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Apple shareholders reject CEO succession plan proposal

  • February 23, 2011
  • Apple

Apple today held its 2011 annual shareholders meeting at its campus in Cupertino, CA. Among the items up for vote was a shareholder proposal, backed by Institutional Shareholder Services (ISS) and the Laborers’ International Union of North America, that would require the company’s board of directors and CEO to annually update and disclose a CEO succession plan. The proposal was opposed by Apple, and was today voted down by shareholders. Another shareholder proposal opposed by Apple, changing the election process of the board from a plurality vote to a majority vote, passed, however; the shareholders also re-elected all seven board members. Notably, Apple CEO Steve Jobs, who took a medical leave of absence earlier this year, did not attend the meeting.

Apple confirms iPad 2 event for March 2

As expected, Apple has sent out invitations to select members of the media inviting them to a special event on March 2. The image accompanying the invitation features a mockup of iOS’s Calendar app set for the date of March 2, with a corner peeled back to reveal an image of the original iPad underneath, and the tagline “Come see what 2011 will be the year of.” Apple is expected to unveil the second-generation iPad at the event; the device itself is expected to feature a front-facing camera for FaceTime video calling, a larger speaker, and a thinner design, among other improvements. The event will be held at the Yerba Buena Center for the Arts Theater in San Francisco and will start at 10:00 a.m. Pacific Time.

Apple cuts minimum iAd buy in half

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Apple has cut the minimum buy for its iAd mobile advertising platform in half, according to a new report. AllThingsD reports that Apple has reduced the entry cost from $1 million to $500,000, in order to appeal to smaller-scale advertisers that couldn’t afford to initial entry cost. “This new minimum buy is a great step forward and a necessary one, I think,” said Mark Read, CEO of WPP Digital, the digital arm of global ad firm WPP. “Lowering the minimum buy to $500,000 from $1 million will certainly make the platform more appealing.” Despite claims of more than 60 successful brand campaigns by Apple, the report notes that some developers saw their fill rates—the percentage of ad inventory actually filled with an ad—decline in the early part of 2011; the lower minimum ad buy is likely meant to reverse than trend and bring more brands into the fold. “Apple isn’t necessarily targeting television ad budgets with iAds, but brand budgets,” said Read. “It’s after whatever portion of the Net advertising budget that it can get by offering access to this developing mobile demographic, which is a pretty valuable one.”

Apple to intro Thunderbolt, FaceTime HD on new laptops

  • February 23, 2011
  • Apple

Apple plans to debut its version of Intel’s Light Peak technology, dubbed Thunderbolt, as well as a newly renamed “FaceTime HD” camera on its new MacBook Pros, which it is expected to announce tomorrow. Mac Rumors reports that the details have come from both leaked images of the new laptops and their packaging. Light Peak is a proprietary high-speed I/O interface developed by Intel that is meant to serve as a single universal replacement for current input/output buses such as FireWire, USB, SATA, and PCI Express. Intel is holding a media event tomorrow at which it is expected to discuss the technology, however, past releases have pegged its initial bandwidth limit at 10 Gbit/s. If or when Apple plans to add Light Peak-compatible ports to its portable media devices is currently unknown.

In addition to the Thunderbolt technology, the new laptops’ labels also boast of a “Built-in FaceTime HD camera.” While the fine print related to the claim notes that FaceTime video calling requires a FaceTime-enabled device and a Wi-Fi connection for both caller and recipient, the “HD” moniker is curious in that it suggests Apple may be planning to offer higher-resolution, possibly as high as 720p, video chats between Macs and any other products it makes that are capable of processing the video, displaying the video, and capturing the video at a high enough resolution. While the front-facing cameras of the iPhone 4 and fourth-generation iPod touch are too low a resolution to be considered “HD,” both of the devices’ rear-facing cameras can capture 720p video.

Update: Apple has released version 1.0 of FaceTime for Mac on the Mac App Store for $1, bringing with it support for 720p “FaceTime HD” video calling. Notably, the HD feature is currently restricted to the company’s new line of MacBook Pro computers which were officially released this morning; past hardware, including Mac, iPhone 4, and fourth-generation iPod touch units, is currently not supported despite its capability to capture HD video content.

Wintek workers write to Apple over health concerns

  • February 22, 2011
  • Apple

A group of workers from Wintek, an Apple manufacturing partner, suffering from symptoms related to n-hexane exposure has written a letter to Apple asking it to address their concerns. Reuters reports that the letter, signed by five employees claiming to represent their workmates, said the workers are suffering from numbness in their hands and feet, weakness in their limbs, and difficulty resting at night. In its 2011 Apple Supplier Responsibility report (PDF Link), Apple admitted that 137 workers at the Suzhou facility of Wintek suffered adverse health effects following n-hexane exposure, something they considered a “core violation for worker endangerment.” Apple claims to have required Wintek to stop use of the chemical, provide evidence of compliance, and to have required them to fix their ventilation system; the company also states that “all affected workers have been treated successfully.”

Despite receiving treatment, the workers claim that Wintek has not provided ample compensation to affected employees, has pressured those who took compensation to abandon their jobs, and has not provided affected workers any assurances that future medical costs related to the exposure will be covered. Lam Ching-wan, a chemical pathologist at the University of Hong Kong, said that daily exposure to n-hexane can cause long-term and possibly irreversible nerve damage. “We are unable to cope with the medical costs of treatment in the future,” said Guo Ruiqiang, a worker at the Wintek plant, who said he was suffering fresh symptoms he believes are residual effects of the poisoning. “We can only stay in the factory and see what happens. We just feel very helpless now.”

Apple to hold iPad 2 event on March 2

Apple is scheduled to hold a special media event on March 2 in San Francisco, at which it will unveil the second-generation iPad. Citing several sources close to the situation, AllThingsD reports that the date is firm, and that the Yerba Buena Center for the Arts is the likely venue; notably, it served as the venue for Apple’s original iPad media event, as well. Apple has yet to send out invitations to media members officially confirming the event and the time/place, but given the close proximity of March 2, it will likely do so later this week.

Apple in talks to improve sound quality of music downloads

Apple is among a group of digital music retailers in discussions with record labels to improve the sound quality of their digital offerings, according to a new report. Citing executives involved in the talks, CNN reports that the change would involve the labels supplying retailers with 24-bit audio files, as opposed to the 16-bit files that are currently distributed. “We’ve gone back now at Universal, and we’re changing our pipes to 24 bit. And Apple has been great,” said Interscope co-founder and chairman Jimmy Iovine. “We’re working with them and other digital services—download services—to change to 24 bit. And some of their electronic devices are going to be changed as well. So we have a long road ahead of us.” According to the report, the higher-quality files might be sold at a premium price, and could require upgrades to future iPods and iPhones to ensure compatibility. “Paul McCartney can master The Beatles albums all he wants,” said Iovine, who also works with Dr. Dre on Beats Audio products, “(but) when you play them through a Dell computer, it sounds like you’re playing them through a portable television.”

Apple draws interest of antitrust regulators

Both the Justice Department and the Federal Trade Commission have started looking at the new terms Apple set this week for media companies that want to sell content on the iOS platform, according to a new report. Citing people familiar with the matter, the Wall Street Journal reports that the groups’ interest in Apple is only at a preliminary stage, and won’t necessarily develop into a formal investigation or action against the company. Beyond the U.S., a spokesperson for the European Commission has said the commission is aware of Apple’s new policies and is “carefully monitoring the situation.” Earlier this week, Apple issued a press release announcing its new subscription service for the App Store, in which it revealed new rules that forbid companies from including links in their apps to sell content outside the app, force them to offer the same subscription price via In-App Purchase—of which Apple gets a 30 percent cut—as they do outside the app. Banning apps from linking to external sites “sounds like a pretty aggressive position,” said Eric Goldman, director of Santa Clara University’s High Tech Law Institute. “It seems like that’s purely in the interests of Apple trying to restrict people doing transactions they don’t get a cut from.”

Apple secures 60% of global touch panel capacity?

Apple has secured close to 60 percent of global touch panel capacity for 2011, leading to tight supplies for its competitors, according to a new report. Citing sources from upstream component makers, DigiTimes reports that Apple’s move was made in order to achieve its internal goal of shipping 40 million iPads in 2011, with the company holding control over the capacity of major panel suppliers such as Wintek and TPK. Sources from iPad distributors reportedly said that Apple’s 2010 order forecasts to OEM partners were also high, but the biggest problem on the supply side was not capacity, but instead low yields of touch panels. The report notes that aside from Apple, large companies such as Motorola, RIM, and HP are also competing for related components, leaving second-tier tablet makers “out of the game.”

Apple developer rule changes may impact a wide range of apps

While the majority of yesterday’s Apple App Store subscription press release focused on the company’s new subscription purchasing system for periodicals, the company also snuck in a policy change that could impact important non-periodical apps. Coupled with an existing policy that gives Apple a 30% share of in-app purchases, the new policy forbids publishers from providing links in their apps to sell content outside the app, where Apple receives no revenue.

This language echoed an earlier statement from Apple spokesperson Trudy Miller, who in responding to the unexpected rejection of Sony’s reader application said, “We are now requiring that if an app offers customers the ability to purchase books outside of the app, that the same option is also available to customers from within the app with in-app purchase.” While that policy appears from one perspective to be reasonable, the practical consequence is that companies are now faced with the business choice of raising their prices across the board as a way to recoup revenues lost to Apple, or cutting off support for Apple’s products and users. Under one scenario, both the company’s Apple- and non-Apple customers will pay more for their content; under the other, customers will pay the same prices but be unable to use the content on Apple’s devices.

The ramifications for traditional publishers, such as the New York Times and Time, Inc., are still being sorted out. “We have agreements with other other tablet makers on mutually beneficial business terms,” a spokesman for Time Inc. told the Wall Street Journal. “Apple’s latest announcement seems to be a step in the right direction, but it raises a lot of questions, mostly centered around consumer data, that we have to work through and agree on.” The New York Times, which has been preparing its own billing system to allow it to sell a digital subscription that includes both online and app access, said through a spokesperson that “We are working with Apple to understand how this impacts our plans, if at all.” Other companies that have not traditionally been understood as publishers, such as digital book vendors Amazon and Barnes & Noble, are being treated as publishers by the new policy and subjected to the same content-related fees and rules. iLounge reached out to both Amazon and Barnes & Noble for comment on how the policy changes might affect their e-reader apps for iOS, but had not received a response from either at the time of this article’s publication.

The impact of the change on other companies—such as those that provide subscription-based access to streaming media, like Netflix, Hulu, and Rhapsody—is even less clear. Rhapsody has already issued a statement airing its concerns over the changes, which states, “Our philosophy is simple too – an Apple-imposed arrangement that requires us to pay 30 percent of our revenue to Apple, in addition to content fees that we pay to the music labels, publishers and artists, is economically untenable. The bottom line is we would not be able to offer our service through the iTunes store if subjected to Apple’s 30 percent monthly fee vs. a typical 2.5 percent credit card fee.” The statement added that “we will be collaborating with our market peers in determining an appropriate legal and business response to this latest development.”

As a consequence of the change, Apple will likely face antitrust scrutiny over its new policy, although it remains to be seen whether its position in the market is seen as strong enough to force action, and to establish Apple’s position in the market, the market itself must be defined. While publishers might claim that Apple dominates the market for consumer tablets, and is using its position to restrict competition, Apple might define the market as including all digital and print media, suggesting that any publisher unhappy with Apple’s terms is still free to reach customers through other means. “Millions will be spent litigating how broad the market is,” Herbert Hovenkamp, an antitrust professor at the University of Iowa College of Law, told the Wall Street Journal. He also said that digital media is the most plausible market definition in this case, and that he doubts Apple currently has a sufficiently dominant position to warrant scrutiny. Should Apple reach a point where it is selling 60 percent or more of all digital subscriptions through the App Store, according to Hovenkamp, “then you might move into territory where an antitrust challenge would seem feasible.”

Apple explains calling differences between GSM, CDMA iPhones

Apple has posted a support document outlining the differences in calling features between the GSM and CDMA models of iPhone. As the document notes, “depending on your wireless carrier’s network technology (GSM or CDMA), there are different methods for enabling and using” many phone features. The list of features includes call forwarding, call waiting, caller ID, conference calls, inserting pauses when dialing, and hold. Notably, the GSM model of iPhone supports up to five calls simultaneously in conference call mode, while the CDMA model supports only two, and doesn’t offer support for placing a call on hold, while the GSM model does. [via 9 to 5 Mac]

Apple updates App Store Review Guidelines to cover ‘cheating’

Following this morning’s announcement of a new subscription billing service for the App Store, Apple has updated its App Store Review Guidelines to reflect changes related to the subscription service, as well as to add new language relating to those who try to ‘cheat’ the App Store system. As reported by Mac Rumors, the new guidelines state, “If you attempt to cheat the system (for example, by trying to trick the review process, steal data from users, copy another developer’s work, or manipulate the ratings) your apps will be removed from the store and you will be expelled from the developer program.” The report notes that the language was likely added to give Apple further power to deal with developers who hide unauthorized features as “easter eggs” inside their programs, as well as those who steal content from other developers.

Apple launches subscription service on App Store

Apple today announced the launch of its long-rumored subscription service for the App Store. According to the announcement, the service is available to all publishers of content-based apps on the store, including magazines, newspapers, video, music, and more. The service will use the same App Store billing system as In-App Purchases, and will allow publishers to set the price and length of subscription (weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly). Customers are able to choose their subscription length with one-click, are automatically charged based based on their chosen length of commitment, and will be able to review and manage all of their subscriptions from their personal account page, including canceling automatic renewals. Notably, Apple processes the payments, and keeps the same 30 percent share as it does for other In-App Purchases.

Customers who purchase a subscription through the App Store will be given the option of providing personal information—such as their name, email address, and zip code—to the publisher when they subscribe. The use of such information will fall under the publisher’s privacy policy, rather than Apple’s. The same rules will apply for any additional information provided to the publisher via the app, assuming the customers are offered a clear choice as to whether or not they want to provide the information, and are clearly told that any additional information will be handled under the publisher’s privacy policy and not Apple’s.

“Our philosophy is simple—when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing,” said Apple CEO Steve Jobs. “All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app. We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers.”

The announcement goes on to say that publishers offering Apple’s subscription service from inside the app may also leverage other methods of acquiring digital subscribers outside of the app, such as selling digital subscriptions online, or providing free access to existing subscribers. Apple notes that there is no revenue sharing or exchange of customer information in such cases, and that it will be up to the publisher to provide an authentication process for such subscribers. In addition, publishers may no longer provide links in their apps which allow the customer to purchase content or subscriptions outside of the app.

Report: Apple to buy $7.8B in components from Samsung

A new report claims that Apple and Samsung are negotiating a component contract that would see the iPhone maker purchase $7.8 billion in parts from Samsung this year. Citing industry sources, the Korea Economic Daily, via the Wall Street Journal, reports that the massive contract would include LCD displays, mobile application processors, and NAND flash memory chips used in the iPod, iPhone, and iPad. The report notes that should the contract push through, Apple would become Samsung’s largest customer.

Apple releases iOS 4.2.6 update for Verizon iPhone 4

Apple has released its iOS 4.2.6 update for the Verizon iPhone 4. Posted online early last week ahead of the device’s launch, iOS 4.2.6 “fixes a bug to ensure Personal Hotspot data usage is accurately reported (for Verizon iPhones),” according to a listing on MacUpdate. Notably, iLounge’s test Verizon iPhone 4 arrived with iOS 4.2.6 pre-installed, so it is unclear how many units will actually require the update. iOS 4.2.6 for the Verizon iPhone 4 is available now through the Update feature in iTunes. [via Wired]

Apple, Verizon open iPhone 4 orders, cite Feb. 18 ship date

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Apple and Verizon Wireless are now accepting pre-orders for the CDMA iPhone 4 online. While Verizon is offering to ship the orders to customers, users ordering through Apple’s Online Store have the choice between shipment or reservation for in-store pickup. Notably, Apple is already citing a shipment date of “by February 18,” indicating that it may have already sold through its entire early allotment of units set aside for online sales. Both companies will be opening their retail stores at 7:00 a.m. tomorrow morning for sales to customers on a first-come, first served basis; in the past, Apple has reserved a large number of units for brick-and-mortar launch-day sales.

Verizon stalls iPhone 4 business shipments, sends empty box

Acting on an earlier tip, iLounge’s editors have now confirmed that Verizon Wireless business customers who pre-ordered Apple’s iPhone 4 have been de-prioritized in favor of consumer orders for the device. Reader reports, as well as a call to Verizon’s business customer service line, established that Verizon has not shipped phones that were ordered and paid for by business customers early on February 3, despite having delivered units earlier today to non-business “consumer” accounts.

“We never got any emails with tracking info,” reader Scott told us. “Our order status only shows this: Order Status: COMPLETED. The Verizon rep said my order is ‘Paid Pending Shipment,’ which means it hasn’t shipped yet. They are telling people that it doesn’t matter when they ship our orders because the phones can’t be activated until the 10th. But that’s not true.”

“Ordered mine on the business site,” said reader Neil, who reported that he succeeded at 3:49AM, roughly an hour after the pre-order system began accepting orders earlier than expected. “[Verizon’s] website says that the order is completed but I have not received a shipping confirm… Not cool treating business customers like this.”

“Ordered mine at 3:30am on the 3rd through my business account,” confirmed Nick, another reader. “No sign of tracking info or that it is in inventory (Status says completed as of Sunday but waiting for inventory). Why would they put their largest financial contributors behind consumer purchases? I called my rep on Friday to ask and they told me that no one would be getting their phone before Thursday.”

Another report concerns a reader who received an empty box instead of the iPhone 4 he had ordered and paid for. “I received an empty sealed box today,” explained Ric. “I got charged for the phone. I called Verizon and they told me that someone else got the phone and already activated it. They have suspended that phone but they do not know when I will get my phone. I am very PO’ed.”

Numerous readers who ordered through Verizon’s consumer division have received and activated their iPhone 4s without issues, contradicting the Verizon customer service claims that pre-ordered phones could not be activated until February 10.

Advisory firm backs Apple CEO succession plan

An Apple shareholder proposal designed to force the company to disclose its succession plan for CEO Steve Jobs has gained the support of Institutional Shareholder Services (ISS), a proxy-advising service. Bloomberg reports that the ISS wants Apple to disclose a CEO succession plan every year, and that the move is backed by the Laborers’ International Union of North America. “A vote for the shareholder proposal to adopt a succession planning policy is warranted in light of the company’s limited disclosure regarding this issue and the market’s expression of concern over CEO succession at Apple,” ISS said in a report. Apple, through its proxy statement (PDF Link), has asked shareholders to vote against the proposal, claiming that public disclosure of the company’s succession planning — which is required of the board and CEO annually, and included naming candidates for succession — could give competitors an unfair advantage, and give them the opportunity to poach current or future executives. The proposal will be considered at Apple’s annual shareholder meeting, which will be held on Wednesday, February 23 in building 4 on Apple’s Cupertino campus.

Verizon, Apple sold out of iPhone pre-orders

Both Verizon’s and Apple’s websites have stopped taking pre-orders for CDMA iPhone 4 units. According to an announcement from Verizon, pre-orders were halted at 8:10 p.m. EST yesterday, ending “the most successful first day sales in the history of the company.” Verizon’s website now indicates that customers—presumably all customers, and not just current Verizon customers—will be able to order the phone online beginning at 3:01 a.m. Eastern Time on February 9, while the handset will launch in stores at 7:00 a.m. local time the following day. Interestingly, both Apple and its GSM carrier partner AT&T sold out of their pre-order allotments of the iPhone 4 within a day, after experiencing technical issues that seemed to be more far-reaching than those faced by Verizon customers yesterday; it’s also worth noting that the Verizon iPhone’s early pre-orders were limited to current Verizon customers, while AT&T’s pre-orders were open to any qualified party.

“This was an exciting day,” said Dan Mead, president and chief executive officer for Verizon Wireless. “In just our first two hours, we had already sold more phones than any first day launch in our history. And, when you consider these initial orders were placed between the hours of 3 a.m. and 5 a.m., it is an incredible success story. It is gratifying to know that our customers responded so enthusiastically to this exclusive offer – designed to reward them for their loyalty.”

Apple’s App Store policy changes anger European publishers

European publishing groups are set to meet later this month to discuss Apple’s recent policy changes for publishers, according to a mocoNews report. Following Apple’s recent move to reject the Sony Reader app and subsequent announcement that it is “now requiring that if an app offers customers the ability to purchase books outside of the app, that the same option is also available to customers from within the app with in-app purchase,” the International Newsmedia Marketing Association (INMA)—which represents some 5,000 members in 80 countries—is holding a meeting with the European Online Publishers Association and the magazine association FIPP on February 17 in London to discuss Apple’s new rules. “The relationship between Apple and publishers has always been direct so its very difficult to find out what is happening elsewhere,” said Grzegorz Piechota, the European president of the INMA.

Many publishers who previously relied on web-based forms for handling subscriptions are confused with Apple’s stance. “Some say they feel betrayed,” Piechota said. “They believed that it would be a great way to access content from newspapers and magazines. So they hyped the iPad, and many of them invested in apps for it. By promoting these apps, they promoted the device. Publishers in fact helped to make the iPad successful on the market.” In explaining Apple’s inconsistencies when dealing with publishers, Piechota said, “Apple said yesterday that that in their policy with Sony Reader, they are not changing anything, just enforcing existing rules. But when they talk to publishers direct, they are saying something else. Apple has been contacting some publishers, and not contacting some. Some get emails, others get informal phone calls,” he said. “The whole process of accepting or rejecting apps is not transparent. It’s very hard to explain why some apps are being accepted and some are being refused; some apps allow you to read content that is bought somewhere else and others that won’t let you do this.” Noting that publishers in Belgium and France have taken the matter to authorities, Piechota said, “Legal action is the least wanted solution. It is slow and will damage the relationship between Apple and publishers. The first thing is a dialogue. As publishers we need to know what Apple is playing at.”

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