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Apple Does the Money Dance

Apple Does the Money Dance

The holiday season paid off for Apple to the tune of $46 billion in revenue for its most recent quarter. Profits were around $13 billion. The iPhone was once again the company's MVP -- it sold nearly 37 million units, thanks to the recent release of the iPhone 4S. Meanwhile, RIM flipped chief executives, coders jumped at the chance to scold Google, and Google gave privacy advocates a jolt.

By Paul Hartsock
01/28/12 5:00 AM PT

Apple's first fiscal quarter is usually a big one. The way its financial calendar works out, what it considers Q1 ends on Dec. 31, meaning it covers the entire holiday period, as well as maybe a little back-to-school action.

But the numbers Apple posted about its most recent Q1 were in an entirely different class than the usual money bender it wakes up from this time of year. One of the biggest drivers for Apple's money train was the iPhone. It sold 37 million units over the last three months of 2011 -- easily a record. The iPhone 4S arrived last fall, rather than during the usual summer release window, so the new product plus the holidays worked together to drive up sales. Even though some buyers seemed disappointed last year that Apple didn't serve up an iPhone 5, apparently 4S was good enough.

Getting down to numbers, Apple took in record-breaking revenue of US$46 billion. It also set a record in profit at just over US$13 billion -- which happened to be right around what its total revenue was during its fourth quarter of 2010. That's not a perfect comparison, since different quarters have different factors working for and against them, but it does underscore the kind of growth the company's been seeing over the last year.

Don't expect a repeat of these figures next quarter. They may not even repeat at this time next year. Apple's latest Q1 was the product of several factors fitting together just right. That's not to say it's all been a fluke -- the trends for lots of Apple products are pointed upward. It'll still need room to grow into, and at the moment that seems to be overseas. In fact, Apple even managed to make that 37 million iPhone sales figure without bringing the 4S to mainland China. The new phone landed there after the quarter was finished.


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RIM's New Bottle

The Balzaridis era at Research In Motion has come to an end -- technically.

For years, Mike Lazaridis and Jim Balsillie presided over the smartphone maker, both as coCEOs and cochairmen of the board. It was an odd arrangement that the two insisted was helpful for the company. But as RIM slowly sank deeper into the mire, investors began to ask increasingly sharp questions about whether some kind of reshuffle was in order.

In the wake of service outages, product delays, limp tablet sales and shrinking value, the two chiefs last month voluntarily cut their salaries to a dollar per year. But even that was apparently not enough. The two were relieved of their offices entirely, both as chief executives and as chairmen.

They weren't exactly dragged out of their offices nude and put into the Waterloo town square pillory. Nope, they're still firmly ensconced in RIM's boardroom. Balsillie's now a director, and Lazaridis is vice chair and head of a new innovation committee.

As for their replacements, Barbara Stymiest is now chair -- not a big surprise; her name came up a lot whenever anyone talked about replacing the head of the board. And Thorsten Heins will now serve as CEO.

This must have been a glorious day for all those RIM investors who'd been grinding their teeth for months over the company's leadership, right? It started out that way. On the Monday after the news hit, RIM's shares quickly climbed about 5 percent.

Then Heins started talking, and Wall Street's warm welcome immediately went cold.

Heins is a RIM insider. Previously he was COO of product and sales. A company doesn't necessarily need to hire an outsider as its new CEO in order to bring in new ideas and new energy -- but Heins projected none of that, judging by investors' reactions. In short, he gave the impression that he means to follow the same path his predecessors have followed -- the same one that's caused RIM's shareholders to lose millions over the years. No big shakeups, no surprises, not even any vague promises of going in any new directions. All summed up, "I don't think there is a drastic need for change needed."

To some investors, the guy looked like a ventriloquist dummy sitting on Balsillie's and Lazaridis' laps. Share price deflated by over 8 percent for the day.

Initial utterances on the first day of the job aren't binding contracts, by any means. Maybe coming out with this mild tone-setter for his administration was Heins' way of underpromising and overdelivering. Remember that Meg Whitman expressed a similar "stay the course" attitude during her first couple of days at HP. But just a few weeks later she reversed her predecessor's decision to vacate PCs and then gave webOS a new lease on life.

But in reversing Apotheker's decisions, Whitman really was staying the course for HP, in the bigger picture. Heins' situation is different, and investors may be worried that in his case, he really means to stay on the road RIM's been on for years. He's been doing things RIM's way for half a decade, and with the former co-captains still deeply entrenched in the company and exerting their influence from board-level positions, it may be difficult for him to do anything but follow their lead.

See What You're Missing

Google caused some deep and dark consternation among rival social networks a few weeks ago with the release of Search Plus Your World. It's this new feature for Google's main search engine that throws in a few links from Google+ each time you run a search. If you're a Google+ user, your search will give you the normal results you'd expect to see from a general Web search along with a sprinkling of Google+ links -- your friends' posts, your photos, info about some celebrity you've never met who happens to have a Google+ page, so forth.

So it blends social search with traditional search. You may find that lots of fun, or annoying, or completely unnoticeable. Whatever -- you can turn it off if you don't like it. But sites like Facebook and Twitter find Search Plus Your World very troubling, because they think it gives Google+ unfair preferential treatment. You get hosed down with a million chunks of info from your Google+ life, but not so much from the worlds of Twitter or Facebook. Google has the info from those other networks; it's just not putting it on the top shelf with its own stuff.

In reaction to this, a bunch of Facebook, MySpace and Twitter engineers got together and cooked up a new bookmarklet. And they opted not to hold back when they came up with a name -- they're calling it "Don't Be Evil."

Don't Be Evil aims to make Search Plus Your World a little more egalitarian. When the bookmarklet's installed and activated, you still get a ton of social links, but instead of favoring Google+ social results, now a search will pull up social results from other networks also and give them top placement when it's appropriate. The developers say that the bookmarklet is unbiased and draws its info from Google's own listings.

Google's Search Plus Your World might not have been such an issue if it was limited only to the search bar you see on Google+. Twitter's search bar only searches tweets, Facebook search is limited to Facebook stuff, and nobody'd care if Google+ search only got Google+ results. But the Search Plus Your World function affects straight-up Google searches, and Google practically owns Internet search. Some Google users haven't bothered to set up a Google+ profile. But it just so happens that starting just now, that won't be an option for anyone setting up a brand-new Gmail account. Now membership is compulsory for new users.

Tearing Down Walls

By the way, Google's also consolidating all the information in its intelligence operations in order to compile everything it knows about you. Oh, but don't worry, it's all the better to serve you, my dear.

Google had around 70 different privacy policies covering its various products and services, but recently it simplified things by consolidating about 60 of those into a single, overarching policy. About 10 special cases had to be left alone for various legal reasons.

But it also tore down some of the walls that used to compartmentalize the data each service stores. Whenever a logged-on person uses a Google product, usage behavior is saved by that particular service, ostensibly so Google can put up more relevant ads. Now, though, Google has changed its policies so that its services can share information about users. Instead of 10 different dossiers for 10 different services, there's now a single, omnibus jacket on what you do on Google and when.

Google stressed that this information is all going to stay in-house. They won't sell it or share it with outsiders unless there's a court order involved. It's stuff Google knew about you already, only now, ALL of Google's going to know about it, not just that one relevant service. Google will benefit from this by being able to boast better ad placement, of course, and users who trust Google with their information might think it's kind of cool when Google Maps suddenly knows where all of your Google Contacts live, for instance.

But the news made privacy advocates' heads spin. There was already a certain amount of animosity between Google and those who think Web users' privacy rights are being abused in the name of advertising. It's one thing when many different companies know bits and pieces of information about the various customers they share, but what really draws their attention is when companies consolidate that info and are suddenly able to draw a startlingly accurate composite sketch of each user. And when one of the biggest companies on the Web decides to consolidate within its own system, that's DEFCON 2 for privacy hounds.

Finally, there's also been criticism that these new terms of service aren't opt in. They also aren't opt out, or opt anything. They're the way things shall be in Googlandia henceforth.

OK, if you really hate it, you can opt out -- by opting out of Google entirely.

Who's on Fifth?

Each of the amendments in the U.S. Constitution seems to kind of have its own personality.

First Amendment: Very bold, noble, righteous.

Second Amendment's all about that gun business -- don't make that guy angry.

Third is kind of old-fashioned. Quartering soldiers in citizens' homes isn't really an issue that comes up very often nowadays. Still, thank you Third, I'm glad you're around.

Fourth is defiant, especially when it's time to pass through security at the airport.

And the Fifth Amendment is a quiet little guy who always makes you think he's up to no good. Really, there are very legitimate reasons to appreciate the Fifth Amendment even if you haven't done anything wrong. But No. 5 is still a favorite among people who really do have something to hide -- or at least that's how it's usually portrayed in the movies.

But it seems the Fifth Amendment won't protect you from information stored on an encrypted disk. That's the ruling of Federal District Court Judge Robert Blackburn. He's presiding in a case in which defendant Romona Fricosu is accused of participating in a mortgage scam. Authorities seized a hard drive from her possession, and it's believed that drive contains evidence that will incriminate Fricosu. When prosecutors demanded that she decrypt the drive for them, she plead the Fifth. No dice, said the judge -- decrypt the drive or you're in contempt.

This is the first time this particular issue has landed squarely in front of a judge, according to Fricosu's attorney, Philip L. Dubois. There have been similar cases in the past, but to the best of his knowledge, this is the first time the government has a drive, doesn't know what's on it, has a warrant to search it, and must rely on the defense to decrypt it.

Practically speaking, a hard drive with juicy secrets on it is a little different than a safe full of files. Police can get into a safe without a defendant's cooperation -- all they need is a few power tools. But a well-encrypted hard drive could take even a powerful computer a great deal of time to decode, so even trying to do so isn't usually practical for the typical prosecutor on the case of an alleged mortgage scammer. For all practical purposes, that drive is locked unless the defendant gives up the goods.

But what was the basis for the judge's decision? Legal experts we spoke to said the Fifth Amendment generally pertains to utterances -- acts of testimony, things you say out loud that could incriminate you. Demanding that someone provide a key, or even personally enter that key on a computer in a courtroom, is a different matter -- at least according to the judge in this case.

Fricosu's attorney said an appeal is in the works.


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