Apple

Nick Hayek, CEO of Swiss watchmaker Swatch, said today during a press conference for the company’s annual results that he doesn’t see a smart watch product from Apple being the “next revolution.” We can’t help but be reminded of Palm CEO Ed Colligan’s comments before the iPhone hit:

“We’ve learned and struggled for a few years here figuring out how to make a decent phone,” Ed Colligan apparently laughed about with John Markoff last Thursday morning. “PC guys are not going to just figure this out. They’re not going to just walk in.”

Hayek’s main reasoning is difficulty delivering compelling content on such a small display, something the company has explored with its Paparazzi line of watches in collaboration with Microsoft:

“Personally, I don’t believe it’s the next revolution,” the chief of the largest Swiss watchmaker said at a press conference on annual results in Grenchen, Switzerland. “Replacing an iPhone with an interactive terminal on your wrist is difficult. You can’t have an immense display.”

Hayek also reasoned that consumers often buy watches as a piece of jewelry and like to change them on any given day. The CEO claimed that Swatch has had talks with Apple over the years regarding “materials for products and so-called energy harvesting technology that would generate energy from physical movement.” Bloomberg reported earlier this year that Apple had a team of over 100 product designers working on a wristwatch-like device and more recently said Apple would launch its watch product some time this year.

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AAPL stock has been in the news a lot lately, whether it comes to Warren Buffett’s opinion on buy-backs, the issue of preferred stock, or even its teetering market cap, but a closer look at the company’s NASDAQ fluctuation over the last year oddly shows a parallel to GOOG.

The graph above illustrates both Apple and Google’s highs and lows since September 2012, and, for the most part, they clearly mirror each other. The companies notably entered the zero-sum game in December 2012 and have continued this trend to present day.

The graph above is a more micro look at 2013, and it shows, again, that Google goes up every time Apple goes down.

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As Ferrari unveils its new 1 million euro “LaFerrari” hybrid, the company has also confirmed it plans to strengthen its partnership with Apple in the months to come. According to Bloomberg, Ferrari Chairman Luca Cordero Di Montezemolo said the company is now “in talks with Apple about broadening a partnership on in-car entertainment.”

Ferrari SpA, the luxury carmaker owned by Fiat SpA (F), will be “more precise” about its partnership with Apple (AAPL) Inc. in the next few months, Chairman Luca Cordero Di Montezemolo said.

Ferrari, which today unveiled the 1 million euro hybrid model “LaFerrari,” is in talks with Apple about broadening a partnership on in-car entertainment, Di Montezemolo said today at the Geneva motor show.

Ferrari also said today that its new four seater FF coupe will come equipped with iPad minis:

The FF is also now seamlessly integrated with Apple technologies, thanks to direct access to the infotainment system via SIRI voice commands and the adoption of two iPad Minis as the entertainment system of choice for the rear seat passengers.

Ferrari announced in November 2012 that Apple Senior Vice President Internet Software and Services Eddy Cue was joining its board of directors. Cue tweeted about the launch of the new LaFerrari mode today, saying, “Ferrari does it once again… it is stunning.”

Ferrari does it once again…it is stunning #LaFerrari – http://t.co/27tw1VQBE2

— Eddy Cue (@cue) March 5, 2013

The full video of Di Montezemolo speaking at the Geneva motor show is below.

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Verizon CFO Fran Shammo spoke at the Duetsche Bank Annual Media, Internet & Telecom conference this morning, where he was asked a few questions related to the iPhone. Verizon reported its fourth quarter 2012 earnings last month with 9.8 million smartphone activations—a record 6.2 million of which were iPhone. We knew about half, or 3.1 million, of those iPhone sales were driven by the first full quarter with the iPhone 5, but today Shammo talked about just how important getting the free iPhone 4 was during the quarter:

But this past fourth quarter you had a couple — you had really one thing happen that never happened before, especially with Verizon Wireless, and that was for the first time ever, because of the iPhone 5 launch, we had the 4 at free. So it was the first time ever you could get a free iPhone on the

Verizon Wireless network. So that produced a lot of volume for us. We had a lot of new customers come into Verizon who took that free phone, and that was great for us because again if you think about — we sold a lot of LTE product in the fourth quarter. We sold a lot of 3G product from the iPhone products in the fourth quarter.

But that is key for us, because if you think about our two networks it is important for me as I migrate people into the 4G network I still have this very large 3G network that operates very efficiently. We are not investing any more capital in that network other than to keep it up and running, so no more coverage capital, no more capacity capital. If I can keep that network up and running that just generates more contribution margins for us. So it is critical for us to balance that. But, again, I think you had one point in time where you had a free phone, a free Apple phone that never happened before with us and that generated a lot of volume.

While noting that 53 percent of the carrier’s smartphone activations were iPhones in 2012, Shammo was asked about the opportunity to incentivize employees to sell non-Apple devices that would also come with lower subsidies for Verizon:

The answer is, no, we don’t and it is critical that we don’t do that. The reason for that is because what is more important for us is when a customer walks into a store that customer walks out with a phone that they will be happy with and not return under our 30-day guarantee. Because the worst thing that can happen for us is for me to incentivise a salesperson to get you into a phone that you walk out the door with thinking you are going to like and in three days you come back because you don’t like it. Therefore, now I’ve just subsidized two smartphones because that phone you used I can’t resell as a new phone.

You can read more from Shammo’s presentation and where he discusses the growth of Share Everything plans, tablets, and more here.

We reported over the weekend that there was some confusion over exactly how Apple’s new Lightning digital AV adapter works and why it lacks the ability to carry a native 1080p signal. One theory is that Apple was using an AirPlay wireless streaming protocol, but we’ve since learned that is not the case. According to a post  that purports to be from an anonymous Apple engineer explaining how the cables function, Apple does not use Airplay protocol. It instead uses the same H.264 encoding technology as AirPlay to encode the output into the ARM SoC. From there, the data is decoded and sent over HDMI:

It’s vastly the same thing with the HDMI adapter. Lightning doesn’t have anything to do with HDMI at all. Again, it’s just a high speed serial interface. Airplay uses a bunch of hardware h264 encoding technology that we’ve already got access to, so what happens here is that we use the same hardware to encode an output stream on the fly and fire it down the Lightning cable straight into the ARM SoC the guys at Panic discovered. Airplay itself (the network protocol) is NOT involved in this process. The encoded data is transferred as packetized data across the Lightning bus, where it is decoded by the ARM SoC and pushed out over HDMI.

Perhaps even more interesting is that Apple could improve the quality with future software updates since the firmware is stored in RAM as opposed to ROM. The poster noted that Apple deemed the quality “suitably acceptable” but *will* make improvements with future iOS updates:
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Bloomberg reported earlier this year that Apple had a team of over 100 product designers working on a wristwatch-like device. At the time, we noted that all the recent rumors and intel surrounding the iWatch seemed like the lead up to an impending product launch. Bloomberg is out with a new report today, claiming Apple will indeed launch its watch product in 2013:

Apple seeks to introduce the device as soon as this year, this person said. Apple has filed at least 79 patent applications that include the word “wrist,” including one for a device with a flexible screen, powered by kinetic energy… The watch business is experiencing a renaissance reminiscent of the cell phone industry before the iPhone.

The report added information about some of the potential features of the device that we had also heard of previously, including the ability to receive incoming calls, view maps, and record health data via various sensors:

Features under consideration include letting users make calls, see the identity of incoming callers and check map coordinates, said one of the people, who asked not to be identified because the plans aren’t public. It would also house a pedometer for counting steps and sensors for monitoring health-related data, such as heart rates, this person said.

Citigroup Inc. analyst Oliver Chen estimated Apple could generate $6 billion of the approximately $60 million in sales he expects the global watch industry to bring in during 2013. As pointed out by Bloomberg, gross margins are roughly four times bigger than TVs, which would only bring about $1.79 billion in gross profit for the company compared to $3.6 billion for watches.

Former creative director at Nike Scott Wilson told Bloomberg that Apple’s Jonathan Ive “has long had an interest in watches.”
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The hacked apart cable costs as much as a Roku because it has the same kind of horsepower

The fine software developers over at Panic are working on some new AV software, and they are investigating Apple’s new-ish Lightning Digital AV Adapter. What they found is that unlike the earlier 30-pin module, the Lightning adapter doesn’t carry a native 1080p signal. In fact, when mirroring, Apple says the optimum resolution is 1,600-by-900, and, when that signal is shown on a 1080p display, it is likely up-converted, showing artifacts consistent with streaming and uncompressing video data

Before it is ripped apart, via Amazon

What’s more interesting is that they split open the cable and found a full ARM processor with 256MB of RAM to process video signals inside the adapter cable. We knew way back in September that the 8-pin adapter wouldn’t carry video natively, but Apple was able to build a cable. How? Panic thinks that it is actually streaming an AirPlay network signal through the cable, and the ARM processor is decoding it.

Why would Apple do this? It’s likely Apple wants to move people to AirPlay wireless streaming to Apple TV, so this is just a stopgap solution. Rather than making a larger Lightning cable, it sacrificed on wired video-out quality and HDMI (And VGA?) cable costs.

Update: Our friends at Braeburn and an anonymous Apple Engineer sent along their takes on the situation below:

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Following an attack on a smaller number of corporate Macs that exploited a flaw in the Java browser plug-in, researchers from security firm FireEye warned users of yet another new Java zero-day vulnerability. According to a blog post published yesterday (via IDG), browsers running Java v1.6 Update 41 and Java v1.7 Update 15 are now vulnerable to a malware attack that installs a remote access tool known as McRAT. The exploit is reportedly different from the one used to attack Facebook, Twitter, Apple, and several other companies last month. Following the earlier attack, Apple released an update to Java for users to version 1.6.0_41. These recent vulnerabilities come after several updates over the last year to Java addressing exploits.

FireEye recommended users disable Java until Oracle addresses the issue:

We have notified Oracle and will continue to work with Oracle on this in-the-wild discovery. Since this exploit affects the latest Java 6u41 and Java 7u15 versions, we urge users to disable Java in your browser until a patch has been released; alternatively, set your Java security settings to “High” and do not execute any unknown Java applets outside of your organization.

Oracle provided the instructions below for uninstalling Java on Mac:
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