Six degrees of separation

By The Informer

It often feels as though the world is getting smaller – a side effect of the increasing density of human networks. The Informer is sure you’ve heard of a popular theory that most people in the world are connected to each other (and Kevin Bacon) by no more than six steps.

It’s a theory the world’s most unpopular government agency has been trying to exploit apparently, when on Thursday NSA chiefs revealed to an angry congressional panel that its analyst can actually perform queries not just on suspected terrorist sympathisers but can extend that by “two or three hops” in terms of people the suspect is connected to.

Expect this circus to keep on running and for plenty of other fallout to come. The name of Chinese vendor Huawei cropped up again in this game of Spy vs Spy, after Michael Hayden, a former head of the NSA and CIA and now a board member at MotorolaSolutions, said he is aware of “hard evidence” that Huawei has spied for the Chinese government.

The Chinese vendor has long denied that it has any links to the Chinese government or military but everyone’s pretty edgy these days. In fact a UK Parliamentary Intelligence Committee report this week raised concerns about Huawei staff working at a cyber security centre in Oxfordshire.

That’s a lovely part of the world to host a cyber security centre, delivering a much more impressive vista than America’s Most Wanted Edward Snowden is getting used to right now. The NSA / Prism whistleblower is camping out in Moscow airport’s transit zone while he waits for approval of temporary asylum in Russia.

The situation has soured relations between the USA and Russia somewhat, but not as much as the latter’s mobile operators have gone sour on American poster company Apple.

Two of Russia’s largest mobile operators have ceased selling iPhones in the country due to the extensive marketing and financial support demanded by Apple. First and second placed MTS and Megafon have already stopped advertising and selling the devices through their online shopping portals.

Both carriers had signed distribution agreements with Apple for a five year period but declined to renew them when the contracts expired recently. An MTS spokesman told the Informer:

“We didn’t renew contract with Apple on purchasing iPhones in Fall 2012, so the iPhone 5 wasn’t available in the MTS retail stores. For the next several months we continued to sell older iPhone models, but I think we are out of stock now. The reason is that Apple wasn’t able to offer us commercially attractive terms.” The terms currently requiring that operators dedicate significant marketing resources and subsidies for the devices.

Not everyone’s upset though. Contrary to other reports, third placed rival VimpelCom has confirmed that it will continue to sell Apple’s handsets. The company signed an iPhone distributor agreement at the same time as MTS and MegaFon and would also have been due to renew its deal this year.

In order to keep sales of iPhones in the country at a decent level, Apple has changed its policy of only using carriers as distributors and is now going to retailers direct.

Apple rivals Microsoft and BlackBerry are having sales trouble as well, both being forced to slash the prices of their devices in a bid to stimulate some sales.

Microsoft’s Surface RT – Microsoft’s own-branded tablet aimed to demonstrate to OEM partners how to make the most of the Windows 8 platform – has had its price slashed by 25 per cent in the UK since the end of last year; from £479 to £359 for the 64GB version. The 32GB version has seen a 33 per cent price reduction from £399 to £279.

As the company reported lower than expected quarterly earnings, it also announced an unexpected $900m charge for its inventory of unsold Surface tablets. According to number crunchers at IDC, the company only shipped 900,000 tablets in the first three months of 2013. So taking the write-down into account, figures suggest Microsoft has a store of six million unsold tablets. At the recent TM Forum Management World in Nice Microsoft was actually handing the devices out to anyone who would take one. Maybe the company can’t even give them away?

Blackberry meanwhile, has slashed the price of its flagship Z10 handset in the US. The touchscreen device was announced at the same time as its BlackBerry 10 operating system, in January this year.

US customers can purchase the device from AT&T or Verizon directly for $99, just half of the $199 price tag the smartphone had at launch. According to local reports, savvy consumers can even find a new Z10 device for just $49 at Amazon or Best Buy.

Earlier in the year, troubled BlackBerry had shown signs of stability after posting a $94m GAAP profit for 1Q13, representing an almost seven-fold increase on the $14m posted in the previous quarter, and up from the $118m loss it posted in the same quarter in 2012. However, the success was short lived and at the beginning of July, the firm posted its 2Q13 results which revealed a $169m operating loss, with financial traders wiping off a whopping $2.1bn of the firm’s value as a result.

But it’s not about tablets or smartphones anymore it’s about watches, as research firm Canalys estimates that over 500,000 Pebble smart watches will be shipped this year, and a new generation of devices from Apple, Google, Microsoft and Samsung will stir a ten-fold growth in sales by the end of 2014.

Overall the worldwide smart watch market is set to exceed five million units next year, according to research which estimates that over 330,000 smart watches were shipped in 2012, led by Sony and Motorola, while recent start-up Pebble Technology joined Sony as a market leader in 2013.

“Smart watches will be the most important new product category in consumer electronics since the iPad defined the market for tablets,’ said Chris Jones, Canalys VP and principal analyst. ‘Software platforms tied to smart watches will also be a tremendous opportunity for developers to write apps in categories such as health and wellness or sports and fitness.’

It’s results time again and fitness was lacking at several companies including Vodafone, which saw service revenue drop by 3.5 per cent year on year in the quarter ended 30 June 2013. The company took a hit in Europe where operations in Italy saw sales drop 17.6 per cent, while Spanish revenue dropped by 10.6 per cent, taking revenue from Southern Europe to £2.27bn.

Infrastructure vendor Nokia Siemens Networks (soon to be just Nokia) was flagging as well, having reported a year on year drop in sales of 17 per cent for 2Q13. Revenue generated by the firm dropped to €2.78bn from €3.34bn in the same period last year. The vendor’s operating margin for the period however rose to 0.3 per cent; it was -6.8 per cent in 2Q12.

Arch rival Ericsson fared better than most, with year on year flat sales for 2Q13, generating SEK55.3bn ($8.4bn) while operating income grew from SEK2.1bn in 2Q12 to SEK 2.5bn, and operating margin grew from 3.8 per cent to 4.5 per cent.

But while rivals such as NSN are opting to narrow down their focus, Ericsson’s offering remains largely comprehensive although CFO Jan Frykhammar insists Ericsson is also becoming a specialist, but in more areas.

“I think the big difference compared with some of the competitors is that they are more focused on the technology rather than services. We think that by adopting this strategy we are very relevant to our customers and we can handle a bigger scope in terms of complexity than many others. You will continue to see us invest in skill sets and solutions to support that ambition,” he said.

Over in Brazil local telco Oi was raising cash by offloading non-core assets to the tune of around Real2.4bn (€820m).The company has agreed to sell its majority stake in undersea cable operator Brasil Telecom Cabos Submarinos and its connected subsidiaries in Venezuela, Colombia, Bermuda and the US, which operate under the GlobeNet brand to Brazilian investment fund Banco BTG Pactual for Real1.74bn.

In another deal, Oi agreed to sell rights to 2,113 mobile towers to SBA Torres Brasil, a unit of SBA Communications Corporation (SBAC), for Real686.73m and lease back antenna space on the units.

Cash was flowing in the other direction at US operator AT&T, which has agreed to acquire prepaid wireless rival LeapWireless for around $1.2bn. The acquisition includes spectrum in the PCS and AWS bands covering 137 million people which AT&T said is largely complementary to its own existing spectrum licenses. AT&T plans to put Leap’s unutilised spectrum – which covers 41 million people – to use in furthering its 4G LTE deployment and providing additional capacity and enhanced network performance for customers.

A guy from Pennsylvania could have bought out Leap singlehandedly with his PayPal account balance, had the payment company not spotted its error. A glitch credited the man with $92 quadrillion for a brief period of time, which is one heck of a slush fund for eBay shopping if the guy treats his PayPal account like the Informer does. It’s also a loss for the US citizens as well as the guy told media outlets he would have used the cash to pay out the national debt and still have change for a baseball team or two.

Now the Informer gets many weird and wonderful emails and product pitches in his inbox, and every now and then one of them just makes him think WTF?

Wanna Hang claims to “remove angst and complication from first time social encounters” and enables users to introduce themselves right from their smartphone instead of say, making eye contact or striking up a conversation. The Informer’s not sure how this works but apparently you have to be within eye sight of your intended er, target in order to ping them your details.

Sometimes it’s just the bonkers redefinition of things like an app’s claim that we don’t engage in conversation anymore, now we have “enhanced social interaction”. Other times it’s just the slight creepy feeling raised by the use cases of this same app which struck a chord because of this issue’s spying theme.

“Stand in a spot where you can see this special someone and you’ll see her profile photo, screen name and age in the app. A simple click and she’ll see your limited profile. If she likes what she sees, she’ll accept your request to connect, and you’ll see her profile and contact info… Nobody knows but you and her.”

So you don’t have to actually approach this someone special, instead you stand there staring awkwardly like some kind of stalker.

That’s about the size of it for this week, silly season is almost upon us.

Take care

The Informer