Edible Apple

With all of the hype and discussion surrounding the impending release of the iPhone 5, we haven’t heard much of anything about Apple’s long-rumored HDTV plans.

Indeed, while many previous reports claimed a late 2012 release was in the works, rumblings from the supply chain in that regard are conspicuously silent.

But that’s not to say that Apple isn’t always up to something.

The Wall Street Journal reported yesterday that Apple, while perhaps in conjunction with its ideas for an integrated HDTV, has been in talks with a number of cable operators regarding the prospects of releasing a set-top box that would be able to run live television and other content.

The report notes that no deals have yet been struck, with some speculating that cable operators are wary of letting Apple securing a foothold in the Cable TV business after it saw the power it accumulated in the music business.

Apple would also need to persuade significant numbers of consumers to buy a set-top box for what could be hundreds of dollars rather than rent one from their cable operators for $10 to $15 a month. Electronics makers such as TiVo Inc. and Samsung Electronics Co already sell set-top boxes, so far without making a big impact on the market.

The talks illustrate that Apple is seeking a less radical path to expand in television than it has contemplated in the past, namely teaming up with existing service providers rather than licensing content to compete with them directly.

It remains unclear if the set-top box Apple is trying to pitch is a variation of its Apple TV or perhaps something much more sophisticated. and expensive.

Notably, one person familiar with Apple’s plans explains that Steve Jobs a few years ago wasn’t too keen on the idea of Apple building a set-top box because of the way cable operators are set up in the US where there aren’t a few large ones with national reach. On the contrary, there are a number of regional cable providers that each “serve only defined geographic territories.”

The two sides have danced around each other for years, say people familiar with the cable companies’ thinking. Cable operators in the past were worried that Apple could erode their relationship with their customers if Apple had a role with the box.

Cable executives have also said that historically weak sales of the Apple TV meant striking a deal to put live programming through the box hasn’t been a priority. Operators have put more emphasis on apps for the popular iPad tablet.

Well either way, Apple is certainly keeping an eye on the space and we’d imagine they’re not going to pounce until they have something that “just works”.

Things are certainly heating up in the courtroom as we’re about to finish up the third week of Apple and Samsung’s trial.

One thing is clear – Judge Lucy Koh is tired of courtroom shenaneigans and wants to keep the trial moving along swiftly and efficiently. That said, she was none too pleased today when Apple filed a 75-page brief detailing a list of 22 potential rebuttal witnesses.

Koh was pretty fumed and asked why Apple would craft such a lengthy document when “unless you’re smoking crack you know these witnesses aren’t going to be called!”

I mean come on. 75 pages! 75 pages! You want me to do an order on 75 pages, (and) unless you’re smoking crack, you know these witnesses aren’t going to be called when you have less than four hours.

Almost comically, Apple’s attorney responded by saying, “First, your honor, I’m not smoking crack. I can promise you that.”

In any event, Apple’s counsel agreed to narrow the briefing down while reaffirming that Apple would be able to get all of its proposed witnesses up on the stand without adding any more unwanted time onto the court proceedings.

As part of the trial, Koh has mandated that Apple and Samsung both have 25 hours worth of time with which to make their case to the jury. Samsung is actually down to just about an hour and a half while Apple now has six and a half hours remaining. Apple will likely be using its remaining time to cross-examine Samsung’s key witnesses while also proffering rebuttal witnesses of its own.

via CNET

Apple shares tend to fluctuate like no other, and after having crept down below to sub-$600 levels for a while, the stock has been on a tear lately.

Moving the stock along, as far as we can tell, is anticipation ahead of Apple’s iPhone 5 unveiling set for September 12th, and perhaps, Apple’s issuance of a dividend as well.

The Wall Street Journal adds:

Shares recently traded up 0.8% at $635.73. The stock is up 11% since closing at $574.88 on July 25 following that earnings report, in which worries popped up that iPhone sales may have lost steam.

Shares are up 57% this year. The all-time intraday peak is $644 hit on April 10.

Apple is currently trading at $636 and might we venture to say that we can see it shooting past its all-time high by the time early September rolls around.

Earlier this week reports emerged of widespread layoffs and hour cutbacks at a number of Apple retail stores.

MacRumors was the first to report on the news:

Over the past couple of weeks, we’ve been receiving reports that Apple has been laying off a number of recently-hired staff members at its retail stores. Most of the reports have been coming from Apple retail employees in the United Kingdom, but several of these reports claim that similar actions are taking place at stores around the world. We’ve also been receiving reports of long-term cutbacks in hours for part-time staff in the United States and Canada.

Now a few days later, Apple has admitted to the layoffs and attributes it to a temporary change in Apple’s retail formula.

The Dow Jones Newswire reports:

In a communication with store leadership teams, senior vice president of retail, John Browett, who took the reins of Apple’s retail stores in April, said that the company had been trying a new staffing formula for its retail stores, leading some employees to see their hourly shifts cut and retail locations to be understaffed. This happened for a few weeks before the company decided to revert to its older system, hoping to rectify the problem.

He instructed leadership teams to tell employees, “We messed up,” according to two people who were aware of the communication, which also stressed that while shift schedules were affected, no one was laid off. He also wanted employees to know that it was hiring new staff, these people said.

Apple acknowledged the retail staffing changes. “Making these changes was a mistake and the changes are being reversed,” said Kristin Huguet, an Apple spokeswoman. “Our employees are our most important asset and the ones who provide the world-class service our customers deserve.”

Interestingly enough, and despite Apple’s assertions to the contrary, there have been reports of people being laid off. ifoAppleStore fleshed out some details adding that the cutbacks were initiated by Browett in an effort to meet internal profit goals – i.e run a smaller team – even though other retail folks within the company objected.

In late July, it was reported that Apple had acquired a fingerprint sensor technology company called AuthenTec for $356 million. Now as a company that rarely makes acquisitions, Apple’s acquisitions take on a much broader significance. In other words, Apple tends to purchase companies with overt strategic importance to their product pipeline.

That said, it stands to reason that Apple is planning to incorporate the company’s fingerprint technology into its products sometime soon, and if you delve into the frenzied pace with which Apple snatched up AuthenTec, their technology may be integrated into Apple’s products sooner rather than later.

To that end, The Next Web has taken a close look at a recent SEC filing which describes Apple’s sense of urgency regarding its interest in acquiring AuthenTec.

Now discussions between the two companies first kicked off in late 2011 after AuthenTec shopped around its technology to a number of leading consumer electronics companies. Oddly enough, Apple, the report states, was the only company interested in developing the technology – though that may be due to cost and not to an otherwise disinterest in what AuthenTec brought to the table.

And so negotiations began in February 2012 and marched forward the next two months with no final arrangement being hammered out.

Then the agreement shifted completely.

On May 1, Apple decided it wouldn’t be satisfied with a commercial agreement and notified AuthenTec’s representatives of its proposal to acquire the company instead. Apple offered a price of $7.00 per share, valuing AuthenTec at a 115% premium over the closing price of its common stock as a day previous, pricing that Apple believed “other potential buyers would be unwilling to pay.”

On May 2, Apple started tightening the screws. The company believed its price was “very attractive” as AuthenTec would face challenges trying to develop new technologies for its rivals, which “have dozens of different smartphone platforms, in contrast to Apple’s unique narrow product platform, which allows for unity of design in component parts across significant unit volumes.”

A transaction structure and timeline for the deal was proposed and this resulted in the showing of Apple’s hand. The company wanted to use AuthenTec’s technology and it needed it fast.

And so the plot thickens.

Next, Apple made it clear that it wanted to move along with the deal quickly on account of its “product plans and ongoing engineering efforts.” What’s more, Apple said that it had no interest in participating in an auction for the technology and indicated that it would rescind its offer should AuthenTec decide to solicit bids from other companies.

The SEC filing also touches on an IP and licensing agreement between the two companies that existed as part of the acquisition offer.

he IP agreement provides Apple with the right to acquire non-exclusive licenses and certain other rights with respect to hardware technology, software technology and patents of the Company for commercialization of 2D fingerprint sensors for use in or with Apple products. For the right to acquire such non-exclusive licenses and other rights, Apple will pay us $20.0 million. Apple will have 270 days from the date of the IP agreement to choose, in its sole discretion, to license certain hardware technology and patents and certain software technology and patents from us on a perpetual, non-exclusive basis for an aggregate sum of up to $115.0 million. Apple can choose to acquire either the non-exclusive hardware technology and patent rights ($90.0 million), the non-exclusive software technology and patent rights ($25.0 million) or both.

So putting this all together, what does Apple have up its sleeve? Some have speculated that Apple may integrate AuthenTec’s fingerprint technology into the iPhone home button, for example. After all, the company back in May took the wraps off of the “first smart sensor specifically tailored for secure NFC mobile commerce.” Measuring in at just 192 by 8 pixels, it comes with “hybrid fingerprint matching, AES, RSA and SHA encryption blocks, and One Time Password (OTP) generation.”

Could a “One more Thing” moment be a brewin’ at Apple’s upcoming special media event scheduled for September 12?

Maybe, but it would require a hell of a lot of engineering resources we’d imagine to incorporate the technology into Apple’s products in just a few months and pass muster with all of Apple’s quality assurance procedures.

But then how does one explain the urgency Apple showcased in acquiring the company? Why would they be so absolutely eager to get things signed and inked up if they weren’t trying to incorporate it into an upcoming product release? Or maybe this is for the iPhone 6 and Apple needs a full year of development and testing to safely feel comfortable getting it into the hands of consumers.

But the more we learn, the more it seems that time was of the essence.

After haggling over the price per share for the company (AuthenTec wanted $9 while Apple said its limit was $8), Apple stopped the negotiations based on something it encountered in the pursuit of its due dilligence.

But, this didn’t mean Apple wanted to abandon development of the new technology.

Instead, focus switched to licensing the technology (again), and from June 1 to July 3 both parties continued to “design and develop the technology for Apple and continued to negotiate to narrow the significant differences between the parties regarding acceptable terms for a commercial agreement.”

If there was a sign that Apple was hell-bent on integrating the technology in its products no matter what, this was it.

But soon AuthenTec resolved the due diligence issue -whatever it was – the deal was back on the table.

Apple emphasized its requirement that the development of the technology would not be interrupted regardless of whether the proposed transaction was completed. On the evening of July 19, the parties agreed to the key terms of the IP agreement and the development agreement.

The Next Web adds:

After much deliberation between AuthenTec, Apple,  Alston & Bird and Piper Jaffray, a deal was agreed on the evening of July 26. Apple would pay $8.00 per share, provide $20 million for AuthenTec’s technologies and license its technologies for up to $115 million.

On July 27, AuthenTec filed an 8-K with the SEC and the deal was announced.

No matter how you slice it and dice it, something’s afoot.

Given that AuthenTec has filed its proxy document, shareholders are still to vote on the Apple deal. It is almost certain to go ahead, but AuthenTec can still hold out for a bigger offer, where it would need to pay Apple $10 million. Regardless of whether the deal is completed or not, the fingerprint technology in question will certainly make its way to an Apple product.

Throughout its meetings with AuthenTec, Apple was keen to express that work on the new technology must continue unhindered, regardless of whether it entered a commercial agreement (which involved royalties, patent licensing and its exclusive use) or it acquired the company.

Over the past few years, Apple’s bank account has exploded to where they now have over $100 billion dollars at their disposal. As a result, many have long wondered just what exactly Apple is planning to do with all that cash.

For a while, the company brass explained that they were keeping it close so that they could make strategic acquisitions on a moments notice, should the opportunity arise. But it soon got to a point where Apple had more money than it really needed. And once Tim Cook assumed the reigns at Apple, he made it clear that Apple was “not religious” about holding onto its cash hoard.

And so, back in March of 2012, Apple announced plans to institute a stock buyback and pay out dividends.

Tim Cook explained at the time that Apple uses its cash to “make great investments in our business, through increased research and development, acquisitions, new retail store openings, strategic prepayments, and capital expenditures in our supply chain, and building out our infrastructure. You’ll see more of these in the future.”

At the same time, Cook added, “we can maintain a war chest for strategic opportunities and have plenty of cash to run our business.”

The stock buyback will set Apple back about $10 billion while the dividend will pay out investors approximately $2.65 per share on a quarterly basis. The dividend program will cover any shares of record owned as of Monday, August 13. And with approximately 935 million Apple shares outstanding, Apple will be spending about $2.5 billion per quarter on dividend payouts.

And just when is dividend pay out day? Today.

Over the next three years, Apple’s buyback and dividend program will swallow up about $45 billion from Apple’s cash reserves. But never fear Apple investors, as Apple will be generating more cash than it will be doling out. In other words, Apple’s cash reserves will continue to grow, albeit at a slower rate. As an illustrative example, Apple this past quarter – which investors thought was somewhat lukewarm – saw the company generate an additional $7 billion in cash.

Given Apple’s cash reserves, some have criticized Apple for not issuing more of a dividend. Still, with so much cash on hand, Apple will easily be one of the top dividend issuing companies in the US.

Barrons adds:

For those of you keeping score of such things, Apple’s quarterly dividend-paying cycle of  February/May/August/November, which already represented the highest-paying  cycle of the three possible quarterly calendar cycles, will further increase its lead over the other two.

What’s more, Apple made it clear that they’re not strictly tied to the $2.65 dividend/share amount and that company is open and willing to make future adjustments to said amount as circumstances change.

We’re not sure how the dividend payments will work for every brokerage company, but some people we talked to with online trading accounts are telling us that dividend payments have already started appearing in their online accounts.

As the Apple-Samsung legal battle is in high gear during its third week, US District Court Judge Lucy Koh is still holding out hope that maybe the two parties can come to agreement before a jury verdict is reached.

“I see risk here for both sides if we go to a verdict,” Koh explained earlier today. If all Samsung and Apple want to do, Koh continued, is to show everyone their intellectual property positions as it pertains to smartphones and tablets, then “message delivered.”

“It’s time for peace,” she added.

Hopeful words, to be sure, but I doubt anything will come of it given the manner in which both Samsung and Apple have been going after each other in the courtroom the last few weeks. Koh does have a point to the extent that once a verdict is reached, it may prove to be too much of a blow to whoever winds up on the losing side of that decision. In this prisoners dilemma of legal battles, so to speak, it may be advantageous for both sides to avoid an adverse judgement and come to a settlement.

Of course, if it were that easy we wouldn’t be in this mess to begin with.

Ina Fried of All Things D writes:

Attorneys for both companies agreed to at least a telephone meeting between the two companies. Executives for both sides have previously met, to no avail, at the court’s direction…

Testimony in the case is due to wrap up on Friday or Monday, with closing arguments planned for Tuesday.

You might recall that Tim Cook previously met with Samsung CEO Choi Gee-sung bac in May as part of some court ordered mediation.

We reported at the time:

Tim Cook has of course said that he’s not a fan of litigation, but at the same time, warned other companies that they need to develop their own products instead of copying Apple’s. To that end, it remains unclear if the two CEOs will be able to hammer out an agreement but my first inclination is that their dispute will be heading to trial come July.

And now that the trial is nearing its conclusion, the result, should a verdict be rendered, will unquestionably have huge repercussions across the entire mobile landscape.

A flurry of iPad Mini news made the rounds late yesterday evening.

First up, 9to5Mac reports that they received word from a number of sources that the rumored iPad Mini will look much like a large iPod touch, “with smaller bezels along the sides in portrait mode and separate volume buttons and not a “rocker” and a mic on the back..” Note the mock-up above which a few other folks “in the know” have deemed to be pretty spot-on.

Following that, iMore added some more detail, noting that the iPad Mini will be about the same thinness as the iPod Touch, which is to say about 0.28 inch (7.2 mm) deep. This is quite a bit thinner than the iPad.

Most importantly, this isn’t a big iPod touch.

The Google Nexus 7 is arguably closer to a big iPod touch than this device. The Nexus 7, in part, scales up smartphone interface elements and apps. The iPad mini runs the iPad version of iOS and scales it down. The iPad mini is an iPad, and that makes a tremendous difference. That allows it to run that higher class of apps that Steve Jobs talked about.

This is a full on iPad, just smaller and lighter.

And finally, John Gruber of Daring Fireball also throws his hat into the ring arguing that the iPad Mini will be more akin to a smaller iPad than a blown up iPod Touch.

For one thing, it’s closer in size to the iPad-as-we-know it, and for another, all credible reports (along with several of my own little birdies) point to the smaller iPad keeping the 4:3 display aspect ratio.

But if you shrink the device enough, and reduce the weight enough, would such a device still need a bezel surrounding the display of the same proportions as the iPad-as-we-know-it? Maybe not.

The iPad 3 — the whole device, not just the display — measures 241.2 × 185.7 mm. Divide and that comes out to roughly 1.3, which is very close to the aspect ratio of the iPad display (1.333…). In other words, the aspect ratio of the iPad as a whole is very close to the aspect ratio of the iPad display. You don’t even need to work out the math — just look at it.

That’s not true for the iPhone and iPod Touch. The iPhone 4S is 115.2 × 58.6 mm; divide and you get roughly 1.97 — far different proportions than the 1.5 (3:2) aspect ratio of the display. Again, just look at it.

As the Apple and Samsung trial now enters its third week, Samsung’s senior user experience designer Jeeyuen Wang explained via an interpreter that the company did not copy Apple’s own icon designs on its line of Galaxy smartphones.

On the contrary, Samsung’s choice of icons – which so closely resemble Apple’s it’s ridiculous – was the result of many many hours of research and testing. For instance, Samsung’s design decision regarding the green phone icon was chosen because it “resonated best with users.”

And believe it or not, and despite internal Samsung documents to the contrary, Wang, when asked if she referenced Apple’s icon designs when designing Samsung’s said, “We did not.” And note, that Wang’s name appears on some of these documents.

Makes for a great story, but let us revisit once again an internal Samsung document which makes it abundantly clear that Samsung was out to copy, quite explicitly, the design aesthetic of Apple’s iPhone.

Apple of course brought this to light during its cross-examination though Wang, ever so instructed by Samsung’s legal team, maintained that Samsung was simply trying to create icons specific to Samsung, but that all designers aim to create “icons that are simple and not confusing to users.”

Well, I guess if you copy the iPhone, that’s one way to familiarize users with the icon scheme and layout. I mean, come on. The same icon design with the same color scheme essentially and we’re supposed to believe that it’s all just a coincidence?

Wang added at the end of her cross-exam, “We tried to develop Samsung icons, something that represents Samsung.”

Here are some more examples brought to light by Apple.

via All Things D

There’s good news for the multitude of iPhone users who rely on their iOS device to help them get up in the morning. One of the many new features in iOS 6 – scheduled to drop in late September alongside the new iPhone 5 – will be the ability to choose songs from one’s iTunes library as an alarm sound.

As it stands now, users can only choose from a selection of pre-installed iPhone alerts, or if they so choose, they can purchase alert tones (which includes songs) from the iTunes Store. As a result, a small niche market for alarm clock apps emerged enabling users to select a wake-up tune from their entire iTunes library.

But with iOS 6, that functionality will be baked right into the Apple’s alarm clock feature.

This is what the new alarm clock pane will look like, courtesy of Apple Insider.

Note that this feature is also going to be available for the iPad once iOS 6 is released.

Apple scored a notable legal victory earlier this week when they successfully convinced US District Judge Lucy Koh to not allow Samsung designer Hyong Shin Park from taking the stand and discussing the Samsung F700 phone, a device which Samsung claims pre-dates the iPhone and was inspired by a “bowl of water.”

Samsung had for some time been trying incorporate the F700 into its case because it was allegedly designed before the iPhone was announced and contains some of the more prominent iPhone design features. Note, though, that the F700 wasn’t released to the public until after the iPhone debuted.

In a court filing from last week, Samsung noted that Park was going to testify as to the design elements of the F700, including its “rectangular housing with four evenly-rounded corners, rounded edges on all four sides, a large, flat clear glass cover over the entire front face without ornamentation, a curved bezel that extends towards the back of the phone, an oblong speaker slot at the top of the front flat face, and a single optical jog button at the bottom of the front face.”

However, the Court had already ruled that the F700 was not admisseble as prior art. What’s more, Apple points out that Park herself has said that none of Samsung’s subsequent accused products were based on her work on the F700.

All that said, the following graphic from AppleInsider is rather telling.

Florian Mueller adds:

The F700 features some (though by far not all) of the visual characteristics of the iPhone and was launched shortly after Apple’s initial iPhone presentation in early 2007, but a Korean design patent related to it was filed the year before.

While Samsung is allowed to present the F700 only in connection with the question of whether certain iPhone design elements are functional (and therefore not protectable), Samsung’s lawyers have been looking for all sorts of ways to inject the F700 into the trial, preferably in contexts in which the jury may be (mis)led to consider the F700 a permissible prior art reference.

Judge Koh notes that “Ms. Park did not design any of the accused devices” and points to an inconsistency in Samsung’s position: “On the one hand, Samsung explains that Ms. Park will testify that the F700 was functional, but also that she obtained a [Korean] design patent […] for the same design”. Judge Koh furthermore remains concerned that using the F700 as an argument to counter Apple’s claims of willful infringement (by raising an independent creation defense) is too likely to lead to jury confusion, even if the court provided a limiting instruction.

via AppleInsider

If you’re a Sprint subscriber who has been contemplating getting an iPhone, now may be the perfect time to pounce.

Not too long ago, Sprint dropped the price of the iPhone 4S to $150 with a 2-year contract. Today, it sweetened the deal even more by dropping the buy-in price to $49, the result of a $100 American Express gift card.

And with Apple now price-matching iPhone sales offers, customers can pick up an iPhone 4S at an Apple Store for $150 and a $100 Apple Store gift card – with an obligatory 2-year contract of course.

This is likely the cheapest price-point at which you’ll be able to pick up an iPhone 4S, that is until of course Apple releases the iPhone 5 in late September. It’ll be interesting to see, though, if the iPhone 3GS remains the “free with contract” device or if Apple will slide down the iPhone 4 to that position.

Lastly, note that Sprint’s generous offer is only available via online and expires on August 26.

via Business Insider