Apple Inc

At its current rate of expansion, Apple could conceivably hit its October goal of 40 retail stores in China within a couple of months. The company has just announced that its 33rd Apple Store in China will open on 31st January, making it the fifth new store in the country in one month … 
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The security researcher who identified a serious flaw in Apple’s Gatekeeper reports that the vulnerability remains despite two security patches applied by the company. Each, he says, only blocks the specific apps he used to demonstrate the method.

Gatekeeper in theory allows users to ensure that their Mac will only run apps downloaded from the Mac App Store – or alternatively, signed by a known developer if you opt for a lower level of protection. But Patrick Wardle last September found a major vulnerability in this protection which would allow any malicious app to be run no matter what Gatekeeper setting was chosen.

Wardle informed Apple, which issued a security patch in response, but Wardle has now reverse-engineered the patch and found that it provides only extremely limited protection …

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With a recent European Commission ruling making it look more likely than ever that Apple’s tax arrangements in Ireland will be declared illegal, Bloomberg has been doing the sums on how much the company may owe in back tax. The total? More than $8 billion.

Apple funnels all its European revenue through Ireland, where a special agreement with the Irish government means that it pays just 2.5% tax instead of the normal 12.5%. A long-running European Commission investigation into the legality of this arrangement was recently extended and expanded its scope.

Assuming the agreement is ruled to be illegal, it would be the Irish government – and not Apple – who broke the law, but Apple would still have to pay the difference between the tax it actually paid and the full amount that would have been due without the deal. The company warned shareholders last year that it may have to pay ‘material’ back taxes, but the figure calculated by Bloomberg is much larger than earlier estimates …

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Korea’s ET News claims that Samsung will become Apple’s primary supplier of OLED display panels, stating that an agreement has “practically been decided.” Samsung is reportedly gearing-up for the contract with an initial investment of between $2.49B and $3.32B in plant and equipment, rising to $7.47B depending on order levels.

Apple currently uses OLED displays in the Watch. Rumors that it will switch to OLED for the iPhone have been doing the rounds for many years, but have been getting much more specific of late. The switch is said to be happening in 2018, with Apple recently reported to be ‘close to agreement‘ with suppliers. The most recent report named both Samsung and LG as likely suppliers …

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Phil Schiller said in 2013 that “education is in Apple’s DNA,” and it’s no exaggeration. The company’s commitment to the education sector was there from the very beginning. Steve Jobs told the Smithsonian that he wanted to donate a computer to every school in the U.S. as long ago as 1979.

I thought if there was just one computer in every school, some of the kids would find it. It will change their life. We saw the rate at which this was happening and the rate at which the school bureaucracies were deciding to buy a computer for the school and it was real slow. We realized that a whole generation of kids was going to go through the school before they even got their first computer so we thought the kids can’t wait. We wanted to donate a computer to every school in America.

The company couldn’t afford it in those days, but Steve lobbied Congress to introduce a bill that would have created sufficient tax breaks to make it possible. That attempt failed, but Apple did succeed in brokering a tax deal in California that saw the company donate an Apple IIe to every school in California. Apple led the PC market in education for a time, and even created education-specific Mac models.

More recently, Apple appeared set to bring its educational success into the iPad era in 2013 when it announced a $30M deal (that would eventually have been worth a quarter of a billion dollars) to equip every student in the LA Unified School District with an iPad. If that program had succeeded, it would have created a template for rolling out similar ones across the whole of the USA. Instead, it failed catastrophically, and it now appears that Chromebooks are winning where iPads have failed …

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A new patent awarded to Apple today suggests that the company’s audio plans for future iPhones may go beyond reportedly ditching the 3.5mm headphone socket in favor of Lightning and Bluetooth. The patent is very densely-worded, but seemingly describes a method of getting higher-quality and higher-volume audio from speakers built into slimmer devices.

Apple’s statement of the problem is clear enough.

Given the area constraints imposed on many portable electronic devices, it is increasingly difficult to provide high-quality audio sound output and pickup without hindering the ability to make portable electronic devices smaller and thinner. Consequently, there is a need for improved approaches to provide high-quality audio sound output and/or pickup from portable electronic devices as they get smaller and thinner.

The language describing Apple’s proposed solution is less clear, but from a combination of this and the accompanying diagrams, I at least have a working theory of what is being suggested …

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An unlikely report from Chinese site MyDrivers accompanied by an even unlikelier-looking graphic claims that Apple’s new 4-inch phone will not be named the iPhone 6c, as expected, but will instead be dubbed the iPhone 5e. The letter ‘e’ supposedly stands for ‘enhanced.’

Now, the latest news shows, this new machine might be called iPhone 5e (I did not expect), as the letter “e” represents enhanced [referring to] the addition of Apple Pay, NFC and VoLTE Features.

The report also claims that the spec of the phone will be lower than previously rumored, having an A8 processor and 1GB RAM rather than the expected A9 and 2GB. This would essentially give it the same internals as the latest iPod touch …

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Apple is looking very comfortably on-track for its goal of 40 retail stores in China by October as it has announced that two more stores will open this month. That will bring the total in China to 32, four of them opening this month alone …

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We heard a report in November that Apple was testing an iPhone 7 model with dual rear cameras, and a patent application published today not only confirms that Apple is indeed exploring the idea, but reveals some extremely exciting possibilities with such a setup.

The most basic of these, noted by Patently Apple, is effectively optical zoom. By fitting two separate camera modules behind the lens, and creating a single lens with both standard and telephoto sections, you’d be able to switch between two different focal lengths. For the first time, you’d be able to take a zoomed-in photo without cropping away pixels to end up with a lower-resolution image.

But the possible applications described in the patent go way beyond this …

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In a radio interview on the syndicated show Conversations on Health Care, Apple COO Jeff Williams said that the reason Apple has come under attack for the use of child labor in its supply chain is that the company actively goes out looking for it. Other companies, he said, simply keep their heads down.

No company wants to talk about child labor. They don’t want to be associated with that. We shine a light on it. We go out and search for cases where an underage worker is found in a factory somewhere and then we take drastic actions with the supplier and the labor groups to try and make a change.

Then we report it publicly every year. We take a lot of heat for that. But we think the only way to make change is to go hit it head-on and talk about it.

Apple has come under fire over the years when underage workers were found in the company’s supply chain, and Williams has spoken before about Apple’s unusual stance on these issues …

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[Update 2: Reuters reports that Foxconn has published an earnings report showing a 20% fall in December revenues. However, the company says that its December earnings were “as expected,” and its full-year earnings are up 6.42% on the previous year, only marginally short of analyst expectations of 7%.]

[Update 1: StreetInsider reports that Foxconn has denied reports that workers started their lunar new year holiday early, and says that the government payout relates to ‘an insurance premium,’ but makes no reference to any response to the claim that it has been laying off workers.]

The WSJ is today suggesting that Apple is scaling back iPhone orders, noting that iPhone manufacturer Foxconn has been laying off workers and has received a $12.6M subsidy from the Chinese government through a program designed to minimize unemployment.

The piece notes that the subsidy is for Foxconn’s Zhengzhou plant, which is mostly devoted to iPhone production, and says that Apple has also reduced order forecasts for iPhone component makers.

Chinese iPhone factories had some idle capacity in the final two months of the calendar year, when they would typically be racing to chongliang, or “rush quantity,” for Apple, in factory-speak. Some workers at Foxconn’s Zhengzhou factory in inland China were let go on early holiday last month, one of the people involved in the supply said, although the typical new-year holiday season doesn’t start until February.

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Biometric specialist Valencell – whose technology is licensed by iRiver, LG, Sony and others – has filed a lawsuit accusing Apple of using underhand tactics to gain access to its patented technology for use in the Apple Watch.

The company claims that Apple violated three of its patents for improving the accuracy and reliability of heart-rate data when using the photoplethysmography (PPG) approach used in the Apple Watch. But the lawsuit alleges more than just patent infringement, reports AI: it also claims that Apple used deceptive techniques to get access to the technology …

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The view that Apple lost its innovative edge with the sad loss of Steve Jobs has been one of the oft-repeated criticisms of the company in recent years. But this idea is based on an entirely mythological view of Apple as a company that was constantly launching ground-breaking new product categories.

The reality is a little more mundane. The Macintosh, a truly revolutionary computer, was launched in 1984. We had to wait 17 years for the next groundbreaking product: the iPod in 2001. We had to wait six years after that for the next major product category: the iPhone in 2007. And a further three years for the iPad in 2010. (If you wanted to push things a little, you could argue that the MacBook Air was also so revolutionary that it deserves to be included; if so, we’re up to five new product categories in 26 years.)

Note, too, that none of the product categories were invented by Apple. Xerox, of course, invented the graphical user interface for personal computers. There were MP3 players before the iPod; touchscreen smartphones before the iPhone; tablets before the iPad. What Apple did in each case was what the company does best: take something clunky and used only by techies, and turn it into a slick product that will appeal to the masses.

So no, Apple never has churned out revolutionary new products on an annual basis. If we’re going to assess its performance today, it has to be against a realistic background. Zac recently reminded us of Apple’s product timeline for 2015. Looking at this in the context of a company whose true history is occasionally taking a new product category and doing it better than anyone else – and in between times merely refining its existing product ranges – how did Apple do this year … ?

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There have been a number of predictions that Apple will next year report a year-on-year decline in iPhone shipments for the current quarter, KGI among them. Most such reports are based on extrapolating from supply chain data which attempts to estimate production volumes.

These reports contrast with Apple’s own guidance for record revenue of $75.5B to $77.5B. Tim Cook argued in October that some two-thirds of existing customers are still using older phones, leaving plenty of room for upgrades this quarter, and that Apple is winning over Android owners in record numbers.

One analyst believes he knows how the conflict can be resolved…

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Update: Apple has decided to include the resolution, but recommends voting against it, arguing that its existing diversity policies cover appointments at all levels within the company.

The Securities and Exchange Commission has said that a resolution submitted by an Apple investor to accelerate diversity on the company’s board and among senior execs should be included in proxy materials sent to shareholders. Bloomberg reports that proposal was prompted by a conversation the shareholder had with his teenage son.

The proposal for an “accelerated recruitment policy” was submitted in September by Antonio Avian Maldonado II, who owns 645 Apple shares. He said he was spurred to act after looking at photos of the directors with his teenage son, who asked him why nearly everyone was white.

Apple rejected the proposal, stating that it was an attempt to micromanage recruitment. Apple told the SEC that it was actively trying to attract minorities but “has no power to ensure that its recruits will accept offers.” The SEC, however, does not accept Apple’s position …

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Prior to the launch of Apple Music, I had a Spotify Premium subscription. Although I listened to my own music a good 80% of the time, I considered the equivalent of one album purchase a month to be decent value to have access to other music when I felt like something new.

But while Spotify didn’t much change the way I listened to music, Apple Music really has. Its ‘For You’ recommendations – especially the playlists – are so good that the 20% streaming I used to do has now grown to 50%. As I mentioned in my Apple Music Diary series, the service has introduced me to more new artists I really like than Spotify did in all the years I used it – despite my initial concerns that it wouldn’t do so.

But the very effectiveness of Apple Music in introducing me to so much new music has thrown up a couple of problems …

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