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What Everyone’s Missing About Apple vs. the FBI


iphone

Well, actually everyone is missing a few things regarding the fight between Apple and the FBI.

First, in case you’re living under a rock, to recap what the fight is over. One of the San Bernardino shooters had an iPhone that was issued to him through his job, a county agency. The FBI would like to look at the data on the phone, as it might contain information valuable to tracing the terrorists movements, finances and communications prior to the attack. This is not an unreasonable thought. It seems as if the FBI crossed all their legal T’s and dotted their Constitutional I’s, even getting a warrant for the search. Unfortunately, the FBI is incapable of getting past the security measures Apple has built into the iPhone’s operating system. So they went back to court and obtained an order that compels Apple to bypass the phone’s security. Apple is refusing, citing privacy concerns.

That’s the 10,000 foot view of the issue. And were it that easy, I don’t think Apple would put up this much a fuss about it. The problem comes about once you drop down and look at the issue up close. And the reason everyone is freaking out, I think, is they don’t understand the technology or how it works. They only know that it works – which, of course, is what makes Apple’s iOS so successful.

That’s the first thing that everyone is missing: nobody actually understands what it is they’re complaining about. For a guy who’s worked in software development and mobile tech, it would be comical if the stakes weren’t so high. Everyone just assumes that Apple can magically give the FBI the phone’s unlock code. It isn’t that easy. The iPhone’s encryption is integral to iOS – the only way to get past the unlock code is to break the encryption within iOS. To comply with the FBI’s request, Apple would have to write a software program that would alter the way iOS functions. In essence, they would have to destroy their own product.

That’s the second thing that everyone is missing: the government’s order would require Apple to blow up their business model. One of the reasons, perhaps the biggest reason, Apple has been so successful is they’ve stuck to a simple proposition for over 20 years. That proposition is that their software and hardware live as an integrated unit. Form and function, together as one. To make that happen, Apple’s products have always worked with proprietary, closed operating systems. The underlying code is not available to the general public. The FBI is asking Apple to do the exact opposite of what they’ve always done. To write code that opens iOS to the public domain; in essence, to allow anyone with minimal code writing ability to alter the way iOS (and thus, the iPhone itself) works. Is that reasonable? Can the government actually require a private firm to fundamentally change the way they do business, create products and market them?

The next thing everyone seems to be missing is that the government has massive signals intelligence infrastructure. It includes the NSA, CIA, DIA, as well as the FBI and 12 other agencies you might not have heard of. A major part of signals intelligence is code-breaking. By demanding Apple break their encryption, the United States Intelligence Community is announcing to the world they are incapable of cracking the code themselves.

The Director of National Intelligence’s counterparts in Beijing, Tehran and Moscow must be laughing themselves silly at the admission.

Now, this might sound ludicrous, but it seems to me that a government that spends $4 trillion every year can come up with $600 to buy an iPhone and have one of their ace code-breakers get past the iOS encryption. If they can’t, then we need to seriously ask why people aren’t being fired.

Finally, the last thing everyone seems to be missing is what having the iOS code broken and in the public domain would mean for privacy and security in the digital age. This isn’t like asking for the key to a locked room. The reality is that most of us have our entire lives on our phones. Everything from sensitive financial data to our Facebook profiles live in the bits and bytes of data stored on them. The government is asking Apple to provide a tool that would allow everyone access to everything stored there. Additionally, if your one of the millions of users who’ve stored things in the cloud, that data would also be available to anyone with a $10 NFC reader and 30 seconds to get close enough to pull it from your phone. The concept of privacy would be moot.

It’s a lot to digest. But what many in the media and government want to portray as relatively simple is anything but.

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Unlimited Data Plans: Are They Coming Back From the Dead?


Odds are, T-Mobile’s move back to offering unlimited data is a stop-gap measure aimed at generating some short-term subscriber gains. It isn’t a direct shot at AT&T and Verizon, since their typical subscriber is more concerned about QoS than price. Rather, it’s aimed at stealing some market share from the other low-cost post paid carrier, Sprint. The big problem is going to be paying for the 4G network build while subsidizing all-you-can-eat data plans, especially in light of parent company Deutsche Telekom’s reluctance to keep pumping cash into what has been a losing proposition for them.

Business & Money

Unlimited data, once a consistent option among cell phone carriers, has been on the outs lately with the big dogs of wireless. But fourth-place carrier T-Mobile is hoping to win back some users — and market share — by offering a true unlimited data plan starting Sept. 5.

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Facebook Mobile Revenue Takes Another Hit


Facebook needs to make a few bucks, people. I know that sounds crazy, considering how much money they raised in their IPO – but if they lose out on mobile ad revenue, The Social Network will disappear. Read on, from my friends at TC:


So Long, #Twitter


An open letter to the leadership & employees of Twitter:

I, along with millions of others worldwide, enjoy using your service. In my case, I originally joined the “Twitterverse” in 2007. Over the nearly 5 years since, I’ve engaged thousands of others in discussions regarding current events, political affairs, health issues and my beloved New York Yankees. During the popular uprising in Iran, I was one of the tens of thousands people around the globe who helped spread the word. As the Arab Spring grew and rose, I was one of those men and women who retweeted the eyes-on accounts from those on the ground.

Your company has provided a unique platform for sharing ideas and organizing the global community. More than any other company, you became the epitome of what “social media” can and should be. Regardless of whatever platform changes you’ve made throughout the years, you never lost sight of what it was that makes your service unique and valuable to millions of people, of all ages and backgrounds, throughout the world.

Never, that is, until today. With your announcement that you will now engage in selective censoship, you have abandoned the very ideals of free speech and expression that make your service at times aggravating, others hilarious, but always thought provoking and important. But once you engage in censoring those short bursts of independent thought, your service is no more relevant than any other propoganda tool.

So, for that reason, I am taking the boycott planned for tomorrow one step further. Effective tomorrow, I will stop using your service until you renounce your current course of action. If you again pledge to support a free and open internet, free of censorship, then I will happily return to using Twitter. The links from this blog, my Facebook account and numerous other sites will all be deactivated. What’s more, I’m asking all of my followers to do likewise.

So, until then, au revoir, Twitter!


End Piracy, Not Liberty – Just Say “NO” to SOPA!


While there have been some positive developments today regarding the effort to derail internet censorship, not all is well. Yes, all of the bill’s co-sponsors ended their support earlier. And several high profile legislators have since reversed positions and are now opposed to the measure, including Marco Rubio.

But SOPA’s author, Lamar (Lamer?) Smith of Texas, is still promising to go forward with the bill. With typical DC hubris, he continues to insist his bill doesn’t allow censorship – and even if it does, we shouldn’t worry about it.

Don’t let up. Keep the pressure on. If you haven’t signed the petition yet, hit the link below and do so now. Then make sure you send it to your Congressmen and Senators and have them sign, too.

https://www.google.com/landing/takeaction/


Great Piece on Why SOPA Needs to be Stopped.


Sometimes, somebody posts something so good I just have to repost it. Here is a terrific example from Mashable. This op-ed goes deep into the weeds on SOPA, explaining why it’s bad for the internet. Bad for privacy. But great if you’re a devotee of censorship.

http://mashable.com/2012/01/17/sopa-dangerous-opinion/


RIP, Mr. Jobs


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I’m writing this with a heavy heart. Well, typing might be the better description. I hardly ever actually write anything any longer. And if I really wanted to be exact, I would say that I’m typing this on my smartphone.

30 years ago this would have been unimaginable. I wrote almost everything. Even when I typed something on my old Olivetti, I wrote it first – since making corrections on the fly was time consuming and rarely came out right, anyway. 30 years ago a handheld device that could do everything this smartphone can didn’t exist, not even on Star Trek. 30 years ago, if I needed to make a call away from home I had to find a public phone – and pray I had a dime in my pocket. 30 years ago, video recorders were the size of a car battery (and just as heavy) and portable music consisted of tinny sounding radios. 30 years ago, computers took up an entire room. The idea of having one in every room in my house, along with one I can fit in my pocket, was unimaginable.

Unimaginable, except to one man who had the vision of making personal computing a reality. Over the next three decades his vision would transform the way the world communicates, interacts and thinks. That innovative spark would not only change the world as a whole, but change the future of one geeky, 16 year old from a sleepy little town on the Jersey shore. The way Steve Jobs envisioned the way the world could work fired my imagination and led me into a career in tech.

So, you’ll pardon me if I occassionally break into tears over the next day or so. When Mr. Jobs passed away earlier this evening, the world may have lost the greatest technologist since Thomas Edison. But I lost a hero.


Are the jobs REALLY gone?


There’s been a lot of talk lately, from both the left and the right, that most of the jobs lost in the current recession are lost forever.  Robert Reich is a well-respected former Labor Secretary for President Clinton. In his article The Future of American Jobs, he contends that American jobs were permanently lost to a pair of factors: technology and outsourcing. Technology allows companies to increase employee efficiency (more employee productivity at lower labor costs); outsourcing is enabled by technology that enables foreign workers to remain competitive with Americans and can be closely monitored using new technologies. Although philosophically opposed to Reich, James Sherk of the Heritage Foundation reaches the same many of the same conclusions in Reduced Investment and Job Creation to Blame for High Unemployment. The only difference in these two articles is that Reich focuses on job losses, while Sherk focuses on job creation. But in both articles, the authors contend that both near- and long-term unemployment will remain at or near 8%. ( I wrote about the disappearing jobs phenomenon earlier this month)

There are many causes for this, of course, beginning with the fact that United States (and most of the developed world) began moving earnestly away from labor-intensive manufacturing economies towards knowledge-based service economies in the late 1970’s. Although well aware of this, nobody did much to prepare the citizenry for this fundamental economic change. Much as the US experienced a dramatic cultural and demographic shift in the late 19th century as we moved from an agrarian economy to a manufacturing economy, we are experiencing the same now. Policies over the past 30 years at both the federal and state level, rather than focusing on restructuring education and employment policies, were largely concentrated on sparing the status quo.  Although the days of a high-school dropout being able to get a well-paying job for life at the local manufacturing plant ended a generation ago, we’ve continued to subsidize both the labor unions (who rely on perpetuating this myth) and the educational systems (whose labor unions and administrators have been resistant to changing the formulas they’ve worked under for 6 generations). As a result, we have a large segment of the population that is ill-suited for the type of work the modern economy provides.

Both liberals and conservatives in this country (and other Western nations) are calling for a return to 20th century economies. Liberals believe that the US can return to a manufacturing-based economy, if only certain policies are enacted. Some of these include:  engaging in protectionist trade policy (apply punitive tariffs on goods produced in low-age countries); requiring a percentage of all goods sold in the US to be produced in American factories and tightening labor and banking regulations to “protect” the American worker. Conservatives are championing reduced immigration, business credits and lower taxes as the way to spur manufacturing growth. Both of these approaches – or any combination thereof – is wrong, immoral and ill-conceived. They are intended primarily to appease the 60% of Americans whose jobs will disappear or have disappeared in the past three decades.

First of all, thanks to technologies that were not even conceived a century ago, the modern world is more tightly interwoven than at any time in history. When combined with the fact that the days of imperialism ended with WWII, it is now impossible for any nation that relies on exports for economic vitality to successfully engage in protectionist trade policies. Imposing excessive tariffs or limiting imports in any way will, in the end, prove counter-productive as other nations reciprocate the move. Many persons in what we often derisively refer to as the “developing world” consider the steady income provided by manufacturing economies as a vast improvement in their situations. Despite wages that are considered substandard in the west, the mere fact that workers have a steady source of income – and therefore, food and shelter – provides a sense of  security previously unknown. This was, by the way, the same attitude that drove many former tenant farmers to migrate to cities during the late 19th and early 20th centuries, in the US and Europe. This was despite the advance knowledge that most would work in conditions that we find abhorrent and for wages that we can’t countenance today. Combined with the interactive nature of modern economies, no nation can afford to block goods coming from these nations.These types of policies were tried during the heights of the Great Depression – the result was over 50 million human beings killed in the greatest conflagration in history. Secondly, imposing inane limits on immigration will rob the US of a tremendous source of energy and vigor, both of which are priceless commodities in the new economy (and I suspect that very vitality is what many are afraid of). Finally, any restructuring of tax and revenue policies that ignore the modern economic realities in favor of a long passed age robs the emerging job market of strength and future generations of Americans of a sorely needed simplified tax code.

So, if the modern economy in the West will not be based on manufacturing, what will we do in the future? Where will the jobs come from? Well, first of all, not all manufacturing will be permanently off-shored. For several reasons (including national defense), there will always be some sort of manufacturing in the US. However, the reality is that as a percentage of employment and average compensation, American manufacturing will never return to the halcyon days of the 1960’s and 70’s. The new economy will be services based and requires a more educated and more flexible workforce than the one that currently exists. I realize that when I say “services” many people conjure visions of hotel maids and McDonald’s cashiers. Those type of jobs have always existed and will always exist, but nobody should think we’ll become a nation of gas station attendants. What I’m referring to by services are the types of positions that require more brain power than brawn power; fields like medicine, technology, research, aerospace, education and banking are all services. All are creating jobs right now. The problem is, their growth is restricted by a lack of skilled workers. It’s a fact that none of your politicians want to talk about, because they know in large part they’re directly responsible for this fact.

The answers about what to do for the next generation of Americans is pretty obvious and I applaud President Obama for starting education initiatives that may prove fruitful. (I’m no fan of the President, but you have to give credit where it’s due). However, there are 2 generations of Americans now in the workforce and a third about to enter, whose citizens are ill-prepared for the current economy. The big question is what do we do about restoring some semblance of full employment, and at tolerable wages now? The first thing is for the labor unions to understand that the world has changed and they need to get with the times. Once, the antagonistic approach between organized labor and business in the US led to a system that worked well, in the contained system that was the US. Once the US was no longer the dominant player in manufacturing, though, the unions failed to keep up with pace of global economics. It is long past time for them to seriously engage foreign governments and labor markets -by working to raise living standards oversees, they can reinforce those standards back home. Secondly, our own politicians need to work in ways that remove the yoke of debt from our collective shoulders. The projected national debt for 2020 equates to $150,000 for every family in the US – or more than 3x the anticipated per family income for that year. That level of debt is unsustainable and is largely driven by “entitlement” spending – Social Security and the new Health Care package. It is past time to revisit how these programs are funded before they drive the entire nation into bankruptcy. Until debt projections are reduced, funding for projects needed to revitalize the economy cannot be pursued. In the same vein, the political class needs to be honest about the limits of government intervention in economic policy – aside from fiscal and tax policy, there really isn’t anything they can do for immediate and sustainable growth. At the moment, fiscal policy is stagnated  -interest rates are at zero. That leaves tax policy – which will not unfreeze capital markets. However, by implementing a strategic tax policy in coordination with a debt reduction plan, lawmakers can relax market tensions by demonstrating long-term fiscal sense.

However, even if the various entrenched factions were to begin immediately putting these ideas in action, the near-term effect would be negligible. We would still need high spending on unemployment compensation and other safety net program to prevent our society from devolving into absolute chaos. I would like to add a caveat to this spending, though. One thing obvious to anyone who’s driven any road in Pennsylvania or watched a manhole explode in New York City knows our infrastructure is aging badly. I would offer those receiving government assistance the option of either attending training in a new field or showing up for manual labor repairing our bridges, schools and the like. This recreation of the WPA would at least prevent the nation from just throwing money down a rat-hole.


Health Care Reform: The Democrats Strike Back


In a recent post, I outlined who I thought the winners and losers of the recently passed HCR bill. Much as I projected, businesses and their employees are among the first to be directly affected by the new regulations and taxes.

This article in the Wall Street Journal sums up, rather nicely, some of these early consequences of the congressional and presidential march towards socialism.

  • Medtronics announced it may have to lay off up to 1,000 workers in order to pay for their new obligations. Rather ironic, considering that those employees probably considered their jobs to be safe. After all, Medtronics makes medical equipment – the last industry you would think would suffer layoffs from a health care bill.
  • Verizon sent an email to all of their employees, suggesting that the company will likely have to reduce health benefits, due to increased costs incorporated in the new law. Yes, that’s right. People with quality coverage are losing that quality as a direct result of the “reform.”
  • Caterpillar announced they anticipate $100M in extra health care costs.
  • AT&T announced a $1B charge-off, directly resulting from increased medical expenses.

What is particularly troubling about these announcements are the industries they represent: medical technology, telecommunications and manufacturing.

Telecom: AT&T and Verizon are the nation’s two largest telecom providers. Their combined announcements represent a troubling issue for the industry as a whole. Given the fierce competition in this sector (in case you hadn’t noticed, per-subscriber rates have dropped by nearly 20% over the past 12 months, largely spurred by competition from smaller carriers) and that both are now in the middle of major technology upgrades, there really is nowhere else for them to turn to make up the shortfall except by whacking health benefits. The pressure on smaller or regional telecom providers will be even more intense.

Medical Technology: Medtronic’s announcement that up 1,000 employees may be forced to enter the worst job market in 30 years is particularly unnerving. Medical-related industries were supposed to be one of the drivers of both economic activity and job growth for 2010. If HCR is having the opposite effect, then the net effect of Obamacare on the economy may well be worse than anyone feared.

Manufacturing: In an industry that hasn’t had any good news in what feels like eons, Caterpillar’s announcement has to give even Paul Krugman pause. An additonal $100M in expenses represent 17% of their operating profit for 2009 – a year that saw both EPS and PPS  results drop by nearly 80% from 2008. Worse, estimates for this year only had Cat realizing $285M in operating profit. If forced to take a charge (which our byzantine accounting rules will require, if they need to write down the increased costs), that $100M represents a 35% reduction in operating expenses. As with any industry, reductions of that magnitude invariably lead to lower stock prices, which lead to a whole raft of financial problems.

Of course, the Democrats who dreamed up this “reform” have taken notice. The last thing they want is any bad news related to HCR on your evening news or in your morning paper. After all, by now, we’re all supposed to be madly in love with O-care and worshiping at the altar of socialism. As pointed out here, Henry Waxman has sent letters to the Chairmen of the companies mentioned here, all but demanding that they appear before Congress to repent of their collective sin. You know, the sin of minding their respective company’s bottom lines.

I suppose this is how socialism slowly overrides free markets. One day, you complain that a lack of corporate responsibility has led to the Great Recession. The next, you complain that corporate responsibility is undermining public trust in your great socialist experiment. I guess Rep. Waxman and his fellow Democrats are hoping that we’re either too dumb or naive to recognize this blatant power-grab for what it is: an all-out assault on freedom, liberty and the pursuit of happiness.