• Newsletter Issue #739

    January 27th, 2014


    It’s hard to believe that the Mac debuted 30 years ago, in that famous 1984 Super Bowl TV ad directed by Ridley Scott. But it’s not as if the original $2,495 was a huge seller. Despite some false perceptions over the years, Macs were always the minority platform, and often regarded as little more than a niche product that wasn’t worth serious attention.

    For many years, Macs, with their pretty graphical interfaces, were also regarded as little more than expensive toys that were not at all suitable for serious work. Well, until Microsoft aped the Mac OS with Windows.

    As those of you who have followed my Mac odyssey over the years know full well, I first used them at the office before bringing one home. My first home-based system, featuring a IIcx, color display and laser printer, plus a few mission-critical apps, such as QuarkXPress, carried a price tag of over $14,000, and that was a sale price. The equipment lease totaled over $400 a month, and all that gear was obsolete long before the “note” was paid off.

    Today that number would buy you a fully outfitted Mac Pro, optioned to the max, along with a 4K display and a handful of apps, including Apple’s Final Cut Pro X. But the performance?

    There’s a lot more to be said, and I’ll cover more of my journey in the days to come.

    Now on this week’s episode of The Tech Night Owl LIVE, we were joined by fearless author and publisher Adam Engst, of TidBITS and Take Control Books, who discussed the Mac’s 30th anniversary, a court decision to overturn the FCC’s net neutrality order, and the ongoing conflict between Apple and the government over that e-book price-fixing case.

    You also heard from tech journalist Rob Pegoraro, a columnist for USA Today and Yahoo! Tech, who also discussed the Mac’s 30th anniversary, the prospects for the new TV standard, Ultra HD, Microsoft’s earnings report, which featured higher sales for the Xbox One and the Surface tablets, and the ongoing net neutrality issues.

    On this week’s episode of our other radio show, The Paracast: Gene and Chris present everyone’s favorite crypto-chaser J.C. Johnson. J.C. has kept busy with his research into the paranormal, and has quite a number of updates about his various projects and trip reports to reveal since his last visit to the show. You’ll hear about the latest sightings of Bigfoot, dog men, possible wolf men and other strange creatures, and J.C.’s ongoing research into these and other strange mysteries.

    Now Shipping! The Official Paracast T-Shirt! We’re taking orders direct from our new Official Paracast Store, where you can place your order and pay with a major credit card or PayPal. The shirts come in white, 100% cotton, and feature The Paracast logo on the front. The rear emblem states: “Separating Signal From Noise.” We’ve also added a huge selection of additional special custom-imprinted merchandise for fans of our show.


    From reading much of the press chatter about Microsoft’s quarterly financials last week, you almost had the impression that the Surface tablet had been a huge seller. Almost. Although revenue, at $893 million, doubled from the previous quarter, Microsoft is still selling a paltry amount compared to the iPad.

    Let’s assume, for the sake of argument, that Microsoft received $400 from each sale after the dealers and distributors got their share. That would amount to some 2,232,500 units sold. However you break this down, however, that number isn’t very impressive.

    Worse, it cost Microsoft $932 million to deliver that $893 million in sales, so chalk up yet another loss for the Surface tablet, though it’s nowhere near as bad as 2012 when the company took a $900 million write-down on the product. There’s something to be said for progress, because it means Microsoft may actually earn a profit from the Surface one of these days.

    So a couple of million or so Surface tablets is paltry when you compare that figure to what Apple may have sold during the same quarter. Current analyst estimates average 25 million, but we’ll know soon enough. By comparison, Microsoft’s numbers are chump change, and not terribly encouraging considering the vast amount of money spent in promoting the product.

    It’s also interesting to see how Microsoft’s partners have responded, and basically they haven’t. It’s generally conceded that the Surface RT is probably destined for an undistinguished burial. The “Pro” version with the Intel processor, which is very much in the mold of one of those failed netbooks, appears to be faring much better. A primary reason is the fact that it can run regular Windows software, since it uses an Intel processor.

    Indeed one of the huge negatives about the Surface RT was that some customers weren’t aware of the nasty truth that their regular apps aren’t compatible with the ARM processor used on that machine, and thus returned them in disgust, or at least because they were quite disappointed at their mistake. It’s not that the TV ads are terribly illuminating about such things.

    Imagine, for example, if Apple built two different versions of the iPad. So the second imaginary version used an Intel processor and was compatible with regular Mac apps. Now imagine having to explain that two superficially identical products worked with totally different app ecosystems. Can you imagine the grief Apple would receive as a result?

    If you think the demands for Tim Cook to quit his day job are loud now, what would happen if Apple pulled the same fool stunt as Microsoft?

    With the Surface, most people probably don’t care. But with the current sales growth, if it continues, maybe it’ll take a few years for the product to pan out. Microsoft may hope to repeat the Xbox experience, where it took years and billions of dollars of losses before it became a genuinely successful product.

    Thus the numbers were far more encouraging for the Xbox lineup, where it seems that Microsoft really has a winner on their hands. Some 7.4 million units were sold during the quarter, bringing in $4.7 billion in revenue.

    Of these, 3.9 million sales were recorded for the new Xbox One. Another 3.5 million Xbox 360 consoles were sold, though I suppose one might have expected a much higher percentage for the newer model. But perhaps customers just wanted to save some money. Consider that the older model costs $199.99 at Best Buy, while the entry-level Xbox One is $499.99.

    But if Apple achieved similar sales percentages with the iPhone 5s and the iPhone 5c, industry analysts would regard that achievement as an abject failure. Selling more expensive gear is supposed to be a good thing, yet it’s still widely believed that the iPhone 5c is a failure and that Apple customers aren’t into plastic smartphones.

    Of course, Samsung’s high-end Galaxy smartphones are also plastic, and actual sales are nowhere near as high as the manufacturer hoped. Worse, some of the talk about the next Galaxy flagship, the S5, still refer to a similarly configured plastic case, perhaps with a larger display.

    As to Microsoft, sales of Windows and Office remain on the decline. Windows Phone? Well revenue from that division supposedly increased, but Microsoft didn’t say by how much. But since Nokia, the largest supplier of Windows Phone handsets, is reporting sharp declines in handset revenue, you wonder where this increase can be found. I assume Microsoft is not faking revenue reports, but certainly bad news is being glossed over.

    Meantime, the search continues for Steve Ballmer’s replacement. Certainly, with the likes of Bill Gates participating in the selection, just how much freedom will the new executive have to attempt to turn things around? Huge changes wouldn’t seem to be in the cards. It’s not that, for example, the acquisition of Nokia’s failing handset division would suddenly be undone. That ship has sailed, but it’s still doubtful Nokia’s products will fare any better when Microsoft runs the show.


    I remember how many years I survived without credit cards, relying on cash and checks to buy things. Some online merchants even do eChecks, short for electronic checks, which allows you to fund a payment for a product or service from your checking or savings account.

    Of course, you can use your bank’s debit card instead, just as you do at a brick and mortar store. In the old days, we called that mail order. You simply mailed your payment with an order form to receive your merchandise. As a child, for example, I remember ordering toys and other stuff, including build-it-yourself radio kits, that way.

    Yes, there are still physical catalogs and all, but most everything is virtual now. There is not, for example, a five-pound Amazon catalog that you can receive in your mailbox as you did with the famous Sears Roebuck catalog.

    Since so much business has moved to the cloud, you need to use electronic methods to make your payment, although they are still largely based on traditional banks and credit card companies. Of course there are other options, such as PayPal, essentially an online bank, and even Bitcoin, a fledgling digital currency that has attracted some interest even from traditional vendors.

    You can certainly still use cash. You can pay for your purchase from a physical store, or mail cash, but you’d want to insure the envelope in case the money turns up missing. But it’s obviously still quite risky. After all, if someone steals all the money in your wallet, you better hope that your home insurance covers the loss. With a credit or debit card, call the bank, report the loss and you shouldn’t be liable for illegal use of that card.

    However, I started thinking of the value of cash again when I first read the story about last year’s data breach at Target and other vendors. Supposedly the online criminals who managed to hack Target’s Windows-based point-of-sale systems even got ahold of the pin numbers from your debit cards, so there was one huge risk.

    I just wonder, in passing, why Microsoft isn’t also being taken to task for this huge lapse.

    In any case, some banks have even gone out of the way to reissue cards that were possibly used for Target transactions, and I know I switched out my bank’s debit card as a result. You see, I do shop at Target from time to time, and I felt a tad safer, though I did have one issue with a bank that might be related. It’s still under investigation.

    One hopes, however, that the breach at Target, Neiman Marcus and other stores will finally inspire U.S.-based banks and other financial institutions to supply more of their cards with a Smart Chip. You see, most credit cards in this country have all the data embedded in a low-tech magnetic strip. But cards that use those chips instead require that you enter your pin or sign for each physical transaction. There’s also a “chip & signature” card that you have to insert in a card reader rather than swipe.

    Regardless, although this technology is common in Europe, it’s not widely used here, which is unfortunate, because it creates all sorts of nasty possibilities for criminals to do their thing. One method is to attach a phony or add-on card reader to a credit card terminal, so that the criminals capture the information from the magnetic strip. So you think you’re simply getting some cash from the ATM, but since the ATM has been hacked with that extra hardware, that information is recorded and used for nefarious purposes. This scheme is also used at gas stations and other establishments.

    But the largest risk may simply be handing your credit card to a store clerk or the server at a restaurant. I realize probably 99.99% or more are perfectly honest and all, but do you ever wonder what they’re doing when your credit card is taken away somewhere for a few minutes? Sure, anyone caught engaging in this sort of behavior would be subject to arrest and all, but it still happens from time to time.

    At least with cash, there’s no question how much you’ve paid. Despite the risks, it sure sounds tempting after you hear about all those data breaches and other security lapses. Sure, I suppose the Smart Chip is much more secure, but you can bet that hackers are already doing their best to crack those systems too in a reliable fashion. So expect the continued cat and mouse game.

    In saying that, however, merchants are responsible for keeping their payment processing systems secure. Nothing is perfect, but if they don’t get their acts together, they do not deserve your business.


    The Tech Night Owl Newsletter is a weekly information service of Making The Impossible, Inc.

    Publisher/Editor: Gene Steinberg
    Managing Editor: Grayson Steinberg
    Marketing and Public Relations: Barbara Kaplan
    Worldwide Licensing: Sharon Jarvis

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