US Government and Big tech on collision course over backdoor entry

Attorney General William Barr has suggested Apple has not offered ‘material’ assistance as authorities investigate the deadly shooting which took place at a Pensacola naval base last month.

Although Apple disputes the claim from Barr, the conflict between the firm and the Attorney General’s office sets the technology industry on a collision course with the Government. Barr seems to be calling for backdoors to be build into digital products and services, a move which has been robustly opposed by the technology industry.

“We have asked Apple for their help in unlocking the shooter’s iPhones,” Barr said during a press conference. “So far Apple has not given us any substantive assistance.

“This situation perfectly illustrates why it is critical that investigators be able to get access to digital evidence once they have obtained a court order based on probable cause. We call on Apple and other technology companies to help us find a solution so that we can better protect the lives of Americans and prevent future attacks.”

Apple rejects the statement and has claimed it has assisted in the investigation.

“We reject the characterization that Apple has not provided substantive assistance in the Pensacola investigation,” Apple said in a statement.

“Our responses to their many requests since the attack have been timely, thorough and are ongoing. We responded to each request promptly, often within hours, sharing information with FBI offices in Jacksonville, Pensacola and New York. The queries resulted in many gigabytes of information that we turned over to investigators. In every instance, we responded with all of the information that we had.”

Apple has not unlocked the devices, but there are ways and means to access some information without doing so. The firm has assisted authorities through data taken from the iCloud (for example) in other cases.

Over the first six months of 2019, Apple received numerous requests from the US Government for customer information and data. The table below outlines the requests.

Request type Requests received Percentage where data was provided
Device 4,796 84%
Financial Identifier 918 81%
Account Identifier 3,619 90%
Emergency 206 90%

For devices, the Government is requesting device identifiers such as serial number or IMEI number. Examples of financial identifiers are credit card or gift card information. The account identifier could be the customers Apple ID or email address. And ‘Emergency’ describes requests received from a government agency seeking customer data in an emergency matter.

The Apple statement also reiterated its position on privacy:

“We have always maintained there is no such thing as a backdoor just for the good guys. Backdoors can also be exploited by those who threaten our national security and the data security of our customers.”

This is an argument which has reared its head numerous times, and it does appear the pieces are falling into place for it to do so once again.

Apple has regularly been a critic of Governments for refused to enable police and intelligence agencies access to phones. In 2015, Apple defied a court order to assist the FBI by unlocking an iPhone which belonged to one of two terrorists who killed 14 people in San Bernardino. The firm has regularly used the argument of privacy in defending its actions, seemingly not wanting to create precedent for future cases.

And while these two cases have focused on the security measures embedded on devices, the services industry has also found itself in conflict in a very similar fashion.

Over the course of 2017, the then-Home Secretary Amber Rudd launched a sustained attack on the technology industry in an attempt to force the creation of backdoors into messaging services such as WhatsApp. The prevention of terrorism and paedophilia was used as justification to break down the defences offered by end-to-end encryption, but industry refused demands to create backdoors to circumnavigate the security features.

Rudd even went as far as to state users do not care about security, but use these messaging applications for simplicity and convenience.

Barr is not taking the same simple-minded and short-sighted approach as Rudd, but this could be viewed as a challenge. What we could see over the coming months is the US Government heading into conflict with the technology industry once again over access to data on secured products and in encrypted services.

What is worth noting is that there are very valid arguments on both sides of the fence. Governments and regulators should be entitled to enlist the assistance of the technology industry in combatting crime, whereas the technology industry should also be able to draw a line through ideas which would create collateral damage.

The creation of backdoors and designed weaknesses in security features is not something which should be considered. Technology companies, whether software or hardware, have designed security features to be robust enough that not even the manufacturer or developer can circumnavigate them. This ensures security but also prevents abuse.

If backdoors are inserted, this is vulnerability by design. It is effectively waving a red-flag in front of the hacker community, inviting them to find the weakness. Accessing an individual’s phone or WhatsApp account will offer reward for hackers, and whether by accident or design, the vulnerability will be eventually found and exploited.

This is not a viable solution for the sustained health of the digital economy, but this fact directs Big Tech and the US Government on another collision course over access. This is a battle which has been fought before and won by no-one, but it is once again on th

Most smartphone brands are worthless

New research from IHS Markit reveals that, beyond Apple and Samsung, people aren’t loyal to smartphone brands.

This conclusion is based on a multinational survey (US, Brazil, UK, Germany, Japan, and India) conducted last year, in which IHS asked punters how they go about picking a mobile. The most common reason was the hardware, which is reassuring, and on the whole it found that people were less brand loyal ask they earned less money.

A big reason for that last trend will surely be the fact that the brand that attracts the most loyalty is also the most expensive – Apple. The only other brand that HIS found people expressed a large degree of loyalty towards was Samsung. It’s presumably no coincidence that these two companies spend far more money on marketing than any of the others.

Apple and Samsung combined claimed a customer loyalty rate of 69%, while all the rest could only manage 33%. When two thirds of your customer base are disloyal, it’s fair to say your brand is essentially worthless in that context, especially since a lot of brand loyalty can simply be attributed to inertia.

“Apple and Samsung have worked diligently over many years to build their brands, spending heavily on marketing and advertising to maintain a strong following among consumers,” said James Allison, Analyst at IHS. “As a result, these two companies have been able to erect competitive bulwarks that insulate them from the pressures faced by other brands. For companies not named Apple or Samsung, conditions in the smartphone business are intensely competitive, as companies battle over a few percentage points of market share without the benefit of a leading brand name.”

IHS didn’t give specific brand loyalty numbers for Apple and Samsung but it seems safe to assume Apple’s is higher. How much of this is down to brand alone, however, is debatable, since IHS seems to consider upgrading from a phone of the same brand to be evidence of brand loyalty. Since Apple uses a different OS and content ecosystem from all other smartphone makers, for many of its customers moving away from it is just too much hassle, so their ‘loyalty’ is more a matter of pragmatism than sentiment.

Fitness tracker use is exploding in the US, especially among rich young women

A recent Pew survey shows 21% of US adults regularly wear a smartwatch or fitness tracker. Over half of them think it acceptable for the device makers to share user data with medical researchers.

According to the survey results shared by the Pew Research Center, an American think-tank, smartwatch and fitness tracker adoption may have crossed the chasm from earlier adopters to early majority. 21% of the surveyed panellists already are regularly using smartwatch or specialised tracker to monitor their fitness.

Such a trajectory is in line with the recent market feedback that the total wearables market volume has nearly doubled from a year ago (though what counts as wearables may be contested), and both wristbands and smartwatches have grown by nearly 50%.

When it comes to difference in adoption rates between social groups, the penetration went up to nearly a third (31%) among those with a household income of over $75,000. In comparison, among those with a household income of less than $30,000, only 12% regularly wear such a device. In addition to variance by income groups, women, Hispanic adults, and respondents with a college degree and above are also more likely to wear such devices than men, non-college graduates, and other major ethnic groups.

Another question on the survey asks the respondents if they think makers of a fitness tracking app can share “their users’ data with medical researchers seeking to better understand the link between exercise and heart disease”. The response is divided. 41% of all the respondents said yes, as opposed to 35% saying no, while 22% unsure. However, the percentage of those believing such sharing acceptable went up to 53% among the respondents that are already regularly using such devices, compared to 38% among the non-adopters.

Due to the lack of a GDPR equivalent in the US, it is not much of a surprise that there is neither a consensus among users nor a standard industry practice related to user data sharing. “Recently, some concerns have been raised over who can and should have access to this health data. Military analysts have also expressed concern about how third parties can use the data to find out where there is an American military presence,” Pew said in its press release.

Meanwhile, how useful the data tracked by the devices can be for medical research purposes may also be debatable. For example, even the best of the devices, the Apple Watch, does not qualify as a medical device, despite its being “FDA certified”.

The survey was conducted by Pew from 3 to 17 June 2019. 4,272 qualified panellists responded to the survey.

Apple iPhone XR is struggling with the O2 UK network

One of Apple’s slightly less expensive smartphones is repeatedly losing its connection to the O2 UK network.

According to the Beeb, a bunch of O2 customers were reporting their iPhone XRs being cut off from the network over the festive period, some of them several times a day. As is increasingly the way of things, much of the corroboration for the claim was taken from Twitter, with one beleaguered tweeter saying he had been enduring this connectivity blight since 16 December. Another was reduced to buying a second hand iPhone 7.

“We’re working closely with our partners to resolve an intermittent issue affecting some of our customers using iPhone XR,” an O2 spokeswoman told the BBC. “We thank any customers affected for their patience.” The spokewoman apparently went on to say something to the extent of ‘have you tried turning it off an on again?’ which the affected users presumably had.

Apple also responded to the Beeb, saying it was aware of the issue and that it was working on a software patch to fix it. The bloke who has this issue since 16 December says O2 told him it was Apple’s fault but neither company has formally confirmed this as far as we can tell. If this is the case then the least Apple could do is make a public statement to that effect.

App economy hauls in $277mn on Christmas Day

Some are preoccupied by presents, others by the mountains of food, and a few are even napping in the comfy sofa, but more of us are spending money on in-app purchases on Christmas Day.

According to data from mobile analyst firm Sensor Tower, $277 million was spend on apps across Google Play and Apple’s App Store on December 25. This represents an 11.5% increase on the amount spend in 2018 while the entertainment category brought in the biggest gains across the app economy.

While the US accounted for the largest proportion of spend globally, it trailed the average grow. In the US, just over $80 million was spend across both the app markets, representing a comparatively sluggish year-on-year growth of 4.8%.

Christmas is usually a profitable time for those involved in the app economy due to the number of new devices, first-time mobile customers and vouchers being offered as last-minute gifts, though interestingly enough, the non-game segment also grew, indicating that perhaps there were some urgent Uber’s called once the realities of spending the evening with the in-laws kicked in.

Imagination re-wins Apple as customer

Almost three years ago, Apple decided it could get by without Imagination Technologies as a supplier, but 2020 gets off to a flier for the UK chip firm resigning a licencing agreement.

Details are thin on the ground for the moment, though this completes a very circular story for the Hertfordshire-based company. Imagination Technologies has now confirmed Apple has signed a multi-year agreement to access a “wider range of Imagination’s intellectual property”.

The original deal between the pair was signed in 2014, though it only took three years for Apple to decide it wanted to move operations in-house. This is becoming an increasingly common tactic for the iLeader, the acquisition of Intel’s 5G modem business is another example, though it seems Apple was not able to replicate the success of Imagination Technologies’ graphics cards.

Although Apple is still a highly profitable company, slowing growth and increased costs for the iPhone have presented a problem on the spreadsheets. As a result, CEO Tim Cook has attempted to supercharge the ‘software and services’ division to generate momentum, while bringing more of the supply chain in-house is another way to create efficiencies and profits. Imagination was a victim of the latter.

As a result of losing Apple as a customer, and more than half of the company’s annual revenues which were tied to the firm, Imagination Technologies saw its share price plummet 70% and eventually have to succumb to being sold to Canyon Bridge, a Chinese-backed private equity firm, for £550 million. At the peak of its powers, Imagination Technologies was worth more than £2 billion.

The agreement with Apple comes a month after the launch of the A-Series chipset, which Imagination Technologies CEO Ron Black described as the “most important GPU launch” in 15 years. This is of course little more than posturing from the CEO, though Apple clearly bought into the buzz, that or it figured out that designing and manufacturing GPUs is more difficult than it first thought.

Big Tech sign-up to make smart home standards

Apple, Amazon and Google are joining forces with the Zigbee Alliance to form the Connected Home over IP project to create universal standards for the smart home ecosystem.

The aim of the project is simple; get ahead of the game and reduce the potential for ecosystem fragmentation in the smart home. With Apple, Amazon and Google on board, the working group has access to the worlds’ most popular virtual assistants and can drive towards creating a framework which encourages interoperability and compatibility.

“Our goal is to bring together market-tested technologies to develop a new, open smart home connectivity standard based on Internet Protocol (IP),” Google’s Nik Sathe and Grant Erikson wrote on the company’s blog.

“Google’s use of IP in home products dates back to the launch of Nest Learning Thermostat in 2011. IP also enables end-to-end, private and secure communication among smart devices, mobile apps, and cloud services.”

While it might seem slightly unusual that the internet giants are attempting to collaborate without being forced to, the bigger picture makes it a bit more logical.

The likes of Google, Apple and Amazon are looking to make more money from the software and services elements of the smart home ecosystem. This is an admirable quest, though for money to be made there needs to be mass adoption of smart home products.

As it stands, smart home devices manufacturers are facing a conundrum. Either, spend a lot of money to make sure devices are compatible with all the different smart home ecosystems which are developing, or pick a winner and risk losing out on customers who will exist elsewhere. By creating universal standards for the smart home ecosystem, the manufacturers will theoretically be more encouraging to engage in this emerging segment.

What is always worth remembering is that while the likes of Google and Amazon currently sell smart home devices, there will be a lot more money for these companies on the software side when smart home products are adopted on scale. This is their bread and butter after all, with a plethora of existing relationships already in place. Looking at Apple, this is a company which manufactures premium devices, but has some very aggressive ambitions in the software and services world. This is where CEO Tim Cook envisions growth for the company in the future.

Ultimately this is a good sign for the industry. Collaboration is a word which is thrown around so much nowadays it is almost meaningless, but when it results in universally accepted standards to drive interoperability and compatibility, there is something genuinely exciting to look forward to.

Wearables market doubles, but only if you include wireless headphones

The latest global wearable device market numbers from IDC reveal it grew by 95% in Q3, but much of this came from a category that didn’t used to be counted.

The launch by Apple of its AirPod earphones provided a general boost to the Bluetooth headphones market. Wired headphones never used to be included in assessments of the wearables market but, for IDC at least, the removal of those wires had been sufficient for them to qualify. As a result, a category that used to be comprised mainly of fitness bands and smart watches is now dominat3ed by earwear.

“Hearables have become the new go-to product for the wearables market,” said Ramon Llamas of IDC. “This began with multiple vendors removing the headphone jack from their smartphones, driving the move toward wireless headphones. It continued with hearables incorporating additional features that either augment or expand the audio experience. Next, hearables have taken on multiple form factors – ranging from truly wireless to over-the-ear headphones – appealing to a broad base of earwear user preferences. Finally, prices have come down significantly, with some reaching below $20.”

Not with Apple they haven’t. AirPods start at £159, going up to £249 for the Pro version. Nonetheless, Apple being Apple, it’s still shifting a ton of them. IDC reckons Apple tripled its total wearables shipments to 29.5 million units in Q3 and since there’s little evidence of an explosion in Apple Watch sales, much of this must be down to the AirPods. If Apple decides to ditch the lightning port, that trend seems bound to continue.

As you can see from the second table below, earware shipments are by far the biggest wearables category now and are almost entirely responsible for its rapid growth. However it’s highly debatable whether a single function accessory should be counted as a wearable device in its own right. Even fitness bands have some degree of smart functionality and the mere removal of a wires seems like a crude reason so suddenly designate something ‘wearable’, since the human interface has barely changed.

 

Top 5 Wearables Companies by Shipment Volume, Market Share, and Year-Over-Year Growth, Q3 2019 (shipments in millions)
Company 3Q19 Shipments 3Q19 Market Share 3Q18 Shipments 3Q18 Market Share Year-Over-Year Growth
1. Apple 29.5 35.0% 10.0 23.0% 195.5%
2. Xiaomi 12.4 14.6% 7.4 17.1% 66.1%
3. Samsung 8.3 9.8% 3.2 7.4% 156.4%
4. Huawei 7.1 8.4% 2.3 5.4% 202.6%
5. Fitbit 3.5 4.1% 3.5 8.0% 0.5%
Others 23.8 28.1% 16.9 39.0% 40.4%
Total 84.5 100.0% 43.4 100.0% 94.6%
Source: IDC Worldwide Quarterly Wearables Tracker, December 5, 2019

 

Worldwide Wearables Market by Product Category Shipment Volume, Market Share, and Year-Over-Year Growth, Q3 2019 (shipments in millions)
Product Category 3Q19 Shipments 3Q19 Market Share 3Q18 Shipments 3Q18 Market Share Year-Over-Year Growth
Earwear 40.7 48.1% 11.9 27.4% 242.4%
Wristband 19.2 22.7% 12.9 29.7% 48.6%
Smartwatch 17.6 20.9% 11.9 27.4% 48.0%
Others 7.1 8.4% 6.7 15.5% 4.7%
Total 84.5 100.0% 43.4 100.0% 94.6%
Source: IDC Worldwide Quarterly Wearables Tracker, December 5, 2019

 

Apple could ditch Lightning port, but should it be allowed to?

Analyst Ming-Chi Kuo has a reputation for pretty accurate guesses at what Apple is going to do next, and the next prediction is ditching the Lightning port for a ‘wireless experience’.

Although wireless charging is a quirky feature many of the smartphone manufacturers are boasting of, it is far from the norm when it comes to charging a device. It is incredibly useful, but when presented the opportunity to purchase an additional cable or wireless charging unit, most consumers would go for the more traditional means of juicing devices.

However, this is Apple we’re talking about. A company which thrives on being innovative, often forcing the hands of competitors to follow suit. There has been a notable lack of innovation in recent years, though that it not to say the team is not cooking up something to shake the industry.

“Apple will create more differentiation between the highest-end and high- end models,” Kuo’s research note for TF International Securities states, courtesy of MacRumors.

“It will benefit the shipment of the highest-end model and iPhone ASP. Among new 2H21 iPhone models, we expect that the highest-end model would cancel the [Lightning] port and provide the completely wireless experience.”

This might sound exciting, but you have to remember Apple likes to charge a premium and doesn’t play well with others. This is one of the most closed companies on the planet, forcing consumers into its own ecosystem of products and services through incompatibility.

This is where the conundrum lies; should Apple be allowed to do this? As per form with Apple, the smartphone may well only be compatible with official Apple wireless charging units, which like every Apple product, will probably be more expensive than the market average. Without a Lightning port, customers will be forced to purchase additional wireless charging units for (potentially) several different locations. This could become very expensive for the customer, unless they are willing to play battery chicken.

Most consumer watchdogs get twitchy when companies effectively force consumers into spending more money, though the reaction might well depend on the development of the wireless charging market. Will the products be commoditised enough to bring prices down? Or perhaps Apple will start playing nice and ensure the devices are compatible with generic products?

That said, despite the aforementioned concerns, this could be a move towards the much-heralded dream of innovation. The ‘wireless experience’ which Kuo describes is looking like it could be a reality sooner rather than later.

Alongside the Airpods launched in 2016, Apple has also launched its own range of smart speakers and a full-range of smart watches, which of course connect wirelessly, while it has persisted with the development of Siri, its in-house virtual assistant. Add wireless charging into the mix, and it does become a complete the ‘wireless experience’.

This is not innovation on the device per se, wireless charging already exists, but moving into a completely wireless experience is a new status quo. This would almost certainly trigger an industry wide-shift and a new type of digital environment for the consumer.

Apple forecast to dominate the 5G smartphone market next year

A report from analyst firm Strategy Analytics reckons that then Apple launches its 5G iPhones next year it will immediately become the biggest 5G player.

Right now SA says Samsung has around 40% of the market and Huawei has another 30%. Apple hasn’t launched a 5G phone yet, thanks in part to it trying to get tough with 5G modem leader Qualcomm, before eventually capitulating. That’s all set to change when the next lot of iPhones gets launched, Which SA says will all be 5G enabled.

“It may seem counterintuitive that Apple, which currently has no 5G phones in its portfolio will be able to pass current 5G market leaders Samsung and Huawei,” said SA’s Ken Hyers. “But with three new 5G models coming next year, Apple merely needs to match its current upgrade rates for newly introduced iPhone models to take the lead next year.”

“Currently Samsung is the undisputed market leader in 5G smartphones,” said Ville-Petteri Ukonaho, of SA. “But with the two largest 5G markets in 2020, China and the USA, dominated by Huawei and Apple respectively, these two vendors are set to lead in 5G next year.”

Eventually, however, the balance will inevitably be restored at 5G modems find their way further down the Android product stack. “Despite the strong showing that is expected for Apple in 5G in 2020, in the longer term Samsung will regain the 5G crown,” said Hyers. As more markets cut over to 5G, Samsung will capture the majority of that share by virtue of its dominance of the overall smartphone market and a broader portfolio of 5G devices across more price-bands.”

“Huawei’s potential in 5G smartphone sales is currently limited by the US technology trade ban,” said Ukonaho. “Huawei is dominant in China and will likely remain so. But until the ban is lifted, prospects for Huawei in 5G smartphone sales elsewhere are limited. Regardless of its long-term prospects in terms of 5G smartphone marketshare. 2020 will be Apple’s time to grab bragging rights in 5G.”

Here’s the SA forecast chart, showing Apple quickly grabbing a 40% share of the 5G market and topping 50% by the end of the year. As Hyers indicated the forecasting is simply based on the historical uptake of new iPhones, which seems fair enough. If Apple decides some of its new iPhones are undeserving of a 5G modem then the things could look pretty different.