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Apple Q207 Results Conference Call (UPDATED)

After the delayed launch of the Apple TV and an announced delay of Leopard until October, a difficult quarter ended with some good news for Apple. Oh, there was an earnings report too. It shows just how important the apparent results of the SEC investigation clearing Steve Jobs over the stock options scandal is compared to more mundane issues like products sold and profits. Nonetheless, the numbers are in, and they are not too bad. HangZhou Night Net

Apple Estimates and Results

Street Q207Q206Q107 Revenue$5.17 billion$ 5.26 billion $4.36 billion $7.1 billion EPS $0.64 $0.87 $0.47 $1.14 Macs 1,450,000 1,517,000 1,112,000 1,606,000 iPods 10,700,000 10,549,00 8,526,000 21,066,000

Not surprisingly, Steve Jobs, speaking for Apple, was pleased.

“The Mac is clearly gaining market share, with sales growing 36 percent—more than three times the industry growth rate,” said Steve Jobs, Apple’s CEO. “We’re very excited about the upcoming launch of iPhone in late June, and are also hard at work on some other amazing new products in our pipeline.”

Has there ever been a time when "amazing new products" weren't in the pipeline?

Getting back to the important news at Apple, that is Steve Jobs, Apple Board members Bill Campbell, Millard Drexler, Albert Gore Jr., Arthur D. Levinson, Eric Schmidt and Jerry York got their chance to turn Apple's website into a personal blog and not exactly call Fred Anderson a liar.

We are not going to enter into a public debate with Fred Anderson or
his lawyer. Steve Jobs cooperated fully with Apple’s independent
investigation and with the government’s investigation of stock option
grants at Apple. The SEC investigated the matter thoroughly and its
complaint speaks for itself, in terms of what it says, what it does not
say, who it charges, and who it does not charge.

While underway, the conference call is 90 percent "we don't comment on future product" non-answers to the whining questions of analysts. Feel free to listen, or simply wait for sad little nerds like myself to listen for you and update as appropriate.

UPDATE:

As calls go, that one was more lame than most. The obvious question regarding Apple TV sales, or the lack thereof, was not answered. One of the only bits of information worth repeating concerns software updates to the Apple TV and iPhone. Apple promises to "surprise and delight" Apple TV and iPhone users with new features and software free of charge.

DrinkOrDie warez ringleader cops to piracy charges

Hew Raymond Griffiths, known in the cracking and pirating circles as "Bandito," has pleaded guilty in a US federal court to one count each of criminal copyright infringement and conspiracy to commit criminal copyright infringement. Griffiths, 44, was the head of the cracking group "DrinkOrDie," an underground software and media trading group. He had been extradited to the US in February from his home in Bateau Bay, Australia, after three years of fighting the charges. HangZhou Night Net

Griffiths faces up to 10 years in prison and $500,000 in fines at the upcoming sentencing, which is currently scheduled for June 22 in the federal court in Alexandria, Virginia. Prior to his arrest and extradition, DrinkOrDie was estimated to have illegally copied and distributed more than $50 million worth of pirated software, movies, games, and music. Of course, the $50 million figure is the total retail value of all the software distributed by the group, much of which is downloaded by teenagers who would never have the income or inclination to purchase said software legally. Therefore it is difficult to argue that this represents $50 million in lost revenue to the software industry.

DrinkOrDie was founded in 1993 in Moscow by a pair of hackers named "deviator" and "CyberAngel." The group achieved fame and prominence in the piracy circles by releasing a cracked copy of Windows 95 over the Internet two weeks before Microsoft's official release. It also released a DVD ripper in 1999 shortly before the release of DeCSS. The group was never a for-profit entity but merely competed with other pirate groups for prestige in releasing software and movies. By 2000 the group was no longer considered to be in the top tier of pirate groups, but it had attracted the attention of the FBI. In 2001, as part of an effort called "Operation Buccaneer," the federal agency busted DrinkOrDie and arrested many of its members.

Griffiths is accused of being a member of other groups besides DoD, including Razor1911 and RiSC. Prosecutors claim that he boasted in a published report that he ran all of DoD's daily operations and controlled access to more than 20 of the top pirate "warez" servers.

Illegal downloads remain a concern of content creation companies worldwide. While organizations such as the Business Software Alliance (BSA) attempt to play the "good cop" by encouraging countries to value the benefits of buying software, the US government continues to play the "bad cop" by coming down hard on the ringleaders of piracy organizations such as DoD. Whether either approach will work remains an unresolved question, but the BSA recently released a study showing that young children are downloading pirated content less than they were a few years ago.

Meat the latest iPod accessory, the iGrill

I've got to hand it to George Foreman: he's always taking things to the next level. Just when you thought grilled food had to be fatty, he rocked the world with the "Lean, Mean, Fat-Reducing Grilling Machine," known to you and I as the George Foreman Grill. I've got news for you, though: you're about to be rocked by George Foreman again, and this time, the rocking will be literal. HangZhou Night Net

The device that will be doing the rocking is the George Foreman iGrill. That's right, the great minds at Foreman Labs (or wherever) have managed to combine meat and music, two of life's greatest pleasures. The iPod is going where it previously hasn't, and in a ridiculously ingenious way, too. As far as specifics go, the iGrill is somewhat of a departure from the traditional Foreman grill. It's electric just like the rest of the Foreman grills, but it seems to be geared a bit more towards indoor and outdoor use. It has a 200-square-inch cooking area, which is comparable to a small gas or charcoal grill, and it's a bit bigger than typical George Foreman grills.

In terms of speakers, it comes with a 10-watt sound system, an amplifier, and the usual 3.5mm audio jack. You can hook any iPod, Zune, or other player up to the iGrill, and although 10 watts isn't a whole lot of power, it should be enough to give you something to rock out to when you're cooking or have a few friends over. Just don't plan on using it to throw massive backyard keggers.

It's hard to put the awesomeness of this device into words, but if you like meat, music, and especially the combination of the two, the iGrill is pretty sweet. Best of all, it'll only run you $150, which isn't too bad for something that will cook and play music. You can grab an iGrill at all of the usual stores, or order one online.

Attack of the “evil twin” WiFi networks

Open wireless networks are rapidly becoming an important part of urban culture as modern digital nomads increasingly eschew offices in favor of coffee shops. With the rise in popularity of WiFi-enabled mobile computing devices and publicly accessible access points, a new kind of WiFi security threat is beginning to emerge. Security researchers are beginning to note increasing instances of so-called "evil twin" attacks, in which a malicious user sets up an open WiFi network and monitors traffic in order to intercept private data. HangZhou Night Net

Security expert Phil Cracknell, president of the UK's Information Systems Security Association, claims that evil twin attacks are easier to perpetrate than conventional phishing schemes. Discussing WiFi security with InfoWorld, Cracknell points out that identity thieves can set up rogue WiFi access points designed to capture private user information using little more than a laptop with a USB WiFi adapter and some special software. According to Cracknell, these schemes can be difficult to trace, and allow culprits to "harvest some incredible information in a short span of time."

How easy is it to set up software that can intercept packets? A few years ago, we wrote about Pcap, a packet sniffing programming library originally devised by the Lawrence Berkeley National Laboratory for use with their tcpdump utility. With Ruby bindings for libpcap, any programmer can trivially write highly sophisticated programs capable of extracting and logging specific kinds of information that are traveling across a network. In that article, we demonstrated the ease with which a developer can create a specialized program that extracts and displays messages from instant messaging conversations.

Generic packet filtering can be done with only a few lines of code, and additional filtering and manipulation is trivially easy. There are also a wide variety of free tools and utilities like Ethereal and Ngrep that can be used for packet interception and analysis. The following is an extremely simple example that displays packets:

#!/usr/bin/env ruby
require "pcaplet"
for packet in Pcaplet.new("-s 1500 -i eth1")
# Custom filtering, logging, and analysis can be done here
puts packet.tcp_data
end

How can users protect themselves from this kind of malicious data interception? Corporate users can protect themselves by using virtual private networks, but the rest of us will have to rely on common sense. Approach free hotspots with a bit of caution. Better yet, use SSH to connect through your home computers.

MPAA: We are committed to fair use, interoperability, and DRM

At a LexisNexis conference on DRM this week, MPAA boss Dan Glickman said the movie studios were now fully committed to interoperable DRM, and they recognize that consumers should be able to use legitimate video material on any item in the house, including home networks. In a major shift for the industry, Glickman also announced a plan to let consumers rip DVDs for use on home media servers and iPods. HangZhou Night Net

Unfortunately, this plan is not yet well developed. In his speech to industry insiders at the posh Beverly Hills Four Seasons hotel, Glickman repeatedly stressed that DRM must be made to work without constricting consumers. The goal, he said, was "to make things simpler for the consumer," and he added that the movie studios were open to "a technology summit" featuring academics, IT companies, and content producers to work on the issues involved. He also pointed to the $30 million MovieLabs project that the studios are currently funding as proof of their commitment to interoperability.

Speaking to Ars after the speech, Glickman acknowledged that the plan was still in the early stages. I asked him specifically about DVDs, which are currently illegal to rip under the DMCA, and how the law would square with his vision of allowing consumers to use such content on iPods and other devices. "You notice that I said 'legally' and in a protected way," Glickman responded, suggesting that some form of DRM would still be required before the studios would sign off on such a plan. He noted, however, that no specific plans have been made.

The MPAA does recognize that progress on DRM needs to be made soon, or impatient consumers will increasingly turn to unauthorized sources for content. "We're working on this right now, trying to find ways to make it interoperable," he said, but added that pricing and business models for such a system are "way beyond my pay grade."

Dean Garfield, VP of Legal Affairs for the MPAA, told me that he has confidence in the market to sort all of these issues out. "You have to give some thought to how young the digital distribution market is," he said. "I suspect that the issues confounding people today won't be the issues challenging the industry six months from now."

But will consumers sit idly by, twiddling their thumbs while content owners and consumer electronics manufacturers get their act together? Garfield recognizes that consumers are impatient, which means that "we also have to be impatient."

In his speech, Glickman said that the industry needs "a collective philosophical commitment" to move forward on issues of interoperability and authorized use, and said that the MPAA has now made that commitment. He called on other companies in the industry to sit down and work out a solution. Though he never mentioned Apple by name, it's clear that the Cupertino-based company was number one on the list of companies that need to get involved; whether interoperable DRM and legitimate DVD ripping actually mesh with Apple's own business priorities is another question, though.

Despite the lack of specificity, Glickman's speech marks a step forward for the MPAA, which says it is now committed to allowing content to play on any device, from any manufacturer. As other presenters at the conference made clear, this is largely a result of self-interest: consumers are frustrated with current limitations, and movie studios aren't thrilled about having to sign off on Apple's terms in order to get content onto iPods. Still, hearing Glickman speak with conviction about consumer rights to use material in "fair ways" and to wax eloquent about interoperability was an encouraging sign—even if he views DRM as a necessary "enabling tool" that's not going away anytime soon.

Apple’s board to Fred Anderson: NO YUO!

Former Apple CFO Fred Anderson tried to make some "interesting" accusations after settling with the SEC over the stock options debacle. In his public statement, Anderson specifically pointed to former general counsel Nancy Heinen and current CEO Steve Jobs as being responsible for the illegal backdating decisions. He said that Jobs assured him that everything was fine, even when Anderson warned him about the accounting problems. HangZhou Night Net

Well Apple's board will have absolutely none of that, it seems. Board members Bill Campbell, Millard Drexler, Al Gore, Arthur Levinston, Eric Schmidt, and Jerry York have got Steve's back (at least publicly, anyway). They issued a statement last night saying that they aren't going to get into blog wars a public debate with Fred Anderson over the issue. Here's the full text of what they had to say:

We are not going to enter into a public debate with Fred Anderson or his lawyer. Steve Jobs cooperated fully with Apple’s independent investigation and with the government’s investigation of stock option grants at Apple. The SEC investigated the matter thoroughly and its complaint speaks for itself, in terms of what it says, what it does not say, who it charges, and who it does not charge. We have complete confidence in the conclusions of Apple’s independent investigation, and in Steve’s integrity and his ability to lead Apple.

It's true that the SEC also issued a statement this week saying that Apple itself is not in hot water. Specifically, the SEC even cited Apple's cooperation and "prompt self-reporting." Is Jobs totally in the clear yet? Possibly not, but it certainly looks like the SEC is acting in his favor so far.

A bit of useful junk: mobile DNA and gene regulation

The mammalian genome appears to largely be a gene-free wasteland: only about 1.5 percent of it codes for proteins. Proteins aren't the only things that appear to matter, though, as five percent of the genome appears to be preserved under selective pressure. It's thought that the remainder of the sequences regulate genes, either by serving as sites for the attachment of regulatory proteins, or by producing regulatory RNAs. Much of the rest of the DNA appears to be junk, consisting of introns, bits of virus, and mobile DNA-based parasites called transposable elements. HangZhou Night Net

But that junk can sometimes be put to use. We've covered a number of cases where pieces of transposable elements have been put to use in coding for proteins, including a survey of how they progress from junk to utility. A paper that will appear in PNAS takes a historical perspective on how transposons wind up doing something useful, searching the entire genome for pieces of transposon that appear to be regulating genes. They took the genome of a series of mammals—humans, chimps, macaques, rats, mice, and dogs—and found the conserved regions that didn't code for proteins. With that in hand, they scanned the sequences for similarity to previously identified transposon sequences.

And they found them, over 10,000 of them in the human genome. All told, they account for just over a megabase of DNA, or .04 percent of the genome. Most of these did not include the entire transposon (which is typically a few kilobases). Instead, fragments of transposons, typically about 100 bases long, were conserved. A few other clear trends were apparent in this population of useful bits of transposon. For one, they were enriched near some of the more interesting genes: those involved in development and those that regulate the expression of other genes.

It didn't appear that a single, useful feature of the transposon was being consistently used. At different genes, different parts of the transposon were conserved and, even when the same part was present, its sequence could vary at different places. The most notable feature, however, may be where they wound up. In general, they were far more common in regions with very few genes, and were usually far from the genes themselves, typically 100 kilobases to a Megabase away.

It's not entirely clear what these data indicate. There is really no coherent reason why the preserved sequences should be biased towards development genes, or they should wind up so far from the coding portions of genes.

But it reinforces previous suggestions that transposons, by moving around the genome, may be generally useful as a source of novel sequences that may get incorporated into either the regulatory or protein coding portions of genes. That's not to say that each transposon is useful, of course—most of them are still junk (note that these useful ones account for .04 percent of the genome, while transposons in general account for nearly half of it). But this may be why these parasites are tolerated by just about every multicellular organism we've looked at.

Sony to join video sharing party on Friday

Sony has decided to go ahead and join the rest of the world in trying to launch its own video sharing service. The company announced its plans at a news conference in Tokyo today, saying that the service will be launched on Friday, first in Japan and later expanded out to other countries, according to Reuters. "This is part of Sony's quiet software revolution," said Sony CEO Howard Stringer at the news conference. HangZhou Night Net

Sony says that its service, which will be called eyeVio, will keep a close eye so that the content uploaded by users doesn't violate copyrights. The company didn't expand on exactly how it plans to do this—whether they will be forcing content providers to use takedown notices, or whether they will attempt to go the much-talked-about filtering route. Takedowns are what YouTube has now become infamous for, and it's not going over well with most content providers. Viacom, for example, sued the company for "brazen" copyright infringement by "allowing" their clips to keep returning to the site. Microsoft plans to take the same route as YouTube with Soapbox but has attempted to reach out to content providers about the takedowns before getting into the same mess that YouTube has found itself in.

"We believe there's a need for a clean and safe place where companies can place their advertisements," Sony spokesperson Takeshi Honma told Reuters in reference to monitoring the uploaded content. He also said that eyeVio will be free to all users, but that the company hopes to generate revenue in the future through advertising and partnerships with content providers.

Will eyeVio be able to compete in the already crowded market of video sharing sites? The big names like YouTube, Soapbox, and MySpace Video are already having a tough enough time competing with each other. Smaller sites like Revver are still struggling to keep up, too, and Will Ferrell's FunnyorDie is still working on maintaining popularity after its initial splash. And last month, News Corp. and NBC announced a huge partnership with various content providers to launch its own "YouTube killer" this summer. Sony may already be too late to the party unless the company can offer something unique to its users that the other sites don't have.

FCC tries (and fails) to define unacceptable TV violence

The FCC has just released its long-awaited report on the possibility of regulating television violence that might be seen by children, and the agency is confident that it can be done constitutionally. Crafting a definition of unacceptable violence, though difficult, might be possible, and the FCC could enforce it through "time channeling" and mandatory labeling. The report has already led pundits to ask: why doesn't the FCC trust parents to make these decisions? HangZhou Night Net

Actually, the various FCC commissioners insist that parents must remain the first line of defense. In a statement, Michael Copps said that "without their active involvement it is difficult to envision a successful cure for the violence virus." Fellow Democrat Jonathan Adelstein called parents the "first, last, and best line of defense against all forms of objectionable content, " and Chairman Kevin Martin agreed in almost identical language. According to the commissioners, the FCC has no desire to do the job of parents, but some personal comments made by Adelstein highlight the difficulty that parents face.

"I fully understand that it is my choice to turn the television on or off," he said, but pointed out that "a trailer for a news show or a promotion for a horror movie" can pop up at any time. "I'm sure my children are not the only ones who have difficulty sleeping after they are inadvertently exposed to violence on television," he added.

One of the most frightening statistics in the FCC report had to do not with violence, but with the amount of television that's being watched in the US. The average household has a television set turned on an average of8 hours and 11 minutes every single day, and children do a good deal of the watching. By the time most kids enter first grade, they've already seen three school years worth of TV programming.

Given that kids are watching plenty of television, Congress has expressed concern about the images they are exposed to. 39 members of the House asked the FCC to undertake an examination of television violence back in 2004, and yesterday's report was the result. The ACLU and the National Association of Broadcasters object to any attempt to come up with a definition of unacceptable violence, but the FCC quoted from a wide variety of studies indicating at least some form of linkage between violent behavior in children and violent images on television. This finding is supported by the American Medical Association, the American Psychological Association, and others, which agree that "children exposed to violent programming at a young age have a higher tendency for violent and aggressive behavior later in life than children who are not so exposed."

The report recognizes a constitutional right to create violent content, but the FCC points out that broadcasters (especially over the air broadcasters) enjoy more limited First Amendment protections than regular citizens because of their "uniquely pervasive presence in the lives of all Americans" and because they are so easily accessible to children. The Supreme Court, which agrees with these claims, has allowed the agency to regulate "indecent" content on television, and the FCC believes that a similar, narrow attempt to regulate violence on the public airwaves would also be acceptable.

Possible solutions

The report proposes two measures to regulate violence: time channeling and mandatory ratings. Time channeling simply involves moving all unacceptably violent content into a time slot in which children are unlikely to be watching—between 10 p.m. and 6 a.m., for instance. Ratings are already undertaken by the industry on a voluntary basis, but the FCC cites numerous complaints that the broadcasters "underrate" their programs, and calls for a mandatory ratings program that would produce more consistent results.

In addition, few parents use the "V-chip" built into televisions since 2000 in order to filter content, and the FCCwants"further action to enable viewer-initiated blocking a violent television content." Like most of the report's suggestions, this one remains vague—it's not entirely clear what's being suggested, except that the government do something.

The vagueness of the report led Commissioner Adelstein (who supported the report in general) to wonder, "Are we saying Law and Order should be banned during hours when children are watching? It is anyone's guess after reading this Report. The Report is not a model of clarity."

In his response, Chairman Kevin Martinoffered two more proposals for regulation. One is the reinstatement of a "family hour" at the beginning of prime-time in which only child-friendly shows and commercials would be aired. The second idea is one near and dear to his heart: a la carte cable and satellite programming, which would allow parents more control over content without requiring as much government intervention.

The report at least recognizes the importance of context to violence, and the issue of films like Schindler's List is explicitly considered. Still, even a well-crafted contextual definition leaves many people nervous, especially the broadcasters, who are worried that they will never know in advance if a particular show will be found infringing. The FCC concedes that "any definition would have to be sufficiently clear to provide fair notice to regulated entities," but it's an open question as to whether such a definition can in fact be crafted.

Adelstein is not convinced that it can. He notes that the report does not actually offer any definition; it only concludes that such a definition would be possible. "Given that we are not able to offer a definition ourselves," he commented, "it does not appear to be as easy to define as some suggest."

Rapid pulse time could make Z machine ready for fusion

Fusion-based power generation, were it to become practical in the near future, would probably end the debate on how best to avoid pumping any more carbon into the atmosphere. But fusion research has moved slowly; the biggest effort currently in the works, the ITER project, has frequently gotten bogged down in politics. HangZhou Night Net

ITER hopes to confine plasma as it is heated, eventually allowing it to reach a temperature and pressure where as sustained fusion reaction results. But there is a competing technology in which short bursts of fusion are generated repeatedly. This has been accomplished by focusing multiple extremely high-powered laser pulses on a small pellet containing fusible material. Sandia Lab's Z machine was designed to study the feasibility of this sort of system (although it does other cool stuff as well).

One of the biggest barriers between the Z machine and commercial fusion, however, is the time in between firings. It simply can't build back up to the power levels needed to trigger fusion fast enough to make commercial application possible. That's why their press release earlier this week is so significant: it describes new technology that could allow the Z machine to fire as often as every ten seconds, thought to be sufficient for commercial use.

The new system is called a linear transformer driver and was developed in a collaboration between Sandia and Russian researchers. It combines large capacitors in parallel into a toroidal array, each of which is capable of firing off a current of 0.5 megamperes. These could then be combined in series to produce the power necessary.

The technology has a number of advantages, primarily because it is relatively compact and efficient. Much of the wiring and the corresponding insulation can be removed from the Z machine if it is powered by linear transformer drivers. The big downside? No more of the "room full of blue lightning" images that we love reporting on the Z machine for. Possibly because of the reduced complexity and resistance, these devices appear to be reliable: one of the ones being tested has survived over 11,000 cycles.

The press release comes to a bit of an awkward end, in that spends much of its time describing the funding situation at Sandia, and how that may be standing between developing these linear transformer drivers and getting enough of them to actually use them to run the Z machine. Hopefully, a way can be found to get the money to where it's needed, and that costs will come down if more of these devices are ordered.

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