Apple’s strong second quarter performance momentarily overshadowed its legal difficulties, while Google dealt with growing lobbying bills from its own courtroom troubles.
Apple’s Legal Matters
Apple faced a couple defeats in the court room. The International Trade Commission upheld its earlier ruling that Kodak did not infringe upon any of Apple’s patents for digital cameras or software, leaving Apple with a disappointing end to at least one of its patent suits.
The ITC didn’t shut out Apple completely. It ruled in favour of the iPhone maker in its copyright case with HTC, stating the Taiwanese company copied two of Apple’s multimedia processing and data detection patents in its Android phones. HTC’s stock fell seven per cent after the news, and the company will likely have to pay royalty fees to Apple for every device sold that violates the patent.
While two cases are coming to an end, another stays strong. The company’s battle with Samsung is far from over. Apple faced a minor setback as Judge Lucy Koh would not grant the company’s request to expedite the trial. Apple wanted the injunction verdict to take place September 8, but will instead have to wait until October 13.
Samsung announced it will begin selling its Galaxy S2 smartphone in the U.S. in August. The South Korean company hopes the device will take Apple’s iPhone 5 to task head on. The phone has been wildly successful in other countries and analysts believe it represents a real threat to Apple. The handset also happens to be one of the devices that could be banned in the U.S. if judge Koh rules in favour of Apple this fall.
Apple is also seeking more lawyers to help the company fight its legal battles, signaling the company’s many lawsuits may not come to any real end for a long time.
Apple Looks to Expand
Apple’s second quarter sales topped analyst predictions. The company moved more than 9 million iPads and over 20 million iPhones. Apple said it could thank strong international sales for its performance, pointing specifically to the Chinese market.
Even though Apple performed better than usual this quarter in China, the country still remains a largely untapped mobile market for the Cupertino, Calif.-based company. Chief operating officer Tim Cook sat down meetings with China Mobile, the country’s largest wireless company, about bringing the iPhone to the carrier, but it’s unclear whether that will happen.
Customers in the Chinese market prefer prepaid phones instead of contracts. Low-end Android based phones currently rule the market in China, but analysts say the rumoured prepaid iPhone 3GS would help Apple cut in to Android’s success there.
Apple’s continued financial success left it with $76 billion in cash and marketable securities that it says it is saving for future ventures and possible acquisitions. The company won’t have to wait too long to start dipping into that pile of cash though. Apple plans to open a retail store in New York City’s Grand Central Station and should receive approval next week.
Apple’s Bad News
Foxconn, the manufacturer best known for making iPhone and iPad devices, dragged Apple back into the news this week when one of its 21-year-old employees killed himself outside his on-site dormitory. It’s not known if the suicide was related to pressure from work, but Apple received criticism earlier this year for not doing anything to fix the poor working conditions in Foxconn’s factories.
But Foxconn isn’t the only ones giving Apple a bad name. A fake Apple Store has emerged in Kunming, China that looks shockingly like one of the company’s authorised retailers. The store has been selling thousands of dollars in products it claims are official merchandise. Apple hasn’t responded to the store’s existence yet, but analysts predict Apple will take legal action against the owners.
Lastly, the subject of Steve Job’s health once again came to the forefront after the release of the company’s second quarter results. Apple’s board of directors is reportedly talking to executive recruiters about a CEO succession plan. Jobs has been on medical leave since January. He has remained somewhat active in the company but a full return date is still uncertain.
Google’s Legal Battle Intensifies
Google hinted it may want to settle its current lawsuit with Oracle. The move to settle indicates Google may understand its operating system is in a vulnerable position in the case.
The move to settle with Oracle also shows Google may be willing to free itself of whatever legal issues it can to save on costs. The software giant’s quarterly report revealed it spent a record $2 million on lobbying in Washington.
Google may soon find itself spending even more, as it goes head to head with Apple in a bidding war for InterDigital. InterDigital owns nearly 9,000 wireless chip design patents and has 10,000 more pending. Google and Apple value the company’s patents so highly because InterDigital may help them stay out of future patent lawsuits.
And, as if Google didn’t have enough legal battles of its own to fight, Google executive chairman Eric Schmidt announced the company will support HTC in its legal battle with Apple. Google’s supporting HTC makes sense, as the company makes many smartphones that run Google’s Android OS.
Google to Expand
Google CFO Patrick Pichette defended the company’s high operating budget and spending, arguing the Google still considers itself a start-up that needs to expand as it focuses on long term growth. Pichette offered the defence after critics said the company needed to find ways to generate more revenue.
Google+ has already hit 20 million unique users. The statistic is even more impressive given that people can only join if they are invited by a friend. The service isn’t expected to go completely public until late this year.
The company also announced it may be begin offering verified accounts to attract celebrities. Twitter uses this model, verifying celebrities’ accounts to assure fans of their identities.
Even as Google+ expands, Google Labs was shut down due to the company’s high operating budget. The section was a testing ground for Google’s new projects, but the company closed it down to save money. It has moved many of the working projects to other divisions within the company but abandoned others entirely.
Facebook Versus Google+
Facebook may still have 700 million more users than Google+, but it is starting to feel the new social network’s ripple effect. Facebook banned one app developer’s advertisement that sought connections for his Google+ page. The ad was up for a few days before Facebook ordered it down.
A new report shows just 66 per cent of Facebook users are completely pleased with the service. The number was up two per cent from the same report last year, but indicates Google+ may have an opening to capitalise on unsatisfied Facebook users.
In the wake of Google+’s growing popularity, Facebook closed a deal with NBC to simulcast the final GOP debate before the New Hampshire primaries. The move could benefit both sides as the Grand Old Party panders to younger viewers on Facebook, and the social network will likely see increased traffic.
Hackers Cause Problems, Get In Trouble
Hacker group Anonymous announced plans to create its own social networking site after Google+ took down its page. The group said its own social network, which it promises to release soon, will be uncensored.
While hacker group Anonymous focused on social networking, the group LulzSec infiltrated Rupert Murdoch’s “The Sun” tabloid website in the wake of a phone hacking scandal now rocking the U.K. The group had been in retirement, but said they couldn’t sit by and watch Murdoch “clowning around,” subsequently posting a fake article about the media mogul’s death on his own tabloid.
Continued hacks may be a headache for those attacked, but they are making cyber-insurance much more popular. Businesses like traveller’s Companies and Chubb are capitalising on companies fearful of hacks who are lining up to buy insurance policies against cyber-infiltration.
But the cyber-insurance market could take a big of a hit after the U.K. and U.S. governments made efforts to strike back against hackers.
U.K. authorities captured 16 individuals in a raid, one of whom may be a LulzSec leader and others who allegedly targeted PayPal for blocking WikiLeaks payments last December. Meanwhile in the U.S., the FBI arrested over a dozen hackers. Agents raided locations in several states and seized computers and accessories from hackers’ homes.
Despite government retaliation, hackers vowed to continue attacks. A joint letter from Anonymous and LulzSec said the groups’ plan to up the ante on attacks against government and corporate websites. The reason for continuing the campaign, they say, is to expose governments’ lies and promote freedom of speech online.
Mobile Payment Alliances Form
The mobile payment market is heating up. Sprint customers can soon access American Express e-wallet services through “Sprint Zone,” a digital payment platform. Serve will allow qualified Sprint customers to make purchases at businesses that accept American Express and pay for goods and services like phone and utility bills.
Meanwhile, Isis, the mobile payment venture backed by AT&T, Verizon and T-Mobile, teamed up with Visa, MasterCard, American Express and Discover to support mobile payments on future Isis-powered devices. Isis is slated to launch in Salt Lake City and Austin in the beginning of 2012.
Isis will reportedly offer software that turns smartphones into e-wallets, allowing customers to pay for goods by swiping their phone at special terminals.
For the players, including Apple and Google, the stakes are lucrative. Competitors aiming to replace credit cards with cell phones, using payment technology called near-field communication, or NFC, are scrambling to get a piece of the market. And no wonder, as it is set to hit $1.13 trillion in 2014, according to Gartner, making the competition particularly fierce.
FDA to Regulate Medical Apps
The Food and Drug Administration released new guidelines on the use of medical apps. Not all medical apps will face the scrutiny, only the ones connected to patient diagnosis and treatment. For example, apps diagnosing skin conditions like melanoma will require FDA approval, but programs storing medical records would not. The FDA, which is gathering feedback about the guidelines, will launch the initiative in October.
The new regulations may drag out the already-long FDA approval process. The agency often takes years to approve prescription drugs and various conventional medical devices for the public, so medical app developers may also face similar delays, a drawback in the quick-moving tech industry. To address the issue, the FDA plans to adjust to the demands of the market.
Meanwhile, scientists at Northeastern University developed a new method to measure blood sugar levels without drawing blood. Instead of drawing blood, a modified iPhone — equipped with a special battery-powered case, camera lens filter and LED array — measures the fluorescence level of a “nanoparticle solution” tattoo in someone’s arm. Doctors can then track “biomarkers,” such as glucose, sodium and even blood oxygen levels.