Why the iPhone is such a big deal

October 26th, 2014 [link]

In theory, Apple is a computer company. In practice, its most important product is a handheld computer called the iPhone, as this NYT piece makes clear.

Excerpt:

Toni Sacconaghi, an analyst at Sanford C. Bernstein, says the gross profit margin for the iPhone is close to 50 percent. Because the iPhone is Apple’s most popular product — with more than 39 million sold in the last quarter — it accounts for a disproportionately large percentage of Apple’s overall profit, somewhere between 60 and 70 percent, Mr. Sacconaghi said.

“Apple is now so big that it takes a lot to make it grow appreciably,” Mr. Sacconaghi said. It’s producing an impressive interrelated ecosystem of products and services, including its forthcoming digital watches, its new digital payment system, its revived Mac line, refreshed iPads and new software operating systems. Even if all of its ventures succeed, none are likely in the next year or two to rival the financial impact of the iPhone. “The iPhone is the core of Apple right now,” he said.

In a sense, it’s the core of the stock market as well. Apple is the biggest company, by market capitalization, in the world. Apple accounts for about 3.5 percent of the weighting of the Standard & Poor’s 500-stock index. And, through Thursday, because its stock has performed magnificently while the overall market has not, Apple accounted for 18 percent of the entire rise of the S.&P. 500 index this year, according to calculations by Paul Hickey, co-founder of the Bespoke Investment Group. And the engine driving Apple shares is the iPhone.

How the network is evolving

October 26th, 2014 [link]

This morning’s Observer column:

Earlier this year engineer Dr Craig Labovitz testified before the US House of Representatives judiciary subcommittee on regulatory reform, commercial and antitrust law. Labovitz is co-founder and chief executive of Deepfield, an outfit that sells software to enable companies to compile detailed analytics on traffic within their computer networks. The hearing was on the proposed merger of Comcast and Time Warner Cable and the impact it was likely to have on competition in the video and broadband market. In the landscape of dysfunctional, viciously partisan US politics, this hearing was the equivalent of rustling in the undergrowth, and yet in the course of his testimony Labovitz said something that laid bare the new realities of our networked world…

Read on…

More…

Wired had an interesting series about this shift, the first episode of which has a useful graphic illustrating the difference between most people’s mental model of the Internet, and the emerging reality.

The view from here

October 25th, 2014 [link]

NPG_Cafe_blog

The restaurant in the National Portrait Gallery this morning.

Big Ben

October 24th, 2014 [link]

David Remnick has a lovely memoir of Ben Bradlee in the New Yorker which captures the essence of the man (and mentions the one black spot on his record, namely the way his friendship with JFK blurred his journalistic judgement). Remnick is a delightful writer with a good ear for anecdote. Take this, for example:

During his reign, from 1968 to 1991, as the executive editor of the Washington Post, Bradlee took time periodically to dictate correspondence into a recorder. His letters in no way resembled those of Emily Dickinson. He was given neither to self-doubt nor to self-restraint. In his era, there may have been demands by isolated readers for greater transparency, for correction or explanation, but there was no Internet, no Twitter, to amplify them. Bradlee was, by today’s standards, unchallengeable, and he was expert in the art of florid dismissal. His secretary, Debbie Regan, was, in turn, careful to reflect precisely his language when transcribing his dictation. One day, Regan approached the house grammarian, an editor named Tom Lippman, and admitted that she was perplexed. “Look, I have to ask you something,” she said. “Is ‘dickhead’ one word or two?”

In the film about the Watergate saga, All the President’s Men, Bradlee was played by Jason Robard, and many people — including me — thought that he had probably hammed it up a bit. Remnick disagrees:

Younger people watching the actor Jason Robards’s portrayal of Bradlee in “All the President’s Men” can be forgiven for thinking it is a broad caricature, an exaggeration of his cement-mixer voice, his cocky ebullience, his ferocious instinct for a political story, and his astonishing support for his reporters. In fact, Robards underplayed Bradlee. Recently, Tom Zito, a feature writer and critic at the Post during the Bradlee era, told me this story:

“One afternoon in the fall of 1971, I was summoned to Ben’s office. I was the paper’s rock critic at the time. A few minutes earlier, at the Post’s main entrance, a marshal from the Department of Justice had arrived, bearing a grand-jury subpoena in my name. As was the case ever since the Department of Justice and the Post had clashed over the Pentagon Papers, earlier that year, rules about process service dictated that the guard at the front desk call Bradlee’s office, where I was now sitting and being grilled about the business of the grand jury and its potential impact on the paper. I explained that my father was of Italian descent, lived in New Jersey, had constructed many publicly financed apartment buildings—and was now being investigated by the U.S. Attorney for the Southern District of New York regarding income-tax evasion. ‘Your father?’ Ben exclaimed in disbelief, and then called out to his secretary, ‘Get John Mitchell on the phone.’ In less than a minute, the voice of the Attorney General could be heard on the speaker box, asking, somewhat curtly, ‘What do you want, Ben?’ In his wonderfully gruff but patrician demeanor, and flashing a broad smile to me, Ben replied, ‘What I want is for you to never again send a subpoena over here asking any of my reporters to give grand-jury testimony about their parents. And if you do, I’m going to personally come over there and shove it up your ass.’ The subpoena was quashed the next day.”

Remnick also quashes the notion that Bradlee was an ideological creature: he wasn’t. What he was, though, was a fierce believer in the First Amendment.

I’m sending the link to Remnick’s essay to my students on our Masters in Public Policy course because we had been talking in class about the decline of the print-journalism era. I was about to append a postcript in Irish — Ní bheidh a leithéad arís ann (We shall not see his like again) — but thought better of it. After all, the Snowden saga suggests that the Bradlee spirit is still alive and well, at least in some corners of our media jungle.

Quote of the Day

October 22nd, 2014 [link]

“At some point soon it will almost be more embarrassing for a retailer if you haven’t been hacked than if you have”.

Benedict Evans

Krugman on Amazon’s abuse of market power

October 22nd, 2014 [link]

Paul Krugman had an interesting column about Amazon the other day. He dives straight in:

Amazon.com, the giant online retailer, has too much power, and it uses that power in ways that hurt America.
O.K., I know that was kind of abrupt. But I wanted to get the central point out there right away, because discussions of Amazon tend, all too often, to get lost in side issues.

Among those ‘side issues’ are the fact that Amazon is good for book buyers and good at customer service (which it is). Krugman is a Prime subscriber, as am I. “The desirability of new technology”, he writes,

“or even Amazon’s effective use of that technology, is not the issue. After all, John D. Rockefeller and his associates were pretty good at the oil business too — but Standard Oil nonetheless had too much power, and public action to curb that power was essential”.

Krugman sees Amazon’s tactics in its dispute with the publisher Hachette as an exact analogy to Standard Oil’s treatment of rail companies that refused to grant the company special discounts for shipping its oil. Amazon is delaying and impeding the sale of Hachette titles on its webssite, because Hachette won’t agree to give discounts to Amazon on the same scale as other publishers apparently do.

In economic jargon, Amazon is not acting like a monopolist (i.e. gouging customers) — not yet anyway. Instead it’s behaving like a monopsonist — i.e. a dominant buyer with the power to push down suppliers’ prices.

Way back in the 1920s, it was that kind of behaviour that triggered state action. “The robber baron era ended”, Krugman writes, “when we as a nation decided that some business tactics were out of line.” The question is whether analogous state action is now likely.

You only have to ask the question to know the answer. The neoliberal ideology has so entered our rulers’ souls that the concept of taking on Amazon is not only verboten, but unthinkable.

Two degrees

October 19th, 2014 [link]

Q: What’s the difference between a rise in global temperature of 2 degrees C and 4 degrees?

A: Human civilisation.

Who says? John Schellnhuber, one of the world’s most influential climate scientists, quoted in Paul Kingsnorth’s LRB Review of George Marshall’s new book, Don’t Even Think About It: Why Our Brains Are Wired to Ignore Climate Change.

According to Kingsnorth’s summary of Marshall’s thinking, four degrees of warming is likely

“to bring heatwaves of magnitudes never experienced before, and temperatures not seen on Earth in the last five million years. Forty per cent of plant and animal species would be at risk of extinction, a third of Asian rainforests would be under threat and most of the Amazon would be at high risk of burning down. Crop yields would collapse, possibly by a third in Africa. US production of corn, soy beans and cotton would fall by up to 82 per cent. Four degrees guarantees the total melting of the Greenland ice sheet and probably the Western Antarctic ice sheet, which would raise sea levels by more than thirty feet. Two thirds of the world’s major cities would wind up underwater. And we aren’t looking at a multigenerational time-scale: we may see a four degree rise over the next sixty years.”

After Snowden, what?

October 19th, 2014 [link]

This morning’s Observer column.

Many moons ago, shortly after Edward Snowden’s revelations about the NSA first appeared, I wrote a column which began, “Repeat after me: Edward Snowden is not the story”. I was infuriated by the way the mainstream media was focusing not on the import of what he had revealed, but on the trivia: Snowden’s personality, facial hair (or absence thereof), whereabouts, family background, girlfriend, etc. The usual crap, in other words. It was like having a chap tell us that the government was poisoning the water supply and concentrating instead on whom he had friended on Facebook.

Mercifully, we have moved on a bit since then. The important thing now, it seems to me, is to consider a new question: given what we now know, what should we do about it? What could we realistically do? Will we, in fact, do anything? And if the latter, where are we heading as democracies?

I tried to put some of these questions to Snowden at the Observer Ideas festival last Sunday via a Skype link that proved comically dysfunctional. The comedy in using a technology to which the NSA has a backdoor was not lost on the (large) audience — or on Snowden, who coped gracefully with it. But it was a bit like trying to have a philosophical discussion using smoke signals. So let’s have another go.

First, what could we do to curb comprehensive surveillance of the net?

Read on…

Value for money in the surveillance business

October 16th, 2014 [link]

Has anyone in government done a cost-benefit analysis on bulk surveillance? I mean to say, we’re spending fortunes on this stuff (in the US something like $100B a year ). Does anyone have any idea of whether it’s really worth it? Could we be spending all that dosh more wisely and getting better anti-terrorist results?

Which is why I found this exchange between a questioner and William Binney, the former Technical Director of the NSA fascinating.

Question: Other than making money off of like these NSA contracts, what capabilities do these companies [i.e. defence contractors like Booz Allen Hamilton -- Snowden's employers] *have, what other value are they generating for themselves?

William Binney: Nobody does return on investment at NSA. They don’t.

I mean, if they did return on investment, they would throw away everything except TRAFFICTHIEF and maybe some graphing programs out of MAINWAY– they’d throw all of this away. They wouldn’t have built Bluffdale [Utah], that $2.3B or whatever it is– facility to store data. This is all the data from PINWALE and MARINA and all that stuff is going out there, being stored. So they wouldn’t have to buy that at all. They’d be more effective, because they wouldn’t be buried. So at any rate, that’s what they’re doing.

The exchange comes from an absolutely riveting report of a presentation that Binney gave in which he explained some of the Snowden material.

The New Yorker’s interview with Edward Snowden

October 16th, 2014 [link]

Unmissable.

Carole Cadwalladr’s report of my conversation with him last Sunday is here.