Lenovo to Sell Phones in Markets Where IPhone Seen Costly

Lenovo Group Ltd., which has its headquarters in Beijing and Morrisville, North Carolina, rose 0.4 percent to HK$8.45 at the noon break in Hong Kong trading, before the announcement. The stock has climbed 20 percent this year, surpassing the 1 percent gain in the city’s benchmark Hang Seng Index.

Lenovo Group Ltd. (992), the largest maker of personal computers, said it will triple the number of markets in which it sells smartphones by focusing on emerging economies where Apple Inc. (AAPL)’s iPhone is seen as too costly.

“We have seen the first wave of success in Asian countries,” Chief Executive Officer Yang Yuanqing said in an interview yesterday. “We provide affordable products for emerging markets. That’s very important. For those markets, the iPhone is probably not the best-selling product, Lenovo can be much more competitive.”
Lenovo, in the next few quarters, will start selling smartphones in at least 20 new markets in the Middle East, Africa and Latin America, adding to the 10 where they are currently sold, Yang said. The global push comes after success in Indonesia, where Lenovo grabbed 13 percent market share in 12 months while achieving profit margins higher than in the home market of China, he said.
The company’s expanding global smartphone market share helped Lenovo report second-quarter profit that beat analysts’ estimates. Net income climbed 36 percent to $219.7 million in the three months ended September, Lenovo said yesterday. That surpassed the $202.7 million average of 17 analysts’ estimates compiled by Bloomberg.

‘Smartphone Shipments’

“Their smartphone shipments were better than they originally guided for,” Jun Zhang, an analyst with Wedge Partners Corp., wrote in an e-mail yesterday. “Gross margin and operating margin should improve as the smartphone business” expands, he said.
Second-quarter revenue rose 13 percent to $9.77 billion, exceeding the $9.41 billion average of 18 analysts’ estimates.
Lenovo, which has its headquarters in Beijing and Morrisville, North Carolina, fell 0.6 percent to HK$8.55 at 10:03 a.m. in Hong Kong trading. The stock has climbed 22 percent this year, surpassing the 0.4 percent gain in the city’s benchmark Hang Seng Index.
Expansion abroad may boost mobile devices to 50 percent of Lenovo sales within five years, from 20 percent now, Yang said.
While the company has plans to grow the business organically, it will also look at opportunities to expand through acquisitions, Yang said. He declined to comment on any specific targets, or whether the company had pursued BlackBerry Ltd. (BBRY)

‘It’s a Tool’

“We want to spend our shareholders’ money smartly,” Yang said in the interview. “Unless there is chance to give shareholders a good return, and we can get a good valuation for our shareholders, then I don’t think we should have an acquisition. Acquisition is not a purpose, it’s a tool.”
Lenovo hasn’t been told by any government that it couldn’t purchase assets because it’s a Chinese company, Chief Financial Officer Wong Wai Ming said on an earnings conference call yesterday. Wong was responding to a question about a report in The Globe and Mail that Lenovo had pursued a bid for BlackBerry until the Canadian Government said it wouldn’t accept a Chinese takeover of the company because of national security concerns.
Wong also declined to comment specifically on any interest the company may have had in bidding for BlackBerry.
Yang is expanding in mobile devices, competing with Apple and Samsung Electronics Co. (005930), amid a slump in global PC shipments. Lenovo posted the biggest gain in shipments among the world’s top-five PC vendors in the period as the industry experienced a 7.6 percent drop amid weak consumer sentiment for traditional computers, researcher IDC reported last month.

Rumors Clash With Reality as HTC Tries to Spell Out Its Future

 
It's been a busy few months for the Taiwanese smartphone maker.
Since Robert Downey Jr. was told to “Hold This Cat” back in August, HTC has gone on to have an historic quarter. That's not hyperbole, it really was historic.
In addition to the humdrum of unveiling, well, smartphones, HTC's also been toiling away at a few side projects.
Talks with Amazon.com about doing a handset for the online retailer's Prime members progressed during the period, with both sides staying mum on the project. The phone maker is also looking at doing a smartwatch, following on the heels of Samsung, Sony and Dick Tracy. HTC folks again chose to keep their lips sealed.
Somewhat less sealed was HTC's treasure chest of intellectual property and trade secrets. After complaints from the company, Taiwan authorities searched the offices and homes of some employees before detaining two R&D executives on the suspicion of leaking company secrets.
Low-key co-founder and Chairwoman Cher Wang came out of the shadows as well, doubling her days at the office and taking over more logistical work from CEO Peter Chou (who remains the boss, she said more than once). In an address to staff, she outlined customer service and consumer experience as an area the company needs to work on, while in an interview with Bloomberg Television, she said “HTC does have some problem of communication,” in terms of marketing its product design and technology.
Its PR situation didn't improve much either. Four months after HTC heralded her arrival, the “new” head of global PR, corporate and internal communications Lorain Wong quietly became the “ex” head of global PR, corporate and internal communications.
HTC's balance sheet does look set to improve after it unwound two of its biggest acquisitions of the past few years, selling off Saffron Digital and exiting from headphones maker Beats.
Meanwhile, Microsoft - the software company that got any kind of traction in mobile phones because HTC decided to devote much of its 16 years exclusively to their operating system - offered an olive branch (or perhaps a juicy carrot) soon after its long-awaited Nokia handset deal had other Windows handset makers annoyed. Microsoft basically said to HTC: How about you load Windows Phone on your Android handsets, and heck, we might even cut the license fee to zero (or very close to)?
None of that, though, is historic for HTC (although that last one is unusual for Microsoft), it's merely the ebb and flow of a modern tech company.
What's historic is that on Oct. 4, at a time and in a manner totally out of line with years of standard practice, HTC announced to the world its first loss on record.
We all know that losses happen in the corporate world. For some tech companies, losses seem to be the rule more than the exception.
To be fair, HTC still has more than $1.6 billion in cash (at the end of June) and minimal long-term debt, financial metrics that have been noticed by Jimmy Lai -- best known in Greater China as the founder of Next Media, and (not) known in the West as the man whose team created those Taiwanese Next Media Animation skits that have satirized the likes of Tiger Woods, Brett Favre and Justin Bieber. Lai, according to spokesman Mark Simon, has seen value in HTC's stock (down about 50 percent this year) and quietly built a stake of about 2 percent as a purely financial investment over the past few months. Lai isn't planning to get involved in management, says Simon, a fact that hasn't stopped speculation of how a Next Media-HTC tie-up might look.
In the smartphone business, though, history has shown that losses haven't tended to be followed by very happy tales. Motorola, Nokia and Blackberry are former handset titans whose earnings dipped below the waterline and have found, or are seeking, life preservers.
In the past few months, the rumors surrounding the future of HTC have poured forth. M&A seems to be the most likely escape route, with Lenovo and ZTE the names that get mentioned most. China Mobile, the world's largest mobile phone carrier, was also thrown into the mix as a possible suitor before HTC shot it down.
Another scenario posits that HTC could sell off its manufacturing operations to the likes of Foxconn (yes, that Foxconn) or Compal (which makes laptops and handsets), and outsource its manufacturing instead (note: Motorola, Nokia and BlackBerry were outsourcers long before they started posting losses).
M&A in Taiwan, however, is a giant hill to climb. Cross-border deals are rare and difficult to pull off, and hostile takeovers are unheard of.
Without the nod of Chairwoman Wang, who owns a significant minority, any deal is a non-starter.
And Wang is adamantly withholding any such nod. Speaking in the same Bloomberg Television interview, she argued that a visit to the “passionate” and “exuberant” employees of HTC would have you persuaded that “HTC should stand alone.”
So as this past quarter gets written up in the annals of HTC company history, today's investor conference call details the next quarter's financial outlook, and Downey prepares for the next installment of wacky TV commercials, it may just be that the words everyone wants to whisper when they hear the letters H-T-C is not Hot Tea Catapult or Humongous Tinfoil Catamaran, but something more germane

Twitter Ranks 5th in Engineer Pay Behind Google and Yahoo

 
Plenty of Twitter employees can look forward to becoming paper millionaires when the company goes public, but for now, engineers at Google and Yahoo! take home bigger paychecks on average.
Twitter ranks fifth in engineer pay with an average of $124,863 in annual salary, according to a study by job-search website Glassdoor. Stock-based compensation was not included in the study.
Juniper Networks, the second-biggest maker of computer-networking equipment, paid its engineers the highest salaries with an average of $159,990, the study said. Juniper was followed by LinkedIn, Yahoo! and Google on the list. The ranking includes companies where at least 50 software engineers had reported their salaries to Glassdoor between October 2012 and the end of last month.
Twitter, which has been growing its workforce ahead of an initial public offering, has said recruiting talented engineers is among the potential risks it could face in the future. The company added 300 employees in the third quarter, putting its total at 2,300.
The social-networking company is in the most competitive market for software engineers. They’re paid $111,885 on average in San Francisco, which is more than anywhere else in the U.S., according to Glassdoor. At the top of Twitter’s engineering team, Senior Vice President Christopher Fry made $10.3 million last year in total compensation including salary, stock and bonuses, the company said in its prospectus.
After its IPO, Twitter risks losing talent when longtime employees cash out their stock. But Twitter brainiacs itching to buy a new Tesla probably won’t find a better salary at Apple or Facebook. Apple ranked sixth, paying $233 less than Twitter on average, and Facebook ranked ninth, with $121,507, the study said.

How Alibaba Could Underprice Amazon, and Other Things You Should Know

If you're not yet familiar with Alibaba, get ready. China's largest e-commerce company will likely go public in 2014. Investment banks have given the company a valuation of as much as $120 billion, a market cap that would make it the third-biggest Internet company behind Google and Amazon.
That position may eventually put it in a spot hordes of companies pine for: a significant competitor to Amazon in the U.S. In addition, Alibaba recently led a $206 million investment in retail website ShopRunner, widening its presence in the country, and is moving toward a U.S. stock sale after talks with Hong Kong’s exchange broke down, a person familiar with the matter said last month.
Even so, few U.S. consumers are well-acquainted with Alibaba. Here are a few things you should know about the company.

It's Obsessed With Marketplaces

Alibaba's e-commerce properties lean heavily toward marketplaces, putting the company head-to-head with Amazon and EBay. Key ones include a set of English-language stores called Alibaba.com and AliExpress (where you can buy a really cute dress for $14.42). The former lets merchants exchange goods with each other, while the latter gives Chinese businesses a place to sell to a global audience. The models are similar to EBay's but more global, with buyers and sellers exchanging goods on the sites in more than 220 countries and regions.
In China, Alibaba has Tmall, a business-to-consumer marketplace, and Taobao, its consumer-to-consumer marketplace that competes with EBay. However, Taobao gets revenue from advertising rather than taking a commission from sellers.

It Could Beat Amazon on Pricing

As China's largest e-commerce company, Alibaba has ready access to its sellers' supply chain of cheap Chinese goods. As Martin Pyykkonen, an analyst at Wedge Partners, notes: "It's hard to find it cheaper than on Amazon. If Alibaba could come in and, at least for Chinese-made goods, offer a cheaper price, that's interesting. That might be their edge."
Ty Rogers, a spokesman for Amazon, declined to comment.

It's an Umbrella for About 25 Business Units

Alibaba's subsidiaries include eTao, its own shopping search engine; and Alibaba Cloud Computing, its data-centric cloud platform that compares with Amazon Web Services and Rackspace. It’s also affiliated with Alipay, a Chinese online payments service akin to PayPal.

It Has a Liberal Approach to Data

Alibaba calls its business units "repositories of massive amounts of market information and statistical data" -- and it wants to share. The company is working to be the first to make all of its market data available for free to its users, giving them the ability to create smarter strategies and move with ever-changing market conditions. That would be like Amazon sharing purchasing data with third-party sellers on its site.

It Wants to Live Long and Prosper

The company, founded in 1999, wants to "flourish" for at least 102 years, spanning three centuries. The goal is indicative of the company’s long-term approach to business, said John Spelich, a spokesman for Alibaba.

Microsoft Promotes ‘Phablets’ After Smartphone, Tablet Misfires

Microsoft Corp. unveiled Windows Phone software for smartphone-tablet hybrids as well as more powerful chips as the company plays catchup to Google Inc. and Apple Inc. in mobile devices.
A bigger start menu with higher-resolution displays will enable the software to run on phones with five- and six-inch screens for the first time, Microsoft said today in a blog post. The update to Windows Phone 8 will roll out to developers tomorrow and customers in the coming months.

After losing out in smartphones and tablets to Google’s Android operating system and Apple’s iOS software, Microsoft is trying to appeal to consumers in the middle. Global shipments of so-called phablets will more than double to 60.4 million this year, research firm IHS predicted in January. That’s a fraction of the more than 1 billion smartphones researcher IDC expects to be shipped.
Nokia Oyj, which is selling its handset unit to Microsoft for $7.2 billion, released a promotion for its Oct. 22 Nokia World event, featuring an image of a phablet. Microsoft, based in Redmond, Washington, is acquiring the business in a bid to jumpstart its phone efforts while also trying to lure other manufacturers to its mobile operating system.
Windows Phone’s 3.7 percent share of the smartphone operating system market in the second quarter compares with 79 percent for Android and 13 percent for iOS, according to IDC. Windows Phone is faring better in Europe and Latin America than in the U.S., Greg Sullivan, a director in the division, said in an interview.

Seeking Partners

Terry Myerson, head of Microsoft’s operating systems unit, tried to reignite HTC Corp.’s interest in Windows Phone last month, said people familiar with the discussions. He offered to cut or eliminate the license fee to make the software attractive as a second option on handsets with Android, said the people.
Chief Executive Officer Steve Ballmer and other executives met with handset makers during a trip to Beijing to try to line up new partners and shore up current agreements, said a person with knowledge of their trip.
As part of today’s announced update, Microsoft said Windows Phone will support Qualcomm Inc.’s Snapdragon 800 chip with four cores, a processor being used in some upcoming Android gadgets. Microsoft also added a feature called driving mode, which keeps users from texting or dialing while behind the wheel.

Tesla shows off Model X SUV at new Palo Alto showroom

If Hollywood movie makers were trying to create the quintessential Silicon Valley scene, they couldn't have done any better than the one Saturday afternoon in the 4100 block of El Camino Real.

Hundreds of people, nearly all of them snapping photos with iPhones, milled about at the opening of America's newest Tesla store, one mile from Stanford University and three miles from Google's campus. The sleek, white showroom gleamed. Flat screen monitors touted the benefits of the company's pricey and tech-hip all-electric vehicles. Music from a live DJ pulsed. And the valet parking was thick with visitors arriving in Tesla Model S sedans they already owned.
"It's awesome. It looks easy to drive, and it
looks so much better than a minivan. Minivans are for old people," said Vilma Estacio-Melamed, of San Jose, who admired a white Model X, Tesla's new SUV, which is scheduled to begin production next year.
 

The 27,000 square foot retail outlet, the vehicular equivalent of an Apple store, is the fifth Tesla location in the Bay Area, joining stores and service centers at Santana Row in San Jose, Fremont, Burlingame and San Rafael. Tesla now has 41 locations in North America.
"It's in the heart of Silicon Valley," said Telsa spokeswoman Alexis Georgeson. "The market is very strong for us in the Bay Area and Silicon Valley. We're opening stores in places where we expect to sell vehicles."
 
Founded in 2003, Palo Alto-based Tesla Motors has become a darling of high-tech set and environmentalists. From 2008 to 2012, the company sold 2,400 of its first vehicle, the Tesla Roadster, a two-seat electric sports car, with a base price of $109,000.
Its second car, the Model S, is a sedan that came out last year to rave reviews. The vehicle, which goes up to 265 miles on an electric charge and accelerates from 0 to 60 mph in 5.6 seconds, was named 2013 Car of the Year by Motor Trend magazine and received the highest score ever for a vehicle from Consumer Reports. The car has a base price of $69,900 to $79,900 before tax credits, depending on the battery pack.
 
"It's the first expensive car we've ever bought," said Christine Sireci, of Saratoga, who bought a dark blue Model S in March with her husband, Don, and visited the store Saturday. "I was driving a 2000 Chevy Astro. But I drove the Tesla and I fell in love with it."
Through June 30, Tesla sold 13,000 Model S cars and expects to sell 21,000 this year, Georgeson said.
Despite the huge buzz for the company -- whose CEO, Elon Musk, is a celebrity and whose stock price has jumped from $22 a share in January 2012 to $178 on Friday -- electric vehicles still represent less than 1 percent of American car sales. By comparison, General Motors sells 10 million vehicles a year.
 
There is also plenty of competition in the green motoring space. For much of the year, the top-selling car in California has been the Toyota Prius, which has sold more than 4 million worldwide since its launch in 1997. Larger carmakers, such as Nissan, with its all-electric Leaf, and Chevrolet, with its plug-in hybrid Volt, sell alternative vehicles for half to one third the cost of a Tesla.
And after a year of glowing press coverage, Tesla hit some bumps in the road when a video showing a Model S bursting into flames went viral earlier this month. The fire was the result of a driver near
freeway. As the stock dropped, Musk reassured the public that the fire was a freak occurrence and that the driver was not injured. A gasoline-powered car would have burned much worse in the same accident, he said.The company has so far received 6,000 orders for its Model X SUV, with customers putting down $5,000 for the standard version and $40,000 for the signature version, even though Tesla has not announced the price of the vehicle or exactly when it will begin delivery. Most deliveries are expected in 2015, and the base price is expected to range from $70,000 to $90,000.
That is a lot of money, said Estacio-Melamed, snapping a photo of the Model X on Saturday in the new Palo Alto showroom.
"But if it is better than all the other cars," she said, "maybe it's worth it."

Microsoft's phone update to feature driving mode

 

 Microsoft is updating its Windows software for cellphones to accommodate larger devices and make it easier for motorists to reduce distractions while driving.

It's the third update to Windows Phone 8 software since the system's release a year ago. Devices with this update will start appearing in the coming weeks, and older phones will be eligible for a free upgrade, too.
Something that may appeal to motorists: a new Driving Mode will automatically silence incoming calls and texts so that you can focus on the road. You also can configure the feature to automatically send out a reply to say that you're driving.
It can be activated automatically when the phone is linked wirelessly with a Bluetooth device in the car, such as a headset. Apple (AAPL) has a Do Not Disturb feature for iPhones, but that needs to be turned on manually.
What the Driving Mode won't do, however, is block outgoing calls or texts. And there will be ways to override it. The feature won't stop a teenager from texting while driving, but it will help reduce distractions for those who want that, says Greg Sullivan, director for Microsoft's Windows Phone business.
The new update also will allow for better resolution to accommodate larger phones. Currently, the system supports a maximum resolution of 1280 pixels by 768 pixels, which is adequate for phones with screens no larger than 5 inches on the diagonal. But video and image quality degrades when stretched out on larger phones, such as a 6.3-inch Android phone from Samsung.
The layout for larger phones also will change. Phones may now sport a third column of tiles, for instance. Contact lists and other features will be able to fit in more information. That's a contrast to Android, where text and images simply get bigger with larger screens, without actually fitting in more content.
Microsoft's Windows Phone software holds a distant third place behind Apple's iOS and Google's (GOOG) Android, with a worldwide market share of 3.7 percent in the second quarter, according to research firm IDC. But shipments of Windows Phone devices grew 78 percent to 8.7 million in the April-to-June period, compared with the same time a year ago. The tile-based layout in Windows Phone is the inspiration for the Windows 8 software powering tablets and personal computers.
There are a few ways Microsoft Corp. will catch up to the iPhone and Android phones with the new update.
For the first time, Windows phones will have a rotation lock function, so that the screen won't switch back and forth between horizontal and vertical mode while you're curled up in bed. There also will be a central way to close open apps. Before, you had to go into each open app and press and hold the back button.
And Microsoft is launching a program to give app developers early access to the new software. Apple has had a similar program for the iOS software behind iPhones and iPads, while Google often has worked with selected developers on unreleased features.

Apple's spaceship is landing in the wrong place

 

To fans of Apple's (AAPL) proposed spaceship headquarters in Cupertino, the most important thing is that it will provide Silicon Valley with the landmark it's long lacked.

I'd suggest those fans, including my fellow columnist Scott Herhold, have been bamboozled by the company's infamous "reality distortion field."
Apple's new campus is going to be a traffic nightmare that offers little benefit to the surrounding community. Instead of being a symbol for Silicon Valley, it will be emblematic of urban planning gone way wrong.
Worse, the project
can be characterized by a word that will make Apple and its fans shudder: phony. The forest park surrounding the spaceship building, which seems to have captured the fans' imagination almost as much as the building itself, is as inauthentic as the felt and leather backgrounds that Apple recently excised from iOS, the software underlying the iPhone.The forest is merely a fig leaf -- a greenwashing, if you will -- for a behemoth development that's too large for its neighborhood and designed without any consideration to its context. It's completely out of place.
Whatever the project's architectural merits, the spaceship building is going to be huge. At 2.8 million square feet, it will be one of the largest buildings in the country, more capacious even than the Empire State Building and more than five times larger than the Transamerica Pyramid.
Apple says the spaceship's actual footprint will be smaller than the existing buildings on the site, because its floor space will be spread across four stories. But there will be more to the campus than just the spaceship. Add up the buildings that will house the corporate fitness center, the parking garage and an auditorium, and you get nearly 6 million square feet of space, which is within spitting distance of the size of the Pentagon.
That size may be appropriate for a downtown metropolis or a rural setting with little else around it, but it doesn't belong smack dab in the middle of single-family homes and strip malls. Would you want the Empire State Building or the Pentagon in your backyard?
The new campus will accommodate 14,200 workers, some 12,000 in the spaceship alone. That's nearly three times the number of people who currently work in buildings on the 176-acre site. Is it any wonder that the environmental report commissioned by the city of Cupertino expects widespread and severe traffic problems around the proposed site?
Drivers can expect backups not only near the Interstate 280

offramps to Wolfe Road, which runs alongside the proposed site, but also on area surface streets and all along I-280 from Winchester Boulevard all the way up to Foothill Expressway. So if you already are frustrated by traffic jams in the area, just wait until the Apple project gets built!The traffic congestion will result not just from the large number of Apple employees but because of the lack of transportation alternatives available to them. The new headquarters will be far from the Caltrain or VTA rail lines that lead to San Francisco, San Jose and the Peninsula -- where the vast majority of Apple's workers live. Those folks will have little choice but to drive or ride the company's shuttle buses.
In addition to terrible traffic, neighbors can also expect to have Apple employees and visitors to the campus parking en masse in their neighborhood. That's because Apple is providing fewer than 11,000 parking spots on the campus for use by both employees and visitors.
Apple has promised to address some of the traffic problems. But many of the proposed solutions could take years to put in place.
And for all those traffic and parking problems, nearby residents can expect little benefit from the project. Those bucolic scenes of people walking through the forested grounds or eating lunch in the grass near the spaceship? Those will all be employees -- assuming they're able to break away from their desks. Apple says the campus will be closed to the public, and a fence around the perimeter of the property will guarantee that. The public won't even get to use a long-planned creek trail that would have run through the southeastern corner of the property, because Cupertino acquiesced to Apple's paranoid security concerns.
Area restaurants and shops shouldn't get too excited about having Apple move into the neighborhood, because employees are likely to stick to campus most of the time. Because the main building is set back from the street and the project is in a largely residential area, there are few retail businesses within easy walking distance. Also, Apple is doing what it can to encourage employees to stay on site, including a corporate fitness center and a large cafe inside the campus.
As for the great architectural icon that my colleague Scott salivates over, it's going to be largely invisible to the public, hidden behind all those trees. Sure, the outside world might be able to catch some glimpses of it from certain angles, but passers-by won't be able to see the entire building.
It will be a landmark that can't really be seen. All the public will see is the traffic mess it has caused

Steve Jobs' Los Altos childhood home eyed for historic preservation

 

A years-long effort to add the childhood home of Apple co-founder Steve Jobs to a list of protected historical sites in Los Altos is poised to move forward Monday.

That's when the seven-member Los Altos Historical Commission is scheduled to discuss a "historic property evaluation" of the single-story, California ranch style house at 2066 Crist Drive.
The property is historically significant because it's where Jobs and Apple co-founder Steve Wozniak built the first 50 Apple 1 computers in 1976, according to the evaluation by Commissioner Sapna Marfatia. The computers were then sold to Paul Terrell's Byte Shop in Mountain View for $500 each.
"Steve Jobs is considered a genius who blended technology and creativity to invent and market a product which dramatically changed six industries -- personal computers, animated movies, music, phones, tablet computing and digital publishing," Marfatia wrote in the evaluation. "His influence is expected to be felt by multiple generations forthcoming."
The first partnership for "Apple Computer Co." was established on April 1, 1976; nine months later, the company was formally established and its operations relocated to Cupertino, according to the evaluation.
Jobs first moved into the house with his adoptive parents, Paul and Clara, in 1968. He attended a local middle school and Homestead High in Cupertino, where he met Wozniak, according to the evaluation.
The historical commission has spent the better part of the past two years reviewing the Crist Drive property for potential designation as a historic resource. The home would have to be preserved as it currently stands if added to the city's historic resources inventory.
A public hearing would be scheduled if the commission decides to add the property to the inventory. The city council wouldn't have any say over the matter unless the decision is appealed.

Apple's new iPhone 5s offers modest changes

 

The iPhone 5S may be the "most forward thinking" smartphone ever, as Apple (AAPL) likes to call it. But you'll be forgiven if you can't tell the difference between it and its predecessor at first glance -- or even after playing around with it for a while.

That's because the changes Apple made between last year's iPhone 5 and the new phone are either subtle or under the hood. If you were hoping for something radically different from Apple, this isn't it. And if you were hoping that the company was going to address some of the long-standing complaints about the iPhone, such as its relatively small screen size or its insufficient battery life, you'll have to wait until next year -- or beyond.
That said, the iPhone 5S remains among the best smartphones on the market. But its most significant new features will take time to realize their full potential.
Take, for example, the new phone's fingerprint sensor, its hallmark new feature that is built into its home button. Once you train the sensor, which Apple calls Touch ID, to recognize your fingerprint, you can use it in place of a passcode to secure your phone.
It takes a couple of minutes to teach Touch ID to recognize a particular fingerprint. You can configure it to recognize up to 10.
In my tests, the sensor worked fairly well. Although it seemed to recognize my thumbprint only about half the time at first, it improved over time. But even when it failed, it wasn't too annoying -- the sensor takes only a second or two to read your print, so it doesn't take very long to retry, and I found it usually got it right the second time around.
The bigger problem with the Touch ID is that unlocking your phone is one of only two functions it has right now. The other is that you can also use it instead of a password to authorize your purchases in Apple's books, music and app stores.
It's not hard to imagine that Touch ID might be used in the future to verify purchases in stores other than Apple's or to log into your financial or social media accounts. But right now, that is just a potential a use of the Touch ID.
Another big change with the iPhone 5S is an internal one: Apple has replaced the 32-bit A6 processor that's in the iPhone 5 with a speedier 64-bit chip it dubs the A7.
At least in benchmark tests, the A7 is plenty fast. It blew away not only my iPhone 5, but also Motorola's brand new Moto X.
But in real-world usage, its speed wasn't readily apparent. The new iPhone didn't launch apps or load Web pages significantly faster

Diana Nguyn holds her new iPhone 5S during the opening day of new iPhone sales in Richmond, Va., Friday, Sept. 20, 2013. (AP Photo/Steve Helber) (Steve Helber)

than last year's model. In fact, the only time I really noticed a difference in speed was when I exported a movie I edited in iMovie to my camera roll, but that's not something that most people are going to do every day. However, it's likely that developers will take advantage of the faster chip with new, more sophisticated apps.The iPhone 5S also has several cool new camera features, among them a slow-motion video mode and a burst shooting mode. The burst mode in particular is great, because it will keep shooting 10 pictures a second until you stop pressing the button or you hit 999 shots. I wish Apple had added more features to the burst mode -- such as the ability users have on Samsung's phones to combine photos to create one with the best facial expressions -- but the much greater number of burst shots you can make with the iPhone and the sheer speed of the burst mode are both pretty impressive.
The camera comes with a bigger sensor that is supposed to be better able to shoot in dark environments. I found the difference to be minor. Apple has also included with the iPhone 5S a new two-tone flash that's supposed to more naturally illuminate subjects. I found it worked moderately well; skin tones were a little truer to life than in flash pictures taken on the iPhone 5.
Like last year's model, the iPhone 5S looks sleek and feels solid. It retains the same four-inch screen that Apple introduced with last year's iPhone 5.
The new phone ships with iOS 7, Apple's revamped operating system, which offers a much cleaner, refreshed look and delivers some long-awaited features.
Overall, the iPhone 5S offers modest changes, although some may become more important in the future. If you have an iPhone 4S or earlier, it represents a great upgrade. If you already have an iPhone 5, though, I'd wait for the iPhone 6.

Contact Troy Wolverton at 408-840-4285 or twolverton@mercurynews.com. Follow him at www.mercurynews.com/troy-wolverton or Twitter.com/troywolv.

Troy's
RATING

8.0

(Out of 10)

What: Apple iPhone 5S
Likes: Bright, vivid screen; new Touch ID sensor quickly reads fingerprints to unlock device; new camera has superfast burst mode; slow-motion video mode and a two-tone flash that offers more true-to-life colors in flash photos; new processor
Dislikes: Battery life remains the same as last year's model; several new features, including the new processor, offer more theoretical than practical benefits; screen is small compared to Android rivals; Apple charges a pricey premium for extra storage space.
Specs: 64-bit, dual-core processor; 1.2 megapixel front and 8 megapixel rear cameras; four-inch, 1136 x 640 display.
Price: With a two-year contract, $200 for 16GB model, $300 for 32GB model, $400 for 64GB model

Zuckerberg says U.S. 'blew it' on NSA spying

SAN FRANCISCO -- Facebook CEO Mark Zuckerberg lashed out at the U.S. government Wednesday, saying that authorities have hurt Silicon Valley companies by doing a poor job of explaining the online spying efforts of U.S. intelligence agencies.

"Frankly I think the government blew it," Zuckerberg complained during an onstage interview at the tech industry conference known as Disrupt, a weeklong event where Yahoo (YHOO) CEO Marissa Mayer and other prominent tech executives also spoke out publicly and expressed frustration in person, for the first time, since a series of news leaks revealed the government's controversial surveillance programs.
"It's our government's job to protect all of us and also protect our freedoms and protect the economy, and companies," Zuckerberg told interviewer Michael Arrington, "and I think they did a bad job of balancing those things."
He went on to say: "They blew it on communicating the balance of what they were going for."
Facebook and other Internet companies have been under intense pressure in recent months after a series of news reports that suggest U.S. intelligence agencies have gained access to the online activities and communications involving users of Facebook and other popular services. Some of those reports have suggested that unnamed companies have cooperated with the U.S. efforts, although the details are unclear.
Analysts say those reports could hurt the companies financially, especially overseas, if consumers and business customers believe their sensitive information isn't safe from government prying.
Along with Google (GOOG), Yahoo and other tech giants, Facebook has insisted it doesn't give the government free rein to tap into its servers. But the companies also say they comply with legal requests to turn over user information. And they have chafed at national security rules that prohibit them from discussing the details of their actions.
Mayer, who was interviewed on stage shortly before Zuckerberg, said Wednesday that she was proud of her company for waging an early, unsuccessful court battle against government requests for Internet user data, a fight that predated her time at Yahoo.
But she said of those battles, "When you lose and you don't comply, it's treason."

AdYahoo CEO Marissa Mayer speaks at the annual Tech Crunch Disrupt conference in San Francisco on Sept. 12, 2013. ( Dai Sugano )d caption

Mayer also indicated sympathy for the government's efforts to defend against terrorism -- saying she agreed with earlier comments by PayPal co-founder Max Levchin, who said onstage this week that government cryptographers and other intelligence workers should not be reviled and deserve respect for trying to keep the country safe.
Arrington had warned tech executives that he planned to ask them about government spying efforts during this year's Disrupt conference, which is organized by the blog TechCrunch. His onstage interviews during the conference are always closely watched industry events.
Zuckerberg, who was clearly prepared for the question,

noted that Facebook joined Google, Yahoo and Microsoft in filing lawsuits this week that seek permission to disclose the number and nature of the user data requests they receive from U.S. intelligence agencies.The Facebook CEO said the numbers would show that the social network has only provided information about a tiny number of the social network's 1.1 billion users worldwide. But he complained that the government has not explained its efforts clearly.
It didn't help the interests of U.S. companies in overseas markets, Zuckerberg added, when the government said, "Don't worry, we're not spying on Americans." He added sarcastically, "Oh wonderful. That's really helpful" for companies that do business around the world. "I think that was really bad."
Most of Zuckerberg's remarks, however, focused on Facebook's progress over the past year. His appearance was a triumphant milestone of sorts for the 29-year-old CEO, who chose the same conference last year to break a lengthy public silence after the social network's lackluster stock market debut.
At the time of his 2012 appearance, Facebook's stock was floundering at nearly half the company's initial public offering price of $38, as critics questioned whether Facebook could adapt to the mobile Internet trend. Zuckerberg was forced to concede then that Facebook's stock performance had been "disappointing," but he vowed the company's nascent mobile business "will make a lot of money."
In the year since, Zuckerberg has followed through on that prediction, while presiding over a resurgence in Facebook's stock. After developing new kinds of advertisements to show within each user's stream of posts and updates from friends, the company is expected to see more than $2.5 billion in mobile ad sales for 2013, according to research firm eMarketer.
Facebook's stock hit an all-time high of $45.09 on Monday, before closing at $45.04.
Zuckerberg acknowledged Wednesday that he worried about the company's initial public offering last year, especially after the stock price plunged. He said he feared that talented employees would become demoralized and leave the company.
They didn't, he said, adding that the experience "has made our company a lot stronger."
Facebook's success has also enabled Zuckerberg to increasingly flex his wealth and clout on public issues: He's launched a political advocacy group to campaign for new immigration laws and announced a campaign with mobile tech firms to expand Internet access in undeveloped countries. He reportedly is scheduled to meet next week with congressional Republican leaders in Washington, D.C.

Christmas in summer? Gadget makers reveal lineups

 

It's still officially summer, yet major electronic companies have already announced a slew of holiday gift ideas: iPhones of different colors, video game players and a new category of wristwatches designed to mimic the functionality of smartphones.

Much of the early attention has been on smartwatches. Although the devices have been around for years, consumer interest has been low. Samsung Electronics Co. is hoping to change that with its $300 Galaxy Gear. When it's linked wirelessly with newer Samsung phones and tablets, the Gear lets you set alarm clocks, check email and Facebook updates, and make phone calls on your wrist, secret agent-style.

The watch will be available in a few weeks in six colors. The Gear's unveiling came as Qualcomm Inc. said it will start selling its Toq smartwatch before the end of the year. Sony Corp., meanwhile, has an updated SmartWatch 2 device coming. And Apple Inc. (AAPL) is widely believed to be working on an iWatch.
What's behind the sudden rise of the smartwatch? Consumer electronics companies are trying to create a new type of device for people to spend money on now that many of them already own smartphones and tablet computers. That doesn't mean companies have given up on phones and tablets, or other gadgets.
Here's a look at what's in store as manufacturers and retailers try to get a jump on the holiday shopping season.
PHONES:
The iOS software that runs iPhones is showing signs of aging, so Apple is refreshing its look and functionality. Recent phones can get the iOS 7 update for free, starting next Wednesday. The software also comes with the new iPhones going on sale on Sept. 20.
Apple is departing from its practice of keeping choices simple. In the past, Apple released one iPhone a year, in black or white. This time, the company has a regular model, the iPhone 5S (selling for $199 with a two-year service agreement) and a less expensive model, the iPhone 5C (which goes for $99). The 5S comes in three colors and the 5C in five.
Samsung, meanwhile, announced the Galaxy Note 3, the latest phone in a line that comes with a stylus for handwriting on its large, 5.7-inch (measured on the diagonal) touch screen. Sony will have the Xperia Z1, notable for its high-resolution, 20.7-megapixel camera and the ability to attach better lenses. Both devices use Google's (GOOG) Android operating system.
Even more devices are expected around this fall's release of a new version of Android, which goes by the name Kit Kat.
TABLETS:
Tablets with screens that measure about 7 inches diagonally are becoming popular because they're cheaper than full-sized tablets and are easier to carry around. Amazon.com Inc. and Google Inc. paved the way with their Kindle Fire and Nexus 7 devices. Apple followed with the iPad Mini last fall.
Google updated its Nexus 7 in July, offering the basic model for $229. Amazon and Apple will likely update their devices, too. Meanwhile, several companies are expected to release smaller tablets running Microsoft Corp.'s Windows 8.1 operating system when the software update comes out on Oct. 17. The current Windows 8 system wasn't designed for smaller touch screens.
Want big? Google, Amazon and Apple are also due to update their full-size models. Lenovo, Dell and other computer makers have also unveiled Windows tablets that can convert into traditional laptops.
Meanwhile, a company that specializes in e-book readers, Kobo, plans tablets of both sizes. Many of the tablets currently available emphasize the ability to play video and music. Kobo's new Arc HD tablets can do that, too, but the company hopes to address the needs of readers with a mode designed to minimize battery use while reading. The 7-inch version starts at $200, and the 10-inch model goes for $400. They will be out Oct. 16.
GAME MACHINES
Many people have shifted to smartphones and tablets to play games, but hard-core gamers still like standalone video game consoles. Although Nintendo Co. released its Wii U console last year to lackluster sales, Microsoft and Sony are hoping to do better with their game machines this fall.
Microsoft's Xbox One wants to be the all-in-one device that lets you watch television, play movies, listen to music and browse the Internet --as well as play video games. It will start selling on Nov. 22 and cost $499. A Kinect motion-control system will be included.
Sony's PlayStation 4 is coming out Nov. 15 for $399. It's touted as a supercharged PC, which should make it easier for developers to create games for it. But that also means the new machine won't be able to play older games, other than by streaming them over the Internet. The machine's other new features revolve around social networking and remote access.
AND THE REST ...
Although much of the attention is on phones and tablets, people are still buying traditional desktop and laptop computers.
Expect to see new PCs out with the release of Windows 8.1 in October. The update is designed to address some of the frustrations people have had with last year's Windows 8. Among other things, the new version will make it easier to bypass Windows' tile-based interface and use a desktop mode that's more familiar to long-time Windows users.
Apple is also coming out with a Mac Pro computer for high-end, professional users. It's notable in that it will be assembled in the United States, rather than in Asia. Apple also may refresh its popular line of MacBook Pro laptops. A new MacBook Air came out in June, sporting longer battery life.
Avid readers will have at least two major e-book readers to choose from: an updated Kindle Paperwhite device from Amazon (starts at $119) and the Aura from Kobo ($150). Both start selling this month. Many people prefer tablets because they do more, but those who only want to read digital books, e-readers are a good choice.
People will also have choices when it comes to standalone devices for watching TVs and movies.
Last month, TiVo Inc. released a digital video recorder that lets people watch recorded shows outside their homes starting this fall, using an app for iPhones and iPads.
Apple, Roku Inc. and other companies have devices for streaming video from Netflix (NFLX) and other services on big-screen TVs. An updated Apple TV is possible this fall.
If you need a new TV, Sony and other companies are continuing to promote so-called 4K sets -- those with ultra-high resolution, far more than current high-definition sets. The 4K sets are coming down in price -- to just a few thousand dollars!
It's your choice: Spend $3,500 on a Sony 55-inch 4K TV. Or buy an iPhone 5C, an iPhone 5S, a Kindle e-reader, a 10-inch Kobo tablet, both new game consoles and six Gear smartwatches, one in each color.

China's response to Apple's new iPhones: A giant, collective yawn

 

BEIJING -- The iPhone's magic as China's must-have smartphone is eroding.

Last year, eager buyers in Beijing waited overnight in freezing weather to buy the iPhone 4S. Pressure to get it -- and the profit to be made by reselling scarce phones -- prompted some to pelt the store with eggs when Apple (AAPL), worried about the size of the crowd, postponed opening.
Just 18 months later, many Chinese gadget lovers responded with a shrug this week when Apple unveiled two new versions of the iPhone 5. Today's market is glutted with alternatives from Samsung to bargain-priced local brands.
"There was no big change, no surprise at all," said Gu Lanjun, a 29-year-old employee at a Shanghai bank. Having bought the three most recent iPhone models as soon as they were released, she said, "I won't update this time."
That lackluster reception suggests Apple faces a struggle in defending its shrinking share of China's crowded, increasingly competitive smartphone market and its premium prices.
That matters, because China is a key part of Apple's growth plans. CEO Tim Cook told the official Xinhua News Agency in January he expects this country to pass the United States as its biggest market.
"Apple's market position in China has stagnated," said telecommunications analyst Jan Dawson of the research firm Ovum, in an email.
One problem, he said, might be that Apple's high price limits it to targeting the top market tier, and customers in that segment who want an iPhone already have one.
The two models unveiled this week "will largely be sold to existing subscribers and won't win many converts," Dawson said.
Earlier iPhones became status symbols in China even before they were formally sold here. Buyers paid hundreds of dollars for handsets brought in from Hong Kong and modified to work on China's phone network. Companies treated them as luxury goods, buying hundreds at a time to give to important customers as Chinese New Year's gifts.
Now, Apple faces increasing competition. Samsung has made inroads into its premium market segment. For the mass market in a country with an average annual income of only about $4,000 per person, less than one-tenth the U.S. level, newcomers such as China's Xiaomi offer smartphones that run Google's (GOOG) Android system for as little as 799 yuan ($125).
The rapid growth of the lower segments where Cupertino-based Apple doesn't compete has helped to shrink its share of the overall market even as its sales grow.
Apple's share of China's smartphone market fell by nearly half, from 9.1 percent to 4.8 percent, over the past year, according to research firm Canalys.
Apple appeared to be trying to capture some of that lower-tier market with this week's announcement of the lower-priced 5C. But the company's website said it will start at 4,488 yuan ($712) in China, well above analysts' expectations of as little as 2,500 yuan ($400).
"People were expecting a much cheaper version to expand the market to the mid-tier segment. But that didn't happen," said analyst C.K. Lu of Gartner. "We don't see much is going on in the China market with this new product launch."
Investors gave Apple's two new iPhones a similarly lukewarm reception.
Shares fell 6 percent in U.S. trading on Wednesday following the announcement. Apple stock has fallen nearly 30 percent since peaking at $705.07 when the last iPhone came out.
Apple also disappointed observers by failing to announce an agreement with China Mobile, the world's largest phone company by number of subscribers, though Apple had promised no deal.
After this week's announcement that Japan's biggest mobile carrier, NTT DoCoMo, would support the new iPhone lineup, China Mobile is the last major holdout. A tie-up would require Apple to create an iPhone that runs on China's homegrown mobile standard but would give it a partner with 750 million subscribers.
The latest iPhone release also marks an upgrading of Apple's marketing in China. For the first time, the new model will be released in China at the same time as it debuts on Sept. 20 in the United States and other major markets such as Britain, Japan and France. In more than 100 other countries, it will not go on sale until December.
But advance orders for the iPhone 5S and 5C have been "much lower" than for previous models, according to Zhang Xue, a saleswoman for China Telecom, one of two Chinese carriers that support the iPhone.
"Customers are much calmer when they face the new iPhone lineup," Zhang said.
Apple still has plenty of fervent admirers in China, but some complained the latest iPhones offer too few technical advances.
Liu Guanlin, a junior at the Beijing Contemporary Music Academy, said he traded up from Samsung Galaxy to an iPhone because Apple's operating system seemed more stable. But he said the 5C didn't look like it would be worth the money.
"I have lots of Apple products, yet my complaint about the iPhone is it lacks innovation," said Liu. "I can't see major breakthroughs in the latest models, which is disappointing."
Others complained Apple failed to live up to its stylish design standards.
"The covers look garish. It will take people back to 10 years ago," said Gu, the Shanghai bank employee. "I would rather wait for the iPhone 6 and if there still is not much change, I will think about switching to another brand."

Apple renews focus on China with iPhone 5c launch

Whether the "c" in iPhone 5c stands for color or China, the launch of a plastic cellphone marks one of the biggest strategic shifts for Apple (AAPL) since the company began the smartphone revolution six years ago.

Though the announcements made Tuesday at Apple's headquarters were relatively modest in scale, the tech giant seemed to be signaling that it was intent on recapturing lost momentum in China. Although a rumored deal with that nation's largest carrier was not announced at the event, analysts are expecting it to be confirmed soon, possibly at a separate media event being held in Beijing on Wednesday.
Still, investors and analysts expressed surprise that Apple's China efforts weren't more aggressive, saying the iPhone 5c was priced much higher than expected. As much as Apple may be deviating from its classic playbook, it remains unclear how much these efforts will help the company gain ground in emerging markets and with first-time smartphone buyers.
"I think we were all expecting a lower price point on the 5c, that it was going to be more about expanding Apple's market share in emerging markets," said Charles Golvin, a Forrester analyst. "And Apple didn't go down that road. They're still maintaining their position that Apple is a premium brand, people need to pay extra to get that experience."
The 90-minute event took place at Apple's Cupertino headquarters, a much smaller venue than the cavernous Yerba Buena Center in San Francisco, where last year's iPhone 5 debut was held.
Despite lower expectations for the event, shareholders signaled their disappointment by driving Apple's stock down $26.93, or 5.44 percent, to $467.71.
Observers were watching Tuesday's event for clear signs that Apple was making moves to be more competitive in China, the world's largest smartphone market.
China is Apple's third-largest market. But after seeing some encouraging signs there, Apple reported that its "greater China" revenue (which includes Hong Kong and Taiwan) fell 14 percent in its most recent quarter from the same period a year earlier. It was down a whopping 43 percent from the previous quarter.
Rumors before the announcements held that the iPhone 5c was the solution: a cheaper smartphone with a plastic casing that would be less expensive in overseas markets where carriers don't tend to subsidize the cost of smartphones.
Many of the whispers about the iPhone 5c proved accurate. It will come in five colors with plastic cases reinforced inside by a steel frame. In a video at the event, Apple design guru Jonathan Ive called the phone "unapologetically plastic." Still, analysts noted that the phone does not look or feel cheap.
And indeed, it isn't. When the iPhone 5c becomes available for pre-ordering Friday, consumers will be able to buy it for as little as $99 with a two-year contract. With no contract, the iPhone 5c starts at $549.
Another unusual aspect of Tuesday's event was the decision to unveil two new iPhones.
The iPhone 5s unveiled Tuesday will start at $199 with a contract and $649 with no contract. The iPhone 4s will become the low-cost option, offered free by many U.S. carriers with a contract and starting at $450 without a contract.
Apple will no longer sell the iPhone 4 or iPhone 5.
"Apple is never going to be the cheap option," said Carl Howe, vice president of research at Yankee Group. "In this case, they've certainly given themselves some room to lower the prices."
Of course, if Apple seals a deal with China Mobile, investors and analyst can be expected to cheer. China Mobile is seven times as large as Verizon Wireless with 740 million customers, and any partnership could supercharge Apple's slowing growth.
Absent a radically cheaper phone, Apple is making other gestures toward the China market. For the first time, the new iPhones will begin selling in China the same time as in the U.S. The new phones will run on a wider range of networks, something important to international markets. And the new gold-colored iPhone 5s is expected to be a popular choice in China.
The new flagship iPhone 5s comes with a faster processor, a better camera and a fingerprint sensor that will enable users to unlock their phones and make iTunes and App Store purchases with the press of a finger.
The 5s and 5c will begin selling Sept. 20, although the 5c can be pre-ordered starting Friday.
Apple continues to lead the U.S. smartphone market but has lost share overseas to smartphones running Google's (GOOG) Android operating system. Even with the new features announced Tuesday, analysts were quick to point out that some existing Android devices are way ahead of the iPhone 5s.
Samsung's Galaxy S4, for instance, has eye-tracking capabilities, gesture control, a 5-inch full HD screen and a 13-megapixel rear-facing camera.
Apple Chief Executive Tim Cook addressed those concerns at Tuesday's event, saying the company thinks carefully about "what experience people should have."
"We don't just pack in feature after feature," he said.
Apple did make a major concession to its users, announcing that it would give its top mobile productivity apps free to those who buy new devices running its iOS operating system.
The Pages, Numbers, Keynote, iPhoto and iMovie apps will be available to customers who buy the latest versions of Apple's mobile devices. Currently Pages, Numbers and Keynote are available for download for $9.99, and iPhoto and iMovie cost $4.99.
Apple's move comes in response to Google, which offers its suite of productivity apps at no cost on the Web and on smartphones through the Google Drive app, and Microsoft, known for its popular business-friendly software.
The company also confirmed that the radically redesigned iOS 7 will be available for download Sept. 18. The new mobile operating system was unveiled over the summer at Apple's developers conference.
The new software, iOS 7, represents the most dramatic change Apple has made to its mobile platform since it launched alongside the original iPhone in 2007. Several analysts noted that downloading iOS 7 will make current users feel as if they just upgraded to a whole new phone, leading some to wonder whether it could cause some consumers to delay buying a new phone.
"The iOS 7 upgrade is going to be a big deal. In a way, it's going to actually deter some of the hardware upgrades," said Bob O'Donnell, a vice president at research firm IDC.
Other analysts said they've learned not to count Apple out, especially when it comes to smartphones. Each new version, no matter how praised or criticized, has set records for sales.
With two models launching in far more markets than in past years, historical comparisons will be difficult. But analysts will be watching closely Sept. 20 to see whether the new models generate the expected enthusiasm among newbies and hard-core loyalists.
"I've learned my lesson about being skeptical," Forrester analyst Golvin said. "And I'm going to say I think that they're going to sell pretty darn well."

Biz Break: Apple shares sink while Facebook hits all-time high

Today: Apple (AAPL) drops 5 percent as investors disappointed by lack of a truly low-cost smartphone, while Facebook completes its comeback and hits $45 for first time since its 2012 IPO. Also, Fremont's Synnex skyrockets after IBM deal and Pandora names a new CEO.

The lead: Apple plunges as Facebook surpasses milestone

It was a tale of two stock prices Wednesday, as Facebook completed a months-long comeback from the depths to reach a new all-time high, while Apple, the company that once could seemingly do no wrong, tumbled

another 5.4 percent a day after its new iPhone models failed to impress. Combined with Tuesday's decline of more than 2 percent, Apple has lost nearly $35 billion in market value in the past two days. It took a year and a half, but Facebook finally topped its all-time high share price, first set on the day of its much-ballyhooed IPO. Shares peaked at $45.09 Wednesday, before closing at an all-time-best $45.05, up 3.33 percent on the day.
The Menlo Park social media giant previously hit $45 a share during midday trading on May 18, 2012. The largest tech IPO in history then went bust, with shares going on a rapid slide, bottoming out below $18 a share last fall. But shares have rallied 70 percent since Facebook's earnings report in July, in which it surprised analysts by reporting huge gains in mobile ad sales. Mobile accounted for 41 percent of Facebook's total ad sales last quarter, compared to zero a year before.
"There's growing recognition that, 'Hey, this is not just a fad -- it's not going away, it's becoming ingrained in people's lives,'" Martin Pyykkonen, an analyst at Wedge Partners, told Bloomberg News. "Their ads are becoming more effective. Advertisers are finding that's a very attractive place to target."
Now the Facebook bandwagon is growing crowded, as increasingly optimistic investors are being joined by Wall Street experts; according to the Los Angeles Times, 30 of 32 analysts who cover the company now give it a "buy" rating.
Apple, meanwhile, continued to make

A woman looks at her mobile phone as she walks past an Apple iPhone 5 poster outside a store in Beijing on September 12, 2013.Add caption

 

analysts shake their heads. In unveiling two new iPhone models at a media event in Cupertino on Tuesday, the tech giant delivered neither the new "wow" gadget experts had hoped for nor the low-cost smartphone that experts had expected to help it compete in developing markets. At a puzzling media event in Beijing on Wednesday, Apple announced it had received a license that would allow its iPhones to work on China Mobile's network, but there was no mention of a much-rumored partnership with the world's biggest mobile carrier. That was hardly the only disappointing news for Chinese consumers. The new iPhone 5C -- touted as a low-cost smartphone in the U.S. -- will start at more than $700 in China, due to the lack of carriers' subsidies. That's more than the average monthly income in urban China, Reuters reports, and will make it next to impossible for Apple to compete with mass-market Android phones, which can sell for as low as $100.
"It's not cheap enough," Tucker Grinnan, an analyst with HSBC Holdings, told Bloomberg News. "We are disappointed with the price point. It is a high-end phone in China."
In the U.S., at least four analysts downgraded their rating of Apple on Wednesday morning. Others were vocal in their disappointment: "We worry that Apple's inability/unwillingness to come out with a low-priced offering for emerging markets nearly ensures that the company will continue to be an overall share loser in the smartphone market until it chooses to address the low end," said Toni Sacconaghi of BernsteinResearch, according to the Los Angeles Times.
Mark Luschini, chief investment strategist at Janney Montgomery Scott, told Reuters: "This was less than expected from a company that has a reputation for surprising with a killer product or strategy."
Credit Suisse analyst Kulbinder Garcha expects Apple's smartphone market share to fall to 13.1 percent next year, down from 18.1 percent in 2012, according to Reuters. The premium smartphone market "is not forecast to see meaningful growth long term," he said. "This decision, at the margin, is good for profitability but not growth."
Whether Apple is out of new ideas and content to spin its wheels, or if it is simply the victim of its own track record of innovation and high expectations, it's looking likely that Apple's recent stock funk is far from over. Apple has plummeted from its all-time high of $705.07 last October, falling as far as $385.10 earlier this year. Until it presents a clear vision or a new must-have gadget (like it did in the past decade with the iPhone, iPod and iPad), expect its doldrums to continue.
Apple shares fell $26.81 on Wednesday, down 5.42 percent, to close at $467.83.

SV150 market roundup: Synnex shares skyrocket, Pandora names new CEO

The Dow Jones industrial average and Standard & Poor's 500 gained slightly Wednesday, but Apple's drop hurt tech stocks. The tech-heavy Nasdaq dipped 0.11 percent, and the SV150 index of Silicon Valley's biggest companies dropped by 0.84 percent.

The big mover in Silicon Valley was Fremont-based Synnex, which Tuesday acquired IBM's customer-care outsourcing unit for $505 million. Synnex shares surged more than 20 percent Wednesday, or $9.62, closing at $57.59. The purchase is expected to add about $120 million to Synnex earnings in its first year, according to a statement from the company.
Also, Mountain View Internet giant Google (GOOG) and Santa Clara chipmaker Intel (INTC) announced a partnership Wednesday for new Chromebooks, which will run Intel's powerful new Haswell processor. The new laptops will be built by Palo Alto-based Hewlett-Packard (HPQ), Acer, Toshiba and Asus and should hit store shelves by the Christmas shopping season. Google shares rose 0.85 percent, while Intel slipped 0.67 percent. HP was unchanged.
Pandora, the Oakland-based Internet radio service, named Brian McAndrews its president and CEO on Wednesday. McAndrews, a former vice president at Microsoft and partner at Madrona Venture Group who has extensive experience in digital advertising, succeeds Joe Kennedy, who announced his retirement in March.
"We had very specific criteria for our new CEO, and we were very strategic about finding the right person -- Brian is that person," Tim Westergren, Pandora's founder and chief strategy officer, said in a statement. "No one better understands the intersection of technology and advertising."
"It is a great privilege to be asked to lead Pandora at this important moment in the company's history," McAndrews said in a statement. "I look forward to joining this great team to build on Pandora's success for years to come."
Pandora is the seventh SV150 company to get a new CEO this quarter, joining Twitter, Polycom, Juniper, IDT, Solta Medical and Applied Materials.
Investors seemed to welcome McAndews' addition; Pandora shares rose 5 percent during trading Wednesday, closing up $1.03 to $21.38, and were rallying even more after hours. As of 3:30 p.m. PDT, Pandora was up another $1.63, or $7.62 percent.
Up: Google, Oracle (ORCL), Cisco (CSCO), eBay (EBAY), Gilead, VMware, Yahoo (YHOO), Juniper, Facebook, LinkedIn
Down: Apple, Intel, VMware, Yahoo, Zynga, Tesla
The SV150 index of Silicon Valley's largest tech companies: Down 11.19, or 0.84 percent, to 1,322.79
The tech-heavy Nasdaq composite index: Down 4.01 , or 0.11 percent, to 3,725.01.
The blue chip Dow Jones industrial average: Up 135.54 or 0.89 percent, to 15,326.60.
And the widely watched Standard & Poor's 500 index: Up 5.14, or 0.31 percent, to 1,689.13.

Has Apple lost its mojo?

 

Could Apple drop a "one-more-thing" bombshell one more time?

The late Steve Jobs used to whip his product-launch crowds into a frenzy with that famous keynote postscript -- "Oh, there is one more thing" -- just before blowing them away with the latest gadget. But on the eve of Tuesday's big product announcement, many Apple watchers are wondering if Cupertino's dream-catcher has lost its knack for innovating technology that time after time would take the world's breath away.
"The wow-factor is wearing off at Apple," said analyst Laurence Balter with Oracle Investment Research. "Innovation has been put on the back burner while the company focuses on market-share penetration. But unless they pull one incredible rabbit out of the hat next week, the pressure is going to be even more intense on Apple to somehow surprise us all again."
While the rumor mill expects Apple to unveil an iPhone 5 successor along with a lower-cost iPhone that will come in multiple colors, Balter scoffs at the offering: "It's almost become like the fall catalog from JCPenney. 'Ooo, look at the new colors for the new season.' But it sure doesn't scream 'innovation.'"
No one is suggesting Apple's days are numbered. It remains the world's most valuable company in terms of market capitalization, even as the growth of sales of its signature iPhone slows and its stock price is stuck far below its highs. Its crack team of creatives, led by the legendary Jony Ive, is presumably hard at work on the next major product. And a second announcement expected next week from the company will reportedly showcase a blockbuster iPhone deal with China Mobile. The behemoth carrier's 710 million customers would lend Apple a staggering heft in the world's largest smartphone market, a place where Apple hopes to step up its game.
As Apple continues to serve up new versions of a product arguably long in the tooth, at least in Internet years, analyst John Jackson with IDC admits there is some "iteration fatigue" among consumers. Still, Jackson insists next week's product launch doesn't need to be of biblical proportion to please fanboys everywhere.
"I don't think Apple has to do much," he said. "And they certainly don't have to create something entirely new right now to get a wow from people, as long as it's slick and sophisticated. I think there's a huge appetite out there for something, anything, new from Apple, even if it's a variation on a current theme."
The spotlight is turned up high on CEO Tim Cook, now more than two years at Apple's helm, where he's had to not only try to fill Jobs' shoes, but do damage control for product snafus like "Mapgate" and fix an important hire that went south when Apple Store chief John Browett was shown the door last October after only six months. Whether it's boosting the bottom line after two quarters of disappointing earnings or finally delivering on what he's hinted at several times as a product pipeline extraordinaire, Cook's under the gun. And overshadowing it all is the not-so-distant memory of Apple under Steve Jobs.
"This is a transcendent moment," business strategist Pam Murtaugh wrote recently on Huffington Post. "Apple became Apple when Jobs brought 'post-computer products' to the world. While Jobs thought the iPod was 'a thousand songs in your pocket,' its magic came from giving people a thousand feelings in their pocket. The iPod was a bank of feelings."
It's hard to imagine that sort of emotional geyser unleashed by simply a new colored iPhone or, as is expected later this year or early 2014, a new version of the iPad. And while Apple busies itself with its product pipeline, which eight long months ago Cook described as being "chock full" of "incredible stuff," the clock is ticking.
Literally. Samsung's release this past week of its new workout-tracking, photo-snapping smartwatch, the Galaxy Gear, puts one of Apple's fiercest rivals a few steps in the lead, at least on this one path of innovation, while the Cupertino brain trust reportedly works on a smartwatch of its own.
But before anyone starts ringing the funeral chimes, said analyst Joel Achramowicz with Merriman Capital, Apple could still make history with a piece of wearable technology that blows Galaxy Gear right off your wrist. Achramowicz finds it intriguing that Apple, simply by its silence, "appears to be falling behind. Maybe it's good that Cook has been so quiet for so long, because Apple could very well come out with a version of a smartwatch that nobody has even thought about yet, and then it's 'Bingo!'"
Think iPod, he said, or iPhone. In both cases, it was as if Apple were lying in wait while its competitors stumbled about releasing their own not-insanely-great portable music-players and mobile phones until -- Bingo! -- Apple finally weighed in. If Achramowicz's instincts are spot on, Cook and his crew may be sitting on an egg of innovation that, once hatched, will blow everyone away. Or maybe not.
"It's hard to believe Apple would come out with, say, a smartwatch that's not really exciting," Achramowicz said. "But either way, this is it for Tim. He's got really smart people in the organization, but you've got to take risks or you don't get anywhere. Now's the time for him to come up with something really surprising, like Jobs always did, and to create his own legacy."

Samsung smartwatch is sign of changing times

 

Like many people these days I don't typically wear a watch because if I want to know the time, I can glance at my smartphone. But I made an exception last week because I was on an overseas trip and needed to know the time on two continents. So I spent $18 for a Casio dual time zone watch that tells me the time here in Europe and at home.

But Samsung wants me to jettison that watch for one they announced last week at the giant IFA tech show here in Berlin.
The watch, named Galaxy Gear, consists of a large metal and glass screen with a large plastic band that comes in a variety of colors, including jet black, "oatmeal beige" and my favorite, "wild orange." It's not a stand-alone device, but a

companion to Samsung's Galaxy Note 3 smartphone that they also announced at IFA. At launch, the watch will work only with that phone. It's set to go on sale Sept. 25 for $299.With the phone in your pocket or purse and the watch on your wrist, you can take pictures and video, check your email and text messages and talk on the phone. You can also use the watch as a pedometer and -- imagine this -- check the time. Samsung is working with app developers to expand the capability of the product.
I got to spend a few minutes trying the Galaxy Gear, which isn't enough time to pass judgment on all its features. For example, I didn't get to see how the 1.63-inch backlit Super AMOLED display works in bright sunlight. What I can say is that it's reasonably stylish for a watch with a plastic band and that the sound quality of its speaker is better than I expected, but not quite as good as talking directly on most smartphones. The interface, which involves gestures similar to what Android and iPhone users are used to, takes some time to learn, but people will figure it out.
My biggest complaint about this and all the other smartwatches I've seen so far is that the battery lasts for only about a day between charges. You can't plug a charging cable directly into the watch, but it does come with a small docking adapter that -- like most smartphones -- connects to a regular Micro USB cable. Still, having to charge the phone daily and carry the adapter when you travel is one more thing to deal with every day. Casio claims that the $18 watch I'm wearing has a 10-year battery life.
My other issue is more of a question. Will Samsung's Galaxy Gear or any other smartwatch solve a big enough problem to be worth whatever it winds up costing? Of course early adapters and techies will buy it, but will it resonate with people who may not feel all that bothered by having to take their phone out of their pocket or purse to make a call, send a text or take a picture? I can see how it might be handy when driving, if the phone's voice recognition software performs as advertised and you don't have to touch the phone to make or answer a call.
If wearable computing like this watch follows in the footsteps of smartphones and tablets, the real value will come not from the hardware, but from the apps it supports. There is already a pedometer app and the usual compliment of phone and contact apps, but it remains to be seen how many third party apps are written for this and other wearable platforms.
There have been consistent rumors that Apple (AAPL) is also working on a smartwatch, but no details have been disclosed regarding what it might be or when it might be announced. If Apple is to introduce a game-changer, it has to be something different from what Samsung is offering. I'm expecting that it will work with Siri to allow voice commands, but I'm also hoping for better battery life. I'd also like to see it include a TV remote control and perhaps controls for home automation and security systems. A big question is whether Apple will follow Samsung's lead and make its smartwatch a companion to the iPhone or come up with a stand-alone device.
Of course, a smart wristwatch is only one type of wearable computing. Google (GOOG) Glass, with its small computer screen suspended from what resembles an eyeglass frame, is another way to put the Internet, quite literally, in your face. Over time we can expect a wide range of devices, including sensors that keep track of our vital signs as well as technology built into our clothing. Nike already has shoes with built-in sensors that send time and distance information to a smartphone.
The personal computer as we know it may be on the decline, but truly personal computers -- ones that we wear and may someday even embed into our bodies -- may be the wave of the future.

Sony Eyes Sensors in Wearable Computers to Gesture TVs

Sony Corp. (6758) is considering applying its image sensors to wearable computers and hand-gesture TVs as it expects smartphone revenue to peak around 2015.

The company plans to seek growth in developing the chips, already used in smartphones and digital cameras, for products such as self-driving cars and medical equipment, Yasuhiro Ueda, senior vice president for Sony’s image sensor unit, said in an interview.

Sony has garnered almost a third of the $7.6 billion market for the low-power chips, known as complementary metal-oxide semiconductors, that quickly capture crisp snapshots in high-end smartphones, a market that is nearing saturation. The company sells CMOS to others, with versions in Apple Inc. (AAPL)’s iPhones 5 and 4S and Samsung Electronics Co. (005930)’s flagship Galaxy S4, according to SMBC Nikko Securities.
“We have a high sense of crisis after seeing the high-end smartphone market start to saturate this year,” Ueda said yesterday at Sony’s technology center in Atsugi, near Tokyo. “Our plan is to draw a growth strategy in an area where we see shipment potential of 10 billion units a year.”
Sony’s Exmor image sensor works as an eye for electronic products, capturing light to convert into electronic signals for processing. The latest chip uses less power and faster processing to catch vivid images under low light.

Surging Shipments

Chief Executive Officer Kazuo Hirai has said the company plans to leverage the technology to expand in medical equipment business. The chips can be offered for endoscopes used to look inside body cavities and medical testing devices, Ueda said.
Worldwide CMOS shipments rose 25 percent to 2.5 billion units last year and may show a similar increase this year, according to an estimate by Techno Systems Research Co. That may slow down to about 11 percent in 2015, according to the Tokyo-based researcher.
Sony’s revenue from the chips probably rose to $2.45 billion in 2012 from $1.89 billion a year earlier, garnering 32 percent of the global market’s sales, according to estimates made by Techno Systems. Omnivision Technologies Inc. (OVTI) is ranked second with 14.4 percent, followed by Samsung at 12.9 percent.

‘Robust Orders’

“Sony’s CMOS business, which has seen robust orders from smartphone makers may be reaching a turning point as demand shifts toward middle- to low-end handsets,” said Ryosuke Katsura, an analyst at UBS AG in Tokyo. “There will be a higher risk going forward for the business” unless it finds a new growth driver, the analyst said.
Sony rose 0.9 percent to 2,059 yen as of the close of trade in Tokyo. The stock has more than doubled this year, compared with a 34 percent gain in the Topix index.
Global smartphone revenue will rise 22 percent in 2013, or nearly half the pace of an expected 41 percent gain in shipments, amid falling prices, according to UBS.
Sony unveiled its Xperia Z1 smartphone today at the IFA consumer electronics show in Berlin. The phone will be available this month, equipped with a 20.7 megapixel camera and a free download of the movie “Elysium.”
Sony’s device division generated operating profit of 10.9 billion yen ($110 million) in the June quarter with most of the earnings generated by sales of the chips, Deutsche Bank AG estimates. The division was the biggest source of profit after its insurance business.
Ueda declined to elaborate on revenue and profit from its image sensors.

Apple, Samsung

Sony started developing image sensors in 1970 as it tried to compete with Eastman Kodak Co. in photographic devices. The Tokyo-based company’s first such chip was used in a camcorder before the growth driver shifted to digital still cameras and smartphones, Ueda said.
Future growth may come from devices such as Google Inc.’s Glass, a set of Web-enabled eyewear, according to Ueda. Apple and Samsung’s planned watch devices may lift sales of wearable gadgets to 70 million units in 2017 from 15 million this year, according to Juniper Research.
“Image sensors will be crucial device for wearable computers,” Ueda said. Sony is “very keen to expand our business in this area.”
Sony’s SmartWatch 2 will hit stores worldwide later this month, and will be able to be used as a second screen for the Xperia smartphone, the company announced today in Berlin.

Autonomous Vehicles

Samsung may unveil a wristwatch-like device named the Galaxy Gear that can make phone calls and surf the Web and handle e-mails, people familiar with the matter said last month. Cupertino, California-based Apple has a team of designers working on a watch-like device, two people familiar with the matter said in February.
Nissan Motor Co. (7201) plans to deliver fully autonomous vehicles to the market by 2020, Andy Palmer, the automaker’s executive vice president, said last month. Technology underpinning autonomous cars, including adaptive cruise control and electronic steering is already available, and added sensors and road-monitoring capabilities are being refined, Palmer said.
Self-driving cars are currently legal in three U.S. states and may offer a revenue opportunity of more than $200 billion, according to a June report by Piper Jaffray & Co.
“If you want to make self-driving cars, you need several sensors in the car,” Ueda said. “Hand-gesture TV sets may see a booming demand, while house-clean robots can probably do a better job if image sensor was added.”

Sony Bets on Xperia Z1 to Pass LG in Smartphone Race

Sony Corp. (6758) is betting its Xperia Z1 handset will propel it to No. 3 in the smartphone market, leaping from seventh place by vaulting past competitors such as LG Electronics Inc. (066570) and Lenovo Group Ltd. (992)
 
The Xperia Z1, which comes with a 20.7 megapixel camera and will be in stores this month, will help it gain ground in the U.S. and China to become the biggest rival to Apple Inc. (AAPL)’s iPhone and Samsung Electronics Co.’s Galaxy devices, said Dennis van Schie, Sony Mobile Communications sales chief. The company also announced a zoom lens-style camera for smartphones.
“Our ambition is to become a top three player,” van Schie said in an interview at the IFA consumer electronics show in Berlin yesterday. “We are, right now, enjoying fantastic momentum in the markets where we play. We are breaking into the U.S.; we are building momentum in China.”
Sony has its sights set on a market dominated by Samsung, which controlled a third of smartphone sales globally in the second quarter, according to research from Gartner Inc. The Tokyo-based company doesn’t rank in the top five, according to data compiled by Bloomberg. Apple, which is unveiling its new iPhone next week, has 14 percent of sales. LG, Lenovo and China’s ZTE Corp. (000063) round out the leaders list.
“Sony has done a good job to differentiate itself from others,” said Junya Ayada, an analyst at Daiwa Securities Group Inc. in Tokyo. “If Samsung does not introduce new smartphone in the second half of this year, I think Sony can continue to enjoy its momentum toward the end of this year and expand its global share.”

Shares Gain

Shares of Sony rose 0.8 percent to 2,076 yen at the close of trade in Tokyo. The stock has more than doubled this year compared with a 35 percent gain in the Topix index.
Sony is gaining in Europe with cheaper handsets, according to Kantar Worldpanel ComTech. Still, the Xperia Z1, which uses Google Inc.’s Android operating system, points to Sony’s aspirations to the more profitable premium market dominated by Apple and Samsung. The maker of Bravia televisions and PlayStation game consoles is playing to its strengths with image sensors in its smartphones, and it often notes water-resistant features to draw customers willing to spend more.
The company unveiled its first lens-style camera featuring optical zoom and an image processor. The device can take pictures on its own and also attach to smartphones, including Sony products and Apple iPhones, the company said.

‘Turning Around’

“While many of our competitors are struggling for their survival, we are turning around, we are delivering according to plan,” van Schie said. “For us, the growth mode is there, also in the high-end segment.”
Sony’s larger competitors are also unveiling new devices to stay ahead. Apple sent out invitations this week to a Sept. 10 event at its Cupertino, California headquarters to debut more models of its top-selling product, the iPhone, a person familiar with the plans has said.
Samsung hosted an event yesterday at the Berlin show featuring a live orchestra to introduce the Galaxy Note 3, a smartphone-tablet combination with a 5.7-inch screen and exterior of patent leather-like plastic. Unlike Apple and Sony, the Note uses a stylus pen for many functions and retooled Android software to ease multitasking.
Microsoft Corp. this week agreed to spend 5.44 billion euros ($7.2 billion) to buy Nokia Oyj (NOK1V)’s handset unit so it can gain ground on Apple and Android devices after lagging behind its rivals in smartphones and tablet computers.
Sony’s device division generated operating profit of 10.9 billion yen ($110 million) in the June quarter with most of the earnings generated by sales of chips, Deutsche Bank AG estimates. The division was the biggest source of profit after its insurance business.
“The Xperia Z1 is truly a watershed moment in Sony’s history,” Chief Executive Officer Kazuo Hirai said at the press conference introducing the new smartphone.