the Defense Advanced Research Projects Agency, the Pentagon’s arm for supporting science and technology research. This fall Dr. Popovic plans to establish a Center for Game Science, which will pursue technologies for using the skills of both novice and expert human game players on a range of scientific problems.
He said one near-term project is to create a nanomachine game, which will give human players the tools to design working nanoscale systems from a variety of components assembled from DNA.
In the future he hopes to offer a portal of science-oriented games leveraging a larger pool of human players. Other possible problems include the development of “packing” algorithms — finding ways to pack cargo on airplanes more efficiently — and a whistle-blower game that might use recently available data on government spending in Brazil to look for corruption.
In using tens of thousands of human game players to look for novel algorithms, Dr. Popovic said there were parallels to a branch of computer science known as genetic algorithms. The processing power of computers has been used to repetitively test programs in a manner similar to the process of evolution.
In harnessing human creativity, Dr. Popovic saw the potential for generating more than novel algorithms. He suspects it might also yield new science as well. “I’ve always been looking for an automatic paper generator, and this is it,” he said.

My Phone Is Shouting at Me

2010-08-09T19:23:00.001-07:00

My new smartphone is very smart indeed. And, frankly, a little insecure. It knows its own name, and it keeps shouting it at me to get my attention.
“Droid,” it says. It’s got this low, robotic voice, like a teenager making a prank call. At first, it seemed to beckon me at random times, without discretion, like when I was driving, working, or napping.
“Droid,” it would pronounce. And I’d look at it, unsure why my new Verizon “Droid X” was declaring itself. After all, none of my other material items, technology or otherwise, announces its own brand name.
“Volvo,” my car does not say. And never once has my tissue box announced “Kleenex,” establishing its trademark street cred.

“Matt,” I once responded to the phone, thinking maybe it wanted an introduction. But a few minutes later, unsatisfied, it again made its overture. I tried: “New York Times reporter.” No avail.
After a few days, I figured out that the “Droid” sound is not, in fact, random. It turns out to be the default sound the device makes whenever I get a new incoming message – whether text, Gmail, corporate mail or voice mail. I changed the incoming-message sound to a pixie ringing noise, which now beckons me with the same random regularity but doesn’t frighten the cat.
End of story?
Not exactly.
(Insert robotic voice) Matt. New York Times reporter.
There’s something telltale about the regularity of the Droid’s utterances and the lack of subtlety of the robotic chime. The regularity happened to remind me just how powerful these devices have become as central information hubs. Maybe had the Droid voice not been so comically annoying – so much like a third grader deprived of attention and imitating an adolescent Darth Vader making a prank call – I wouldn’t have noticed that I get a message popping in all the time these days. It’s information overload with a robotic serenade.
The voice also underscored for me how much Verizon is scrambling to capture the hearts and minds of a society that associates smartphones with iPhones. The iPhone, elegant and stately, the landed class of devices, would never declare itself, or utter its own name. It knows you know it’s there and, frankly, such utterances would make it feel ashamed.
On the other hand, prior to getting my Droid, I had an iPhone and the other thing it didn’t do was get good reception. So there’s that.
I can’t blame Verizon for trying to make a name for its Droid. I’m glad I was able to turn it off. I hope to never hear from my Cuisinart.

Google and Verizon Announce Net Neutrality Proposal

2010-08-09T19:17:00.001-07:00

4:09 p.m. | Updated Our article on this news has been posted.
Google and Verizon held a conference call with the news media to discuss a joint proposal on net neutrality issues. Details in our live-blogging updates below, with the most recent updates at the top.

2:07 P.M. |Wrapping Up and a Reaction

The press conference concludes. First reactions from net neutrality advocates appear to be mixed. In a statement, Andrew Jay Schwartzman, senior vice president and policy director at the Media Access Project, said: “The plan raises as many questions as it answers. For example, it does not disclose the standard to be used in resolving consumer complaints. One question that the plan does definitively answer is that the non-discrimination proposal would never apply to wireless. That alone makes this arrangement a non-starter.”

2:01 P.M. |On New Services

Another question is asked about what is different about these new services that would not be on the Internet. Mr. Seidenberg mentions the FiOS TV service as an example.
Asked about other examples of new entertainment services, Mr. Seidenberg says that for example the Metropolitan Opera may want to broadcast its entire archive in 3-D, and they may choose do so over a new type of service.
Mr. Schmidt reiterates: “This is not a deal. This is a joint policy announcement.” He says that Google and Verizon are committed to playing by these rules.
(This is the relevant portion of the companies’ announcement: “Fifth, we want the broadband infrastructure to be a platform for innovation. Therefore, our proposal would allow broadband providers to offer additional, differentiated online services, in addition to the Internet access and video services (such as Verizon’s FiOS TV) offered today. This means that broadband providers can work with other players to develop new services. It is too soon to predict how these new services will develop, but examples might include health care monitoring, the smart grid, advanced educational services, or new entertainment and gaming options. Our proposal also includes safeguards to ensure that such online services must be distinguishable from traditional broadband Internet access services and are not designed to circumvent the rules. The FCC would also monitor the development of these services to make sure they don’t interfere with the continued development of Internet access services.”)

1:55 P.M. |No Business Deal

A question is asked about whether the companies ran this proposal by the F.C.C. and whether there is a business arrangement between the two companies that is behind this announcement.
Mr. Schmidt: “There is no business arrangement.” He says any reports that say there is an arrangement are false and misleading. He also says that they have run this by the F.C.C.
Mr. Seidenberg emphasizes that there is no business deal and that this is merely a proposal to move the policy debate forward.

1:53 P.M. |Investment Incentives

Mr. Schmidt adds that there would be an incentive for carriers to continue investing in the “open Internet” since that’s what customers want. He also reiterates that YouTube and other Google services would remain on the open Internet, not on one of the new paid and prioritized channels.

1:50 P.M. |Prioritizing Traffic

Mr. Seidenberg fields a question about the distinction between the neutral public Internet and the new services that could be prioritized. “Under the principles, there is no prioritization of traffic that comes from Google over the Internet, period,” he said. It is not entirely clear how these new services would work, but Mr. Schmidt said that Google has no plans to offer any of these enhanced services.
Mr. Seidenberg said that carriers would add enough capacity so that none of the new services would degrade their ability to deliver existing Internet services.

1:44 P.M. |Verizon’s Take

Ivan Seidenberg takes over. He says that he agrees with the rules outlined by Mr. Schmidt but that carriers should be able to offer new types of services that are not part of the open Internet, like sophisticated health care monitoring systems or new forms of entertainment. He says these new services should not be used to circumvent the kinds of rules they are proposing.
Wireless services would be exempt from major net neutrality rules, but carriers would be required to be transparent about what they do in terms of managing traffic.
Verizon will post these principles on its Web site and plans to abide by them.
Question and answers now.

1:41 P.M. |Some Details

Highlights: Mr. Schmidt recommends principles that allow for enforcing net neutrality rules on landline communications. He also calls for more enforceable rules and more transparency from carriers.
A post about this is up on the Google Public Policy Blog.

1:39 P.M. |A New Proposal

They are releasing a detailed joint policy proposal.
Mr. Schmidt says Google has benefited from an open Internet. “More importantly, an open Internet allows for the next Google to be created.” He adds that just about everything that has been in the press on this topic recently was completely wrong.

1:37 P.M. |Google-Verizon Call Begins

Eric Schmidt and Ivan Seidenberg are leading the conference call. Mr. Schmidt says the two companies spent a long time trying to find common ground. He was pleasantly surprised that there was a lot of common ground. He says the two companies are dependent upon each other.

Boss’s Stumble May Also Trip Hewlett-Packard

2010-08-08T19:37:00.000-07:00

The events were billed as C.E.O. executive summit meetings, exclusive gatherings, often lasting several days, where Hewlett-Packard officials wooed top customers. When Mark V. Hurd, H.P.’s chief, appeared at them, he sometimes relied on Jodie Fisher, a 50-year-old former reality television contestant turned H.P. marketing consultant, who would introduce him to customers and keep him company.

Mr. Hurd’s relationship with Ms. Fisher, which led to his ouster last week, has put an unsavory end to one of the great executive runs in recent American business history. And it has stunted a long search by H.P.’s employees for stability and pride at the patriarch of Silicon Valley companies.
On Sunday, Ms. Fisher, who had accused Mr. Hurd, 53, of sexual harassment, disclosed her identity in a statement from her lawyer and said that she had never had a sexual relationship with Mr. Hurd. “I was surprised and saddened that Mark lost his job over this,” she said. “That was never my intention.”
Mr. Hurd, who is married, has settled the matter with Ms. Fisher for an undisclosed sum.
H.P.’s top executives on Sunday said they would no longer discuss Mr. Hurd’s situation and vowed to find a new chief executive to keep the business running smoothly. “We are not going to slow down one bit,” said Cathie Lesjak, the chief financial officer and interim chief executive.

But turning the page on the scandal will not be easy. While Ms. Lesjak maintained that investors remained confident in the company, H.P.’s share price tumbled 10 percent on Friday as word of Mr. Hurd’s departure rippled through Wall Street.

Analysts had come to view Mr. Hurd as a stabilizing presence who galvanized the formerly chaotic company, and as the glue that held a complex organization with more than 300,000 employees together.
They saw him as having a knack for finding new areas where H.P. could lower costs, and for maintaining order among the top executives. And Mr. Hurd led the company’s charge past I.B.M. as the top seller of technology.
In a nod to Mr. Hurd’s influence on the company, Ms. Lesjak said, “Disciplined execution has become part of H.P.’s DNA.”
The new leader of H.P. will have to maintain fiscal discipline while also coming up with a second act that stimulates new growth for the company.
Over the past 10 years, H.P.’s employees have endured a series of unsettling events. “If I was an H.P. employee, I would feel betrayed,” said Michael S. Malone, a historian who wrote “Bill and Dave,” a book about the company’s founders, William Hewlett and David Packard. “It’s almost like there is a stigma attached to this company where you have people at the top who have done you in again and again.”
When Carly Fiorina, Mr. Hurd’s flashy predecessor, began the contentious acquisition of the PC maker Compaq Computer, some veterans argued it would put an end to H.P.’s culture. Ms. Fiorina went on to preside over years of inconsistent financial performance and large layoffs.
Mr. Hurd took over the chief executive job in 2005. H.P.’s board hoped he could put a bit of the boring back into the company by delivering steady results and staying out of the limelight.
In his days playing tennis at Baylor University, Mr. Hurd had long hair, wore shorts everywhere and puffed on cigarettes during breaks. He went on to build a rather different persona as the suit-wearing master of metrics, glasses at the tip of his nose, a memorizer of business minutiae.
“Everyone hoped for this resurrection of Bill and Dave,” Mr. Malone said. “They didn’t get that, but they got the next best thing — a guy who was low key and straightforward.”
But Mr. Hurd soon was embroiled in controversy, as he inherited a corporate espionage debacle in which H.P. was found to have spied on reporters, its board members and employees. Still, Mr. Hurd emerged from this episode with a promotion, adding the chairman title, previously held by Patricia C. Dunn.
Part of Mr. Hurd’s role in recent years has included showing up at the C.E.O. summit meetings where customers would sometimes spend a weekend at a resort in the United States, Europe or Asia with their families.
People close to Mr. Hurd portrayed him as abhorring business lunches and dinners, preferring instead to do business on his own. One said that while Mr. Hurd did not have a romantic relationship with Ms. Fisher, he did enjoy her company at meals as he wound down from long days.
Gloria Allred, Ms. Fisher’s lawyer, said that her client, “is a single mom focused on raising her young son.” She said Ms. Fisher had a degree in political science and had worked in commercial real estate. Ms. Fisher appeared in “Age of Love” on NBC.
An executive who attended a number of these events said Mr. Hurd would often give a talk at the beginning and make the occasional appearance at a party.
H.P. has said that Mr. Hurd approved paying Ms. Fisher $1,000 to $10,000 per event and then dined with her afterward. After the company stopped holding the events, Ms. Fisher presented H.P. with a sexual harassment claim against Mr. Hurd, although a company investigation did not result in charges of misconduct.
After H.P.’s board learned of the sexual harassment charges, it began the investigation and hired the consulting firm APCO to evaluate the damage such a revelation could cause if made public, according to people with direct knowledge of the situation.
A debate subsequently erupted over whether Mr. Hurd needed to disclose the charges against him publicly, according to a person close to Mr. Hurd. APCO told the board that the company would most likely endure a devastating public relations hit if Mr. Hurd stayed on as chief executive, according to that person.
Last week, H.P.’s executives said that Mr. Hurd had falsified expense reports and had broken the trust of the board by trying to hide his relationship with Ms. Fisher. They cited the fiscal malfeasance as the primary reason for his ouster, since sexual harassment was not supported by the investigation.
The person close to Mr. Hurd said the expense reports were not discussed in meetings leading up to Mr. Hurd’s resignation, with the focus instead on whether the company needed to disclose the situation.
According to his peers, Mr. Hurd has set a high bar for any successor. “He has done such a brilliant job at H.P.,” wrote Lawrence J. Ellison, the chief executive of H.P.’s partner and rival Oracle, in an e-mail. “He will be very hard to replace.

After Drought, Hope for Shows Made for Web

2010-08-08T19:34:00.000-07:00

LOS ANGELES — When Illeana Douglas, long active in independent film, wanted to make a show about a Hollywood actress who becomes a cog in a blue-collar wheel, she turned to the Web and to an unusual ally, Ikea.
She persuaded Ikea, the Swedish furniture maker, to be the sole sponsor of her Web video show, “Easy to Assemble,” in which she plays an employee. The most recent episodes, from October through February, drew more than 1.5 million views each month. At home late last month, getting ready for an awards festival where her show would be honored, Ms. Douglas was dressed in a yellow Ikea jumpsuit, mimicking her character.

“The brand is a co-worker in the story line,” she said, adding that Ikea does not actually make jumpsuits, so she made one herself.
After a protracted drought, money is trickling back into the professional Web video industry. So-called branded entertainment deals like the one by Ikea are becoming more common, helping to nourish new programming. And venture capital firms are also paying new attention to the industry. My Damn Channel, which distributes “Easy to Assemble,” will announce a $4.4 million infusion of financing on Monday, joining companies like Blip.tv and Machinima in raising money this year.
The promise of Web video has risen and fallen over the last few years. What makes the current round of interest more compelling is the realization in the industry that Web video will not supplant television viewing anytime soon, just complement it. That partly explains why the companies have stopped labeling themselves “TV on the Internet.”
“We realized we were putting a burden on Web-original programming by trying to make it like TV,” said Lance Podell, the Next New Networks chief executive, who now calls his company a provider of “Web original programming.”
Its most popular content includes “The Key of Awesome,” an Internet-oriented musical comedy show, and “Indy Mogul,” a network of shows about do-it-yourself filmmaking.
The Web video industry flies under the radar, but together, the major players rack up hundreds of millions of video views each month. As people spend more time online, producers are betting that video viewing times will keep growing in tandem.
According to the measurement firm comScore, 86 percent of Internet users in the United States now watch at least one online video a month. Some of those shows originate on traditional TV, something that Hulu specializes in; others originate online, and that portion is growing.
“There’s an inevitability to Web video that makes it exciting,” said Rob Barnett, the chief executive of My Damn Channel, which features original comedy and music shows.
Reaffirming its belief in made-for-the-Web programming, YouTube last month announced $5 million in grants for online producers. The grants will seed new content for YouTube, a unit of Google, which has largely failed to persuade big television networks and studios to place TV episodes and films on the site. Encouraging more professional Web video is another way for YouTube to expand its inventory for advertisers.
Despite the evidence that viewers are eager to watch more on the Web, the recession was an ugly reality check for purveyors of such programming, and many start-ups were closed. At My Damn Channel, Mr. Barnett hunkered down, trimmed staff and took solace in the fact that he was seeing repeat business from his existing advertisers like Southern Comfort and HBO, even though he was struggling to add new ones. Now, he says, venture capital will allow him to hire more advertising sales staff, add business development workers and broaden the types of shows he creates.
“I often think of my daily business life as a guy running a cable network in the early 1980s,” at the dawn of that medium, Mr. Barnett said. “There is, no matter how you slice it, a timeline for any new industry to grow.”
Web video companies say that advertisers are starting to make million-dollar commitments — hardly a threat to established television networks, but a big improvement for sites that started out making $5,000 at a time. Commercials in front of professionally produced entertainment videos can command $15 to $35 per thousand views, while banner ads alongside the videos can run $5 to $15 per thousand views.
“All of the distributors we talk to have a shortage of premium video inventory, which seems to indicate that that market has really picked up,” said Larry Tanz, the chief executive of the independent studio Vuguru, which is backed by Michael Eisner.
The ad revenue is important, but companies like My Damn Channel say they make more money from the branded entertainment deals, which incorporate advertisers into the story lines.
Ms. Douglas would not disclose the amount that Ikea had paid for the two-year-old “Easy to Assemble,” though she said the budget had increased for season two and again for season three, which is in production now.
Like most Web shows, her series is produced on a shoestring relative to television or film; her bungalow off Sunset Boulevard still doubles as her production office, and she recalled wincing at the $400 price tag of a portable toilet for one of the on-location scenes last year.
Nonetheless, the cast and crew members are now part of unions, and the show has attracted an impressive slate of guest stars, including Jeff Goldblum and Patricia Heaton. Some people “want to do this because they’re not having fun at their television jobs,” she said, nursing a cup of tea in her kitchen, where a white MacBook was plugged in. (Yes, she also owns a desk from Ikea.)
Ms. Douglas, who views Web video as a new outlet for artists like herself, said Ikea gave her great autonomy, asking her only to keep the content family-friendly. This summer, she is recruiting a second sponsor, shooting a third season of the show and planning a tour. She would still like to see “Easy to Assemble” end up on television, but she is satisfied that she has built a franchise on her own, online.
“Nobody doubts anymore that this is the best way to make entertainment,” she said.

BlackBerry Security Stance Sows Anxiety

2010-08-08T19:33:00.000-07:00

The 2008 terrorist attacks in Mumbai heightened concerns in India over the government’s inability to eavesdrop on encrypted communications. In the United Arab Emirates, similar concerns escalated this year after a Palestinian operative was killed in a hotel in Dubai, possibly by a team from the Mossad, the Israeli intelligence agency.

In both countries, those concerns have crystalized into a battle with Research In Motion, the Canadian maker of BlackBerry smartphones, over whether and how their governments can gain access to messages that flow over the BlackBerry network. And the dispute has put a spotlight on the challenges faced by many governments in monitoring communications services with global reach.

Last week the Emirates threatened to block BlackBerry’s e-mail and instant messaging services in that country unless R.I.M. created back doors to allow officials to eavesdrop on the company’s customers. Saudi Arabia has made a similar threat, and news reports over the weekend suggested that a deal had been made, but it was unclear what any deal might involve. Lebanon has also raised concerns. Indian officials have been negotiating with R.I.M. over access to BlackBerry messages for a couple of weeks.
Although it is unclear precisely what these countries are asking for, one demand is for the same kind of access to BlackBerry’s encrypted services that they think the company already gives authorities in the United States and other industrialized democracies.
“I don’t think the concerns raised by India are out of the ordinary,” Sachin Pilot, the country’s junior minister for communications and information technology, said in a phone interview. “Most countries in the Western world have raised the issues and to the best of my information — and I am willing to be corrected — their concerns have been addressed.”
R.I.M. officials flatly denied last week that the company had cut deals with certain countries to grant authorities special access to the BlackBerry system. They also said R.I.M. would not compromise the security of its system.
At the same time, R.I.M. says it complies with regulatory requirements around the world.
But the company, which is generally known for its secrecy, has declined to provide details on its discussions with governments or to explain how it complies with laws around the world that require communications companies to grant government agencies access to their systems for lawful intercepts. This has kept alive suspicions in some foreign capitals and among computer security experts in the United States that R.I.M. has made concessions to some countries.
“There are all kinds of rumors that various deals have been struck around the world, including in the United States, but we don’t know what those deals are,” said Leslie Harris, chief executive of the Center for Democracy and Technology, which is based in Washington, and a board member of the Global Network Initiative, a coalition of companies and nonprofit groups that seeks to protect privacy and free expression on the Internet.
Speaking privately, several United States law enforcement and security officials would not say whether the government has a way to decrypt BlackBerry messages, explaining that they were reluctant to divulge whether any particular service posed difficulties. But there has been little public sign of law enforcement frustration with BlackBerry encryption.
The officials said that law-enforcement agencies in the United States had an advantage over their counterparts overseas because many of the most popular e-mail services — Gmail, Hotmail and Yahoo — are based here, and so are subject to court orders. That means the government can often see messages in unencrypted forms, even if sent from a BlackBerry. In addition, officials said that in emergencies, when lives might be in danger, they sometimes sought the voluntary assistance of companies, including those outside the United States.
David Szuchman, the chief of the cybercrime and identity theft bureau at the Manhattan district attorney’s office, said investigators occasionally obtained from R.I.M. logs of Internet protocol addresses associated with e-mails sent through the BlackBerry system, but they were unable to obtain the contents of the e-mails from the company.
Security experts say that BlackBerry’s system, while secure, is susceptible to eavesdropping. Some even say that its design allows companies, and potentially governments, to monitor messages, though not necessarily with R.I.M.’s cooperation.
Most experts say R.I.M.’s service for consumers is not at issue, because the messages are largely unencrypted and easy for governments to intercept.
R.I.M. sells its most secure service to corporations. The corporate service encrypts e-mails and messages and largely routes communication through R.I.M.’s private network. As a selling point, R.I.M. has provided corporations with tools allowing them to monitor and archive everything that happens on all BlackBerrys they own through BlackBerry Enterprise Servers, which act as a gateway to a company’s e-mail systems.
Security experts say governments wanting to eavesdrop on some people could easily demand access from those companies.
“R.I.M. could be technically correct that they are not giving up anything,” said Lee Tien, a senior staff lawyer at the Electronic Frontier Foundation, a San Francisco group that promotes civil liberties online. “But their systems are not necessarily more secure because there are other places for authorities to go to.”
When China first allowed BlackBerry service in the last few years, sales were restricted to hand-held devices linked to enterprise servers within the country. Many security experts say Chinese security agencies have direct access to all data stored on those servers, which are often owned by government-controlled corporations.
China Mobile and China Telecom, the two mobile operators that sell BlackBerry devices in China, did not respond to requests for interviews. But technology analysts in China said R.I.M. would have to comply with the government’s strict regulations over communication and perhaps give the government some access to its encrypted data.
Whether Chinese regulators have such access or not is unclear, but a customer service representative at China Mobile suggested that government officials could intercept communications through a BlackBerry Enterprise Server operated by the carrier. “If someone, like government departments, want to monitor the message, they can do it,” said the representative, who would not give his name.
In India, Mr. Pilot, the communications minister, said the government would like to have the ability to monitor communications if officials suspected that a crime was being committed. “Time is of the essence,” he said. “Even five minutes can make a big difference.”
He said that R.I.M. executives had met with government officials but that the company had not formally responded to the government’s requests. He declined to say what the government might do if it were not satisfied by the company’s response.
But legal experts said the authorities appeared to be seeking more wide-ranging access to BlackBerry messages and codes than the company has made available to other countries.
New Delhi has powerful legal tools, including a recently changed Indian law that gives the government the power to intercept any “computer communication” without court order to carry out criminal investigations. Previously, officials had to seek an order from a quasi-judicial body, the Controller of Certifying Authorities.
The amended law was passed by Parliament in December 2008, a month after raids by Pakistani terrorists in Mumbai left more than 163 people dead. Lawmakers seem to have been motivated, in part, by the fact that the attackers used Internet-based phone services to communicate with their handlers in Pakistan.
The government’s negotiations with R.I.M. could become the first significant test of its new expanded authority.
The tensions between R.I.M. and various governments echo a debate that took place in the United States in the 1990s, when the government sought to ban the use of strong encryption systems. In the face of strong opposition from technology companies and privacy advocates, the government gave up.
But the debate has continued, as new technologies, like Skype or widely used encrypted Web e-mail systems like Gmail, raise new challenges. In 1994, Congress passed a law requiring telecommunications companies to design their systems so that authorities could legally eavesdrop on them, but the law does not cover some new Internet communications technologies.
“It is a battle over the last 20 years as to how much we want communications to be secure and how much we want government” to be able to monitor illegal activity, said Mark Rasch, who for nine years headed the computer crimes division at the Department of Justice. “It is a balance we strike with every new technology in every new country.”

Docks for Apple Gadgets Help a Business Thrive

2010-08-08T19:28:00.000-07:00

RAHWAY, N.J. — In the 1950s and 1960s, Realtone Electronics made transistor radios, one of the must-have gadgets of the era.

Mary DiBiase Blaich for The New York Times

Ezra S. Ashkenazi, the president of SDI
Technologies, with the iA100, the company's
first product compatible with the iPad tablet
computer. It is to go on sale later this year for $199.
But by the 1970s, that gold mine had played out. For the next two decades, the company survived in the electronics business by making clocks for Timex that sold in drugstores and by creatively combining devices. It made the first cassette tape player-clock radio and the first telephone-clock radio.

It struck gold again in this decade with another combination — speakers with a dock for the iPod music player from Apple. By tapping into the Apple system, the company, now called SDI Technologies, has become the largest supplier of speaker and alarm clock docks. It is also the leading maker of hotel alarm clocks.
Software developers may chafe at Apple’s restrictions and standards for the iPod, iPhone and iPad. But Apple’s set-in-stone design requirements actually help companies making speaker docks and rechargers because they know that the placement of the connector will probably not vary from one Apple model to the next. And they are confident that sales of the Apple products will be strong enough that they will lead to large production runs.
In 2005, SDI was trying to figure out how to recreate the company for the digital age. “I asked one of our designers if he could replace a CD changer from one of our clock radios and let the user wake and sleep from an iPod,” said Ezra S. Ashkenazi, SDI’s president and the son of one of Realtone’s founders. “When I asked that, the karma in the room changed.”
“We recreated the $19.99 drugstore alarm clock radio and turned it into a $100 product,” Mr. Ashkenazi said.
To increase the likelihood of success with its first Apple accessory, the company purposely mimicked the Apple style in its earliest designs. “Our instructions to our designers were ‘Make it look like Apple designed it,’ ” Mr. Ashkenazi said. Its first product, the iH5, was housed in a white plastic case and packaged in a clean box with minimal graphics. “This was the opposite of our Timex boxes,” he said.
“This was a real challenge for us. You get no help from Apple except for specs and requirements. We knew we had something big when stores mistakenly called our products ‘iHome by Apple,’ ” Mr. Ashkenazi said.
It transformed the private company, now run by the children and grandchildren of the men who started the company near the foot of Fifth Avenue in New York. It gets the bulk of its revenue from its 20 types of iPod and iPhone audio accessories.
With 20 percent of the speaker dock market, the company has twice the market share of Sony, its nearest competitor. It also dwarfs Memorex, iLive and Bose.
“IHome has done a good job keeping pace and growing their portfolio,” said Ross Rubin, director of industry analysis at the research firm NPD. “They established the clock dock category and created many variations.”
Not that the company has not made mistakes. An under-the-counter kitchen iPod dock failed to attract customers. “It was expensive, and you had to drill under a cabinet to install it,” Mr. Ashkenazi said.
In the hotel market, though, the company has placed more than two million alarm clocks with iPod and iPhone docks in almost 40 percent of the 4.9 million hotel rooms in the United States, according hotelnewsnow.com. It cleverly gave itself an edge by designing an iPod alarm clock that would ring only once and then reset itself, preventing the next guest in the room from being unexpectedly awakened at 5:30 in the morning.
Responding to the current obsession with software applications, or apps, for the iPhone or iPad, the company has created its first app-aware alarm clock. Its free iHome+Sleep app allows an iPhone user to customize the phone with sleep, wake and music instructions.
When a traveler docks the iPhone to the hotel alarm clock, the proper settings are used. That way, a weary traveler never has to figure out how the alarm clock works. The app also handles Twitter messages and aggregates news and weather that is displayed on the iPhone upon awakening.
Its first iPad-compatible product, the $199 iA100, will be sold later this year at its usual outlets, including Best Buy and Apple stores. Like all accessories manufacturers, iHome had to wait until the iPad was in stores before it could learn its dimensions and specs.
It reconfigured an earlier, iPhone-only design to accommodate the iPad. The iA100, equipped with Bluetooth, can stream music from an unconnected iPhone or iPad across a room. The iA100’s clock also syncs to the correct time on an iPhone or iPad.
Given the iPad’s larger battery capacity, Mr. Ashkenazi’s designers were not concerned with having it continuously connected to the docking station to be recharged. To appeal to video game players, iHome increased the unit’s sound quality by incorporating four speakers and enhanced bass response.
Though Apple’s products are selling well, some analysts say SDI Technologies is still taking a risk by relying on one company’s products.
“You’re tied to the core,” said Robert Enderle, president of the Enderle Group research firm. “If the Android smartphone market takes off, you’re in trouble.”
Mr. Ashkenazi is not worried. “The iPad, iPhone and iPod are recession-proof,” he said.

Sony Ericsson phones ideas rotate, flip, detachable

2010-08-08T08:39:00.000-07:00

Not merely a clamshell flip phone design with two touch screens, half of Sony Ericsson FH body can rotate 180 degrees to pair with a different screen, creating a wide-screen computer table. Thus, users will view video, web browsing easier.

Designer so this is his idea that Du Jun "swivel folding design makes the most of this afternoon's special phone."

In addition, two half fuselages can detachable separately but can still connect with each other using Bluetooth.

However, this phone is just an idea, Sony Ericsson does not know whether to proceed to realize this concept is not.

phone appear first Windows 7 Asus Phone

2010-08-07T17:04:00.000-07:00

Also during this time, mastering information about Samsung also said the village also prepared a series of new products using the phone software Windows 7, including Cetus i917.

Today, pictures of the phone's first Windows 7 Phone Asus has appeared in Pakistan.

No confirmed information from the manufacturer Asus does however, look at pictures can be seen this phone is quite eye-catching design with external layer of metal plating is very slick. We specifications, price or ship date yet to be revealed.

Executive Leaves After iPhone Antenna Troubles

2010-08-07T16:51:00.000-07:00

By MIGUEL HELFT

Published: August 7, 2010

Mark Papermaster, the Apple executive in charge of hardware for the company’s flagship iPhone, has left the company in the wake of widely reported problems with the antenna of the recently introduced iPhone 4.

It is not clear if Mr. Papermaster was ousted or left on his own accord.
Reached on his cellphone, Mr. Papermaster declined to comment.

In a statement, an Apple spokesman, Steve Dowling, confirmed Mr. Papermaster’s departure. Mr. Dowling said Mr. Papermaster “is leaving the company and Bob Mansfield, senior vice president of Macintosh hardware engineering, is assuming his responsibilities.”
Mr. Mansfield already oversees several technologies that are part of the iPhone, including the A4 chip, the retina display and touch screens, Mr. Dowling said.
Mr. Papermaster arrived at Apple in 2008, setting off a prominent battle with I.B.M., where in a 25-year-career he had risen to the top levels of management. I.B.M. sued Mr. Papermaster in federal court in an attempt to prevent him from joining Apple, saying that he had signed a noncompete agreement. The parties settled the case after Mr. Papermaster testified in court that he had not revealed any trade secrets.
When Steven P. Jobs, the chief of Apple, introduced the iPhone 4, he hailed the design of its antenna, which is built into a steel band that encases the phone. But almost immediately after the iPhone 4 went on sale, consumers began to complain that when they touched a spot on the lower left section of the device, reception would decrease sharply, in some cases resulting in dropped calls.
The problems, and Apple’s clumsy response, turned into a public relations mess for the company. Apple first recommended that users hold the phone in a way that avoids contact with the lower left section of the device. The company later said it found a software problem with the signal meter that indicates cellphone reception. Embarrassingly, the company said the problem affected not only the iPhone 4, but also earlier models. While Apple fixed the problem, complaints about the antenna continued to mount.
After Consumer Reports shone a spotlight on the problems and said it could not recommend the iPhone 4, Apple called a press conference on July 16 where Mr. Jobs mounted an impassioned defense of the device. Mr. Jobs said other smartphones suffered from similar problems when cradled in certain ways, an assertion that was challenged by several of Apple’s competitors.
But in an effort to put the problem behind the company, Mr. Jobs offered free bumpers to all iPhone 4 customers. By insulating the antenna from human touch, the bumpers solve the reception problems. Mr. Jobs also said that the iPhone 4 was the most successful new product introduction in Apple’s history. He said complaints among customers were minimal and he accused the media of blowing the problem out of proportion.
Some observers were surprised that Mr. Papermaster was not present at the press conference, which in addition to Mr. Jobs included Tim Cook, the chief operating officer, and Mr. Mansfield. Mr. Papermaster, who was listed as an executive on Apple’s Web site earlier Saturday, had vanished from the site later in the day.

E-Book Wars: The Specialist vs. the Multitasker

2010-08-07T16:48:00.000-07:00

THE Kindle from Amazon.com is designed to let us do one thing very well: read. To survive, it must excel at this, not only by jostling to stay a nose ahead of other e-readers, but also by maintaining an enormous lead over the Apple iPad and its coming competitors. The multipurpose iPad can do thousands of things very well; used for reading book-length texts, it doesn’t excel, but it’s passable.
THE Kindle from Amazon.com is designed to let us do one thing very well: read. To survive, it must excel at this, not only by jostling to stay a nose ahead of other e-readers, but also by maintaining an enormous lead over the Apple iPad and its coming competitors. The multipurpose iPad can do thousands of things very well; used for reading book-length texts, it doesn’t excel, but it’s passable.

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Amazon

The new Kindle Wi-Fi is priced at $139. Amazon says it will not forgo profits on the device to bolster e-book sales.

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Last month, Amazon introduced a pair of third-generation machines — smaller, lighter and with crisper text. One has a new, lower entry price of $139. “I predict there will be a 10th-generation and a 20th-generation Kindle,” said Jeffrey P. Bezos, Amazon’s chief executive.
If that sounds a tad defensive, it’s probably because of the instant success of the multipurpose iPad: 3.3 million units sold since its introduction in April.
We know how many iPads were sold because Apple is straightforward about reporting the unit sales of all of its products. Amazon is a different story. We don’t know the size of Amazon’s Kindle business because the company is averse to disclosing details of its operations. When it reports its financial results, the company that sells just about anything that can be put in a box or sent electronically divides its businesses into just three categories: “media,” which lumps books, music and videos into one indistinguishable agglomeration; “electronics and other general merchandise,” an even larger, indistinguishable agglomeration; and “other.”
“The key numbers are a black box,” says Colin W. Gillis, director of research at BGC Financial. “Apple told us when they sold one million iPads,” he said, “and Apple breaks out every quarter how many are sold for all of their products.” Why, he asks beseechingly, doesn’t Amazon do the same for the Kindle? “Come on, if you’re proud of it, just tell us how many you sold!”
An Amazon spokeswoman said last week, “We don’t release figures for competitive reasons.”
Amazon calls the Kindle a “purpose-built device,” leaving room for ancillary uses but preserving the idea that it has one central purpose. It’s much lighter than the iPad — not a small consideration when reading for any length of time. Wherever there’s sunlight, the Kindle’s text is easier on the eyes. And its battery life is measured in weeks, not hours.
Amazon could bring color to the Kindle — there is a color version of the E-Ink display technology it uses — but adding it would lower resolution or diminish the reading experience in other ways. “For most of the books that people read, black-and-white is a feature, not a bug,” said Russ Grandinetti, Amazon’s vice president for Kindle content.
It’s not surprising that a “purpose-built device” does a better job at its one task. The question is whether some years down the road — say, in the 2020 holiday season — customers will still be willing to buy single-purpose devices in addition to irresistible multipurpose ones. Mr. Grandinetti points to running shoes for the answer. “If I’m going on a 10-mile run,” he says, “I want a really well-designed pair of running shoes instead of Converse high-tops.”
Another example is cameras. “As good as the technology in my phone camera is, when my son has his third birthday party, I’ll use my 35mm S.L.R.,” Mr. Grandinetti said.
If Kindles offer such a vastly superior reading experience over iPads, however, we wouldn’t expect to hear the following about some people who own both, “Early evidence suggests some Kindle owners are buying iPads and beginning to shift a portion of eBook purchases to Apple’s iBookstore,” writes Marianne Wolk, an analyst at the Susquehanna International Group, in a report to clients at the end of June.
She says iPad users “are buying a lot more books than we expected, with five million e-book downloads in the first 65 days, roughly 2.5 per device,” comparable to the estimate of three books per Kindle for the quarter. The iBookstore from Apple competes against Amazon’s Kindle store without undercutting Amazon’s prices. (The uniformity of e-book prices at Amazon and Apple on many of the most popular e-books has drawn the attention of Richard Blumenthal, attorney general of Connecticut, who said last week that his office had started an investigation into their agreements with major e-book publishers that “threaten to encourage coordinated pricing and discourage discounting.”)
When the Kindle was introduced in late 2007, it was priced at $399. Does its new entry-level price of $139 reflect a decision to forgo profits on the hardware to bolster sales at its Kindle store? Nothing of the sort, Amazon says.
“We believe each of those two businesses should stand on its own,” Mr. Grandinetti says. E-book buyers do not have to own a Kindle to read a Kindle e-book: his company is device-agnostic and supplies free software for reading Kindle e-books on iPads, iPhones, Macs, PCs, BlackBerrys and Android devices.
ANALYSTS have wondered what profit margins Amazon makes on its Kindle hardware business. “It is difficult to say Amazon is making much money at its new device prices of $139,” says Ms. Wolk.
Barnes & Noble’s e-reader, the Nook, and Sony’s Reader both start at about $149.
Many people thought that the Kindle’s price must drop below $100 to excite the hesitant buyer. But consumers aren’t waiting for that deal. The two new Kindle models, which are to start shipping on Aug. 27, are already back-ordered, and orders submitted today will be shipped still later.
This doesn’t settle the long-term question of Kindle’s mass-market appeal amid multipurpose tablets, which will become lighter and less expensive. Sure, Amazon can talk of a future 20th-generation Kindle. But unless it’s brave enough to reveal Kindle’s actual sales numbers, it sounds as if it’s whistling past the graveyard. Dedicated word processors, purpose-built machines of the 1970s, had a good run of about 10 years.

Randall Stross is an author based in Silicon Valley and a professor of business at San Jose State University. E-mail: stross@nytimes.com.