Applesauce: All Things Apple
November 11, 2012

Applesauce: All Things Apple – November 11, 2012

It’s back to the courts for Apple as one company has decided now is the right time to strike out and send a lawsuit. Elsewhere in the Apple world, the iPad mini has now been released, but is its maker happy with sales thus far? Finally, the CEO at Foxconn finally admits that making iPhones is, like, totally hard you guys.

Have you ever put potato chips on a sandwich? It’s time for some Applesauce.

Apple, it seems, exists in either one of two states. From time to time, Apple releases new products, numbers soar, critics pan (if only to rave as soon as they have the device in their hand) and their stock grows. They aren’t in this state, they’re locked in battle in courtrooms across the world, either by their own hand or at the request of others. Since we’re beginning to wrap up the new product state, it’s only natural to see stories about Apple’s legal issues, and they’ve been thrust into this state with the weight of 368 million dollar bills. While the rest of the nation was busy voting for the next leader of America, one court in Tyler, TX was voting against Apple in a lawsuit over the use of some patents in their FaceTime feature. According to patent holding company VirnetX, Apple and some other companies have been violating some patents they hold which involve establishing a secure connection link. All told, the company claims Apple violated 4 of their patents in their FaceTime and iMessage services on iPhones 1-4S and the iPad 1 and 2. While the court did order Apple to pay $368 million to VirnetX, (a decision which Apple will almost certainly appeal) they were seeking twice that much as payment for Apple using their patents without paying for a license. Apple is in familiar company, however. VirnetX has also sued Microsoft before for the same thing and came out on top of that suit as well. According to one of VirnetX’s lawyers, they’ve got an Apple developer who claims the company didn’t pay attention to patents when they built their systems, they just built them anyway. Feeling large from their earlier conquests, VirnetX launched yet another lawsuit against Apple on Friday, this time going after their newer products, such as the iPhone 5, iPad mini, newer iPads and newer Macs. These newer devices couldn’t be included in the previous suit as they hadn’t been released at that time. Ah, but now they’re out, and as we move away from Apple’s releasing state of existence, VirnetX is waiting, hands extending and awaiting payment. It’s not just payment VirnetX wants, either. They are also asking the US International Trade Commission (ITC) to ban these Apple products from being sold in the States. It seems VirnetX is quite upset that Apple has ben violating their patents since 2010, when FaceTime was first announced. Of course, companies should stand up for their IP and if Apple truly is guilty of violating these patents in their FaceTime and iMessage services, then they deserve to be fined. The tricky issue here, however, is the nature of VirnetX’s business. So far as I know, it’s not illegal to hold onto patents and license them out for use in other technologies. In fact, it sounds like a smart business that many companies jumped on as telecommunications was up and coming. VirnetX is one such company, holding a handful of patents and offering them out for licensing. However, this kind of strategy also has a tendency to come across as being a patent troll, or a company who exists only to sue other companies for violation of said patents. According to their filings, VirnetX holds a total of 45 patents and brought in a total of $36,000 in revenue last year from licensing out these patents to other companies. Going from $36,000 to more than $368 million in one year is quite the pay raise. Some, like the Mac Observer, have also questioned the company’s decision to hold court in East Texas. There’s some sympathetic judges living in the midst of those piney woods, and according to some reports, they’re more likely to rule in favor of the little guy and do it quickly. Sounds a lot like VirnetX is just upset that Apple hasn’t been giving them money for a few years, and they’re going to threaten Apple with more suits and a ban in the States in order to get what they want. Apple’s known for selling millions of their devices, and if VirnetX can get just a few pennies from each one, they’ll probably be earning more than $36,000 real soon.

Apple may be transitioning into the lawsuit state of their existence, but they’re still quite excited about their newest products, namely the 4th generation iPad (yes, already) and the iPad mini. The Wi-Fi models of both these new products launched last Friday and, true to Apple form, they released some sales figures from the opening weekend. Why does Apple do this? Well, Apple has this interesting little habit of creating stellar devices which make the general first-world public salivate with desire, and for some reason, these devices are even better when you buy them opening weekend. There are researchers currently looking into this phenomenon, but no solid data has been found as of yet. The iPhone 5, as you might remember, sold 5 million units in it’s debut weekend, a number which is not only it’s equal (get it, 5 million 5s?) but also somehow lower than what some analysts had predicted. No matter… The (at the time) new iPad sold 3 million units in its opening weekend this past March, prompting Schiller to call it “the strongest iPad launch yet.” That a company wants to brag on themselves for hitting new milestones isn’t out of the ordinary. What is peculiar, however, is the amount of qualifications Apple put on their latest sales figures.. As mentioned before, Apple only launched the Wi-Fi versions of these new iPads this weekend. For whatever reason, (Apple hasn’t said) the LTE versions of these iPads didn’t ship at the same time.

(Apple did send out emails on Friday informing those customers who preordered one of these LTE iPads that their tablets would be shipping “in the next 5 business days.” So there’s that.)

Apple also mentioned they had sold twice as many Wi-Fi tablets this opening weekend (3 million) than Wi-Fi tablets in March, 1.5 million. There’s a few interesting points here. First, though Apple has labeled the iPad mini as such (and not simply “iPad” as some had predicted they would) they seem to be fine lumping both sizes in under one “iPad” heading. While they do mention them as two separate products later in the release, they do refer to both devices as, simply, “iPads.”

Awfully convenient, no?

Secondly, Apple didn’t split the iPad into two categories in their March announcement, saying only sales had “topped” 3 million. So why the sudden change? Did the mini not sell as well as they would have liked, thereby prompting them to lump both models together? I find it hard to believe that Apple would skip an opportunity to brag about how well their newest thing sold, especially if it alone had sold somewhere near the 3 million range. People were reporting shorter-than-average lines last week for the iPad mini opening weekend. Of course, it’s hard to believe that many people thought there’d be such lines for the mini. As cool as it seems, and as new as it is, Apple has done their part to push it as “another iPad” instead of this totally new thing. Additionally, those who are likely to wait in line probably did so not long ago for the iPhone 5. Though lines weren’t as long, analyst Brian White with Topeka Capital Markets conducted a survey of Apple stores around the country and found that the majority had sold out of all minis, and of those stores that had some minis, 100% had sold out of the entry level 16 GB. Wi-Fi, of course. On one hand, an analyst is saying the iPad mini nearly sold out during opening weekend, and on the other, Apple is boosting the numbers of minis sold by lumping in the iPad Proper. The easy (and likely) answer here, of course, is that Apple didn’t make as many minis as they did other devices. Whatever happens, let’s remember that the Wall Street Journal cited sources last month which claimed Apple has already ordered 10 million of these things for the 4th quarter alone. Looks like they have some catching up to do. And, to be honest, they probably will, what with the holidays and all.

And what of that other product Apple has only recently announced?

It sold 5 million units and has been praised for its luxurious design and has already been fingered the subject of a lawsuit.

It’s the iPhone 5, and it’s causing some problems at Foxconn.

In fact, it’s this luxurious design, the crisp display tucked away so snuggly in its thin frame, which could be responsible for several problems at Apple’s manufacturer.

It was a common refrain: Most reviewers who picked up the iPhone 5 for the first time felt the heft of it (or lack thereof) and then began turning it over in their hands. Yes, the phone was light and beautifully crafted, like a very expensive piece of sophisticated machinery, but it was the details that made it so lust worthy. That anodized aluminum back, those wonderfully shiny edges, we even got to learn what chamfered means.

(Full disclosure, I had no idea)

This iPhone is truly the most beautiful iPhone yet, but it’s difficult to stop and think about how the phone became this way.

In early October, reports began to turn up from Chinese labor advocacy groups that workers had been having fights with their managers in the quality assurance department.

While many early adopters quickly became enamored with the phone, some noted their devices were easily scratched, particularly the back plate. This news quickly rose to the surface of the Internet (as anything Apple related often does) and sure enough, it appeared as if Apple was going to do something about it.

The rest is pure speculation, really. The reports do say that those who protested and had arguments with management were in quality assurance, and some have even hinted that it’s this scratch issue which has caused Apple to become even more strict about the quality of the phones which leave the plant.

Apple has been in the business of selling phones for 5 years, after all, and in these five years, they’ve not only been able to nearly double sales from the previous year, but they’ve also earned quite the reputation for build quality.

This is something Cook and crew take very seriously.

This week, Terry Gou, CEO at Foxconn has finally admitted that his plants are having a tough time of filling Apple’s orders.

“It’s not easy to make the iPhones. We are falling short of meeting the huge demand,” he said to a small group of assembled reporters.

This could mean anything, really. The iPhone is a sophisticated piece of equipment with its own set of hurdles to overcome.

In this phone, Apple is employing a brand new display technology which no other company is using, changing the shape from the previous 2 years and squeezing all this inside a ridiculously thin frame. On the other hand, it’s not unreasonable to expect Foxconn to be up to the challenge. After all, this is their job. Apple pays them to assemble these phones and other companies employ them to build their own things too.

For now, we’re all stuck in a rather awkward tangle, the customers, Apple and Foxconn. Customers want the new iPhone– they want it badly, and Apple wants just as bad to sell them one of these devices. It’s the company which is halfway around the world which is having the problem shipping these things, and since they’re so far separated from the rest of us, it’s easy to look over the issues at play.

When Saturday Night Live aired their skit which skewered the likes of the tech press several weeks ago, many laughed and followed standard protocol: Tweet the link and share it with friends.

However, I have to wonder if what made this skit so funny was just how true it was. We sit a million miles away and complain about the way our phones are scratched without realizing that these complaints have to end somewhere, and it just may be that “somewhere” is right where another pair of human hands meets an unfinished iPhone.

I’m not suggesting we should all just let our complaints slide or not take a scratched iPhone back….

It’s just worth noting, once again, that every action has an equal and opposite reaction.

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