The Gillmor Gang — Robert Scoble, Kevin Marks, Keith Teare, John Taschek, and Steve Gillmor — neatly sidestepped the Yahoo Tumblr acquisition and segued into the wonderful world of messaging. As Facebook Home settles into a cot at the homeless shelter, Google is revving up for an all-out assault on the service suite. Google Glass is just the tip of the iceberg; below the waterline, the search giant is sucking image, location, traffic, and advertising data in realtime.

It may seem like the Gang is tilting over into Google love, but scratch the surface (no pun intended) and you’ll find just as much Apple love lurking beneath. The consensus is not so much a two-horse race as a widening duopoly that makes it very hard for Yahoo or Microsoft or Amazon or any new player to break the hold these two giants maintain. Of course, that’s what they said about Microsoft, which in reality was the duopoly of Windows and Office.

@stevegillmor, @scobleizer, @kteare, @jtaschek, @kevinmarks

Produced and directed by Tina Chase Gillmor @tinagillmor

Live chat stream

A new report from 9to5Mac and its usually well-connected sources today adds a little more color to what we’ll be seeing from the big iOS 7 redesign rumored to be making an appearance at WWDC this year in June – and what we’ll apparently be seeing is a lot less color. The visual overhaul not only emphasizes so-called “flat design” (avoiding complicated textures in favor of bold, solid tones), but also features the use of many black and white elements across the UI.

The new report reiterates what we’ve already heard – that Ive is heading up a pretty extensive overhaul of Apple’s mobile OS, concentrating primarily on the visual aspects of iOS. Now, though, we get a bit more info about how and why Ive is targeting so-called skeuomorphic elements (those that mimic real-world textures) and additional details about specific elements of the OS that have undergone change, plus redesigned apps and even some new features.

Ive feels that the sorts of heavy textures used in the current iteration of iOS aren’t designed to last, and will quickly take on a dated look, according to 9to5Mac’s sources. Physical metaphors for digital design are a dead end, he apparently believes, and makes for a lack of harmony between and among individual iOS apps like Notes, Maps and Game Center. It’s true that other, more recent takes on mobile interfaces have focused more on unity, like Windows Phone, but it’s also true that from a success perspective, iOS has trounced Microsoft’s newer mobile OS; flat design may have the praise of the tech community, but it hasn’t necessarily proved itself in the consumer arena yet.

Other big changes coming to what people are used to on iPhone include the lock screen mechanisms, which will finally see the iconic lock screen re-envisioned with a “shine-free, black interface” says 9to5Mac. Round buttons will replace the grid for security code input, and notifications might get more useful thanks to expanded interactivity options made possible through multi-touch gestures.

Notifications in general will get some changes, ditching the linen texture background per the report in favor of something more black and white. More widgets are on their way to Notification Center, too, and we could see access included to regularly-accessed settings, including Wi-Fi, Bluetooth and the Airplane Mode switch.

The Home Screen gets a minor but notable visual refresh, losing the shine on buttons and system apps given flatter designs that don’t “pop” quite as much as the current versions. iOS 7 also apparently borrows a trick from Android, adding in panorama-style scrollable wallpapers that continue across home screens, instead of presenting the same static image for each. In general, common interface elements like the on-screen keyboard will undergo a flattening effect, ditching things like drop shadow and toning down the color in favor of greys, whites and blacks. This extends to core apps like Mail, Calendar, Maps and Notes, each of which have more uniformed, primarily white interfaces. Each also gets a unique olor for buttons and highlights, however, providing a strong visual cue about which you’re using while retaining a similarity of design across all the software.

New features reportedly include a standalone FaceTime app for iPhone, as well as Flickr and Vimeo integration, and better in-car tools connected to Maps and Siri for hands-free use. We’ll also see a lot of changes on the developer side, likely with the introduction of many new APIs to unlock more potential for apps, something which has become a common feature of iOS updates.

9to5 reports that we’ll see this arrive for the general public along with new iPhone and possibly iPad hardware this fall. The iPhone version of the iOS 7 redesign might beat the iPad version out of the gate however, as the report claims that Apple’s design and engineering talent are focused on pushing out the smartphone version first. Hopefully we’ll learn more at the WWDC keynote, which is coming up June 10, and where we’ll be reporting live.

Amazon has reportedly submitted plans for a new futuristic headquarters in Seattle that combines a skyscraper and a tri-sphere, bio-dome-like structure. According to the plans, the structure will be able to hold various forms of plant life and become a place where employees can “work and socialize in a more natural, park-like setting.”

Because, God forbid, employees walk to the park that’s three blocks away.

Here’s an excerpt from the plans (also, hat tip to GeekWire for the find):

While the form of the building will be visually reminiscent of a greenhouse or conservatory, plant material will be selected for its ability to co-exist in a microclimate that also suits people. To encourage growth and maintain the health of the plants, the building’s interior will include high bay spaces on five floors totaling approximately 65,000 SF and capable of accommodating mature trees. The exterior enclosure will be highly transparent and be composed primarily of multiple layers of glass supported by a metal framework. In addition to a variety of workplace environments, the facility will incorporate dining, meeting and lounge spaces, as well as a variety of botanical zonesmodeled on montane ecologies found around the globe. The building will be anchored at either end by publically accessible retail spaces entered from 6th and 7th Avenues.

Generally, it all sounds very cool and very futuristic and very trendy (read: Apple did the whole “plans for a spaceship” thing ages ago). However, it’s interesting to see how the biggest companies in tech are tackling the issue of working in an office or with a more loose structure.

Remember, everyone made a pretty big deal out of Marissa Mayer’s recent policy change that requires all Yahoo employees to work in an office. And just recently she announced that Yahoo would be taking up space in the Times building in New York’s Times Square, which is capable of housing up to 700 employees.

As it stands now, all of the big four tech companies — Google, Apple, Facebook, and Amazon — favor keeping employees in the office.

Google has one of the best campuses you could dream of, both in Mountain View and in New York, feeding employees free lunch from world-renowned chefs. Apple is working to build out one of Steve Jobs’ final projects, a new spaceship office. Facebook has the same diversions: chess boards, and video games, and basketball courts, and free lunch.

So of course, the fourth horseman in the race, Amazon is devising its own tricks to keep employees at the office as long as possible. It’s a win-win: Employees do more and better work due to a pleasing and comfortable work environment, and employers get more, and better work, out of their employees.

Also, there’s a perfectly good park just three blocks from the new campus.

Here’s the full set of plans:

Amazon’s new HQ design by John Cook

[Biodome rendering via NBBJ]

Features:

• Ships with OS X 10.8 Mountain Lion
• 2560 x 1600 13.3-inch at 227 PPI
• 128GB SSD
• 2.5GHz Intel Core i5 Processor
• MSRP: $1,499

Pros:

• Portability combined with high-quality display
• Super speedy sleep and resume
• Good battery life

Cons:

• Just two USB ports
• Non-upgradeable RAM

If I could only have one MacBook (which is usually the case for your average laptop-buyer), this is the one I’d pick without hesitation. Fewer issues than its 15-inch cousin, which pioneered the Retina line, combined with a much lighter design with a smaller desktop footprint for a display that can still give you crazy amounts of screen real estate all add up to a sure-fire winner.

The Most Flexible Mac

I’ve owned a lot of Macs. To find myself so ready to claim any single one a clear “winner” seems crazy, but the 13-inch MacBook Pro with Retina Display is it. The smaller Retina notebook has proven itself through trial by fire and continues to be the Mac I pick for nearly every situation.

For example it’s my constant companion at every travel event I ever go to. The 15-inch is just a hair too heavy and unwieldy, but the 13-inch Retina hits the sweet spot. It slides easily into any bag, takes up an amount of desk space that’s better for your peripherals and for those seated around you, and yet can stil provide you with one of the best screens in the business.

True Retina-quality graphics isn’t the reason to own this notebook. Apple’s “Best for Retina display” radial button in the Displays settings menu is something you can go ahead and forget about right now; instead, select “scaled” and crank that sucker up to the “More Space” maximum. But if that’s not enough, go grab DisplayMode from the Mac App Store and enjoy up to 2560 x 1280 resolution, which is beyond that supported by Apple’s official settings. My eyes suffer after 2048 x 1280, so that’s where I keep it, but even there you get so much screen real estate it feels positively sinful. If you’re used to a Cinema display or two at home, there’s nothing else that compares.

The hardware is up to Apple expectations, and while I’ve experienced case creak on the 15-inch version (a widely reported issue), I’ve never had a problem with the 13 inch’s fit and finish. It feels as sturdy as a laptop can (with the possible exception of Google’s leaden Chromebook Pixel) and it withstands rough treatment with gusto, as a busy blogger can attest.

In terms of Geekbench, the base Core i5 13-inch, which is the version I’m reviewing here, consistently scores between 6,000 and 7,000. That’s not a chart-topping number, but the machine hardly stutters, even under fairly demanding conditions. I thought I’d miss the dedicated graphics card or upgraded RAM from my 15-inch model, but I don’t, at least not for anything short of using Final Cut Pro X.

Another nice win for the 13-inch is battery life. The Pro can stretch itself to around seven and a half hours if I need it to, but even with my incredibly sloppy, multi-app setup with tons of things going on in the background and about a thousand Chrome tabs open, it seems to average around five.

Who is it for?

Designers

Yes. The one complaint that designers might have with the Retina MacBook Pro is that its screen is still glossy and that the color rendering and contrast are a little exaggerated to make photos pop. But if you need a device for running Photoshop or Illustrator, the Retina scratches that itch, even with the minimum specs at the $1,499 level.

Plus, you can always power up to three external displays via Thunderbolt and HDMI out, but I’d only recommend doing this if you’re very cold and also enjoy the sound of a fan operating at maximum power. Still, in a pinch the Retina Pro becomes a solid companion for a 27-inch Cinema Display, giving designers even more flexibility.

Founders

Yes. John pointed out that entrepreneurs love MacBook Airs in his review of the Dell XPS Developer’s Edition, but that’s actually outmoded. If you’re a modern entrepreneur, and keeping a close watch on your company’s design and suitability for the future of HiDPI devices and displays, you’ll want the 13-inch Retina. It’s still light enough to carry with you everywhere, plus you can pile on the open applications thanks to the screen real estate benefits I mentioned above.

The 13-inch Retina is pretty much exactly like the successful entrepreneur: flexible where it needs to be, rigid when it doesn’t; equally comfortable doing their thing in the boardroom or working out of the small local coffee shop; equipped with enough endurance to keep producing through the day.

Programmers

Yes. Programmers love Macs, and this is a Mac that’s easy to fall in love with. You want to run Xcode next to the iOS Simulator and still have room to keep a team chat window open? You can do that with the 13-inch Retina Pro, so long as you’re okay with squinting. You can build websites and watch them output and tweak on the fly without squishing anything inordinately. If there’s a development flaw on the Pro, it’s not an apparent one.

Bottom Line

MG said this laptop was near perfect back when he reviewed it at launch, and it’s pretty hard to disagree. There are support threads filled with growing pains and other issues experienced by the inaugural 15-inch Retina Pro, but Apple seems to have worked out any kinks with this one, and the added portability is a big benefit besides. It’s still a pricey beast, but the use value to cost ratio is through the roof regardless.

Kudos to Apple’s finance lawyers, who are the Cirque Du Soleil of legal contortionism. On the eve of live testimony from CEO Tim Cook, a scathing congressional investigation of Apple’s tax dodging strategy reveals how the computer giant avoided $13.8 billion in taxes through a clever labyrinth of offshore tax havens, shell corporations, and paper shuffling.

“The ability to pay taxes of less than 2% on all of Apple’s offshore income gives the company a powerful financial incentive to engage in convoluted tax planning to avoid paying U.S. taxes,” notes the report from Senators Carl Levin and John McCain of the Permanent Subcommittee on Investigations.

The 37-page report is jam-packed with all the edge-of-your-seat thrills one would expect from a congressional report on multinational tax policy; we summed up the good parts so you can concentrate your valuable workday procrastination on cat videos.

1. Ireland: Come For The Beer, Stay For The Tax Haven

In addition to the majesty of rolling hills, towering waterfalls, and a rich culture, Ireland also welcomes billion-dollar multinational corporations with an appealing 12% tax rate. Even better, in a sweetheart deal with the makers of the laptop used to type this story, the Irish have offered Apple a tax rate below 2%. At least since 2009, according to the report, it was, on average, 0.06%.

Senate investigators found this curious, since nearly all of Apple research, development, and board meetings are conducted in the United States. So, when they quizzed Apple about where it calls home, “Apple responded that it had not determined the answer to that question.”

As a result, Apple has had an effective tax rate of just 20.1%, below the 24-32% it tells investors (according to the report), and well below the 35% the U.S. government wants it to pay. In 2011, it paid a mere $2.5 billion.

2. Sell To Yourself and It’s (Technically) Not Income

On paper, Ireland would appear to buy enough Apple products to reconstruct Blarney Castle from discarded iPods, but Apple’s Irish HQ legal entity is merely a passthrough shell corporation to funnel profits to tax havens, says the report.

The investigators determined that Apple cleverly splits itself into entities around the world, charged with selling products and intellectual property at distorted prices. For instance, Apple Sales International, a shell corporation entitled to Apple Inc’s intellectual property, sells products to its worldwide retailers at a “substantial” markup, technically raking in most of the profits from goods sold in stores.

“For example, in 2011, Apple reported $34 billion in income before taxes; however, just $150 million of those profits, a fraction of one percent, were recorded for Apple’s Japanese subsidiaries, even though Japan is one of Apple’s strongest foreign markets. ASI, meanwhile, reported $22 billion in 2011 net income,” explains the report.

3. Choose Which Entity Pays Taxes (Hint: The One With The Lowest Income)

Apple avoids taxes on its $102 billion in offshore holdings, thanks to an unintentional loophole that allows the company to decide which subsidiary gets taxed. In an effort to simplify the global tax rules, the IRS permitted multinationals to “disregard” sub-entities that were normally taxed (the so-called “check-the-box” rule).

Apple structured the relationship so that its tax-haven entities received billions in otherwise taxable dividend payments from subsidiaries it had elected to be among its disregarded entities.

In other words, according to the IRS, the payment within corporations is treated as a kind of internal transfer, which Apple funneled to its tax-friendliest locations.

“Those figures indicate that Apple’s Japanese profits were being shifted away from the United States to Ireland, where Apple had negotiated a minimal tax rate and maintained two non-tax resident corporations.”

Looking For A “Reasonable” Tax Code

Apple, of course, is not the only major tech firm accused of dodging taxes through offshore havens. In Apple’s case, Tim Cook has already donned the good cop role ahead of his congressional grilling, alongside Apple also providing written testimony to the subcommittee.

“If you look at it today, to repatriate cash to the U.S., you need to pay 35 percent of that cash. And that is a very high number,” said Cook. “We are not proposing that it be zero. I know many of our peers believe that. But I don’t view that. But I think it has to be reasonable.”

Cook will reportedly plead with Congress to simplify the tax code. But, if that happens, a lot of very clever tax lawyers will lose their jobs.

[Image Credit: Flickr User jpmpinmontreal]

Google is under fire in the UK for its tax practices in the country, and a new key witness (who spoke to The Sunday Times) might put them in deeper hot water when he hands over a reported 100,000 emails and documents to the British Revenue & Customs (HRMC) services. Barney Jones, a former Googler who was at the company between 2004 and 2006, says he has material proof that Google’s London sales staff which would negotiate and close sales for the UK market, despite claiming its Dublin HQ handled finalizing all deals.

Jones was prompted to speak out by testimony given to the Commons Public Accounts Committee (PAC) last week by Google VP Matt Brittin, who said that London-based Google staff were never closing any ad sales deals, though some selling efforts were made there. Brittin had previously gone on record in November 2012 with statements asserting that no one in the London office was doing any kind of ad selling.

The matter of where the deals were finalized is especially important because if a sale closes in London, it’s likely they’d be taxable in Britain, rather than in the extremely low tax-rated Ireland. Jones told the Sunday Times that Google is fully aware of this, yet there are still records of Google staff closing major deals from companies like eBay and Lloyds TSB, but Google doesn’t seem at all certain that any of the documentation will absolutely prove that it has done anything strictly against UK tax law, according to a statement provided by Google Direct of External Relations Peter Barron to the Sunday Times.

“As we said in front of the public accounts committee, it is difficult to respond fully to documents we have not seen,” the statement reads. “These questions relate to Google’s business in the UK going back a decade or more. None of the allegations put to us change the fact that Google pays the corporate tax due on its UK activities and complies fully with UK law.” Google reiterated this statement to TechCrunch when we contacted them for comment.

Ireland uses its lower corporate taxation rate, which is 12.5 percent, or a little over half of Britain’s 23 percent, to attract big names who base their European corporate headquarters there, including Apple and Facebook in addition to Google. The search giant is currently under fire from UK parliament members for its tax practices, thanks to a Reuters investigation that revealed statements it made last November to the PAC about its London operations may not have been entirely accurate.

Amazon is next in the PAC’s sights for its UK tax practices, as Reuters has also recently uncovered evidence to suggest that it, too, is doing a lot of selling through an autonomous London-based unit, despite routing its sales on paper through a tax-exempt affiliate based in Luxembourg. In fact, for most on Google’s footing, avoiding taxes seems to be the exception, not the rule, and a recent piece by V3′s Madeline Bennett explains that even if this fresh round of hearings reveals that these schemes do run afoul of UK tax regulations, it’s unlikely we’ll see situations change all that dramatically. Governments are too dependent on the general economic benefits of hosting big corporations, and get too much out of awarding them contracts, she says, to risk doing long-term harm to those arrangements.

Still, what Jones claims to have would be incredibly embarrassing for Google, especially if it spells out in no uncertain terms that closing deals was regularly handled by Google’s London staff, in direct contradiction to what Brittin has told the committee, but until we see the goods, there’s no telling how deep down the rabbit hole his information actually goes.

Google’s stock price came close to its 52-week high on the first day of Google I/O today, hitting $915 per share at close. In comparison, Apple today dropped 15 points to close at $428 per share, 277 points off its 52-week high.

This morning, Google stock jumped to $909 per share from its opening price of $895 when Co-Founder Larry Page hit the stage at around 11:45. It is now trading at $916.50 in after-hours trading. One analyst I talked to attributed the increase to Google’s announcement of its “all access” streaming service and the rotation out of hardware makers such as Apple and HP.

The difference between Google and Apple’s share price is a barometer of the tech landscape. Google is a data company. Apple is more about design, creating beautiful devices.

The difference is evident here at Google I/O. Google has built its infrastructure to manage more data than arguably any company in the world. It uses ths data to provide services that it highlighted today in its keynote. This includes its Google Translate APIs and the next generation of its Google Maps. The iPhone will always be elegant. As my colleague Josh Constine points out, the beauty of a device is just not as important, as the entire world becomes a fabric of data objects.

Apple had a bit of a head start when it came to mobile software sales, since it launched its App Store earlier than the Android Market — now called Google Play. The gap between the two, which was more pronounced in terms of initial downloads, has begun to close. Today both Play and the App Store announced very similar milestones.

Apple has been counting down to its 50 billionth app download for a while now. In fact, the assets were leaked via the Apple website backend code earlier today, so we all knew it was coming. Coincidence that it would land on a Google keynote day? That’s hard to tell, but Google had its own milestone to announce: 48 billion downloads announced onstage at I/O today.

The announcements give us a unique opportunity to compare download numbers from both stores on as equal footing as possible, and the result is a snapshot of two app stores that are neck and neck — at least in terms of straight downloads.

That doesn’t take into account paid vs. free apps, or how much revenue each makes from ads and other sources. But as you can see from the graph, it marks one area at least where Google used to trail considerably but is now catching up. Also the fact that Google’s Android OS now accounts for a majority percentage of global smartphone sales means it shouldn’t be surprising that there are a lot of people downloading apps.

Apple continues to lead both as the single-most profitable smartphone maker, and by default the most profitable platform, taking 57% of $12.5 billion in smartphone operating profits in Q1, according to figures out from Strategy Analytics today. Android took 43%, equating to $5.3 billion, Neil Mawston, chief analyst with the firm, tells TechCrunch.

The figures come as analyst houses are releasing various estimates for how smartphones have been selling in Q1. Strategy Analytics have published some numbers that tell the story in a different way.

Yes, Android is dominating smartphone sales (Gartner’s figures yesterday noted that Google’s platform took nearly 75% of all sales in the three month period). Yes, Samsung continues to widen its lead against Apple — now at 31% of all smartphone sales. But it still has a ways to go before it tops Apple, which has built its brand as the premium offering. (One possible reason why it has resisted up to now launching a low-cost, more cheaply made handset.)

Within the Android portion of smartphone profits, Samsung is taking ever the bigger lion’s share. Its $5.1 billion in operating profit works out to 95% of all Android revenues, and 40.8% of all smartphone operating profits overall. Bad news for other vendors/platforms like Nokia and BlackBerry: their collective profits totalled just $300 million for the quarter, working out to a 2.2% share of profits.

This also shows that Samsung has come quite some way in working out its profitability engine in the last year as it has continued to grow. This time a year ago, it was generating only about half the revenues of Apple in mobile devices (and that was counting Samsung’s smartphones as well as its feature phone handsets), and accordingly a thinner proportion of profits.

These numbers largely tally with some released earlier this month by Canaccord Genuity (via AllThingsD). The difference lies at the lower end, where Canaccord Genuity says that vendors beyond the top two effectively took nothing.

With these numbers coming out just as Google I/O kicks off, Strategy Analytics again throws light on just how disproportionate Samsung’s weight is in the Android ecosystem, and how its sales dominance works out to larger economies of scale and profit: its $5.1 billion in operating profits works out to 95% of all profits made on Android, with LG the only other vendor to break out from “others,” with a meagre 2.5% of profit share on $100 million in operating profits.

“An efficient supply chain, sleek products and crisp marketing have been among the main drivers of Samsung’s impressive profitability,” Woody Oh, Strategy Analytics’ senior analyst writes. In contrast, “LG delivered a small profit during the quarter, but it currently lacks the volume scale needed to match Samsung’s outsized profits.”

Just think of what that means for the even smaller Android OEMs.

Mawston believes that Samsung is actually generating even more revenue than Google itself from Android, counting things like mobile advertising and apps revenue.

“We believe Samsung generates more revenue and profit from the Android platform than Google does,” he writes. As Google’s Android head Sundar Pichai today reported during that I/O keynote that there have been some 900 million Android activations worldwide, this begs the question of who is in the driver’s seat on the platform — and by association smartphones worldwide.

“Samsung has strong market power and it may use this position to influence the future direction of the Android ecosystem,” Mawston writes. “For example, Samsung could request first or exclusive updates of new software from Android before rival hardware vendors.” If those kinds of requests are likely to get made, it will get harder and harder for Google to resist and continue maintaining the level playing field it’s tried to create for its mobile platform.

Tablets are not included in any of the above calculations, Strategy Analytics says.

It’s nice to see people in a power position in the valley give up their time for charitable causes. Apple’s CEO, Tim Cook, recently offered up his time for probably the most expensive cup of coffee ever, to benefit The RFK Center for Justice and Human Rights. The current top bid is a whopping $605K, and the auction ends in two days if you’ve got the cash to donate.

If the “Cook Experience” is a bit too rich for your blood, then you might be interested in hanging out with Twitter co-founder and Square CEO, Jack Dorsey. His recent auction, benefitting BUILD.org, gets you a full-on lunch with the man at Square’s office in San Francisco.

Whereas Cook’s auction took off with huge bids immediately, Dorsey’s hasn’t quite gotten off to the same start. There’s only one bid right now, and it’s for $5K. Sure, Apple is a company with more mainstream appeal, and a visit to the offices in Cupertino does sound fun, but Dorsey came up with Twitter. That’s worth at least $100K, right?

All kidding aside, the BUILD organization is doing great things for entrepreneurs, stating their mission as: “…to use entrepreneurship to excite and propel disadvantaged and disengaged students through high school to college and career success.” Here’s the pitch for Dorsey, whose auction ends in four days:

Learn from one of the most successful entrepreneurs of our time, Jack Dorsey, as you and seven of your closest friends sit down to lunch with him at his newest business, Square, headquartered in San Francisco.

At the end of the day, this is a great way to raise money for charities, but the winning bidders probably have a plan as to what they’d like to get out of the meetings. It would be interesting to get to talk to the person who meets either Cook or Dorsey, so if you’re that person, definitely reach out to us. Even if it’s under strict NDA…which would be nice to know, too.

If you score the Dorsey lunch, you can even bring seven of your friends. Maybe you’ll even get invited to cameo in one of his infamous Vine selfies:

Editor’s note: Derek Andersen is the founder of Startup Grind, a 40-city community bringing the global startup world together while educating, inspiring, and connecting entrepreneurs.

I remember when the press first hit about Nest Labs. The guys behind the iPod/iPhone were taking on thermostats everywhere! A collective “huh?” went through the industry. It felt like the tech version of the Avengers got together to build an office park, not save the world. After sitting down with Nest co-founder Matt Rogers at Google For Entrepreneurs‘ office a few weeks ago, I learned the backstory and vision of a company on a mission to build one of the world’s only great hardware/software companies.

There are hard workers, there are really hard workers, and then there are the Matt Rogers of the world. If you think you work hard, please watch our entire interview and think again. Matt had an early start with his first Mac product interactions at age three. When asked as a child growing up in Gainesville Florida what he wanted to be someday, Matt would respond, “I want to work at Apple.” At 16 he was building robots and entering them into competitions with his classmates. As a sophomore at Carnegie Mellon he agreed to basically do anything (anything being to help draw bones in CAD for a robotics hand project) to get a chance to work with the robotics lab. His Junior year he applied for an intership at Apple via Monster.com, and pestered employees until he got accepted. That summer he took on the worst grunt work project imaginable (he rewrote all the software for manufacturing for iPod), and had three months for what he described as a “one year project.” Seven days a week, 20-hour days, and “basically not sleeping.” How did it pay off? Apple awarded him a cash bonus as an intern, something VP of iPod at the time and eventual Nest co-founder Tony Fadell said, “He had never done before.”

Apple

After school he returned to Apple and spent the next few years working on the firmware for iPod nano and iPod classic. After his first weekend back at Apple, and spending Saturday and Sunday getting moved in and buying furniture, his manager approached him saying, “Where have you been?” Matt responded, “I went to buy furniture.” He replied, “You should have been here.” He responded, “Oh. I didn’t even know!” Matt said this, ”Set the pace for how iPod would be for the next five years.”

In December 2005, Matt and a small team started working on the first iPhone concepts in a project called “Purple.” At the time no one in the company knew what was going on, not even some of their own managers. They built the initial prototype in four months. It wasn’t good enough so they started again.  The next version was the one Steve Jobs would unveil on stage at MacWorld in January 2007. Four weeks previous to that, 25-members of the team went to China to assemble each of the first 200-devices to be shown at MacWorld. The team was divided into a day and night shift to hit the deadlines, working through Christmas and returning after New Year’s Day.

The Founding of Nest

After shipping the iPhone, Matt led work on products like iPod nano and shuffle, parts of the iPhone, iPad, and Apple TV. By late 2009 he had hired 40 people and managed these teams while still just in his twenties. That fall he had a two-hour lunch with Tony Fadell, his former boss at Apple who had left in 2008. Matt told Tony he wanted to start a company. “What do you want to do?” Tony replied. “I want to build a smart home company.” Tony’s response? “You’re an idiot. No one wants to buy a smart home. They’re for geeks.” But it turned out Tony was already building a smart home in Tahoe, with solar panels, geothermal heat pumps, and more. Tony honed in and focused on a single idea. “Why don’t you just build me a thermostat?” Matt replied, “Why not? We could build an iPod?” Tony responded, “We’ll do it in six months.”

Tony and Matt have what appears to be the ideal co-founder relationship stemming from Matt’s early internship days at Apple. “We think very much alike, to the point where we complete each other’s sentences. I don’t know if I would be able to do it without him.”

But was this the idea to risk his promising future at Apple? Matt had elevated from intern to Senior Manager in a few short years. “The more we dug, the more we realized, this is a company we must go start. We could save 10 percent of energy, solve an epic problem, no innovation (in the industry), multibillion dollar market. Why would we not do this?”

Matt quit his job in spring 2010, rented a garage in Palo Alto, and started cranking in secret. Matt would visit with old colleagues and tell them, “Will you quit your job? Will you come work (for free) with us on a new project I can’t tell you about?” The first ten hires worked for free for six months before finally raising money in October 2010. They bootstrapped with money from Tony and some from Matt. “We were all working basically severn days a week, twelve hours a day, it was crazy. Not everyone was living in the office – people have families, so they’d go home for dinner and then come back. It was craziness.” Everyone worked on Thanksgiving only taking a few hours off. Matt assured me no one got divorced adding, “All the wives are happy now.”

Still no one knew that Tony was even involved. “In the early days when we were fully stealth. “We had no website, no LinkedIn, we had nothing. Zero outbound communication. I wouldn’t even tell people that (Tony was involved). For all they knew, I was the only founder. To get people in the door the first time meant I did a lot of lunches, a lot of coffees to get people excited. I wouldn’t tell people on the first date – I’d show a little leg, but I wouldn’t go all the way.”

Even with limited funding Nest still managing to assemble a killer engineering team in the midst of a talent war exploding all across Silicon Valley. “It was a mixture of my old team at Apple, my old professor from CMU and a few folks from Tony’s early days at General Magic twenty years earlier. One guy was a VP at Twitter, one was running Microsoft User Experience. Unlike most startup teams the average age of our team was about 40. I think I was the youngest.”

A year after raising Series A capital from Kleiner Perkins, Google Ventures, Lightspeed, and Shasta, they shipped their first product. This past spring Nest was rumored to have raised $80MM at an $800MM valuation and shipping 50,000 thermostats each month. This company that was in a garage in 2010 now has 200 employees, and selling its products at Lowe’s, Apple Stores, and Best Buy. About half their inventory is sold online. Like most great companies in the Valley it is not without controversy. They were recently sued by Honeywell for patient infringement and as one friend in the home automation industry recently told me, “Everyone is watching Nest.” They also recently acquired venture backed energy dashboard MyEnergy.

Building HARD-ware

Nest shipped its first product 18-months after their inception, with 75-employees and having spent $10MM. “That’s with a team of extremely senior guys who have all done this a dozen times before. The difference between doing it a dozen times before at Apple, Samsung or Google and doing it on your own is that there is no backup. At Apple we worked on the project for a year, got it ready and hand it over to the operations team to go scale and shoot to the moon with. We all had roles we played at previous companies and that all went out the window at Startup Land. You have an HR hat, facilities hat, and janitor hat. Doesn’t matter, you have do it.”

Is it any surprise that there are so few hardware startups the Valley? Or that most entrepreneurs choose an app or a website over a hardware device? Entrepreneurship is hard enough not to have to layer in these additional complications. Matt adds, “I don’t believe I could build Nest if Tony and I didn’t have all that experience at Apple. It’s really hard to pull off fully integrated consumer electronic devices. It’s also really expensive to build a consumer electronic product. You have to build prototypes but you have to build tools. You have to get a manufacturing line set up. You have to front inventory costs. It’s crazy expensive.”

When our interview finished a few weeks ago, I walked Matt out to his car. It was 9pm, and he was cheerfully headed back to work for yet another late night at Nest. After hearing about the culture and work ethic at Nest, his attitude simply reminded me of how he described working a holiday a few years previously. ”That’s what it takes,” he casually said.

Apple faces a whole lot of inbound requests to unlock iPhone devices from law enforcement officials, according to a new report from CNET. Seized iPhones with a passcode lock are apparently secure enough to frustrate a lot of police agencies in the U.S., resulting in a wait list that Apple has put in place to help it deal with unlock requests from the authorities.

The waiting list was long enough that it resulted in a 7-week delay for a recent request by the ATF last summer, according to the CNET report. The good news for iPhone owners is that the ATF in that instance turned to Apple as a last resort, after trying to find a law enforcement body at either the local, state or federal level that had the capability to unlock the phone in-house for three months to no avail. The bad news is that an affidavit obtained by CNET, the decryptions seem to take place without necessarily requiring a customer’s knowledge, whereas with Google there’s a password reset involved that notifies a user via email of the unlock.

Apple can reportedly bypass the security lock to get access to data on a phone, download it to an external device and hand that over to the authorities, according to an ATF affidavit, which means that ultimately, the information on an iOS device isn’t 100 percent secure. But overall, repeated reports peg Apple devices as particularly resistant to prying eyes operating in law enforcement.

A previous report from CNET also identified iMessage as resilient in the face of outside surveillance attempts, especially compared to more common text communication methods like SMS. Combined, the reports suggest that Apple’s technology for its mobile devices is especially good at repelling unwanted advances, which is great for privacy buffs, though the policies around when and why Apple does share that information needs more fleshing out.

We’ve reached out to Apple to see if they have any official comment on the unlock queue from law enforcement and how they proceed with requests, and will update if we hear more.

Once again, news from a supplier is fueling rumors about Apple’s future product roster. This time it’s manufacturer Pegatron’s announcement that it will increase its number of workers in China by up to 40 percent in the second half of this year. The hiring blitz at the company, which produces iOS devices, has led to new round of speculation that a cheaper iPhone is in the works.

Suppliers have told Reuters that Apple is developing a cheaper iPhone in order to target emerging markets such as China and India. The less expensive version of the smartphone is expected to launch by the third quarter.

Pegatron’s financial performance is closely tied to the Apple products it makes. Just yesterday the company forecast its biggest drop in consumer electronics revenue in six quarters due to falling demand for the iPad Mini. Pegatron said its second quarter revenue will decrease 25 percent to 30 percent from the previous three months.

Other signs that Pegatron is expecting orders for a cheaper iPhone is chief financial officer Charles Lin’s disclosure that more than 60 percent of the company’s 2013 revenue will come from the second half of the year. Pegatron president and chief executive officer Jason Cheng said earlier this week that revenue from communication products will contribute up to 40 percent to the total in second half of 2013, compared to 24 percent in the first quarter.

Apple CEO Tim Cook said last month that the Cupertino company will start rolling out new products this fall and throughout 2014, including devices in “exciting new product categories.” Though its unclear exactly what Apple will be unleashing in a few months, many analysts believe that it will launch a cheaper iPhone instead of a larger-sized “phablet” that would compete with Samsung’s Galaxy Note.

A less expensive handset will allow Apple to compete with cheaper devices running on Android in emerging markets, but analysts’ opinions on how much of an effect a less pricey iPhone would have on Apple’s earnings vary widely. The company posted its first year-over-year earnings decline since 2003 in the second quarter, reporting $43.6 billion in revenue (up from $39.2 billion in the year-ago quarter) along with $9.5 billion in quarterly net profit.

Enders Analysis’ Benedict Evans said “a blockbuster new Apple phone that almost doubles unit sales and blows a hole in the middle of the Android market might only add 5 percent to Apple’s gross profits.”

On the other hand, Morgan Stanley analyst Katy Huberty believes a cheaper version can potentially add another 20 percent to the 10 percent market share iPhone currently holds in China. “Even in a scenario of low 40 percent gross margin and 1/3 iPhone cannibalization rate (flattening legacy iPhone shipment growth, which we view as conservative, the iPhone Mini adds incremental revenue and gross profit dollars,” she wrote in a recent investors note.

Apple’s annual Worldwide Developers Conference is only around a month away, and while we’re already expecting to see iOS 7 at least previewed at the event, now we have some actual data to back up that supposition. Onswipe, the mobile site conversion company that leverages HTML5 to deliver tablet-optimized websites, has seen a big spike in traffic to its partner sites from devices running iOS 7 in recent days.

Over the past week, Onswipe found a significant bump in the number of visits from iOS 7 iPhones and iPads, specifically located in both Cupertino and San Francisco. SF had the most iOS 7 visits, with 18.75 percent, and Cupertino accounted for 17.9 percent of the total. May 2 saw the highest iOS 7 traffic to date, representing 23 percent, or nearly a quarter, of all unique iOS visitors to Onswipe-enabled sites. Most were visiting from iPhones (75 percent), but iPads also represented a full quarter of visits.

Apple typically tests new versions of iOS internally, before then releasing them as a developer preview to anyone registered with the iOS developer program, and then finally releasing it to the public after another few months of testing. An increase in the number of users on iOS 7 is a likely sign that Apple is advancing the testing more aggressively ahead of a wider launch at WWDC, which is in keeping with other reports we’ve seen that say Apple is indeed redirecting resources to iOS 7 to make sure it arrives on schedule.

Onswipe didn’t just note how much use iOS 7 was getting, it also identified what people on the yet-to-be-released OS were looking at. Specifically, Onswipe found that iOS 7′s pioneer users were interested in finding out about which turntable to buy, Vine’s recent update that allows for selfie vids, Apple’s stock price drama and Kid Cudi. Maybe those Onswipe-enabled sites are particularly well-tuned for stress testing the next version of Safari, or maybe that’s just the kind of stuff Apple engineers are into.

As for what iOS 7 will bring, there’s precious little information so far, besides rumors that the design will embrace a more flat visual style, and that core apps like calendar and email will get significant functionality updates. At least we don’t have long to wait to find out what’s next for Apple’s mobile OS.

A new front has opened in the smartphone war, and for the first time in many years, Apple is both outnumbered and outgunned.

I’m not talking about the phones themselves. iOS is still better than Android, although the gap has narrowed. The next iPhone will doubtless be the best phone in the world when it’s released, as ever. It won’t be as customizable – no Swype, no Facebook Home – but those remain relatively minor inferiorities.

The new battlefront is different. The new battlefront is the cloud: Google Maps vs. Apple Maps, Siri vs. Google voice search, iCloud vs. Dropbox et al, and Google Now vs…well, nothing at all, yet. This is a big deal. As we grow accustomed to an always-online world of ubiquitous computing, your phone becomes less a device in and of itself and more a gateway to its cloud services. And it’s very hard to argue that Apple is anything but the serious underdog here.

You know they have a problem when even die-hard Apple supporter John Gruber is linking to pieces like “Apple’s Broken Promise: iCloud and Core Data,” which is replete with quotes like “If they couldn’t get iCloud working, who can?” … “It just doesn’t work” … “Many of these issues take hours to resolve and some can permanently corrupt your account” … “A developer’s worst nightmare.”

Remember when Siri was introduced, and people were pronouncing it a serious threat to Google Search itself? No, really. Haven’t heard that one in a while, have you? And not without reason; Siri seems to have stagnated, while over in Mountain View, Google is doing some truly phenomenal things with many-layered neural networks — and superior voice search is just one of the applications.

Can Apple match that? Who knows — but it’s safe to say that this kind of thing, cutting-edge technology beyond great hardware and superb design, isn’t their core strength. It’s Google’s. As is shown by Google Now, which is inexplicably treated as nothing more than Google’s answer to Siri by hordes of writers who apparently can’t think beyond simple dichotomies. It’s much more than that; until Siri tells you what you should do before you ask, there’s really no comparison.

Meanwhile, Google Now has been released to iOS, continuing Google’s ongoing battle to dominate the iPhone app space. (They’ve been quite successful; the two most-downloaded iOS apps are YouTube and Google Maps.) As TC’s Semil Shah has pointed out, thanks to Apple’s iOS restrictions, no third party could build a true iOS competitor to Google Now on Android. Only Apple itself has that power.

But will they succeed? And by the time they do, will Google have outstripped them again? Again, nobody has a crystal ball; but Google has a long history of building superb, scalable, reliable, (mostly) developer-friendly, and technically groundbreaking web services. Apple…does not.

That said, a bet against them is by no means a guaranteed win. Consider Apple Maps, which has taken great strides since its initial stumbles. And as my friend Lunatic (no, really) pointed out while debating this post with me on Twitter, it’s a bit rich to call Apple overmatched while iOS’s share of the American smartphone market still seems to be increasing faster than Android’s, and

@rezendi At least it's actual data, rather than anecdotes. & more adept at skating to where the puck is going to be: Apple/Google? Arguable.—
Lun Esex (@LunaticSX) April 30, 2013

But at the very least, on this new cloud-services battlefront, Apple is in the unfamiliar position of underachieving underdog up against the mighty Google war machine. With Google I/O and Apple WWDC both only weeks away, we can expect to find out soon whether either has a new secret weapon. Let’s hope they both do, because the great thing about this war is that when these two giants do battle, everyone else usually wins.

Image credit: Clouds over SoMa, by yours truly, on Flickr.

Apple’s iOS 7 will arrive “on time,” according to a couple of well-placed sources following a report from Bloomberg this morning that suggests it was risking delays in the face of major software changes. Apple blogger and noted beard-wearer Jim Dalrymple gave one of his famous one-word confirms today on his blog, agreeing with a source which told AllThingsD that while Apple has had to shift engineering resources away from OS X to iOS to make sure things proceed on schedule, the update will arrive on time.

Apple says on its WWDC landing page that we’ll see “what’s next in iOS and OS X,” but it hasn’t spelled out that we’ll see new versions of either its Mac desktop OS, or the mobile platform that powers iPhones and iPads. Still, the focus at WWDC is on software, and it’s more than reasonable to expect given the teaser on the information page as well as references to the future of iOS and OS X made in the official press release noting when tickets for WWDC would go on sale this year.

iOS 7 delay rumors have been making the rounds since John Gruber noted that Apple was “running behind” on the next version of its OS, and they cropped up again today thanks to Bloomberg’s report. But while Apple is apparently having to devote more engineering resources than normal to helping with the redesign process, which is rumored to be headed up by Jony Ive and involves a big visual refresh, which will embrace “flat” design (favoring solid colors and doing away with optical effect that mimic the textures and reflections of physical materials) and bring big changes to the calendar and email tools built-in to iOS.

The changes coming in iOS 7 are about modernizing the UI, likely to inject some fresh energy into a mobile operating system that has retained a fairly stable aesthetic style throughout the course of its six year existence. A significant change to the basic functionality of some apps and the look and feel of the entire OS would be quite difficult on its own, but Bloomberg says that the management shift that took place at the end of last year with Scott Forstall’s departure ended up causing a pause and refocus in the direction of overall development.

WWDC is just over a month away, so we’ll see exactly how extensive the modification really is with a likely introduction of a public developer preview version at that time, if Apple continues doing the same thing it has in the past around the iOS development process.

Apple’s next version of OS X, 10.9 is on the way, according to 9to5Mac, and will offer an improved multi-monitor experience, finally allowing users to run fullscreen apps on one monitor and access different desktop spaces or other fullscreen apps alongside those. That’s a big plus for power users, but most of the other additions planned seem to be under the hood improvements instead of a dramatic amount of new features and UI changes.

The report cites anonymous sources and claims that what 10.9 will bring is more about iterating than overhauling, which is in keeping with Apple’s recent development strategy with OS X. Some highlights include enhancements to Finder to bring it in line with third-party tools that add things like tabbed browsing and tags for content organization, as well as a brand new Safari that should provide a generally improved browsing experience. The fullscreen thing has been a problem since the introduction of the feature, and there are also said to be a number of improvements to core apps and functionality, which will make for better overall system performance.

A new version of OS X could also include some app switching and pausing tricks borrowed from iOS, which would make for CPU and battery life usage improvements, especially for more casual users who don’t need multiple apps running fully at the same time. Depending on how effective it is, it could even make for true worry-free all-day computing.

Apple’s next-generation OS X is probably going to at least be previewed by the Worldwide Developer’s Conference coming up in June, so we won’t have long to wait to find out what’s in store. The event will probably focus primarily on software, in fact, based on comments made by CEO Tim Cook during Apple’s most recent earnings call. But if that’s the case, it sounds like it will also be showing off primarily evolutionary changes from OS X 10.8 Mountain Lion.

Macs are an increasingly small percentage of Apple’s overall revenue picture, however, and the company has actually been lucky in that Microsoft’s last major OS overhaul, Windows 8, seems to have mostly met with consumer disappointment and confusion. Taking Mountain Lion, and improving it where it most needs it, might be the smartest approach to take at this point.

Hon Hai is planning to diversify its business away from producing Apple devices by signing an agreement with Indonesia to make and sell handsets in that country, reports Reuters.

A Hon Hai spokesman said that the company, which derives about 60 to 70 percent of its revenue from manufacturing work for Apple, hopes to sign the agreement next month. Hon Hai, the parent company of Foxconn, is one of Apple’s largest suppliers.

The Taiwanese company joins other manufacturers looking to make their business less dependent on Apple contracts as the Cupertino company’s growth slows. Earlier this month, Hon Hai reported a decrease of 19 percent in 1Q sales, due in large part to falling demand for iPhones. Another heavily Apple-dependent manufacturer, Cirrus Logic, has said that it is trying to diversify its customer base and is now shipping to several mobile phone manufacturers. Fellow Apple chip maker SK Hynix may start selling to Samsung, a deal that could help the Korean tech giant avoid supply disruptions for its Galaxy S4 smartphone, a key iPhone rival.

Hon Hai spokesman Simon Hsing told Reuters that the company is currently in talks with several Indonesian phone companies and will finalize the details of its investment and partnership agreements after securing a memorandum of understanding (MOU) with the government.

Indonesian Trade Minister Gita Wirjawan has previously stated that Hon Hai’s investment would be between $5 billion and $10 billion, and that it would build a factory near Jakarta to assemble 3 million handsets a year. Hon Hai won’t export phones from Indonesia or manufacture Apple products there. Instead, it will make devices for local brands and sell them domestically.

Latching onto Indonesia is a savvy move for Hon Hai because the nation’s growing economy will be driven in large part by the tech industry. Hsing said that the phone market in Indonesia is worth $2.4 billion. According to a recent IDC report, IT spending in Indonesia is forecasted to reach $15.8 billion this year. Furthermore, up to 70 percent of Indonesia’s population is working age–in other words, they are the people who will drive spending on consumer tech.

In case you can’t wait for Jony Ive to give iOS a complete revamp, there’s Classic Note, an app that will bring back a bit of the Woz-Jobs magic in fully 128K glory. The app includes a note taker and calculator stuffed into a package that harkens back to the days of the original Macintosh.

Created by Salem-based programmer David T Green, the app costs $3.99 an is available now.

“My main inspiration came when I was playing around with System 6 in Mini VMac a few months ago and noted that the flat colors and shapes of the older OS had a lot in common with the design of modern mobile apps such as LetterPress, and Microsofts Metro style apps. From there I just felt it would be incredibly fun to have some simple little apps that reproduced the feel of the old desk accessories,” said Green.

While it’s lean on features, it definitely puts the iPhone screen to good use with large, chunky Chicago-style fonts and enough pixellated buttons to choke a Wild Eep. “There is no support for bit mapped fonts in iOS so I had to hand make a custom font that matches the font used on the original Mac pixel for pixel,” he said.

“Sometimes it’s fun to work within such limited visual constraints.”

[Thanks, Michael!]

The USPTO published a number of Apple patent applications Tuesday, including two related to automobiles (via AppleInsider). The car patents both describe systems that can be built into future iPhones, replacing most of the functionality of your standard key fob with the smartphone, and providing a way to help drivers navigate the often maze-like interiors of parking garages to find their ride.

In one application, Apple describes what amounts to a series of different indoor positioning systems to help drivers locate their cars when parked. The system would involve pairing a car and an iPhone via Bluetooth, and then using that connection to automatically detect when a car ends up actually parking in a spot. Then, it uses sensor data communicated from the parking facility itself to peg a location.

Once a user returns to the garage, they can trigger the phone to find their current positioning data from the same system, and then provide actual guidance or directions back to their car itself. The patent describes parking garages in which devices are placed at regular intervals throughout to help facilitate the indoor location portion. Apple’s recent acquisition of indoor positioning system company WiFiSLAM could also work very well in terms of helping provide a way to make this system work.

The IPS element is interesting, but where Apple’s patent is really unique is in using on-board device sensors, including things like the camera and microphone, to determine automatically when a car parks to begin with to trigger the car location logging information. There are plenty of “where did I park my car” apps out there (though few boast IPS), but the automatic, fully-integrated way Apple’s system would work would make it so that you don’t even have to remember to activate it.

The other car-related application describes a system that would turn the iPhone into a remote car starter, unlocker, and essentially a parental control device for a target vehicle. The patent talks about using Bluetooth to pair a car and a handset, then allowing a user to choose their level of security, making it possible to have the phone unlock the car automatically based on proximity, or require a PIN to even use any car control functions.

Apple’s patent goes further than most remote starter/unlocker key fobs by allowing a user to set specific limits for particular devices, like making it possible to start the engine with a phone only during set hours, setting a max speed for use with a particular device, limiting access to infotainment services, and building in geofencing. All of these can be used in theft prevention, but also to set limits on say a teen child’s car permissions.

It’s about time that cars got tighter integration with mobile devices, in ways that make the best use of all the tech on board our modern smartphones. Many car companies seem to be open to working closer with Apple, too, so while there’s a lot of infrastructure changes described in these patents, we still could see these features make their way to shipping devices over the next few years.