How to control the news and save your stock.

June 22, 2009

I woke up Saturday morning to the somewhat troubling news that Apple CEO Steve Jobs had undergone a liver transplant a couple of months ago. Obviously, if Mr. Jobs was ill, it isn’t troubling that he received the transplant, and I wish him well in his recovery. What did trouble me, and will likely trouble the Security and Exchange Commission, is that the public is only hearing about this two months later — post iPhone 3GS release, of course.

As you may be aware, the SEC is already looking into the Jobs health saga — specifically, what other Apple execs and board members have known about his health prior to his taking a leave of absense six months ago, amid speculation that he was indeed very ill. The line at the time from Apple was that Jobs had some health issues that were more complicated than originally believed and that he was going to take some time to recover before a late-June return to work. So they didn’t worry investors, Apple told the world Jobs would keep a watchful eye over the company, even in his absense.

For most companies, a leave of absense by the CEOs is barely worth a blip on the radar screen. But in Apple’s case, it is huge news. Few companies are as reliant on the well-being of their leadership. And, generally, any mention that Jobs is in ill health sends Apple stocks into free fall. Remember the faulty report a few months back that claimed Jobs had a heart attack? That report sent the stocks tumbling, just in time for some folks to scoop them up and make a pretty penny when the world learned it was a hoax.

Clearly Apple played Jobs’ health close to the breast in December, acting as if maybe Steve was just a tad tired and needed an extended vacation. Unfortunately, a liver transplant is not a vacation.

The Apple reality distortion field was working overtime on this story, very clearly in attempt to downplay Jobs’ very real health problems (one doctor said the liver is the next stop for cancer after the pancreas) and keep stock prices up. And when the news finally leaked that Jobs had a transplant, it wasn’t while he was on the table — it was two months later, when he’d had time to recover. It also broke late Friday night, after the markets had been closed and the new iPhone had hit stores, so there was no chance fear of Jobs’ health would deflate the stock prices.

Imagine what would have happened to Apple stock had Jobs announced he was going on leave to have a liver transplant. What if the Wall Street Journal broke the story the day before the transplant? What if the story had run Friday morning? The point is that any scenario other than exactly what did happen would have been awfully bad. Rarely do companies avoid such PR mishaps by mistake.

There’s a degree of deception going on at Apple that should have shareholders concerned. Sure, the PR team could be lauded for its ability to spin, but we aren’t talking about spin here; we’re talking about deception. The refusal to answer direct questions, the pointed accusations that the public is improperly meddling in Jobs’ personal affairs, the assertions that he’s fine and looking forward to resuming his work….all point to sins of ommission and commission. And because the company knows full well how strongly its stock price is tied to Jobs’ health, one must wonder what the company knew about Jobs, and whether it was intentionally misleading stockholders to keep prices up.

My prediction is that the SEC will be looking into this, to determine who knew what and when.

But in the meantime, take this as an example. If you’ve got bad news, hold onto it until it can be spun into a positive. Failing that, make sure it comes out on Friday night. Because nobody reads the news on Saturday. Except me.

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Patron Saint of file sharing.

June 19, 2009

Jammie Thomas-Rasset, I’m convinced, will someday be hailed as a martyr of the digital revolution.

Yesterday, a federal jury ordered Thomas-Rasset — a 32-year-old mother of four — to pay $1.2 million for illegal file sharing in the first and only case waged in the courtroom over file sharing. That jury found that Thomas-Rasset was guilty of sharing 24 songs on the formerly popular file-sharing service Kazaa. Her punishment amounts to paying $80,000 per song.

I don’t know why the jury thought $80,000 was a reasonable price to pay for each track Jammie supposedly shared. It’s unnecessarily punitive and not at all in line with anything proved at trial.

Apparently, Media Sentry (a company hired by the recording industry to track down so-called illegal file sharers) downloaded samples of music files Thomas-Rasset had on her computer. That simple act was enough to prove that Thomas-Rasset was intentionally sharing files, and, as such, was illegally distributing them without a license. How many illegal copies was she responsible for? Nobody knows. But I can promise you, none of those songs was downloaded from her computer 80,000 times.

Why 80,000? Any of those songs can be purchased on iTunes for about a buck apiece. If Thomas-Rasset didn’t hand out 80,000 free copies of each song, why should she pay for 80,000 copies of each song? It’s a ludicrous result.

All that being said, this time around, the RIAA did exactly what it hasn’t in the past. This lawsuit was won for two reasons: One, because Thomas-Rasset actually decided to fight it and two, because the RIAA actually showed she distributed the music. See, the law doesn’t say it’s illegal to get a free copy of music; it says it’s illegal to copy and distribute music to others. That’s an awfully important distinction. Too often we hear about “illegal downloading.” And though the RIAA would love you to believe there is such a thing, it has never won a lawsuit upholding its stance on downloading music.

And that’s why Jammie Thomas-Rasset is the patron saint of file-sharing.

The recording industry’s dirty little secret is that over the years it has threatened or filed more than 30,000 lawsuits over alleged file sharing. Nearly all of them have been settled out of court for about $3,500 apiece. That adds up to a pretty chunk of change: $105 million. And do you know what the RIAA had to prove in order to get that money? Nothing.

The modus operendi of the recording industry (at least until last August) was to target college campuses and track down students who downloaded — not shared — music from the Internet. By strong-arming colleges, they’d get the names of students attached to particular IP addresses and threaten to sue them. Little Susie or Little Johnny would get threatening letters from the RIAA’s lawyers offering them the option to pony up $3,500 or face a lawsuit. Johnny and Susie, afraid of their parents’ rath and nervous about what such a lawsuit would do to their futures, dipped into student loans, college savings or borrowed from their parents to make the RIAA go away. In essence, they caved to bully tactics, rather than do what we’re all told to do when we’re bullied: Stand up to them.

Frankly, I know nothing about Jammie Thomas-Rasset outside of this case. She may not be a fine, upstanding person. But plenty of others targeted by the RIAA are. And the fact the Thomas-Rasset actually fought for herself in this case is admirable.

Look, we are moving entirely away from physical media as a distribution model. File sharing is basically growing pains of the industry. More than anything, file sharing has forced the industry to create new distribution models. It has taken away the “album” construct the industry has screwed music lovers with for 30 years or so and will, I believe, force musicians to release only the best art they can.

As a musician, I can say that I want absolutely nothing to do with the RIAA. While I have music available for purchase, I’m totally comfortable with people “stealing” it; I just want people to hear it. How many times did you buy an album because you liked one song, only to find out the other 11 songs on the album were terrible? You paid for all of them anyway, didn’t you? Who got ripped off on that deal.

Music should be about art — not marketing. The RIAA has gotten fat and happy on marketing garbage and passing it off as art. And we’ve been suckered into it. At least Jammie Thomas-Rasset had the guts to pay what it was worth. Unfortunately, the dunderheads on the jury disagreed. Would you pay $80,000 for your very own copy of “Don’t Stop Believing?” Jammie Thomas-Rasset is doing just that.


Location: Tehran. Avatar: Not green.

June 18, 2009

Like so many on Twitter (and elsewhere), I’ve been following whatever developments I can about the Iran elections. I share the concerns of the world about the obvious sham of an election and I’m waiting, nervously, to see Iran erupt into full-blown civil war.

In the last couple of days, Twitter users have started adding a green overlay to their avatars, indicating support for Mousavi. I’ll not do that, nor do I support that particular movement. I have, however changed my “location” field in Twitter to read “TEHRAN.” I’ll explain why.

Let’s face facts here: Because of the way news is spread from Iran to the US, it’s nearly impossible for us to support one leader over another in that country. And the fact that Mousavi most likely won that election doesn’t make him the best guy for the job. Granted, Mahmoud Ahmadinejad is no good guy, and clearly any election fraud in Iran will most likely be traced back to him. Mir-Hossein Mousavi, for the majority of Twitterers especially, is not a known quantity. Sure, we have a record to trace from his time served as Prime Minister, and we have some of his lofty election goals, such as allowing private ownership of television stations, adding more transparency to government and transferring control of the police force to the President, to look at, but are we really informed enough to make a decision, here, a half-world away, on who should lead Iran?

As an American, I was increasingly disturbed by European support of Barack Obama in our last election. The disturbance wasn’t based on who I supported in the election, but on the undue pressure it put on American voters to please the international community — as if we should choose the president that would best serve Europe instead of the president that would best serve the US. Now, the same people who said throughout the Bush presidency that the US should not meddle in the affairs of sovereign nations are, through this passive support campaign, meddling in the election (corrupt as it may be) of a sovereign nation.

I have decided, however, to change my location to TEHRAN on my Twitter profile, as a show of support for the bloggers and Twitterers in Iran who are believed to be in extreme danger for making their voices heard. Freedom of thought and speech are extraordinarily important to me, and a people banned from thinking for itself is a danger to us all. Dissident voices should never be silenced — especially through violence.

It is believed that Iranian police are hunting down or at least identifying dissident voices in Iran in part by looking at their location status in Twitter. This may not be true. If it is, and I can be just one more record for them to sift through, maybe provide five more minutes of safety for someone writing what they believe in their hearts, then that one tiny step is well worth it.

As a former journalist and columnist, I know there are very real dangers for anyone who speaks truth to power. In my own career I was harrassed, threatened with lawsuits and bodily harm. But fortunately I was never attacked or silenced. There were plenty of people in positions of authority who didn’t respect my freedom to opine, but they hadn’t the authority to stop me from saying what I believed in.

I am a regular critic of today’s news media. Increasingly, that media includes bloggers and regular folks as well.  I’m increasingly more interested in the media’s failures than in its successes, and I’m more inclined to support the private blogger than the bloated corporate megalopolies running America’s news. And now, I will support every small voice screaming to be heard, no matter who they support.


A case for Apple netbooks.

June 17, 2009

Whenever someone mentions that Apple should make a netbook, the fanboys come out in droves, fervently defending The Great Jobs and Co.’s failure to enter that space as the smartest way to go. They say Apple doesn’t need a netbook, and that machines like the Macbook Air and really the future. They defend the idea that netbooks aren’t consumer friendly because they’re underpowered, have cramped keyboards and won’t last more than a couple of years. There’s no margin on netbooks, they say, so why would Apple want to offer a product that would steal from the popular Macbook line?

We’ll, I’ve owned my little Acer AspireONE now for well over six months. It set me back all of $350. I opted for the 120g optical drive rather than the 8g flash drive, and chose the Windows XP model over the cheaper Linux model. What I can tell you after living with the AspireONE is I have never been happier with a tech purchase. Ever. And that includes my Garmin GPS and my iPod Touch.

First off, the netbook is not underpowered. In fact, it’s perfectly powered. Would I like more snap? Yes, I would. But I have run Photoshop, Dreamweaver, an FTP client and two browsers at the same time on it when I was throwing up a quick web page. Obviously I wouldn’t use it to do any hard-core coding, and the screen’s a tiny bit small for real photo editing, but I’ve found it handles most software in the Adobe Creative Suite quite well. I’ve also done some light audio editing with Audacity, encoded video clips and made some pretty decent PDFs using InDesign. I’m not saying it’s an ideal production machine, but in a pinch I’ve found that it’s been able to do the work — even if it is a bit bogged down.

Cramped keyboard? No chance. I’m a quick typer. I type a lot. It took all of a day and a half to get used to the Acer’s keyboard, and it’s a heckuva lot better to type on than, say, an iPhone. Hands down.

Will it last more than two years? Probably not. But guess what? I don’t want or need it to. It runs XP. Within a year I’ll want a faster netbook, probably running Windows 7 (or OSX). We’ve got to start thinking about our technology as being somewhat disposable; advancements in technology make any gadget obsolete by the time you get it home. For that, the price of a netbook is perfect. It isn’t the investment a Macbook Air would be. And let’s face it, from a portability standpoint, you can’t beat it. I’d have a hard time carrying an Air around, just based on the fear of breaking it. No such fear with the Acer, though. I through it in my bag, throw it in the car, and it always works.

But I guess the argument that bugs me the most is that Apple wouldn’t make enough profit per unit sold on netbooks. The most galling thing about this argument is that the fanboys are actually admitting they’re paying a high markup on every Apple product they buy. Unbelievable. This leads me into a discussion about the perception of worth, and how that’s worked quite well for Apple…but I won’t go there yet.

As I said in my last post, Apple’s market share in the personal computer market will likely stagnate until it creates more and better gateway products. The iPod was supposed to be that device; there was a time when iTunes wasn’t even available for  PC users. No Mac? No iPod. That scenario didn’t make people want to buy Macs, but iPod sales exploded as soon as iTunes was available for PCs. Now Apple can build a Shuffle for about $25 and sell it for $80, and folks think that’s just fine.

The first iMac was supposed to be a gateway product. It was cute, colorful and inexpensive. Sales were good. But it didn’t make enough people really really want real Macs. And the Mac mini…cheaper than a full-blown G4, certainly, but not enticing enough for the mass market. I say all of this with full knowledge of the fact that up until this year, Apple’s market share was growing. The point is that fanboys love to pretend that Apple doesn’t need gateway products or loss leaders; in fact, they love to claim Apple’s business has been built on customer experience and customer loyalty. To a degree they’re right: the fierce loyalty to Apple products has helped the company grow considerably. But Apple has a history of using gateway products and loss leaders. Heck, most of us (myself included) used Apple IIe labs in elementary school. And what we’ve seen in the last year or two is that although Apple is cleaning up in the mobile space with over 17 million iPhones sold, those sales are not translating into Apple-loyal consumers.

I have no doubt that if Apple put some heads together it could make the best netbook on the market. It would be thinner than that slick Sony Vaio entry and certainly sexier than my Acer. With the flash drive of the Air and all the other bells and whistles Apple’s known for, folks would be chomping at the bit. Does it have to be sub-$500? I don’t think so. But for under $600 you’d sell a whole lot of them. And if you didn’t make bank, at least you’d have introduced a whole lot of folks to OSX. And those people will be a lot easier to convince into buying that $4,000 chunk of hardware you’re trying to sell.


Apple: Behind the hype, there’s desperation.

June 15, 2009

Behind the hype of Apple’s Worldwide Developers Conference last week — the new iPhone OS, the price drops for Macbooks and the Snow Leopard release — I got the sense that something is not altogether right in the Apple universe these days. It’s almost as if there’s a bit of desperation lurking behind the hype.

To its credit, Apple has almost always been good at hiding its fear. The question now is whether the company is really primed to compete, or whether we’ll see it plummet back to its pre-return-of-Jobs days.

Let’s start with notebooks:

Apple announced last week that it will drop notebook prices 5% to 15% — a welcome respite for those with Mac envy who couldn’t afford even an entry-level Apple notebook. The media hype (of course generated by the Apple reality distortion field) has been primarily praise for Apple recongizing difficult economic times and giving potential customers a break. Truth is, though, that these price cuts are not entirely altruistic. It was actually done to conteract a 10 percent drop, year-over-year, in revenue for Apple’s Mac business. Industry analysts say Mac doesn’t appear to be gaining market share at all — this after several years of posting 20% to 50% gains per year.

The economy may have something to do with that — after all, if most of us have less disposable income, our dollars are more likely spent on necessities. And if we absolutely need a new computer, we’re going to save whatever we can. And that scenario plays to one of Apple’s most glaring weaknesses: the lack of affordable, entry-level computers.

The netbook market has exploded in the past year. I can’t imagine a better time for netbooks to have come on the scene. These days, you can easily pick up a sub-$300 machine loaded with XP just about anywhere. Heck,  I own one, and I love it. Apple refuses to enter the netbook space, and has instead relied on its old standby ideology: Anything cheaper that what they charge is crap. In the meantime, plenty of folks are using the netbook as either the entry-level computer or, like me, the go-to gadget for the livingroom or on the go, and Apple’s missing that boat.

At the same time, Microsoft is making hay over Apple’s high prices with its “I’m a PC” ad campaign, pointing out just how affordable a suped-up PC can be when compared to Apple products.

Ever so quietly, these factors are convincing fence-sitters to go the PC or netbook route.

On to Snow Leopard:

There appear to be a lot of neat new bells and whistles in Snow Leopard, and the tech media, as usual, is doing a nice job of drooling over the improvements. What was striking to me, however, was how Apple couldn’t introduce Snow Leopard without bashing what will become its primary competitor, Windows 7. During the Snow Leopard announcement, there were claims that Windows 7 was really a service pack for Windows Vista, and that it’s “still going to have problems.” This for an OS that won’t hit shelves for another four months.

Why attack Windows 7? Why mention Vista at all?

Unfortunately, Apple has built so much of its advertising around the “not PC” ideal that — especially in the OS space — it can’t compete without tearing down its competitor (using vague jabs) first. Particularly galling in this instance is Apple’s claim that Windows 7 is a Vista service pack — especially because Apple itself admits that Snow Leopard is an incremental upgrade over Leopard — not a full rewrite of the OS. It is not, after all, OS XI, right? And if you’re selling value, you’re telling us a brand new OS is worth $29?

Apple makes beautiful products. There is no question that Apple has cornered the market on chic. And I like the OSX operating system. Day-to-day, though, I use three different computers and they all run Windows XP. I don’t get the Blue Screen of Death (I think I’ve gotten it twice. Ever.). I don’t suffer system crashes. As an IT manager I find far more cases of user error than hardware or software failure. Why am I telling you this? Because if you’re going to sell me an Apple product, tell me what it does — don’t tell me what Windows doesn’t do.

If Apple is to turn around its stagnation (Wall Street predicts an 8% year-over-year drop in Mac unit sales in the June quarter), it must concentrate its message on what it does well — not the competition’s weakness. It also has to provide more and better gateway products to take away the competition’s strengths. I don’t agree that a tablet PC is the way to go here, but a sub-notebook is a very solid start. Apple execs need to stop dictating what consumers want and start listening.

So what is Apple afraid of? Failure? Not likely. Failure is a necessary part of innovation, and certainly Apple has had its share of miserable OS and products. Heck, without Microsoft, Apple probably wouldn’t be in business today.

Perhaps Apple is realizing that it has reached the pinnacle of the boutique computer business, and it has done so by consistently billing itself as anti-PC. Perhaps there’s a realization that there are only so many fanboys in the world who are willing to pay whatever you’ll charge…and the rest of us are actually price sensitive. Perhaps they’re just seeing the numbers and realizing they’re not recession-proof. Perhaps they realize that — as most reviewers have said — Windows 7 looks like a damned good operating system.

No matter what the answer, there’s a lot more to Apple’s words and actions than hype alone. You can mark my words on that.


Is aged news better than fresh?

June 12, 2009

The New York Times let Jason Jones of The Daily Show in for a visit. The results are quite telling. Check it out here.

I’ve certainly talked about how far newspapers have fallen, and I know the clip is heavily edited. But the question about aged news, and the reaction it generates are, well, priceless.

Also funny? “Look at me! I’m a reporter from the 80s!”

That line killed me.


This guy threatened to kill me.

June 8, 2009

I was outside my office Friday, testing out a video camera, the last time my life was threatened.

As I swept the lens across the streetscape, a shirtless “gentleman” rode his bicycle through my field of vision. I didn’t even notice him. He asked if I was pointing a camera at him. I turned off the camera. What followed was a string of expletives aimed at me, including this gem:

“If my picture shows up on the Internet, I will hunt you down and I will kill you.”

Awesome.

So, here’s the offending video:

I don’t put this up because I want to be hunted down or, indeed, killed. I do, however, want to clear up a few misconceptions this gentleman, and many others as well, have about privacy. I’ll go through his argument point by point. I will leave out the curse words.

1. “It is illegal to point a camera at someone without their permission.”

Wrong. I can legally point a camera at whomever I’d like. Furthermore, most of us are caught on camera several times a day, at stores, street corners, gas stations and ATMs. Consent is not necessary.

2. “This is an invasion of my privacy.”

Wrong again. There is no reasonable expectation of privacy on a public street. That’s why it’s called public. If I want to, I can take your picture and run it anywhere I’d like — on the front page of a newspaper or magazine, on my website. I can’t use it in ads or commercials, but as many newspapers do, I can sell prints of your image. The copyright holder — the guy with all the rights — is me.

Want to know something that will bug you even more? It’s entirely legal for me to take pictures of you in your house! If I can see you from the street, I can take your picture. I’m not allowed on your property, but if you happen to be washing your unmentionables in front of your livingroom picture window, you’re fair game.

3. “I’ll call the cops and have your camera confiscated.”

Wrong. There is a clause in our Constitution that protects against illegal search and seizure. My property cannot be taken from me without either a warrant or “probable cause.” If the police have no reason to believe I’ve broken the law, they cannot detain me, search me or take my property without my consent.

4. “We’ll see what my attorney has to say about this.”

No we won’t. Perhaps you will hear what he has to say, but I believe you’ll be sorely disappointed. And I doubt you’ll want to fill me in when your lawyer tells you to get out of his office.

If I seem a little bent about this, I apologize. I don’t mean to sound rude. It was, however, more than a little upsetting to be treated that way. I explained to him that I wasn’t using the footage for anything, that I was only testing the camera, and that I planned to throw the footage away. I even explained that I didn’t actually intend to film him — he rode through my shot. None of those things mattered, though.

So, I have thrown out the rest of the footage. I am, however, preserving the bit above for posterity.

Way to go, guy. Hope it was worth it.