How Many Questionable Assumptions Can You Layer On Top Of Each Other To Estimate Bogus 'Losses' From Unauthorized iPhone App Downloads?

from the let-me-count-the-ways dept

A while back someone had sent me to a website I'd never heard of called 24/7 Wall St. that had a post claiming how much certain top blogs were "worth." The reason someone pointed me to it was because it had Techdirt in the list. What was amusing was that whoever wrote the article made a bunch of assumptions and every single one of them was wrong -- and some of them could have been checked with a simple look at our website. Given that every single assumption was wrong, the conclusion was equally laughable. I actually emailed them to point out a few factual errors in the post -- none of which were corrected. Since then I tend not to trust anything from that site -- though it has a habit of getting attention for similarly ridiculous "estimates," and people repeat them as if they were factual.

Allison K was the first of a whole bunch of you to send in the fact that the site is trying to "estimate" the "impact of piracy" of iPhone apps on Apple and app developers. While I commend the site on at least explaining its methodology, the more you read it, the more ridiculous it becomes. They simply layer questionable assumption upon questionable assumption upon questionable assumption, and when they get stuck, they pull out a random number. It's almost comical to read. As Allison noted, it reminds her of xkcd's famous comic of the Drake Equation, where one of the variables in the formula is defined as "Amount of bullshit you're willing to buy from Frank Drake": It's nice to have some sort of concrete numbers, because people like to have numbers to discuss. But when they're based on so many layers of questionable assumptions, they tend to do a lot more harm than good. People will assume there's some real basis for them when there is not.

And, of course, as everyone should understand by now there's no such thing as "losses" from unauthorized access. There is only a failure on the part of the company to convince people to buy. There is no line in their financial reports on "losses" from such activities -- with good reason. The only issue is a business model issue, which is that the company has not given users a good enough reason to buy, so they chose to get the product elsewhere.

Update: And it gets more ridiculous. 24/7's response was a comment below that did not address any of the concerns but simply says that I must not have made it through my high school math class. Classy. Meanwhile, Dark Helmet points us to TUAW's takedown of the numbers, where they note that based on the assumptions, 24/7 appears to be assuming that there are 510 pirated apps per device. Uh. Yeah. Check those assumptions, folks.

Filed Under: iphone apps, losses, piracy
Companies: apple

Once Again, Google's Customer Service Is Becoming An Issue

from the this-again? dept

We've had a whole string of stories in the last few months about communication problems from Google -- from users getting locked out of their documents to advertisers banned with no explanation or recourse to a blogger who went six months trying to get Google to turn back on a blog that it had shut down. I've heard from a few Google folks, noting that they recognize it's an issue, and it's something that some people within Google are trying to deal with. But given all of these problems on "smaller" issues, perhaps it's no surprise that there's been an outcry over the poor customer service people are receiving after purchasing Nexus One phones from the company.

Google does lots of things really well. But, clearly, customer service is not one of them. And while its massive success can hide (or at least minimize) the impact of such poor customer service, at some point it's really going to begin to hurt, unless Google finally wakes up to the fact that when people have problems, they want to be able to reach out to a human being who will listen to them, hear what they have to say and (hopefully) help. Some have claimed that this is just not Google's culture -- and perhaps that's the case, but at some point that cultural flaw may cause much larger headaches.

Filed Under: customer service, nexus one
Companies: google

Man Sues Neighbor For Not Turning Off WiFi And Cell Phone

from the science? dept

For years, we've heard of people freaking out about WiFi or mobile phones, claiming they have "electromagnetic sensitivity" to those things. The only problem is that in double-blind tests, there is no evidence that any sensitivity is due to electromagnetic waves. And yet, people keep insisting it must be true. In the latest extreme case, a guy in Santa Fe is suing his neighbor for not turning off his WiFi or mobile phone, saying that it caused him to become homeless:

Firstenberg "cannot stay in a hotel, because hotels and motels all employ wi-fi connections, which trigger a severe illness," says the request for a preliminary injunction. "If (Firstenberg) cannot obtain preliminary relief, he will be forced to continue to sleep in his car, enduring winter cold and discomfort, until this case can be heard."

Filed Under: electromagnetic sensitivity, lawsuits, mobile phones, wifi, wireless

BMI Sues T-Mobile, Claims It Needs To Pay Up Over Ringback Tones

from the are-ringbacks-a-public-performance? dept

I'm still in the camp of folks who doesn't quite understand "ringback tones" -- the ugly stepchild of ringtones, where it's not what music your phone plays, but what music a caller hears when they call you and are waiting for you to pick up. While ringbacks have been a big deal in Asia, they're still a relatively small market in the US. But, that's not going to stop collections societies from demanding cash, of course. mike allen alerts us to the news that BMI has sued T-Mobile over its ringback tones. Of course, here's the thing: a court has already established that ringtones are not performances, so are ringback tones performances? Or, of course, T-Mobile could just ban the use of any BMI songs as ringbacks, and then see how those artists feel about how BMI is "protecting" their interests...

Filed Under: performance, ringback tones, ringtones
Companies: bmi, t-mobile

Embedded Wireless: A Step Towards Dumb Pipes?

from the open,-but-not-that-open dept

At a FierceWireless panel during the CES show today, panelists from Verizon, AT&T and T-Mobile discussed the progress the embedded sector has seen over the past year and is expected to show in 2010. Embedded wireless, from a consumer electronics perspective, means factory installing a cellular radio into a (non-phone) device. The devices range from the obvious Netbooks and Kindles, to the less obvious cameras and media players, and more. The panelists were keen to point out that in the past year, the pieces of the puzzle all fell into place -- what had been lacking was affordable embedded modules, strong data networks, and flexible enough rate plans that didn't try to capture $60 a month from every device. I would agree that the carriers have finally become eager to consider a range of pricing models, all in the past year. From ad hoc daily netbook connection fees, to the integrated pricing seen on the Kindle, the Nook, and Garmin Nav devices, we're finally seeing some flexibility in the way carriers charge for data access. It's about time, too: for too long mobile data followed the $80 Rule, where the only way to get cellular data was an $80/mo lengthy contract.

As an example of the changes from just the last year, Verizon Wireless previously offered just a $60/mo contract for laptop connectivity, where now they sell a prepaid day pass, a week pass, and different tiers of subscription plans. That's good progress, but market forces are going to demand a wider range of solutions, and at more reasonable discounts for lower tiers. For example, how long will the market support Verizon's 5GB/mo subscription at $60 and their 250MB plan at $40? The lower plan is 5% of the throughput at 66% of the price! Clearly, there is room for these prices to move a little more.

An interesting point raised by Sue Marek of FierceWireless was whether embedded connectivity deals like that on the Kindle relegate the carrier to dumb pipe status. After all, when a great embedded wireless user experience is created, the carrier becomes invisible. Good question, but I think the answer is no. The carrier becomes a white label partner, but not a dumb pipe. That's because, so far, most of these deals have involved cooperation between the CE vendor and the telecom operator, in order to make the activation seamless and simple for the user. The carrier has been integral to the development, activation, and service management. That trend is likely to continue for the reason I explain in the following paragraph.

Consumer Electronics makers, like Garmin, could just put a GSM radio in their devices and say "connect to your choice of service provider by inserting your SIM". However, the cellular module costs are hovering just under $100, and that's a big nugget to add to the Bill of Materials on any CE product. And the CE makers know that they have leverage, since they have the ability to steer their customers onto a specific wireless carrier, and that any carrier will be attracted to a block of new subscribers. Guess what happens... that old, familiar word, subsidy. If Garmin chooses to partner with a specific carrier, the carrier will pay for the opportunity and in effect subsidize the device's radio. This brings down the cost, and the MSRP of the product, which in turn helps Garmin and the consumer. For this reason, until the radio modules are very cheap (like Wi-Fi modules are), we will generally see embedded wireless tied to a specific carrier.

Filed Under: dumb pipes, embedded wireless, wireless

Apple Blocks Google App From iPhone While Trying To Patent The Same Invention?

from the ah,-monopolies dept

Christopher alerts us to the news of an Apple patent application (20090325603) that was just published that appears quite similar to Google's location tracking service, Google Latitude. What makes this story more interesting is the fact that Apple barred Google Lattitude from the iPhone app store. Of course, Apple has a history of barring competitive apps, but that's also brought about regulatory scrutiny from the federal government over whether or not Apple is abusing its market position. Blocking an app while patenting the same thing certainly doesn't look good. But, of course, isn't that what patenting is all about? It's a government granted system for blocking competitors.

Filed Under: competition, location based services, patents
Companies: apple, google

Google Isn't Targeting iPhone Users; It's Targeting Everyone Else (Maybe)

from the jump-in dept

There are plenty of stories today about the not-so-secret "Google Phone" known as the Nexus One (assuming no silly legal issues get in the way) was finally "officially" announced. There wasn't much surprise at the announcement, other than the fact that Verizon Wireless is expected to get the phone in the spring as well, meaning that there's a CDMA version out there somewhere. Nearly every story about the phone has played the paint-by-numbers game of asking "is this an iPhone killer." To be sure, the Nexus One (which I have had a chance to play with) is extremely iPhone-like. But pitting it head-to-head against the iPhone may be the wrong way of thinking about it.

As he often does, Bill Gurley cuts through the clutter to make a really strong point. The iPhone and its closed system were designed for the top of the market only. Google isn't necessarily looking to compete with the iPhone or take users away from the iPhone -- it's looking to attract the market of "everyone else," for whom the Nexus One (or other Android Phones) represents a huge upgrade over what they have:

The iPhone does exist, and it is wildly popular. There are an estimated 55 million iPhones in use around the world. Despite this remarkable success, history will also show that Apple intentionally chose a business model with plenty of room for disruption underneath its pricing structure. It also chose a single carrier as a partner, which resultantly threatened others. Then Google built a product and a strategy that allayed the carrier's relative fears. Google gave them what they wanted, and then even gave them money. It could afford to do this because Google aims solely to protect the great business they already have in advertising, not to make money directly from the product (HW or SW in this case). Microsoft Windows, Internet Explorer, and Mozilla's Firefox represent choke points on the personal computer whereby Google could lose search share, or at least be forced to pay a toll. In mobile, they see a chance to potentially eliminate the toll-takers.

With a business model that allows for much broader distribution and price points that are well beneath the iPhone, Google's Android won't compete directly with the iPhone. For the iPhone loyalist, like Stewart Alsop who railed against Android, Android is simply not an option. This price insensitive user demands the very best experience they can possibly have and this is still the iPhone. Users won't switch in mass from the iPhone to the Android. It's the other 3.95 billion cell phone users that are highly likely to consider Android a step up from their current feature phone. The Android strategy results in phones at much lower prices with much more diversity which will hit a broader set of demographics. Apple can and will quintuple its current market share and still have a small portion of the overall cell phone market.

This is why the two products do not compete head to head. With its super aggressive model, Android will be the choice of the masses, and with its sleek design and non-compromising price point, Apple will rule the high end.

While I think Gurley overplays the claim that the Android strategy results in "phones at much lower price points," since that hasn't happened yet, there are a number of good points raised in this article. In many ways it goes back to the discussion we had a year and a half ago about the differences between open and proprietary strategies. The closed, proprietary, "walled garden," strategies have advantages in brand new markets -- no doubt. They are less chaotic, more user friendly and simply easier to grasp for many. But, in the long run, the open solutions almost always win out. The solutions that allow others to jump in and add stuff, change stuff or make stuff better. It may take some time, and the lead time for the proprietary solution may seem insurmountable, but overtime, the more open solution almost always wins out. Remember when AOL and its walled gardens were going to dominate the "open" internet? It seems likely that the same thing may play out in the mobile space.

The second point that I think is key is the recognition that Google has the opportunity to play a bit of business model jujitsu against competitors with Android, noted in this sentence: "It could afford to do this because Google aims solely to protect the great business they already have in advertising, not to make money directly from the product (HW or SW in this case)." This is a point that we discuss in a variety of different business markets. It's why we think that those who understand how to embrace the difference between scarce and infinite goods have a huge advantage. If you can make money by giving away a product for free that some legacy business relies on charging for -- and then making your money up in an ancillary market (made bigger by giving your product away for free), then you have a massive advantage to disrupt the market.

The problem, however, with Gurley's post is that it isn't clear that Google is actually doing any of this. As noted, the pricing on the Nexus One is hardly revolutionary, and seems quite standard. Gurley is right that Google with Android has an opportunity to do something disruptive, but it's not clear it's there yet.

Filed Under: android, competition, openness
Companies: apple, google

Unexpected, But Good: Justice Department Says FCC Should Free Up More Spectrum

from the it's-a-start dept

You don't really expect the Justice Department to be involved in the question of spectrum allocation, but it has suggested that the FCC free up more spectrum for broadband efforts. The reason is that this is coming from the antitrust division of the DoJ, and the hope is that with more spectrum, it can be allocated to upstart competitors which will increase competition in the not very competitive broadband market (and don't believe the telco lobbyists who claim otherwise).

Still, if we're talking about freeing up spectrum, shouldn't things go a bit further? We still have a situation where the FCC doesn't just allocate the spectrum, but also decides what it must be used for. We'd be much better off, and have a lot more competition, if companies were free to make use of spectrum in the way they felt could bring the best return -- and that companies who were granted spectrum rights also had the right to then resell those rights. While I'm still hopeful that new technologies will make spectrum scarcity a thing of the past, we still haven't seen enough evidence that the technology really works. So, in the meantime, the better solution is to get more spectrum on the market, and stop putting limitations on how it can be used.

Filed Under: competition, fcc, justice department, spectrum, wireless

Nokia Launches Another Patent Attack On Apple, Uses ITC Loophole To Get Second Shot At Hurting Apple

from the can't-compete? dept

We've seen how Nokia's troubles in keeping up in the smartphone market have resulted in suddenly filing a whole bunch of patent lawsuits, including the big one against Apple over the iPhone. Of course, as usually happens in these types of situations, Apple fired back with a patent infringement lawsuit of its own against Nokia. Welcome to patent nuclear war.

And, of course, if you thought the battles would end there, you haven't been paying attention to how patent battles work these days. For years now, we've been pointing out that many patent holders actually get two cracks at companies over the same exact patents. They sue in the courts, and they use the ITC loophole to get a second crack, which could have even worse consequences. You see, the International Trade Commission is supposed to watch out for unfair trade practices. So many patent holders go to the ITC and claim that companies that infringe on patents are using unfair trade practices and should be barred from importing those goods into the US. Of course, the ITC could rely on the courts to determine if the products are actually infringing, but it does not. It decides for itself. And while the ITC cannot issue fines, it can issue an injunction barring the import of these products. With so many high tech products being manufactured overseas, this creates an effective injunction against selling many high tech products in the US... even as the Supreme Court has made clear that injunctions don't always make sense. But, the ITC is not bound by the Supreme Court on this and can do what it wants. A recent study has shown that this ITC loophole is frequently abused.

So, it's not at all surprising that (yes, indeed), Nokia has jumped in with both feet and has filed a complaint with the ITC as well over the Apple iPhone and its alleged infringement on Nokia patents. So now we have two totally seprate processes, either of which could conceivably bar Apple from selling iPhones in the US, just because Nokia's been too slow in coming up with its own iPhone competitor. That's not encouraging innovation at all. It's proactively trying to use the US government to slow it down.

Filed Under: itc, loophole, patents
Companies: apple, nokia

GSM Encryption Cracked... GSMA's First Response? That's Illegal!

from the yeah,-because-the-eavesdroppers-care dept

The big news in security circles this week is the fact that a security researcher claims to have cracked the encryption used to keep GSM mobile phone calls private. It looks like he and some collaborators used a brute force method. He admits that it requires about $30,000 worth of equipment to de-crypt calls in real-time, but that's pocket change for many of the folks who would want to make use of this. What's much more interesting (and worrisome) is the GSM Association's (GSMA) response to this news:

"This is theoretically possible but practically unlikely," said Claire Cranton, an association spokeswoman. She said no one else had broken the code since its adoption. "What he is doing would be illegal in Britain and the United States. To do this while supposedly being concerned about privacy is beyond me."

There are so many things wrong with that statement it's hard to know where to begin. First, claiming it's "theoretically possible, but practically unlikely" means that it's very, very possible and quite likely. To then say that no one else had broken the code since its adoption fifteen years ago is almost certainly false. What she means is that no one else who's broken the code has gone public with it -- probably because it's much more lucrative keeping that info to themselves. Next, blaming the messenger by announcing that cracking the code is "illegal in Britain and the United States" is not what anyone who uses a GSM phone should want to hear. They should want to know how the GSMA is responding and fixing the problem -- not how they're responding to the public release. Finally, if it's "beyond" her why cracking a code used for private conversations and showing that it's insecure is all about being concerned about "privacy" -- she should be looking for a different job. This has everything to do with privacy. The GSMA claims that the code is secure for private conversations, and this group of folks is showing that it is not. That seems to have everything to do with privacy.

Filed Under: encryption, gsm, privacy, reaction, security
Companies: gsma