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Can Verizon Take the iPhone's Heat?

Can Verizon Take the iPhone's Heat?

Starting next month, Verizon will begin carrying Apple's iPhone, ending AT&T's exclusive U.S. rights on the device. Those who've complained about AT&T's service in the past may take the opportunity to jump ship, but it remains to be seen how well Verizon will handle a flood of iPhone refugees. Meanwhile, AMD boots its boss, MySpace might sell to someone and Facebook might sell to everyone.

By Paul Hartsock
01/15/11 5:00 AM PT

Perhaps you have an iPhone, and perhaps you were at CES last week. If so, you may have noticed that your phone's data services just plain didn't work most of the time. For some users, that's an aberration that only happens when they go to very crowded events.

But for users who live in certain cities, that's pretty much an everyday condition. In places like San Francisco and New York, AT&T's cellular data network has been entangled in a years-long traffic jam, and it's driven some users to solemnly swear that the day the iPhone comes to another network, that's where they're headed.

Now that day has arrived. Or at least, we now know when it's coming. Feb. 10 will be the day the iPhone will arrive on the Verizon network, ending Apple's exclusive agreement with AT&T in the U.S.

For the most part, the Verizon version of iPhone 4 will be just about the same as the AT&T version. It's mostly the same design, though I've seen photos indicating the metal outer band is just little different -- possibly a post-antennagate redesign. Same chip, same display. Same price, too: US$199 to $299 with a two-year contract.

To run on Verizon's network, this new iPhone will use CDMA technology, not GSM. So it seems this is definitely not going to be a 4G phone -- I guess that comes later. Also, the Verizon iPhone 4 can be used as a WiFi hotspot. Turn on that feature, and multiple devices in the room can wirelessly latch onto the phone's data connection.

But the Verizon iPhone also shares a shortcoming with a lot of other Verizon smartphones -- you can't make calls and exchange cellular data at the same time. That might affect the use of certain applications, but for most users it's probably not a make-or-breaker.

A much bigger issue for many will be how well Verizon's network deals with a bump in traffic. Judging from how much energy Verizon iPhone rumors have had for so long, this thing is going to draw in a lot of customers. Some will be angry AT&T refugees; some will have been waiting for an iPhone for years but couldn't bring themselves to sign on with AT&T; some will be loyal Verizonistas who just want to step up from their old dumbphones.

Verizon says it's confident it can handle the load, but a study from the Yankee Group indicates the carrier's network currently hosts the lowest percentage of smartphones among any U.S. nationwide carrier. A surge of new iPhone users will certainly drive that number up, and then we'll start to see whether a Verizon iPhone restores balance to the universe or just tips the scale in the other direction.


Listen to the podcast (13:23 minutes).

Privacy Settings: Off

Privacy is kind of a big issue for Facebook. On one side of that is user privacy -- what information friends, strangers and Facebook itself can see about you. Critics say the social network juggles its privacy settings too often and doesn't tell the full story about who can learn what about you if they really, really cared to know. Suffice to say that if you want perfect privacy, don't join Facebook. If you want so-so privacy, get into your profile settings and tighten them up -- they are pretty loose by default.

But the desire for privacy is also felt by the company's leadership. It's the biggest social network in the world, it gets more traffic than Google, it has over a half a billion members, yet it's still not a publicly traded enterprise. That's because so far, Mark Zuckerberg and company have decided they want to handle operations their own way and not have to answer to stockholders or a board of directors.

It seems all that will change next year. Facebook plans to go public sometime in 2012, according to a document investment firm Goldman Sachs gave to several of its clients. Big IPO, big parties, big sloppy handshakes from Wall Street types, and at the end of the day, Facebook's leadership will go home wearing diamond-studded collars. Handling the leashes will be many thousands of newly minted shareholders.

Another tidbit from the Goldman document: In the first nine months of 2010, Facebook made $355 million. Make of that what you will.

Zuckerberg could have made a splash on Wall Street any given trading day in the last two or three years had he decided to take Facebook public before. What's so special about 2012? It seems that will be the point at which the Securities and Exchange Commission will possibly step in and force Facebook's hand.

At this time, not just anyone can invest in Facebook. You have to have the right connections, and being a client of Goldman Sachs -- a very big client, specifically -- is one way to get your foot in the door. The firm's been asking its wealthiest clients if they want in on Facebook, and the kind of money it's asking for values the social network at $50 billion. Apparently Goldman thinks it'll get enough takers that by the end of this year, Facebook will have more than 500 individual investors. Per SEC rules, when that happens, a company has until the end of April of the following year to reveal the secrets of its financial sausage-making.

A Facebook IPO seems like it was almost bound to happen sooner or later, given the company's growth. Might as well do it when the company's on a relative winning streak, right? Even so, going public might throw some cold water on the company's culture, giving it a whole lot more busywork to take care of in order to fulfill the accountability mandates public companies have. Lawyers, accountants, quarterly reports, shareholder meetings -- sounds like someone there's gonna have to buy a tie.

Selling Space

It's been less than two months since MySpace basically conceded defeat in the general social networking space and decided it wasn't going to try to compete head-on with Facebook anymore. Now it's unclear who exactly will own MySpace a few months from now.

Just a few days after the company laid off half its staff -- about 500 people -- CEO Mike Jones has reportedly said that the social network's current owner, News Corp., is exploring its options: maybe a spinout, maybe a selloff, maybe a merger.

The site used to be on top of the online social networking world. In fact, it still gets a significant amount of traffic, about 25 million hits a month. But it clearly blew what used to be a huge lead over its rivals.

MySpace has been kind of an odd fit for News Corp. ever since it joined the family in 2005. Stateside, the corporation's most famous holdings are probably Fox News, Dow Jones, the Wall Street Journal and the New York Post -- not exactly the kind of portfolio where you'd expect to see an online social network targeting teens and young adults.

But MySpace didn't lose its lead just because it was a corporate misfit. It also lost it because of its extended awkward adolescence.

MySpace managed to draw a lot of people into social networking for the first time. But what it showed them when they got there was a site full of gawdy user-designed profiles, message boxes full of spam, ugly and intrusive ads, and an overall cumbersome user interface. The site's cleaned itself up a lot since then, and now it's actually looking OK, but at that crucial phase in the growth of online social networking, MySpace was this crowded, festering swamp from a GeoCities nightmare.

And Facebook happened to come in at just the right time with just the right alternative. It had been limited to college kids at first, so it avoided the "teenybopper club" associations that MySpace is still stuck with. It also offered a clean interface. Ads were there, but they weren't as awkward. And since relatively few users had been into online social networking long enough to establish anything like brand loyalty, Facebook sucked them in by the millions. And now we are all slaves to Zuckerberg.

Even though half the desks at MySpace are empty, there's still some hope. Though it's way behind Facebook, it's still the second-largest social network out there, and it has a lot of cache among musicians and music fans. Maybe Viacom could buy it and hook it up with MTV. Maybe CBS could buy it and sit it next to all the other sites it's been buying. Maybe AOL could be buy it and do ... whatever it is that AOL does with the stuff it picks up. Point is, this site may have a lot of rust and a stinky interior, but it still runs, and it might be a great buy for a company looking for a particular kind of fixer-upper.

Whack-a-Hacker

Despite the name, Sony's PlayStation 3 is actually capable of a whole lot more than playing video games. It has a very muscular processor inside, and in the past, some people have figured out ways to use the PS3 for much more productive tasks than laying waste to alien armies.

You could install software to turn it into more or less a fully functional Linux PC, and it's even compatible with the Folding@Home project, which lets participants volunteer their computer's processing power to help out research in protein folding. So when they're not being used to blow up imaginary enemies real good, some PlayStations are unlocking the secrets of molecular dynamics.

But Sony isn't 100 percent supportive of efforts to use PS3s more like PCs and less like gaming consoles. For example, in a firmware update last year, Sony nixed a PS3 feature called "OtherOS," -- the feature that enabled the console to run Linux. Those who updated to that new firmware version borked their machine's Linux capabilities, and anyone who bought a new PlayStation from that point on never saw OtherOS at all.

For some users, barring Linux seriously lowers their PS3's value, so some hackers decided to do something about it. George Hotz, the original iPhone hacker himself, cracked the console's root key, and a hacking group with which he's associated, Fail0verflow, cracked the PS3's security codes. This information would give owners of newer PS3 machines the ability restore OtherOS, if they think they're up for it.

Sony has filed a temporary restraining order in an attempt to prevent this information from ever being published. According to the company, the motivation for its action isn't some deep-seated hatred for Linux. It's all about security. That was the reason it gave for dumping OtherOS in the first place. Sony says that dissemination of the console's security codes lets users play pirated games.

This action likely won't sit well with Sony customers on the geekier side of the spectrum, who were already pretty miffed that Sony cut off the PS3's Linux legs. And even to owners who'd never think of messing around under the hood of a PlayStation or any other gadget, the idea that a company is trying to tell people what they can and cannot do with their own personal property long after it's been bought and paid for sounds ridiculous, especially since the mere act of installing these keys doesn't directly result in a bunch of free games falling into your lap. Someone might choose to pirate games after hacking the system, but why stand in the way of people with legitimate intentions like turning the thing into a Linux box?

For Sony, it's also a move in the opposite direction of competitor Microsoft. Currently, the Xbox Kinect is one of the hottest items in the video-game world, and Microsoft has scored big points in the hacker community by openly tolerating -- you might even say encouraging -- hacking the product to do stuff it wasn't originally intended for. And the hacker community has responded with all sorts of applications, practical and impractical alike.

The Vision Thing

AMD's public statement regarding CEO Dirk Meyer's abrupt departure this week called it a "resignation." But consider also that the company said that the departure was "effective immediately" and that its board of directors didn't think Meyer was the right person to take the company to the next level. So in other words, he was axed.

It's left a lot of people wondering why. Meyer guided AMD through some pretty rough patches, and things were finally beginning to turn around for the company. He managed to more than quadruple AMD's stock value from the time he stepped on board to about 9 bucks a share. And AMD's announcement last week of a new line of Fusion chips was pretty well-received.

Perhaps the board feels that even though Meyer kept the company breathing during some dark times, it's sick of being regarded as second banana to Intel, and it's time to do something crazy to shake up the desktop/laptop status quo. Maybe it wants to jump into the tablet market, or maybe it has smartphone processors in mind.

Still, even if cutting Meyer loose was the right thing to do for AMD's future, it's strange that the board tapped CFO Thomas Seifert as temporary boss instead of having a permanent replacement all warmed up on the sideline. Meyer's vision may not have lined up with the board's, but the title "interim CEO" is about as vision-free as it gets.


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