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Former Levi Strauss & Co. executive Enrique Atienza joins Apple's retail team
9to5Mac is reporting that Apple recently poached former Levi Strauss executive Enrique Atienza to join its retail team. Atienza will reportedly join Apple as a director for the company's US retail operations. A source says that Atienza will be the director of all retail matters for many regions within the West Coast of the United States, and this role is one of the highest ranking retail positions inside of Apple. Several internal and external candidates were considered for the position, but the external Atienza is said to have been the best fit. While Atienza has already signed on with Apple, he is yet to actually begin his management role. He will officially start in October. Bear in mind that this is not the Senior VP of Retail position originally held by Ron Johnson and later by John Browett. That search remains ongoing, and last we heard, Apple is looking to hire someone with a tremendous amount of retail experience at the international level. As for Atienza, he spent the last three years at Levi Strauss after a nearly 10-year stint at Walt Disney where he held a number of retail-oriented positions. During Atienza's tenure at Levi Strauss, his position was that of "Senior Vice President Retail Americas and Global Store Operations and Training COE." According to Atienza's LinkedIn profile -- which confirms that he now works for Apple -- his responsibilities at Levi encompassed the following: Leads the retail strategic development and execution to ensure that revenue, productivity, level 1 profitability and customer experience goals are achieved within the Americas region. Leads company own stores and franchise management for the Americas region, and asset/execution controls for license & distributorships. Develop strategic direction and lead pan brand stores, store operations, training, maintenance, construction, real estate and merchandising in the Americas region. With rumors pointing to Apple to shipping two new iPhone models this fall, Atienza will likely have to hit the ground running, especially in light of reports that Apple is hoping to increase the percentage of iPhone sales that occur at Apple retail stores.
How Steve Jobs was able to negotiate a revenue-sharing agreement with AT&T
Forbes has an extremely interesting article detailing how the negotiating prowess of Steve Jobs helped Apple secure, for a short time, a revenue-sharing agreement with AT&T along with a host of other perks that carriers had previously been staunchly opposed to. The following Steve Jobs anecdotes come courtesy of Raj Aggarwal, a telecommunications consultant who, in the months preceding the iPhone announcement, met with Steve Jobs twice a week. Aggarwal relays that Jobs was able to secure terms that other handset manufacturers couldn't because he was obsessively involved with every detail surrounding the iPhone launch. In conjunction with that, Jobs, in classic fashion, made grandiose demands and never wavered from his commitment to deliver his vision of an ideal user experience. Aggarwal was impressed by the way Jobs was willing to take a risk to realize his vision. "In one meeting in the conference room with Jobs, he was annoyed that AT&T was spending too much time worrying about the risks of the deal. So he said, 'You know what we should do to stop them from complaining? We should write AT&T a check for $1 billion and if the deal doesn't work out, they can keep the money. Let's give them the $1 billion [Apple had $5 billion in cash at the time] and shut them the hell up,'" Aggarwal recounted. Although Jobs did not actually offer AT&T the cash, his willingness to do so made an impression on Aggarwal. Aggarwal also found Jobs unique in his outrageous demands. As he explained, "Jobs said, '$50 a month unlimited voice, data, and SMS plan - that's our mission. We should ask for and go after something unreasonable that no one has been willing to accept.' He would come up with these outrageous demands and fight for them - getting much more than he otherwise would have." All in all, this is vintage Jobs. You might recall a post from a few days ago where we detailed some of the colorful examples highlighting Steve Jobs' famous, and again, obsessive attention to detail. There's no question that Jobs was not one to be deterred, and as a result, he certainly rubbed a lot of people the wrong way. The end result, however, was always beneficial for the consumer. Say what you will about the iPhone and Android, but there's no denying that the lengths Apple went to deliver the type of iPhone experience it did fundamentally changed the smartphone landscape while wrestling back a bit of control from the carriers in the process. Thanks to Jobs and his seemingly outrageous demands, iPhone users have thankfully never had to contend with pre-installed crapware and AT&T logos emblazoned everywhere -- or Intel logos for that matter.
Norwegian government bans Apple from capturing 3D Flyover Maps data in Oslo
The Norwegian government has banned Apple from capturing 3D Flyover Maps imagry of Oslo, reports Aftenposten (via 9to5Mac). Apparently the Norwegian National Security Authority has instituted the ban because it is concerned that the small aircraft Apple uses, which has advanced 3D photography systems on board, could map confidential buildings and other security infrastructure in the city. Apple is now working with the United States Embassy in Norway to help resolve the issue. Oslo's mayor Fabian Stang has come out in support of Apple saying its 3D maps can not only help those that live in the capital, but also increase tourist interest as they can view the city from afar. As Stang told the Aftenposten newspaper: I think the new apps is very exciting – and they are also relevant for tourists, both those who are here and those who are considering going here. I have therefore asked the minister to look into the possibility of achieving this, while maintaining the security measures but me must consider. A semi-obvious answer to this problem would be for Apple to work with the Norwegian government in identifying imagery that is suitable to be shown to users. Google and other mapping services in the past have worked with various governments around the world in identifying security structures and not making photography of such structures available to the public.
Behind the music: the backstory of Marimba 158, the iPhone text tone
In a fascinating post from Kelly Jacklin, the long time Apple software engineer details how he helped create the default text alert sound on the iPhone -- now known as the "Tri-tone" alert. The history of the the pleasant chime we've all come to know and love stretches all the way back to 1998, nearly 10 years before the iPhone ever hit store shelves. Back in 1998, Jeff Robbin, Bill Kincaid and Dave Heller began working on an MP3 player for the Mac called SoundJam MP. If the name sounds vaguely familiar, it's because Apple famously acquired SoundJam MP in 2000 and quickly repurposed it into the first version of iTunes. But in 1999, before an Apple acquisition was on the horizon, Jeff Robbin asked Jacklin if he could come up with a sound to alert a user when a CD burning session was complete. Being a hobbyist musician, Jacklin was up to the task, and he got to work experimenting with various sounds. I was looking for something "simple" that would grab the user's attention. I thought a simple sequence of notes, played with a clean-sounding instrument, would cut through the clutter of noise in a home or office. So I had two tasks: pick an instrument, and pick a sequence of notes. Simple, right? Yeah, says you; everyone's an armchair musician... I was really into the sound of marimbas and kalimbas at the time, so I thought I'd try both of those. I also went through bank (after bank) of sounds built into the SW1000XG, auditioning instrument sounds, and found three other instrument sounds that I liked: a harp, a koto (Japanese zither), and a pizzicato string sound (that's the sound a violinist makes when plucking the string, rather than bowing it). Jacklin recalls that he wanted a simple sound, which meant that many of the sounds he experimented with were just three of four notes long. For all you music buffs out there, Jacklin also mentions that he wanted the sound to have a happy vibe, so he particularly experimented with "notes from the major scale, focusing on I, III, IV, V, and VIII" octaves. If you'd like the full nitty-gritty as to how Jacklin came up with a plethora of note permutations to choose from, the full article is a must read. But suffice it to say, Jacklin ultimately settled upon a winner, a sound file he called 158-marimba.aiff. As initially intended, the sound did indeed become the default sound when a disc burning session in Soundjam MP concluded. When Apple transformed Soundjam MP into iTunes, the sound remained part of the app. Jumping ahead a few years to the iPhone's release in 2007, Jacklin was pleasantly surprised when he discovered that the sound he created many years earlier continued to live on, this time in the form of the default text alert. So imagine my surprise when the iPhone ships, and the default text message tone is... "158-marimba", now going by the clever (and not actually accurate, from a music theory perspective) name "Tri-Tone". Time goes by, and this sound becomes iconic, showing up in TV shows and movies, and becoming international short-hand for "you have a text message"... Wow! Who'd have thought? Indeed, I myself have noticed, while watching TV with friends, that when the "Tri-tone" sound happens to be played in a scene, a number of people reach for their pockets to see if they have a message. Again, Jacklin's full write-up is worth checking out. As an added and extremely interesting bonus, Jacklin's post includes an audio file comprised of sounds he experimented with that didn't quite make the cut. [Ed. note: It has come to our attention that blockquotes are not working on the mobile version of the site (m.tuaw.com) and may distort this story, particularly for those reading on the iPad via the Facebook app. We are working on a fix and apologize for the inconvenience.]
A gallery of Apple's tower computers
The new Mac Pro has an innovative design by many standards. Though it may push the envelope with its tube-shaped design, it's not the only Mac tower that has a striking appearance. Previous Mac desktop towers had a look of their own that set them apart from the boring beige plastic of most comparable PCs. You can check out a gallery of these Mac beauties over at Macworld in its "Towers of Power" slideshow.
Siskel and Ebert review vintage Apple ads
This weekend we reported on an eclectic and extensive collection of vintage 1980s Apple commercials that were uploaded to the ever growing YouTube channel EveryAppleAds. Apple's older commercials are rather amusing to watch. They're cheesy, fun, and clearly represent a time when manufacturers really had to make a case explaining why anyone might want a computer in the first place. Put differently, watching vintage 80s Apple commercials is great. But you know what's even better? Watching film critics Gene Siskel and Roger Ebert review Apple's advertising efforts with the same rigor, insight, and humor they famously applied to their film critiques. MacRumors writes: The video appears to have been recorded at a special Apple event in 1986, as indicated by the Apple podium that Siskel stands behind. The two famous critics use the format of their then-popular film review show "Siskel & Ebert At The Movies", minus the "Thumbs Up, Thumbs Down" rating system, to critique some of Apple's mid-80s commercials. The video is highly entertaining and well worth checking out. Highlighting just how old the video is, note the prominence of the typewriter in the opening sequence. Further, I myself noted Siskel praising one commercial in particular for "humanizing the computer", which back in 1986 was a rather important thing to do.
Jobs was interested in the phone industry as early as the 80's
Former Apple CEO John Sculley spoke recently during Young Turks Conclave 2013 and shared his thoughts on Steve Jobs, Apple's future and India's entrepreneurs. His conversation was reprinted by YourStory.in, a website dedicated to India's startup scene. Speaking about Steve Jobs, Sculley shared that He and Jobs were working on Mac phones as early as 1984. "I remember we were working on Mac phones back in late 1984. Steve was thinking about those kinds of products back then. He used to say, the most important things are not the things you build but also the things you don't build. He was rigorous in the discipline of simplifying." As noted by The Mac Observer, these phones likely were not mobile phones like the iPhone, but a Mac-based landline phones. It probably was an idea hatched by engineers at Apple and eventually killed by Jobs Many of Jobs' visions for Apple continue today under the leadership of Tim Cook. Cook, Sculley believes, will lead Apple into the next game-changing product, which will likely involve televisions or wearable technology. "Apple is like BMW, and BMW doesn't compete with the lowest price brands. I think Apple will do just fine. Tim Cook has done a terrific job of setting up the stage for some exciting products next year. I don't think there would be a creative leap in the smartphone industry, and the industry is maturing and is stabilizing right now. But I am sure we will see a creative leap from Apple maybe a TV or a wearable." Sculley also shares some anecdotal stories about the friendly, yet competitive relationship between Steve Jobs and Bill Gates. Sculley's comments on YourStory.in are worth a read for those interested in Apple history. [Via The Mac Observer]
Bob Mansfield leaves Apple's executive team, will assist Tim Cook
The biography for Bob Mansfield, Apple's senior vice president of technologies, unexpectedly disappeared from Apple's executive web page over the weekend. The removal of Mansfield's biography was first reported by MacRumors, and AllThingsD followed with an official statement from Apple that confirmed Mansfield is no longer part of Apple's executive leadership. Apple refused to comment on the reasons for Mansfield's departure. "Bob is no longer going to be on Apple's executive team, but will remain at Apple working on special projects reporting to [CEO] Tim [Cook]," Apple spokesperson Steve Dowling told AllThingsD. Mansfield announced his resignation from Apple in June 2012 and returned to the company a few months later as its SVP of Technologies. According to AllThingsD, Mansfield was paid handsomely for his return with a package worth more than $2 million a month. Details on Mansfield's reasons for leaving are not known, but his departure from this executive position less than a year later is surprising.
Construction begins at Reno iCloud data center
Running a service as complicated as Apple's iCloud takes massive investments in infrastructure to properly support. This past March Apple broke ground on a new Reno, Nev., iCloud data center, a modern facility which will house massive banks of servers and the other guts that keep iCloud running. It will even use solar power, in keeping with the company's focus on green energy. Now AppleInsider is reporting the company has started to build the first large structures at the site following the building of a tactical structure this past March to house security and support equiment. The US$16 million dollar project includes a massive $4.6 million administration building and two data-processing centers, which have been reported to total 50,570 square feet. Head over to AppleInsider to see their new pictures of the work site. They've been taken from some distance away, sort of like UFO researchers trying to sneak pictures of secret test planes at Groom Lake. Still we rarely get to take a look at the scale of infrastructure required to keep our little magic data boxes pouring information into our hands. You can find the rest of their reporting here.
Judge finds Apple guilty of fixing e-book prices (Updated)
According to Reuters, US District Judge Denise Cote has ruled against Apple in its big e-book price-fixing trial. The judge found that Apple conspired to raise the retail price of e-books and will now face a trial to determine damages. Update: Both Apple and the Department of Justice have released statements about this decision, according to AllThingsD. Not surprisingly, Apple is disappointed with the ruling and will appeal, while the DOJ is pleased. Apple spokesman Tom Neumayr confirmed the company will appeal and says, "Apple did not conspire to fix e-book pricing and we will continue to fight against these false accusations. When we introduced the iBookstore in 2010, we gave customers more choice, injecting much-needed innovation and competition into the market, breaking Amazon's monopolistic grip on the publishing industry. We've done nothing wrong and we will appeal the judge's decision." Assistant Attorney General Bill Baer writes, "This result is a victory for millions of consumers who choose to read books electronically ... Companies cannot ignore the antitrust laws when they believe it is in their economic self-interest to do so. This decision by the court is a critical step in undoing the harm caused by Apple's illegal actions."
Rare Apple I sold for $387,750 in online Christie's auction
Late last month, Christie's kicked off an auction for a rare Apple I computer with its original manual, schematics and a photo of the two Steves. The online-only auction ended today at a lower-than-expected US$387,750, according to a press release from Christie's. Pre-auction estimates suggested the piece of Apple history could sell for as much as $500,000, as previous auctions for Apple I computers fetched up to $671,400. The Apple I was part of a larger group that included a total of 10 iconic items from Apple's history. Besides the Apple I, the First Bytes collection also included an Apple Lisa, a prototype Apple IIGS and a 20th Anniversary Macintosh limited to 12,000 units. All the auctions ended today, and we will update the prices for these vintage Apple items when they become available. [Via CNBC] Show full PR text APPLE-1 SELLS FOR $387,750 FIRST BYTES: ICONIC TECHNOLOGY FROM THE TWENTIETH CENTURY ONLINE-ONLY AUCTION FEATURING VINTAGE TECH PRODUCTS INCLUDING THE ORIGINAL APPLE COMPUTER, APPLE-1 New York/London/Paris/Hong Kong – An original Apple computer, now known as the Apple-1, sold for $387,750 at Christie's auction of vintage tech products, making it the highest priced item to ever be sold through Christie's new online-only platform. The Apple-1, one of the first 25 Apple-1's ever assembled, inscribed with the serial number 01-0025 in black ink was designed and hand-built in 1976 by Steve Wozniak, who later signed his work "Woz." Christie's saw traffic to the First Bytes online-only sale page from 96 countries with 77% of the viewers new to Christie's.
On Apple's 'inability to innovate'
During WWDC 2013, Apple's Senior VP of Worldwide Marketing Phil Schiller presided over a sneak peek of Apple's upcoming Mac Pro and boldly exclaimed, "Can't innovate anymore, my ass!" Schiller's off-the-cuff remark was in response to the increasing number of tech pundits who seem to think that Apple has lost its inability to innovate, now that Steve Jobs is no longer running the show. Of course, anyone who has followed Apple over the years knows that the "Apple can't innovate anymore!" refrain is nothing new. Indeed, every time Apple releases a new product, critics are quick to proclaim that Apple has peaked. "What can follow the iPod?" they asked. "Okay, the iPhone is amazing, but what's next?" they impatiently wondered. "The iPad is a game changer, but Apple is now out of ideas!" they declared. What's funny is that Apple, more so than most any other company, has a proven track record of innovation that stretches back for over a decade. Yet, curiously, Apple has seemingly garnered no credit amongst tech pundits when it comes to its current ability to innovate. At the same time, tech pundits are all too eager to predict Apple's demise and levy the tech crown upon whatever tech company happens to challenging Apple at the moment. Remember when the Palm Pre was going to steal the iPhone's thunder? Highlighting the shockingly absurd and oftentimes foolish sentiments that frequently swirl over Apple, John Kirk over at Techpinions has assembled a goldmine of blurbs that unabashedly paint Apple as a "has-been" company. One such blurb comes courtesy of David Goldman of CNN Money who wrote the following this past June: Apple will hold its first major product event in nine months on Monday, a stunning gap for a company that relies on regularly impressing customers with new innovations. I always find it funny when folks think the Apple ship is sinking simply because there isn't an annual iPhone-level product introduction. A revolutionary device like the iPhone doesn't come along every single year, which is why such products are so transformative when they are introduced. Gauging Apple's ability to innovate within the timeframe of a lone year is anything but instructive. The gap between the iPod and iPhone introductions, for example, was more than five years. The gap between the iPhone and iPad introductions was three years. And now people are going nuts because nine months go by without a brand-new shiny device? Addressing this very point, Kirk references an old and on-point Jobs quote about catching the waves of technology. Things happen fairly slowly, you know. They do. Those waves of technology, you can see them way before they happen, and you just have to choose wisely which ones you're going to surf. If you choose unwisely, then you can waste a lot of energy, but if you choose wisely, it actually unfolds fairly slowly. It takes years. Instant movies. Instant shopping. TV on demand. So much is immediately accessible these days. What's more, many great tech companies are working furiously to give consumers even faster access to the goods and services they crave. Amazon's ongoing efforts to establish same-day shipping comes to mind. This "I want it now" attitude, or perhaps expectation, has clearly seeped into the psyche of tech pundits when it comes to Apple. The reality, though, is that true innovation doesn't happen in an instant. As intimated by Jobs, it takes time for all of the pieces of the innovation puzzle to coalesce. And the funny thing is, even when Apple does come out with a game-changing device like the iPod or the iPhone, the very same critics that are quick to declare that Apple can't innovate are just as quick to predict that said products are nothing special and will flop in the marketplace. Sometimes it seems that Apple is quick to be painted with the "can't innovate anymore" brush simply because they don't come out and say what products they're working on months in advance. I'll close with this. Here's a quick look at some of the products Apple released within the last 12 months. An iPhone 5 An iPad mini A fourth-gen iPad New MacBook Airs with almost double the battery life A revamped iMac Not bad for a company, which if you believe the headlines, is plummeting into mediocrity.
Now Apple files for iWatch trademark in Mexico, Taiwan, and Turkey
Just yesterday word spread through the technology sphere that Apple had filed for an iWatch trademark in Japan. The news seemed to give some limited credence to earlier rumors that Apple had filed for the same iWatch trademark in Russia. Now, less than 24 hours after that Japan trademark surfaced, trademark registrations for iWatch have appeared in Mexico, Taiwan and Turkey, according to MacRumors. As I wrote yesterday, a trademark registration does not mean the imminent arrival of Apple's fabled smartwatch. However, the fact that Apple is registering iWatch in countries across the globe does now seem to strongly suggest that work on the device is well underway and we may see it early next year. But only time will tell.
Brian Hogan, the man who sold the iPhone 4 to Gizmodo, speaks up
Back in April 2010, the tech world was all aflutter when Gizmodo managed to get its hands on and post photos of what would later be called the iPhone 4. For a company that prides itself on secrecy, the pre-release photos of Apple's iPhone 4 were a major embarrassment. If you recall, an Apple engineer mistakenly left an iPhone 4 device he was testing at a bar whereupon it came into the possession of a 21-year-old named Brian Hogan who attempted to hock the device to any tech blog that was willing to pay for it. Gizmodo turned out to be the "lucky" winner, paying Hogan $5,000 for the device. Yesterday, Hogan started an Ask Me Anything (AMA) thread on Reddit where he answered user-submitted questions about a wide range of topics. Some quick points of interest from the AMA include: Hogan spent more than $5,000 in legal fees. Crime really doesn't pay. Gizmodo promised to pay Hogan an additional $3,000 after the story aired, but didn't. Again, crime doesn't pay! Hogan was charged with a misdemeanor misappropriation of lost property and had to pay a $125 fine. Hogan says he didn't turn over the phone to the bar owners because he was 21, drunk and "didn't think about that at the time." The AMA is still ongoing, so hop on over to Reddit if you have a burning question you want to ask the man who helped create quite the Apple scandal a few years back.
Rare Apple I to be auctioned off by Christie's
Once again, a rare Apple I will be up on the auction block. According to a report from the AP, a 1976 Apple I will be up for grabs at Christie's auction house where the bidding will begin at US$300,000. It's estimated that the iconic computer may end up going for $500,000 by the time bidding closes. "This is a piece of history that made a difference in the world, it's where the computer revolution started," said Ted Perry, a retired school psychologist who owns the old Apple and has kept it stashed away in a cardboard box at his home outside Sacramento, Calif. It's estimated that only 200 or so Apple I units were ever produced, with the number of units still in existence believed to be in the 30-50 range. Recently, Apple I machines have been fetching exorbitant amounts at auctions worldwide. This past May, for example, a working Apple 1 sold for $671,400 at a German auction house. Before that, an Apple I yielded $640,000 at a Sotheby's auction. The Christie's auction, which will be held online, will begin on Monday, June 24 and will run through July 9.
The designer Steve Jobs might have hired
Famed German designer Richard Sapper has revealed in an interview with Dezeen that Steve Jobs once wanted to hire him to design Apple's computers: Jobs once wanted to hire me to do the design of Apple [computers] but the circumstances weren't right because I didn't want to move to California and I had very interesting work here that I didn't want to abandon. Also, at that time Apple was not a great company, it was just a small computer company. They were doing interesting things so I was very interested, of course, but I had an exclusivity contract with IBM. When asked if he regretted his decision not to work with the company, he replied: Sure I regret it – the man who then did it makes $30 million a year! [Laughs] so how can you not regret it? It's not clear from the interview when Jobs exactly asked Sapper to do industrial designs for the company. Sapper said Apple was "just a small computer company" when Jobs approached him, which would suggest it was the early 1980s. However, Sapper is clearly referring to Jonathan Ive when he says "the man who then did it," which would put Steve's unsuccessful recruitment attempt in the late 1990s, shortly after he returned to the company. Besides Sapper's work for IBM, the 81-year-old industrial designer has created myriad products over his 60-year career including bicycles, lamps and kettles.
Apple's most significant keynotes
WWDC is right around the corner and the highly anticipated keynote will kick off the event on Monday June 10. This keynote will be a critical one for Apple as the company is expected to unveil a Jonny Ive-led overhaul of iOS. Apple has a long string of game-changing presentations, including these 10 keynotes that were singled out by Macworld. On Macworld's top 10 list are the 2003 introduction of Safari, the iPad special event in 2010 and the unveiling of the iPhone at Macworld 2007. You can browse through the full list on Macworld's website and enjoy this walk down memory lane.
Apple 1 sells for $671,400 at auction
A few weeks ago, we reported on an impending auction involving one of six known working Apple 1 computers. The New York Times is now reporting that the auction has officially closed with the winning bid checking in at an astounding $671,400. The winning bid set a new record for the Apple 1, eclipsing a previous auction where Apple's first computer netted a $640,000 bid. "This really confirms the value of Apple-1's," Uwe Breker, the German auctioneer, said in an interview on Saturday. The buyer, Mr. Breker said, was a wealthy entrepreneur from the Far East, who wishes to remain anonymous. Part of the allure of the earliest Apple machines, Mr. Breker said, is not what they are, but what they represent. "It is a superb symbol of the American dream," he said. "You have two college dropouts from California who pursued an idea and a dream, and that dream becomes one of the most admired, successful and valuable companies in the world." Interestingly enough, the Friday story from the Times said that Apple 1 in question was originally owned by Major League Baseball player Fred Hatfield. His nickname? Scrap Iron. However, reporter Steve Lohr amended that identification this weekend when he was contacted by another Fred Hatfield (not the major leaguer; this Fred is a retired electrical engineer living in New Orleans) who was able to prove, by virtue of some signed correspondence with Steve Jobs, that he was in fact the Apple-1's original owner. Hatfield II got $40,000 for his antique and non-working machine when he sold it to an eager buyer, "a young man from Texas in the software business," who in turn got it functional and auction-ready. Also of note is that the Apple 1 here includes a circuit board signed by Woz, another "upgrade" acquired by the mysterious Texan. Meanwhile, you can pick up an original iMac on eBay for less than $100. I suppose not everything appreciates in value as it gets older.
Judge reportedly leaning towards DoJ in Apple e-book case
In less than two weeks, Apple will head to trial over allegations that it colluded with five publishing houses in an effort to inflate the price of e-books. Indeed, the Justice Department last week released internal Apple emails which it claims supports the allegation that Apple was a "ringleader" in a price-fixing conspiracy. In one such email, Apple executive Eddy Cue explained to Steve Jobs that he was able to secure a deal with Random House by threatening to block an app of theirs from getting into the App Store. With a trial on the matter scheduled to kick off on June 3, Bloomberg reports that US District Judge Denise Cote -- who happens to be overseeing the trial -- expressed confidence that the government will be able to prove its case against Apple. I believe that the government will be able to show at trial direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of e-books, and that the circumstantial evidence in this case, including the terms of the agreements, will confirm that. The judge's comments seem a bit curious because, as Bloomberg notes, this will not be a jury trial. Judge Cote alone will be deciding the case on its merits. Consequently, one wonders why Cote is comfortable expressing such a strong view before hearing any testimony and the full breadth of arguments from both parties. To that end, Judge Cote did qualify that her opinion at this point is tentative. In an emailed statement to Bloomberg, Apple lawyer Orin Snyder remarked: We strongly disagree with the court's preliminary statements about the case. The court made clear that this was not a final ruling and that the evidence at trial will determine the verdict. This is what a trial is for. Apple has previously stated that it was not operating with the intent to artificially increase the price of e-books, but rather wanted to foster innovation in the e-book marketplace and break "Amazon's monopolistic grip on the publishing industry."
NYT Columnist Joe Nocera laughably calls Tim Cook a liar
As we reported previously, Tim Cook and two other Apple executives appeared before Congress earlier this week to discuss Apple's tax practices. The focus of the hearing centered on how Apple manages to keep the bulk of its foreign earned cash overseas and what might be done to incentivize Apple to bring that cash back to the US. In an op-ed piece in the New York Times today, columnist Joe Nocera misconstrues the events which took place at the hearing and proceeds to characterize Tim Cook as a liar who, according to Nocera, learned how to create a "reality distortion field" from Steve Jobs. I'm not sure if Nocera watched the entire hearing, but I did, and many of his characterizations of the events which took place are skewed at best, if not downright false. Let's dive in. Nocera writes: On Tuesday, despite the overwhelming evidence presented by the Senate Permanent Subcommittee on Investigations that Apple engaged in dubious tax avoidance gimmicks, Cook claimed that Apple never resorted to tax gimmickry. First off, given that the tax experts brought in by Congress testified that Apple's tax strategy doesn't run afoul of International Law, I fail to see how the evidence presented by the Senate Subcommittee overwhelmingly proves that Apple engaged in dubious tax avoidance gimmicks. Call it semantics if you will, but Apple's tax mechanisms are set up in such a way as to minimize the company's overall tax liability, all within the confines of the law. As easily as one can call it tax gimmickry, another could just as quickly and accurately call it tax compliance. Nocera continues: Cook said, "We pay all the taxes we owe -- every single dollar." He added that Apple had never shifted any of its American profits to an offshore tax haven when, in fact, that is basically what it has done, routing tens of billions in pretax profits to a shell corporation in Ireland that exists solely to avoid taxes in the United States. He even said that the low taxes Apple pays overseas is on the profits of its overseas sales. Not to put too fine a point on it, but this was a flat-out lie. On this point, Nocera has his facts completely backwards. In its prepared testimony to Congress, Apple also emphasized that it has never shifted any of its American profits to offshore tax havens. This is true, despite Nocera's curious assertion to the contrary. What Cook is saying here is pretty simple. Every single dollar Apple earns in the United States is taxed. Further, Apple, in no way whatsoever, moves any of its profits earned in the States abroad as to avoid paying US taxes. Regardless of what you think about Apple's tax setup with respect to its foreign earned income, Apple has not routed any of its American profits overseas. While some companies may engage in such behavior, not one iota of evidence presented even hints that Apple does any such thing. That said, Cook's assertion that the low taxes Apple pays overseas is on the profits from its overseas sales is accurate. Nocera calls this a flat-out lie, but conveniently neglects to explain why or how. Instead, he proceeds to talk about how folks in the Senate hearing were eating out of Cook's hand. In other words, Cook spent Tuesday claiming that the sun was setting when it was actually rising, and, predictably, by the time the hearing had ended, most of the senators were agreeing with him. Senator John McCain, the committee's ranking Republican, who had earlier labeled Apple "a tax avoider," was soon swooning over Apple's "incredible legacy." Again, I watched the entire hearing and to say that most of the senators were agreeing with Cook simply isn't true. The notion that McCain came out guns ablazin' against Apple, only to be left swooning over Apple's legacy is misguided. The fact of the matter is that Senators McCain and Carl Levin pulled no punches with Apple. They went after Apple hard, asked extremely tough questions and often times, really put Apple's panel of executives on the hot seat. Comments regarding Apple's aptitude for innovation and its legacy were certainly made, but these were often made in the context of, "Hey listen Apple, we think you're a great company and all, but your tax practices seem shady." In other words, praise for Apple was typically sprinkled in at the end of particularly tough question and answer periods. I encourage you to go back and watch video of Levin grilling Apple executives for an extended period of time. It almost gets uncomfortably and awkwardly intense. Levin was completely unswayed by any of Apple's testimony, it seemed. Nonetheless, Levin, at the end, noted that Apple makes great products, going so far as to say that his granddaughter has an iPhone. Moving along, Nocera continues: Indeed, Apple's fabulous success over the past decade or so - its creation of the iPads and iPhones that the world lusts over - is a large part of the reason it always gets the benefit of the doubt, whether deserved or not. Two years ago, when David Kocieniewski of The Times reported on General Electric's tax-avoidance prowess, a storm of protest resulted. Last year, however, when Kocieniewski and Charles Duhigg wrote about Apple's tax avoidance schemes as part of a series about the company that won a Pulitzer Prize, it was greeted mainly with yawns. Nobody really wants to hear anything bad about Apple. At this point, I have to wonder if Nocera is simply trying to troll us. If anything, Apple's success with the iPod, iPhone and iPad is precisely why the company rarely gets the benefit of the doubt. Indeed, Apple's unprecedented success, coupled with its billions in the bank, seems to have created an environment where Apple is often held to an entirely different standard than other companies. Furthermore, the notion that the New York Times' series of articles was greeted with yawns is laughable. It did win a Pulitzer Prize, right? On that note, Philip Elmer-DeWitt of Fortune wrote the following this past April: The fact is, the New York Times knows how to win Pulitzers -- better than any other journalistic operation. It has now won a record 112. It employs editors who specialize in identifying Pulitzer-winning topics and assigning reporters who will bring them home. And that's what it set out to do -- with Apple as its conspicuous subject -- in seven major stories capped with a self-serving kicker that suggested that it was Times' reporting that led to substantive changes in the working conditions in China's electronics factories. As for the claim that no one wants to hear anything bad about Apple? That's even more laughable. If anything, it stands to reason that the NYT specifically targeted Apple because it knows that people love to read articles which badmouth Apple. It's a sure-fire way to generate an abundance of pageviews and attention, no matter how factual the assertions may be. Heck, some columnists have even made careers out of exploiting this dynamic (I'm looking at you Rob Enderle). Almost comically, Nocera later in his piece admits that Congress has in fact singled out Apple, just mere paragraphs after claiming that Apple is somehow always afforded the benefit of the doubt. In short, people love to hear anything bad about Apple. Who doesn't enjoy, after all, watching a giant fall? Nocera goes on to explain Apple's tax setup abroad. Subsidiaries, holding companies, Ireland -- it's all there. But here's the thing -- this isn't an Apple issue. A vast number of multinational corporations implement the same tax minimization schemes as Apple. Many companies, from Google to Pfizer to Coca-Cola all hold billions of dollars in offshore cash that they are under no legal obligation to repatriate back to the US. And with the United States' extremely high 35 percent corporate income tax rate, can you blame them? So sure, Apple has about $100 billion in profits overseas, but when you tally up the money all US-based corporations hold overseas, we start talking about trillions of dollars. Again, this isn't an Apple issue; it's a tax code issue. Howard Gleckman highlighted this very fact on the Tax Policy Center Blog: The remarkable thing about the Senate Permanent Investigations Subcommittee's report on Apple Inc.'s corporate tax avoidance is how unremarkable it is. Because Apple is so profitable, the dollars involved will certainly attract attention (this is a Senate committee after all, so that is the point). The report alleges Apple reduced its U.S. corporate income tax by an average of $10 billion-a-year for the past four years. Since the corporate levy generated only about $240 billion in 2012, $10 billion foregone from one company is a very big number indeed. But while it added a few interesting twists, Apple cut its taxes with the same tools multinationals have been using for years to minimize their worldwide tax liability. And if there is a scandal, I suppose it is the very ordinariness of these transactions. Apple's tax avoidance shop, it seems, is a lot less innovative than its phone designers. It's also worth pointing out comments made by Senator Rob Portman during this week's hearing: If we don't reform the tax code, we're competing with one hand tied behind our back. Almost all of our industrial competitors have shifted to a territorial system including the UK, France, Germany, Japan. I think that's the right way to go. They don't tax active business income earned beyond their borders and their businesses are more competitive as a result. $1.5-$2 trillion is locked up overseas. That money is being deployed to put factories and R&D overseas. We've got to move quickly. No other nation erects such a high barrier to bringing earnings back to the US. Every one of our global competitors have reformed their tax systems since we last reformed ours. Not just the rate, but the code. If we don't reform, we'll continue to lose opportunities. Nocera, with his seeming focus on Cook's reality distortion field doesn't seem to grasp that the real issue is much larger than Apple.
