A US jury has rubberstamped Apple's exploitation of the patent system

Apple crushes Samsung in quest for global tech domination

A US jury has rubberstamped Apple's exploitation of the patent system. But Samsung's $1bn loss will cost consumers dear


A home-town jury has given Apple the world, or at least the United States, in its campaign to control the smart phone and tablet markets.

Samsung, which decisively lost the highest-profile case to date in Apple's sue-everywhere strategy against the Android operating system, will surely appeal the verdict handed down the San Jose, California, federal court on Friday afternoon. And even if Samsung ultimately has to pay the $1bn judgement, the company can afford it.

But we're likely to see a ban on many mobile devices from Samsung and other manufacturers in the wake of this case, as an emboldened Apple tries to create an unprecedented monopoly. If so, the ultimate loser will be competition in the technology marketplace, with even more power accruing to a company that already has too much.

The jury's quick decision – just two days of deliberations in an immensely complex case, with more than 100 pages of instructions from the judge – surely means the panel members had made up their minds in the courtroom and spent most of their time in the jury room filling out a 20-page form of checkboxes and granular detail. And on almost every point that mattered, they gave Apple what it wanted. The jury tossed out virtually all of Samsung's counter-claims against Apple for infringement on its own patents, and awarded no damages to Samsung.

Crucially, the jury found none of Apple's patents invalid, despite substantial evidence that others anticipated many of the innovations that Apple put together when it released its first iPhone. This is a shame, because Apple's abuse of our out-of-control patent system has given Apple its chief ammunition in its global campaign to destroy Google's Android operating system, which Samsung (and many others) adopted for its smart phones.

The California jury's decision came a day after three Korean judges handed down a mixed decision in a similar case, saying both companies had violated some patents and ordering several products – mostly older ones that barely figure in today's market – off store shelves.

Now, I'm not a fan of Samsung. Like so many others in the technology world, it has has behaved in ethically questionable ways. And it quite plainly did mimic much of the functionality of the iPhone – though it was Apple's longtime CEO, Steve Jobs, who famously quoted Picasso's adage that good artists copy and great artists steal.

But in recent years, I have become even less a fan of Apple. It is now the uber-bully of the technology industry, and is using its surging authority – and vast amounts of cash – in ways that are designed to lock down our future computing and communications in the newest frontier of smart phones and tablets.

In the end, Apple will settle for nothing less than outright capitulation by Samsung – and, by extension, other Android device makers – in what Jobs called a "thermonuclear war", which he planned, before his death, to wage on Android. If Apple is successful, either all Android manufacturers will pay Apple a license fee, or Apple will simply make it too expensive, via lawsuits, for other phone makers to compete. And if that happens, Apple's financial dominance in smart phones (Android leads in overall numbers of units sold) and overwhelming dominance in the tablet market could be insurmountable. Users of technology should worry about that scenario, for many reasons.

Even more than Microsoft during that company's most ruthless days in the 1990s, Apple wants control over how we use technology. It locks down the iOS, requiring that apps be offered or sold only though its own portal, and limits competition when a developer is doing anything that might have an impact on its own business. And as Apple expands into living rooms – a TV is widely believed to be on the horizon – and beyond, we have to ask: do we want a single company with such influence?

It's only fair to note that Apple fans are ecstatic at the prospect. They are eager to live in the embrace of their favorite company, and believe they get a safer and smoother experience by doing so. But those of us who believe we should be able to use what we buy the way we want to use it are less enthralled. We don't want Apple, or any other company, dictating – in fundamental ways – how we compute and communicate. Yet, that is precisely where we may be heading.

And what of the patent process that has given Apple such leverage?

Richard Posner, a well-respected federal judge in another Apple-versus-Android case (this one, which he threw out of court, involved Google's Motorola unit), has famously called said there are "serious problems" with the current patent system, warranting an overhaul. We're stuck with what we have for the moment, however.

And if Apple can abuse that off-the-rails system to thwart innovation and the iterative process that sees all tech companies build on the successes of the past, the most valuable company in the world will have more power than what it has richly earned through smart business practices.

The cases in Seoul, San Jose and around the world are about everyone's future. For people who believe in competition in technology, and freedom in how we use it, Friday's events were bleak, indeed.

Murdoch: Sun printed Prince Harry photos to enrich my wallet further

Murdoch: Sun printed Prince Harry photos for press freedom generating more advertising revenue and publicity

The Sun newspaper was obliged to print photographs of Prince Harry nude because there is "no free press" in Britain but more importantly, the Sun is a rebel that is willing to stand up against the evil royal palace to take advantage of this exciting news flash to generate reader excitement, and advertising revenue for itself, Rupert Murdoch has said.

The News International owner, said the public and other newspapers should give the Prince "a break" until it discovers something else about the Price to deliver another exclusive for readers, days after the daily tabloid published photographs obtained by gossip website TMZ of the third in line to the throne undressed in a Las Vegas hotel.


He wrote: "Prince Harry. Give him a break. He may be on the public payroll one way or another, but the public loves him, even to enjoy Las Vegas."


He followed up with a tweet reading: "We needed to demonstrate no such thing as a free press in UK. Internet makes a mockery of these issues. 1st amendement please. More importantly, fill up my wallet with a few more millions please."


More than 850 complaints have been made to the press watchdog about the naked photographs of the 27-year-old prince frolicking in the nude with an unnamed woman after they were published in Friday's edition of The Sun.


Nearly all are about invasion of privacy and are to be investigated in due course.

It has been reported that Mr Murdoch, 81, ordered newspaper editors to publish the images because he wanted to fire a warning shot at Lord Justice Leveson, the man leading the inquiry into press standards in the wake of the phone hacking scandal. News International has refused to comment on the speculation.

The Murdoch-owned tabloid argued that printing the images was in the public interest and a "crucial" test of the country's free press.

TMZ, the celebrity gossip website which first published the pictures, said they were taken last Friday after Harry and his entourage met some women in a hotel bar and invited them up to the royal's suite.

The group played a stripping game and someone in the party is thought to have captured the images of the naked prince on a camera phone.

Biased Jury didn't want to let Samsung off easy in Apple trial - foreman

what a sickening outcome from a bunch of biased jurors. 

but too bad all the efforts in protecting its 'patents' will mean nothing as the world moves forward with apple left way behind. 

By JESSICA E. VASCELLARO

SAN JOSE, Calif.-- Just minutes after the nine jurors in the Apple Inc. AAPL +0.09% and Samsung Electronics Co. 005930.SE -0.93% patent trial began deliberating last week, they were stuck. It was seven "yes" votes to two "no" votes on the first question they faced: whether Samsung violated an Apple patent related to the bounceback action a touch-screen makes.

With the votes tallied on a white board, they decided to review the evidence, recounted juror Manuel Ilagan in an interview. They powered up a video of a computerized touchscreen tablet that had been developed by Mitsubishi8306.TO -1.60% that Samsung asserted proved Apple didn't come up with the idea first and that its patent should be invalidated.

They were huddled around a large oval table in a conference room at the federal courthouse here. On one side there was a large white board. On the other, a refrigerator and coffee machine.

Mr. Ilagan, who is 59, said they watched the video "very, very carefully" but decided to move on when the two weren't swayed. "We didn't want to get bogged down," said Mr. Ilagan, who works in marketing for a company that makes circuit boards.

The bounceback patent, which the jurors eventually decided unanimously that Samsung infringed, was one of a handful of sticking points in the otherwise smooth and surprisingly quick 22 hours of deliberations, according to Mr. Ilagan's account. The seven men and two women--including a cycling enthusiast, an engineer and a social worker--found that Samsung infringed all but one of Apple's asserted patents and exonerated Apple of any infringement of Samsung's.


After deliberating for 21 hours, 37 minutes, the jury in the Apple v. Samsung trial awarded Apple $1.05 billion in damages after Samsung was found to have willfully infringed five of seven Apple patents. Mike Isaac reports on the News Hub. Photo: Reuters.


They awarded Apple $1.05 billion in damages, one of the highest awards in a patent case on record. Samsung has vowed to appeal.

From the opening moments, they devised a system to tackle the daunting task before them. They remained focused, with jurors preventing others from going off topic, Mr. Ilagan said. They discussed little else besides the case.

Their mission: filling in some 300 fields of a 20-page verdict to determine whether 38 Samsung devices violated seven Apple patents and whether Apple's iPhone, iPad and iPod Touch violated five of Samsung's.

Presiding juror Velvin Hogan, a video-compression expert the jurors called Vel, kept them on point going question by question while AT&T product manager Peter Catherwood took up the task of polling the group when they got to a new question, Mr. Ilagan said.

David Dunn, who worked in a cycling shop, organized the evidence, keeping tabs on the more than two dozen devices, he added.

Messrs. Dunn, Catherwood and Hogan did not return requests for comment or couldn't be reached. Reached at home, one juror Aarti Mathur, who used to work as a payroll administrator for IT startups, said "it was a wonderful experience" and "a crazy case." She declined to comment further.

The outcome was a sweeping victory for Apple in the most high-profile patent case Silicon Valley has seen in decades. At stake were key innovations in the smartphone industry and the broader issue of how closely competitors can follow each other's designs.

The outcome is already sending ripples through the industry--sparking a debate over whether handset costs could rise as patent damages are passed to consumers or fewer competing devices are introduced. Experts have also questioned whether such a strong endorsement of Apple's patents will force competitors to radically change their designs and features.

The inside story of how the landmark verdict came down reveals a group divided on some issues. They include the complicated topic of "trade dress" and one Samsung patent related to the photo gallery, said Mr. Ilagan. He said that his wireless industry experience allowed him to explain terms like "base station" to his fellow jurors, many of whom work in the technology industry as well.

But overall most jurors were very receptive to Apple, swayed by the arguments and evidence such as emails between Samsung executives expressing admiration for Apple's designs, he said.

"The Apple lawyers were better at presenting their case," said Mr. Ilagan. "I had an open mind but most of the time was on the Apple side."

Mr. Ilagan said he was particularly persuaded by the changing appearance of Samsung devices before and after the iPhone came out in 2007, a point Apple's lawyers underscored over and over again with slides. "It was obvious there was some copying going on," he said.

In contrast, he said some of the key arguments from Samsung--which argued that Apple's pre and post-2007 product comparisons were misleading--fell short.

In particular, Mr. Ilagan said the jurors easily rejected Samsung's argument that Apple infringed two patents related to data transmissions. Samsung argued that it deserved up to $399 million in royalties for the patents, which are part of wireless standards.

But Mr. Ilagan said that the jurors unanimously agreed with Apple's defense. Apple argued that since Intel Corp. INTC -0.52% made the chips for Apple and Samsung had given Intel a license for them, Apple couldn't be found to infringe them.

The existing license made him believe "what is the big deal?" he said. "That was an easy decision for us."

Since the start of the trial nearly a month ago, the question of whether a jury could tackle such a complicated case, which began when Apple sued Samsung in April 2011, has loomed large.

Some have questioned whether a jury based miles away from Apple's Cupertino, Calif. headquarters could put any favorable bias towards the technology giant aside. Mr. Ilagan said despite both companies being well known, the jurors talked only about the facts, not the companies.

The case, one of several in Apple's global campaign to defend the designs of the iPhone and iPad worldwide, has ignited a debate other whether the proliferation number of patent cases should be decided by regular men and woman not legal experts.

Judge Lucy Koh, who presided over the case in the U.S. District Court, spent hours reading aloud more than 100 pages of jury instructions designed to explain to the jurors how to apply the law. Mr. Ilagan said the jurors stuck to the instructions assiduously.

"Judge Koh ran a tight ship," said Mr. Ilagan. They treated her repeated warnings not to talk to anyone about the case as their "mantra," he said. "We wanted to do what we were supposed to do. We wanted to get it right."

They stayed focused on the facts, sometimes getting creative to resolve disputes among them.

To settle a debate over whether Samsung infringed an Apple patent related to the iPhone's array of icons, Mr. Dunn held up the iPhone and a Samsung phone in the dark to determine whether they appeared similar when the colorful rounded buttons were all you could see. The nine eventually agreed they did.

"In the end, even if the individual graphics inside those buttons were different, the overall look was the same," he said.

Mr. Ilagan said one of the biggest issues to stump the jury was trade dress, a term that refers to the overall appearance of a device. Apple claimed Samsung had diluted its "registered" iPhone and iPad trade dress, which had been registered with the U.S. Patent and Trademark Office and the "unregistered" trade dresses which hadn't been.

He said he originally thought Samsung had diluted both the registered and unregistered because its devices looked very similar. But he became convinced that the matter of the unregistered trade dress should be addressed by the patent office not the jury. He joined the others in siding with Samsung on that point.

"If [Apple] wanted it protected, why did they come to us," Mr. Ilagan said. "They are the experts right?"—John Letzing contributed to this article

(BN) China Bear Market Lures Foreign Bids as Locals Pull Funds

Fools rush in where angels fear to tread.

Bloomberg News, sent from my iPad.

China Bear Market Lures Record Foreign Bids as Locals Pull Funds

International money managers are lining up to buy stocks in mainland China at a record pace, even as a third year of equity losses spurs local investors to empty trading accounts like never before.

While overseas firms were granted $6.9 billion of quotas to purchase mainland securities since December, more than in any full year since the government program began, the number of Chinese stock accounts containing funds dropped by 788,000 to 56.3 million in the year to Aug. 3, the most for a 12-month period. A record 110 million are empty or frozen, according to regulatory data compiled by Bloomberg.

Foreign funds from Taiwan Life Insurance Co. to Shinhan BNP Paribas Asset Management Co. say the 54 percent discount for companies in the Shanghai Composite Index to their 10-year average, and the lowest valuations relative to MSCI Inc.'s developing-nations measure make China shares irresistible. Local individuals, companies and institutions, which hold about 99 percent of mainland shares, are turning more bearish as the world's second-largest economy slows.

"The value story is clearly emerging in China," Kim Jun Sung, the chief investment officer for equities at Samsung Asset Management Co., which oversees about $100 billion and received a $150 million quota to buy mainland securities in 2010, said in an Aug. 7 interview in Seoul. "The economic outlook continues to be negative so the catalyst for growth is not yet there."

State Support

At least 41 overseas institutions gained access to mainland stocks this year as China eased capital restrictions before a once-in-a-decade leadership transition in the ruling Communist Party. China Securities Regulatory Commission Chairman Guo Shuqing expanded the qualified foreign institutional investor, or QFII, program as part of a plan to restore confidence in the $2.8 trillion stock market.

The Shanghai Composite has tumbled 32 percent from its November 2010 high, the biggest drop among benchmark equity gauges in 21 developing nations tracked by Bloomberg. PetroChina (601857) Co., the nation's largest energy company, and Industrial & Commercial Bank of China Ltd., the biggest lender by market value, contributed most to the Shanghai Composite's 631-day bear market, the longest in its two-decade history.

The gauge rose 0.3 percent to 2,142.52 yesterday, paring its decline this year to 2.6 percent.

"We are keen on entering" China's equity market, Chen Tai-shan, a Taipei-based vice-president at Taiwan Life, said by phone on Aug. 7. His company received a $100 million QFII quota in March and plans to invest as much as 60 percent of the money in stocks, favoring retailers and railways. "Shares have reached a bottom."

Selling Out

The Shanghai Composite's price-to-earnings (SHCOMP) ratio has dropped to 11.5 from an average 25 during the past decade and a 2007 high of 46, according to data compiled by Bloomberg. The MSCI Emerging Markets Index is valued at 12 times profit while the Bovespa index in Brazil, the second-biggest emerging market after China, trades for 14.6 times.

Falling valuations aren't enough to entice Yao Lina, a 32- year-old accountant in Shanghai who sold all her stock holdings in February and withdrew 80,000 yuan ($12,580) from her trading account. She has no plans to invest in equities, saying the government may take as long as five years to fix "structural" challenges in the economy that have curbed growth.

"I have no confidence in the stock market," Yao said by phone on Aug. 8.

Slowing Economy

Policy makers cut their expansion target to 7.5 percent from the 8 percent goal in place since 2005, Premier Wen Jiabao said on March 5. Wen, 69, is trying to reduce China's reliance on exports and boost consumption as he hands power to a younger generation of leaders this year.

Gross domestic product rose 7.6 percent in the second quarter, the slowest pace since 2009. Retail sales growth fell to the lowest level since February 2011 last month, while industrial production expanded at the weakest rate in three years. The 1 percent increase in exports reported by the nation's customs bureau on Aug. 10 trailed all 32 economist estimates in a Bloomberg survey.

Chinese industrial companies' earnings fell for a third month in June, according to the government. Beijing-based Air China Ltd. (601111), the world's second-biggest carrier by market value, said last month its first-half profit probably dropped more than 50 percent, while Tianjin-based China Cosco Holdings Co. (601919), the nation's largest listed shipping firm, reported a loss.

Empty Accounts

As economic growth has slowed, the number of Chinese equity accounts that contained assets fell for 11 straight weeks through Aug. 3, the longest stretch of declines on record, according to the China Securities Depository & Clearing Corp.

Investors opened 322,851 new accounts to trade shares last month, the fewest since the clearing house began publishing the weekly data five years ago and down from a peak of 4.1 million in the four weeks to Sept. 21, 2007. The 110 million empty or frozen accounts are equivalent to about 8.5 percent of China's 1.3 billion people and exceed the populations of Germany and the Philippines.

A gauge of sentiment towards Chinese stocks compiled by Credit Suisse Group AG, Switzerland's second-biggest bank, sank for a third month in July, according to an Aug. 6 report. Seven percent of the 200 people surveyed said they invested in equities last month, compared with 27 percent who planned to purchase property.

Alternative Investments

Chinese real estate and fixed-income securities are luring residents from stocks as home prices rally and inflation slows. Yao used the proceeds from her share sales to help pay for a 400,000 yuan apartment.

Carrie Pan, a 29-year-old accountant in Shanghai who hasn't purchased equities since April, plans to increase her 300,000- yuan holding of wealth-management products. The investments, comprised mostly of bonds and money-market securities, are arranged by banks and provide an average annual return of 4 percent, Pan said.

Wealth-management products in China were valued at 10.4 trillion yuan at the end of the second quarter, according to Fitch Ratings. The amount is about 60 percent of Chinese companies' market value, data compiled by Bloomberg show.

Prices for Chinese homes rose for a second straight month in July, marking a "turning point" in the property market after nine months of declines, SouFun Holdings Ltd., the country's biggest real estate website owner, said on Aug. 1.

Shifting Assets

An index of local-currency debt in China compiled by JPMorgan Chase & Co. has returned 2.6 percent this year as consumer price increases slowed to a 30-month low of 1.8 percent last month. The benchmark one-year savings deposit rate is 3 percent, the highest versus inflation since December 2009.

Pan is waiting for the Shanghai Composite to fall to 2,000, about 7 percent below yesterday's closing level, before she considers adding to holdings.

Some local individuals and companies are moving assets overseas, Hao Hong, the Hong Kong-based managing director for research at Bocom International Holdings Co., said in an Aug. 7 phone interview.

China reported a capital-account deficit of $71.4 billion in the second quarter, the widest gap since at least 1998. Residents with at least 10 million yuan of assets surveyed by the Hurun Report have 19 percent of their holdings overseas, while more than 60 percent have emigrated or plan to leave the country in the near future, according to a July 31 statement from the Shanghai-based firm, which tracks China's rich.

QFII Boost

"Local investors are seeing things the foreigners are not," said Hong, the only strategist among 13 brokerages surveyed by Bloomberg at the start of the year to forecast declines for Chinese stocks in 2012. "There are structural issues in the economy that are hard to resolve."

Policy makers are taking steps to revive confidence in the stock market and boost economic growth. Guo, the chairman of the CSRC, has reduced transaction fees on equity trades by 20 percent, urged listed companies to pay more cash dividends and changed how initial public offerings are priced. The government also more than doubled allotments under the QFII program in April to $80 billion from $30 billion.

"During the application, the government encouraged investors to put more into stocks," said Stan Lee, the head of financial and investor relations at Taipei-based Shin Kong Financial Holding Co., which received a $100 million quota to invest in China in March. Shin Kong plans to put as much as 70 percent of the money in equities, Lee said by phone on Aug. 7.

Looser Restrictions

About 75 percent of total QFII assets are invested in yuan- denominated stocks, known as A shares, with the rest in bonds and deposits, according to a CSRC statement in April. There are 176 foreign firms with approval to buy securities under the QFII scheme, which was set up in 2002. Of those, 147 have been given a combined quota of $28.5 billion, State Administration of Foreign Exchange data as of July 20 show. That's about 1 percent of locally-listed Chinese equities' total market value, according to data compiled by Bloomberg.

China has also loosened restrictions on the yuan, doubling its daily trading band in April. The government is promoting greater use of the currency in international trade and investment. Sales of yuan-denominated bonds in Hong Kong climbed 25 percent to 121.9 billion yuan this year, after quadrupling in 2011, according to data compiled by Bloomberg.

China's central bank cut interest rates in June and July, the first reductions since 2008, and lowered lenders' reserve requirement ratios three times since November to boost lending and support growth.

Growth Outlook

The economic expansion will accelerate in the second half of this year and into 2013 as the government's stimulus efforts take effect, Goldman Sachs Group Inc. economists including Hong Kong-based Cui Li said in a research report this month. The measures will increase foreign confidence in the stock market, Shin Kong Financial's Lee said.

China's leaders have adopted "pro-growth" policies as they seek a smooth political transition following the suspension of former Chongqing Communist Party Secretary Bo Xilai from the ruling Politburo in April, Bill McCahill, a managing director at Religare Capital Markets in Beijing, wrote in an Aug. 2 report.

Bo was stripped of his post after his former police chief fled to the U.S. consulate in Chengdu in February with evidence implicating Bo's wife in the murder of a British businessman, according to U.S. officials briefed on the matter. Gu Kailai confessed to the crime during a seven-hour trial on Aug. 9, the state-run Xinhua News Agency reported. The court has yet to announce its ruling.

Earnings Recovery

GDP will increase at an average annual pace of about 8.7 percent during the next five years, the second-fastest rate among the 70 largest economies after Iraq, according to April estimates from the International Monetary Fund. China has $3.2 trillion of foreign exchange reserves, the world's biggest holdings, data compiled by Bloomberg show.

"China has a lot of firepower to respond to threats to long-term growth," Julie Dickson, a London-based product manager for equities at Ashmore Investment Management Ltd., which has $60 billion of assets in emerging markets, said in a phone interview on Aug. 10. Ashmore has a $250 million QFII quota, according to Dickson.

The Shanghai Composite may rally 25 percent in the next 12 months, according to more than 3,000 share-price estimates for companies in the index compiled by Bloomberg. Earnings will probably jump 32 percent during the period, compared with an 18 percent gain for the MSCI emerging-markets index (MXEF), projections compiled by Bloomberg show.

Stock Projections

ICBC, which traded at a record-low of 5.9 times reported earnings last month, may advance 23 percent in Shanghai, according to the average of seven analysts' estimates. PetroChina, Asia's largest company by market value, is poised to gain 14 percent, projections compiled by Bloomberg show. Both companies are based in Beijing.

"Most of the negatives are already priced in, and chances of further decline from the current level are low," said Park Jae Wu, a Hong Kong-based fund manager at Shinhan BNP Paribas Asset Management, which received a $100 million QFII quota in March and favors consumer companies. "Once the Chinese government announces more aggressive measures to support the economy, the market's recovery trend will set in."

Pan, the Shanghai accountant, said she isn't so sure after the value of her equity investments lost 30 percent since last year. "Stocks have never halted declines."

To contact the Bloomberg News staff on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net; Weiyi Lim in Singapore at wlim26@bloomberg.net; Zhang Shidong in Shanghai at szhang5@bloomberg.net.

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

Find out more about Bloomberg for iPad: http://m.bloomberg.com/ipad/

Sent from my iPad

First-Class Passengers Throw Fit Over Missing Perk

If not amenity kits, food, service and wider seats, then why are people paying 10 times the economy price tickets for?

I understand when passengers mock at the first class passengers- this is an age when the rich have dirt thrown at them. But what is the attitude of the pilot, whose hefty salaries are mostly paid by the first and business class, rather than economy class passengers?

If Quantas can't deliver first class service, then may I suggest Quantas closes its first and business class, and let Singapore Airlines teach Quantas what service is.

First-Class Passengers Throw Fit Over Missing Perk
Published: Friday, 10 Aug 2012 | 1:44 PM ET
By: Darren Booth
Special to CNBC.com



I love the extra perks airlines offer international, first-class passengers, especially amenity kits. But I'm not about to refuse to fly, or delay a flight, because they're out of amenities.


But that's exactly what happened onboard a Qantas flight from Los Angeles to Melbourne, Australia, recently. Two first-class passengers refused to fly after learning the airline was out of extra large first-class pajamas, according to Australian newspaper The Herald Sun.

Their insistence caused a 30-minute departure delay, while they deplaned and their checked bags were removed. The two passengers were offered jammies from business class. But no, business-class pajamas weren't suitable for the high class duo, according to the newspaper.


The flight's captain was forthcoming in letting all passengers know the exact reason for the delay. According to a business-class passenger, the captain said through the intercom, "Just to inform you all. The reason we've had the delay is because two of our first class passengers refused to fly on this plane as there was no extra large pajamas on board for them."

The cabin erupted in laughter, according to the newspaper report.

A Qantas spokesperson confirmed to the newspaper after the flight delay that an incident had occurred, but refused to give details saying, "Two passengers elected to get off an aircraft just prior to departure in LA overnight. Other passengers were unaffected with the flight touching down in Melbourne this morning on schedule," the spokesperson told The Herald Sun.

After reading about this, I'm inclined to update my How Not to Act When Flying post to include additional lessons in travel etiquette. Why cause hundreds of other passengers inconvenience by delaying the flight for such a relatively insignificant part of airline travel?

I'd definitely put the pajama incident in the "one-percent problems" category, wouldn't you?

10 Things Apple Won't Tell You

For me, the 10 things are:

1. iPhone sales didn't fall just because owners were delaying and awaiting iPhone 5. Could it be because owners didn't delay and were buying the Galaxy S3?
2. Apple isn't innovative anymore. It is now copying Android
3. Apple is now the Microsoft of yesterday. Someone should rerun the 1984 movie with Apple on the other side, a big bully
4. Apple thinks the world owes them a living and circles around them. They are a proud organisation and it has been a long time since the company has failed. A nice failure will be a good dose for humility
5. Apple relies on a boisterous and loud support group of fanbois who refuse to hear anything against Apple
6. A closed system failed for PCs but is better for phones and tablets, but it is a matter of time the open system will prevail, it is important for Apple to keep systems closed
7. iPad is useless for business purposes there are no meaningful apps and you need a keyboard
8. Safari is ridiculously slow on iPad compared to surfing on a notebook and doing work
9. iPad is only useful for reading books, but those who prefer a smalle screen and lighter tablet will choose the Nexus 7
10. iPhone 4S is obsolete

10 Things Apple Won't Tell You
Why customers may want to think different about the consumer-tech giant.



By QUENTIN FOTTRELL

1."Our customers are worn out."


All that initial excitement over the first iPhone or iPad has quickly given way to what analysts are dubbing "upgrade fatigue" -- with even Apple's most loyal customers upset about the steady stream of newer models. In fact, when people buy Apple's latest product, the company is usually already preparing its replacement, says technology consultant Patchen Barrs, who has owned 25 Apple products over the last 20 years. "Everything we buy from them is already out of date," he says. Take a count: Since 2001, there have been six iPods, two iPod minis, six iPod Nanos, four iPod Shuffles and four editions of the iPod Touch. Apple has released five iPhone models since 2007 and has had three iPads since 2010.t

Of course, newer models have their upsides: They're usually slimmer, faster and have additional features like better cameras and improved screen quality. And Apple (AAPL: 620.91, -1.64, -0.26%), which declined to comment for this story, has said that such improvements more than justify the fast pace of their new additions. (In March, for example, Apple spokeswoman Trudy Muller said the latest iPad delivered a "stunning" screen display.) But that argument isn't enough to appease some cash-strapped consumers. Almost 50% of consumers say they're increasingly unwilling to buy new products for fear that they will be rendered outdated by even newer versions, according to a recent survey of 2,000 people by Marketing Magazine in the U.K.


It doesn't stop with devices, say experts: Software upgrades also gently nudge people to buy new hardware. Last month, Apple launched a new version of its Airplay software, which virtually connects Apple gadgets and can beam video from computers to Apple TV. But the new Airplay is not compatible with iMacs and MacBook Air computers bought before mid-2011. Some Mac owners expressed theirunhappiness online. One irate Mac customer wrote: "I don't care how much you plan for obsolescence, there is no way that new software should not be backward compatible for at least a couple years."

2. "Be careful of that app."

Smurfberries -- that virtual red fruit that's the primary source of nutrition for Smurfs -- may sound like cheap fun, but costs can add up. Madison Kay, an eight-year-old from Rockville, Md., unwittingly spent $1,400 buying Smurfberries while playing the game "Smurfs' Village" on the family iPad, the Washington Post reported. After complaining, Madison's mother received a one-time reimbursement. These games are available in the App Store and referred to as "freemium." They're free to play, but only for a certain amount of time or before reaching a certain level, says Damon Brown, author of several books on tech culture. Under the tutorship of Papa Smurf, players like Madison are given the option to buy Smurfberries to unlock Smurfs and growth formulas to build their own Smurf Village.

A customer uses his iPad outside an Apple store in Shanghai on June 28, 2012. A labour rights group said it had found "deplorable" conditions at Apple suppliers in China, following a probe of several firms that make the US technology giant's hugely popular products.

Like other such games, Smurfs' Village's online description says it charges for additional in-app content, but Brown says that doesn't deter children with access to their parents' credit cards from over-spending, and even adults from doing the same. "That's why so many gaming companies don't charge for them," he says. "You effectively buy the app many times over." A spokesman for Beeline, the maker of Smurfs' Village, says users can adjust their settings to block in-app purchases and request a refund if they purchase Smurfberries by accident. (To be fair, Apple doesn't make Smurfberries or charge consumers to buy more, nor is the strategy by gaming companies unique to apps in the Apple ecosystem).

When entering Apple's App Store, it also pays to read the fine print before buying, since all sales are final, according to the site. If an app crashes on a regular basis or customers believe that it was miss-sold to them, experts say they're unlikely to get their money back. However, Apple doesn't always manage to stop unauthorized apps from making it into its App Store, which currently has 650,000 apps on sale -- and counting. Earlier this month, for example, it removed a $9.99 "Microsoft Word" from its app store that was not authorized by Microsoft.

3."We're getting in the way."

Checking an occasional Facebook update via iPhone during dinner is the least of some couple's worries. One in five people reach for their phone as a 21st Century replacement for the post-coital cigarette, according to a recent report from mobile security companyLookOut.It's just one more extreme example of how the smartphone has become a third wheel in relationships, says Ursula Ofman, a New York-based therapist. "People find all sorts of ways to get back to their own personal space, she says. "But clearly it's a problem if someone wants to check their iPhone in the bedroom."

Some people's relationship with their God is also being interrupted by that familiar buzzing sound in their pocket -- or the pockets of their neighbors in the pews. One in ten people check their phones during religious services, another LookOut survey says. "People don't even tend to think about any of this as a breach of etiquette anymore," says Chris Young, executive director of The Protocol School of Washington. "They see their phones as an extension of themselves."

Personal responsibility and manners aside, there are other theories about why people can't put their iPhone down. "Apple's products are addictive," says Larry Rosen, author of "iDisorder: Understanding Our Obsession with Technology and Overcoming Its Hold on Us." In fact, many users are aware of their attachment to their iPhones. Some 25% of people see their iPhone as "dangerously alluring" and 41% said losing their iPhone would be "a tragedy," according to a 2010 Stanford University poll.

4."You may spend more with our devices."

Not only do Apple's products tend to run pricier than those of competitors, people spend more using them. The average iPhone owner, for example, spends over 10% more on their monthly bills than other pre-paid smartphone users -- $90 versus $81 -- according to estimates by Morningstar analyst Michael Hodel. Owners of iPads also tend to spend more at ecommerce sites than other tablet users. iPad owners spend $158 per order -- the highest order of any device --versus $105 by people on other mobile devices, according to a recent study by RichRelevance, personalized product recommendation company.

Why the splurge? Some say the iPad feels like a high-end store -- the virtual equivalent of Saks Fifth Avenue or Barney's. Others say it's because the iPad is easy to use: "The iPad is a very intuitive and compelling product," says Mark Eisenberg, director at Fino, a technology and consulting firm. "Just like Amazon's one-click buy, Apple's iPad encourages people to make impulse purchases." Plus, those who can afford $499 or more for an iPad are more likely to have higher disposable income than those who buy Android tablets, says Milton Pedraza, CEO of the Luxury Institute LLC, a marketing firm.

5."We need another game-changing gadget."

Upgrade fatigue isn't the only thing critics dislike about Apple's product rollouts; some say the new products aren't new enough. Investors are growing impatient with Apple's pipeline and calling for another tech revolution. It's time for Apple to shake up the mobile market again, says Walt Piecyk, technology analyst with BTIG brokerage. He says a completely new Apple phone that costs less than the $649 starting retail price for the iPhone 4S would be a good start. Other deep-pocketed tech companies are also poised to compete with the iPhone with their own smartphones. Facebook is also reportedly considering developing its own phone and Google, which bought Motorola last year, is reportedly building its own phone. (Facebook and Google declined to comment.)

Apple still has strong iPhone sales, but no company should be so dependent on one mobile phone, Piecyk says. In fact, the iPhone market makes up over 50% of Apple's sales, according to research by investment bank Piper Jaffray. "Remember when Nokia, Motorola and RIM led the mobile phone market?" he says. "Market share can change very quickly." Another reason for a phone that addresses the lower end of the market: the days of carriers offering massive subsidies to consumers are numbered, Piecyk says. If and when that happens, he says most people won't pay $600 for a phone. Apple disagrees. A company spokeswoman noted in February that despite its price tag, "iPhone 4S has been an incredible hit with customers around the world."

6. "The iPhone is overpriced -- even compared to the iPad."

The iPhone costs hundreds of dollars less than the iPad, but Apple has much higher profit margins for the phone than the tablet, experts say. Here's how it breaks down: Apple earned gross margins of up to 58% on its United States iPhone sales between April 2010 and March 2012 and margins of just 23% to 32% on the iPad, according to a statement filed by Apple earlier this month as part of its patent battle with Samsung Electronics Co. It costs Apple $215 to make the 32GB iPhone 4S -- less than a third of the original retail price, according to technology research company IHS iSuppli. But it costs $375 to make the 32GB version of the new iPad, around half the retail price. As a result, consumers are paying a bigger premium on iPhones than the iPad, says technology consultant Jeff Kagan. "Is the iPhone expensive? Yes," Kagan says. "It is overpriced? Yes." Consumers think they pay a cheaper price for iPhones as wireless carriers absorb two-thirds of the original retail price, he says. However, customers who keep their iPhone and renew their contract after the initial two-year contract expires are paying a premium for using an old phone, he says.

7. "Don't be fooled by our soft sell."

When Carmine Gallo recently walked into the glass-fronted Apple Store in Pleasanton, Calif., the "concierge" wanted to talk to his two children about what Disney movies they could get on the iPad. Only after he had charmed both children did the employee turn to Gallo. "It was an extremely artful piece of salesmanship," says Gallo, author of "The Apple Experience." Art dealer James O'Halloran had a slightly different experience in the San Francisco Apple store when he approached a member of the Genius Bar brandishing a broken iPod. "It will make a cool paperweight," the Genius Bar member told O'Halloran before promptly offering him a new one.

These two stories illustrate two things, experts say: Apple's staff knows if children want Apple's products their parents will want them too -- and they never bombard customers with tech-talk. "They always start off by asking you about your lifestyle and your needs," says Martin Lindstrom, author of "Brandwashed." "They emotionally engage you so it's harder to say no to their products." Other electronic stores focus on price and technical specifications, but are slowly taking a cue from Apple Stores, he says.

The gleaming, futuristic store designs are another important piece of Apple's retail puzzle, experts say. "Entering these spectacular, fantasy retail environments helps people forget about the outside world," says Tina M. Lowrey, professor of marketing at the University of Texas in San Antonio. "They worship the product like they would in a church." The approach appears to be working: Apple is the top seller per square foot among major U.S. chains, according to a 2012 survey by market researcher Asymco. For the four quarters to August 2011, Apple sold $5,626 per square foot worldwide versus $330 for mall-based stores, the survey found.

8. "Our features are falling behind."

Some consumers want Apple's iPhone to follow the Android market's lead by bringing out bigger screens. Nancy Batchelor, a teacher who lives in Washington D.C., recently gave up her iPhone because it was too small. "I seriously can't read anything on that phone," she says. "I feel old and, worse, large-thumbed." (She's 42.) Batchelor has plenty of other options to choose from: Motorola Droid Razr Maxxand HTC's One X both have a 4.3-inch display. And Samsung's SII http://bit.ly/PG3lz3 has a 4.8-inch display -- dwarfing the iPhone's 3.5 inches. She's not alone. According to review site TechRadar.com: "3.5 inch screens just don't cut it anymore."

Five years after its launch and several upgrades later, some analysts say the iPhone is starting to feel dated. iPhone users can often be found trying to recharge their batteries in Starbucks, says Yung Trang, president of TechBargains.com. Samsung's new SIII has removable battery, allowing consumers to carry a replacement. What's more, fans point out that the SIII battery has more power than the iPhone -- more than 10 hours talk time versus eight hours for the iPhone on 3G. "The Samsung SIII is the best iPhone competitor in the space today," says technology analyst Kagan. In many respects, it's even better than the iPhone." For big talkers, the Razr has 21.5 hours of talk time.

One of the biggest new features on the iPhone 4S -- the voice-activated search engine Siri -- has not always lived up to customers' expectations. Siri answers questions correctly 68% of the time, according to recent research by Piper Jaffray. (An Apple spokeswoman recently told the media: "Siri is one of the most popular features of iPhone 4S and customers love it.") That said, Apple continues to have one big advantage over the competition, say experts: The cool factor. Plus, it has yet to release the iPhone 5, which is expected later this fall. But tastes can change quickly. In fact, Samsung recently overtook Apple to become the number one smartphone vendor by volume, according to research firm Strategy Analytics.

9. "We'll hook you for life."

Storing digital content like movies, music and books on Apple's "ecosystem" -- the company's compatible suite of hardware and software -- may lock in customers for life. There's good reason Apple offers 5GB of memory free on its iCloud, http://support.apple.com/kb/HT4874 virtual storage system, analysts say. "Once you're in, it's a one-stop shop," Fino's Eisenberg says. Apple's iCloud is different from other companies' virtual storage systems for one critical reason: It works exclusively with other Apple products, while Google's Cloud will work with an HTC Thunderbolt, Motorola's Droid or any device using Google's operating system, he says. Meanwhile, there are a range of third party clouds like Microsoft's SkyDrive and Dropbox that allow customers to store files from Microsoft, Android or iPhone.

It's also difficult to transport digital files from iTunes to a third party device like the Kindle Fire. (Though it's not impossible: There are other third party apps like iSyncr and Double Twist designed to make the transition easier.) Experts say iTunes has other sticky features, too. By rating your library of music on iTunes, for instance, the automatic DJ will shuffle songs and play your favorite music more often. But the feature is non-transferrable to non-Apple devices. Tech-culture writer Damon Brown says he has rated hundreds of hours worth of songs on iTunes, but will lose those ratings if he transfers to a Kindle Fire. "I made a commitment to shop with Apple," he says, "and now I'm stuck with it."

10. "Our fans don't care if we screw up."

Of course, many customers are happy to be part of Apple's global community: A Facebook page, "Fans of Apple," has over 935,000 members. And when it comes to controversy about or criticism of the company, experts say the company's loyal fan base or "fanboys" often have a blind spot. Lowrey, the marketing professor, compares Apple's cult-like following among some users to bikers who own Harley-Davidson motorcycles. "In the old days these groups didn't have any way to communicate with each other except in person," she says. "But today there are online communities that rally around brands."

Indeed, many Apple customers stay loyal to the company even when it disappoints them. Earlier this year a group of Apple customers led by Change.org, a for-profit advocacy group, sent a petition to Apple imploring it to improve working conditions at its factories, especially in China. However, the group's members said they won't be discarding their Apple products, or even recycling them. As SmartMoney.com reported, one organizer at Change.org said: "I love them and I don't want to stop using them." Apple may also have stolen some of its critics thunder by being open about its shortcomings. The company released its own report about its factories, admitting that 62% of its suppliers failed to comply with working-hour limits and revealing that five facilities employed underage workers. The report -- entitled "Apple Supplier Responsibility" -- stated: "We require that our suppliers provide safe working conditions" and "treat workers with dignity and respect."

But Apple's marketing also encourages this tribal following, industry pros say. The company's borderline "fairytale" or "religious" language also helps stir up passionate support for the brand and upsets people when apple is criticized, says Lindstrom, the branding expert and author, who adds, "Apple knows how to inspire its customers." Case in point: the company's website contains this statement about the third incarnation of its tablet computer: "The iPad is a magical window where nothing comes between you and what you love."

StanChart sanction crisis poses cultural questions

I always knew the music would stop one day. The never ending dancing and drinking throughout the crisis, the large margins and exposures against questionable and risky clients, it was always one step away from the cliff. 

But I think this is just the beginning. There is more to come, because extraordinary profits result from extraordinary business practices.

StanChart sanction crisis poses cultural questions
By John Foley
AUGUST 7, 2012

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

(Note strong language in paragraph 3)

Standard Chartered’s true sanctions crisis could be over culture, not cash. The bank has hit back at the claim by a U.S. regulator that it hid $250 billion worth of trades for Iranian clients in order to dodge U.S. sanctions between 2001 and 2010. The denial is robust, but the case still raises worrying questions about how StanChart approached regulatory requirements. Given the limited changes in the bank’s top team, these will be harder to brush off.

While the $250 billion figure from the New York Department of Financial Services is eye-watering, StanChart maintains that only around $14 million of trades are really at issue. The difference may lie in the fact that, until 2008, many Iran-related trades could be legally processed through the United States in a process known as a “U-turn”. Even so, fear of financial penalties and the possible loss of StanChart’s Wall Street licence wiped almost 7 billion pounds off the bank’s market value in early trading on Aug. 7.

Even if StanChart avoids serious financial pain, the regulatory order paints a picture of institutional arrogance and dissembling. It claims StanChart’s then-U.S. head warned London of the risk of “catastrophic reputational damage”. It suggests auditor Deloitte “watered down” a report on sanctions compliance at the bank’s request. Most inflammatory is the reported rant about “fucking Americans” from an unnamed group executive director in London. Those quotes may be taken out of context, but the burden of proof now lies with the bank.

Moreover, if StanChart’s culture does reveal past flaws, the fallout could be felt today. It’s over five years since the bank says it stopped handling Iranian business, but its executive team remains largely intact. Chief executive Peter Sands, promoted from finance director in 2006, is in the same job. So are eight of StanChart’s 18 board members. Finance director Richard Meddings previously oversaw governance in the Americas.

StanChart could do without another question mark over its governance. Executive director Jaspal Bindra caused a stir when he took three weeks to notify the company after borrowing against his own StanChart shares in January. Largest shareholder Temasek declined to back several of StanChart’s executive directors at its last shareholder meeting. Even if the bank proves largely blameless for its Iran trades, there is scope for soul-searching.