Apple’s (AAPL) iCloud breach took the market by surprise and may have taken the shine off its new products.
Apple iCloud Breach
Apple shares took a tumble last week on privacy concerns as several celebrity accounts were hacked with related sensitive information being stolen and publicized. Users have assumed that the quality of service and security that Apple provides is superior to others and this is partly the reason for its brand value.
When news reports indicated that the breach was enabled by an oversight on Apple’s part (it has now issued a patch), this led to an uproar. The incident assumes greater significance because Apple is slated to launch its new iPhone this week and the negative publicity could affect sales.
Apple has denied that any information was leaked from its servers and has instead said that the hacking was targeted and intense and that it was working with the authorities to identify the offenders. It also said that it would increase efforts to enforce two-step verification that ensures a higher level of security.
Data breaches are not uncommon and usually it’s a matter of when — not whether — they can happen. Still, since technology companies usually target youngsters, the technology goes mainstream before its effects can be understood. But people are becoming more wary, as was evident from a recent Pew Research report that found people growing more reticent on social networking platforms.
Facebook Helps Videos Go Viral
Media reports say that Facebook (FB) has generated more than a billion video views a day since June, two-thirds of which were on mobile devices. Part of the success was because of the auto-load feature (which also had a negative backlash because of the associated impact on data usage). But part was also on account of its sharing capabilities. It makes a lot of sense for a star such as Beyonce for example to choose Facebook to communicate with fans because it’s possible to get 2.4 million views in just four hours. This is also probably the reason that Netflix (NFLX) decided to team up with Facebook so users can directly share their reactions to Netflix movies on Facebook (provided the two accounts are linked).
So video is becoming an extremely important platform for Facebook, with tremendous potential for ad revenue. This is partly the reason it has been spending on the technology. There are a couple of drawbacks in this regard at the moment: the first is the limited shelf life of these videos. Once seen and shared, the video loses value.
In contrast, YouTube doesn’t share so easily because of the absence of the social element, but a video can be viewed any number of times because it is saved on YouTube and searchable. Facebook appears to be working on this angle and this could be the factor driving its keyword search technology.
The second is related to ad placements. YouTube can play video ads before the actual video plays and also place ads on the page. Video-viewing on Facebook does not take place on a separate page and if implemented, this change could even affect its appeal.
Other stories you may have missed-
Corporate
Apple Gets Celeb Designer: Apple’s wearables plans remain secret, but the company continues to invest in hardware design. Last week, it got Marc Newson on the payroll, somebody who is known for designing a host of items from airplane interiors to watches. What’s more, he’s also close friends with Apple’s design chief Jonathan Ive, and the two have apparently worked together before.
Google Losing Lots of Talent: The media has reported that Google’s (GOOGL) space/satellite/drone-building efforts continue unabated despite the fact that several important employees — Greg Wyler (who joined Google from O3b to build satellites for Google), Brian Holz and David Bettinger — had left the company. Separately, X Labs, which is responsible for Google’s innovative moonshot projects lost a VP (Megan Smith) to the White House, which has recruited her as the government’s chief technology officer. Its too early to tell if this is a good or bad thing.
Amazon CFO to Retire Next Year: After 14 years of service, Amazon (AMZN) CFO Thomas Szkutak, 53, will retire in June next year, making way for Brian Olsavsky, vice president of finance for global consumer business to fill the position. His tenure has seen Amazon's annual revenue rise 23X.
Regulatory
EU Regulators Scrutinize Facebook WhatsApp Deal: Facebook’s $19 billion acquisition of WhatsApp may have hit a snag. EU regulators are in the process of determining whether the deal is anti-competitive, or whether it could lead to price hikes or curtail innovation in the space. For this purpose, it has sent out a questionnaire to various parties, including Facebook rivals. The EU decision set for Oct 3 will tell whether the deal will be cleared unconditionally or with conditions, or be subjected to further legal procedures.
Microsoft Defies Court Order: Microsoft (MSFT) has refused to comply with the orders of a district court judge in Manhattan because it involved the handing over of information held in servers based in Ireland. Handing over the information to U.S. authorities to further criminal investigation (or for any other purpose) is a breach of Irish law and since the servers are outside U.S. jurisdiction, Microsoft may ultimately win. But the judge has lifted her stay order, which means that a failure to comply on Microsoft’s part would mean it was in contempt of court.
The German government has apparently told Microsoft that it wouldn’t use data storage from U.S. companies unless the ruling was overturned. This could have a ripple effect on other governments and companies and turn out to be a big blow to tech as a whole, especially among those companies providing cloud services all over the world.
Amazon’s Selling Practices Under Review In India: The Wall Street Journal has reported that the Indian Finance Ministry's Enforcement Directorate is determining whether Amazon’s subsidiary directly sold goods to Indians, since Indian laws do not allow foreign companies majority stakes in retailers selling more than one brand. Amazon, which operates in India as a marketplace, recently said that it was going to invest $2 billion to tap the huge opportunity in the country.
New Technology/Products
Apple’s iWatch Will Have NFC: For those wondering whether Apple would shut out near-field communication (NFC) altogether, there is some good news. The company, while keeping the technology out of its other devices, is expected to make it a part of the iWatch, or so says the Wall Street Journal, quoting people familiar with the matter. NFC is better known for enabling a tap and pay option, but it could also have other uses such as to turn on lights, sync devices to automobile in-dash display software, download information about artworks at a museum, or even as a replacement for room keys.
Facebook On Patent-Building Spree: A recent report from a New York-based research firm called Envision IP shows that Facebook has bought a 100 patents since January 2013. The majority (54) was from Fujifilm and related to cover image and video compression, image playback, image editing and presentation. Facebook also bought 22 patents from AT&T and another 10 from Vega Vista. It also came in possession of a few as a result of the Oculus acquisition and has a growing list of patent applications for technology developed in-house.
Intel Has A Smart Bracelet: Intel (INTC) is getting serious about wearables. The company recently joined fashion house Opening Ceremony to produce a highly fashionable high-tech bracelet. While this is a luxury item, it may be possible to make cheaper devices with Intel technology in the future. Intel appears determined to make it big in the devices market. The bracelet closely follows its heart rate-measuring headphones (introduced with consumer electronics company 50 Cent) and Intel has already entered into another agreement with Fossil to make other devices.
Some Numbers
Alibaba Prices IPO: Alibaba has said in a filing that it intends to price its ADSs at $60-$66 each. At $66, the company will raise $24.3 billion, which will put Yahoo’s intake at nearly $6 billion. Yahoo has said earlier that it would pay related taxes and repatriate the cash, which could then be used for acquisitions and other growth initiatives. Some of it could also be distributed.
Windows 8 Market Share Increased In August: Research firm Net Applications says that Windows 8 finally saw a slight increase in market share to 13.4% for the month of August, up from 12.6% in May and 12.5% in the next two months. Windows 7 continues to lead the market with a 51.2% share, followed by XP with 23.9%. Microsoft’s operating systems continue to dominate the market with 91.6% total share, followed by the Mac with 6.7% and Linux with 1.7%. Microsoft’s latest OS has not attracted users and the company has had to force and coerce users to make the upgrade. But Windows 9 could change things. We’ll see.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
(We are reissuing this article to correct a mistake. The original article, issued earlier today, Sept. 8, 2014, should no longer be relied upon.)
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment