2012 was the year when there was immense focus on Apple. Not because of its products, nor of the legal war that it was fighting with Samsung (and basically every single Android maker out there). It was because of its new CEO Tim Cook, who succeeded its long-time visionary Steve Jobs.
Apple has had previously been without Jobs, after the board ousted him back in the 1980s. When he returned, it was at the brink of collapse. Thankfully, Jobs had managed to turn things around. But you can obviously tell why there has been so much interest on Cook’s role as Apple’s chief executive – they want to see how Apple copes post-Steve Jobs again. However, unlike last time, Jobs had managed to put the people he wanted to run the company, as opposed to the board.
A New Year, A New Leader
Technically, Cook became the CEO of Apple in late August, but had full control of the company in October after Jobs’ death. However, we focus on this year because it was the year he actually made an impact in Apple.
He joined Apple in 1998, less than one year after he was made a vice president at Compaq (and previously worked for IBM for 12 years). He was made the Senior Vice President of its worldwide operations, and he was successful in streamlining its supply chain and increasing margins. He shut down its manufacturing plants, and created strong relationships with external manufacturers (like Foxconn). He was then promoted in 2007 to be Apple’s Chief Operating Officer.
It is clear that Tim Cook is trying to position himself as someone different to Steve Jobs. After the iOS Maps fiasco, Cook personally apologised to users about the quality. In contrast with Antennagate, Jobs did offer users a bumper in order to patch the problem, but he also said this problem existed on other phones and it was a software bug. Cook also issued a dividend to its shareholders – the first since Jobs took over the company – and reintroduced the company’s charity programme
But the biggest mark he made was the managerial shakeup in October. He removed the controversial Scott Forstall, its head of its iOS devision (and behind Apple Maps); and its retail chief John Browett, who joined the company at the start of the year. Browett’s removal was pure and simple, he just didn’t fit in with Apple’s culture. He made several mistakes, including introducing a new staffing procedure that triggered an internal backlash. Employee hours were cut so severely that rumours of job cuts were spreading.
Forstall’s departure was due to the fact that he wasn’t a much loved figure in Apple. Both the employees and some executives disliked him, especially with Jonathan Ive, the head of hardware design. According to the Wall Street Journal, Ive and Forstall clashed so severely that “they avoided being in the same room together… they didn’t cooperate at any level.” Their relationship was so bad that Jobs had to mediate between the two.
That was no longer going to happen under Cook, who wanted more collaboration. One had to go.
“There can’t be politics. I despise politics. There is no room for it in a company. My life is going to be way too short to deal with that. No bureaucracy. We want this fast-moving, agile company where there are no politics, no agendas,” Cook told Bloomberg Businessweek.
Forstall was political, and therefore did not fit in Cook’s vision on how to run Apple. Reports said that he took credit for other people’s work, and refused to sign the apology on Apple Maps.
The Labour Issues
2012 saw more pressure on Apple because of the labour practices of its contract suppliers. While we have known about the practices for some time, it was an episode of This American Life that sparked a lot of outrage from consumers. The piece, produced by Mike Daisey and based on his one-man show “The Agony and the Ecstasy of Steve Jobs”, detailed his encounters in China – where he witnessed underage workers, and met with the maimed and poisoned.
The outrage was so much that Apple called in the American Fair Labor Association to investigate the claims, and give recommendations to improve the working conditions of its factories. They did find that they had found “significant issues”, including where workers were working 60 hours per week. Both Apple and Foxconn have committed to comply with both Chinese legal limits and FLA standards, in addition to other recommendations.
And while that may be good news, the story that caused the outrage had one problem. It was all a lie.
Apple’s problems aren’t a lie, they have been published in great detail. A separate New York Times piece was scathing about Apple’s use of labour practices (that being said, they’re not the only company to use such labour). The report opens with an explosion in a factory that polished iPad cases, where four people were killed and another 18 injured.
Daisey, however, fabricated most of his trip to China. He did go to China and met with workers from Foxconn. But he didn’t see underage workers, and the worker with a maimed hand did not exist. Nor did he meet with any of the victims of n-hexane gas poisoning. There was always something that didn’t feel right, but they were mostly identified by those who worked in China and knew the whole situation. The rest of us were persuaded by the emotional impact it had – and that was what the lies were designed to do, to make us feel guilty.
Apple isn’t the only company that uses Chinese labour, nor the only company that partners with Foxconn. As I previously noted before:
We can all hope for better working conditions, but realistically – we’ll still have cheap labour, we will still have the poor working conditions and abuses. And we will all ignore it, because we want the goods at a price we deem is right for it. Effectively, that means the prices will remain low and ‘cheap’.
So, if we really, really want change; we all have to change our spending habits. Are you willing to pay more for something ethical?
The truth did come out in the end – by another programme made for public radio in America called Marketplace. In March,This American Life retracted the episode, followed by another episode detailing the problems with the original piece.
“We’re retracting the story because we can’t vouch for its truth. This is not a story we commissioned. It was an excerpt of Mike Daisey’s acclaimed one-man show “The Agony and the Ecstasy of Steve Jobs,” Ira Glass, the host of the programme, said in a statement.
In December, Apple announced that the company is bringing some of its manufacturing back to America in 2013. It will invest $100 million in a new plant to make some of its Mac computers – the details, however, were not revealed. Speculation is pointing that it will make the Mac Mini in America – which is the least-popular Mac in its entire line-up.
“We’ve been working on this for a long time, and we were getting closer to it. It will happen in 2013. We’re really proud of it. We could have quickly maybe done just assembly, but it’s broader because we wanted to do something more substantial,” Cook told Bloomberg Businessweek. “This doesn’t mean that Apple will do it ourselves, but we’ll be working with people, and we’ll be investing our money.”
Cook also added that Apple already is already sourcing parts for its devices in America – the processor is made in Texas, while the glass is made from Kentucky.
The obligatory “new products” bit
In 2012, there were a lot of product refreshes – as usual. But a lot of them were pretty major. Of course, the long awaited iPhone 5 (or the sixth-generation iPhone) finally got released, and was pretty much on par with what we had expected from the rumours. It had a taller, 4-inch screen, new body and faster processor. It also dumped the 30-pin connector for the Lightning port, much to the dismay of many because it would mean that their accessories would not work without an adaptor.
We also got the obligatory iPod refresh. The iPod classic still is the same, while the iPod touch refresh is basically what we saw with the iPhone 5 except a lower-spec processor and camera, and having multiple colours. The iPod nano reverted back from a square to its traditional tall shape – much to the dismay of Chris Southcott. To be honest, the iPod nano looks cheap. It just doesn’t feel like an Apple product but more like a third-party knock off. The Apple TV also got a slight update, with a new processor and support for 1080p video playback.
The MacBooks got a refresh in the second-half of the year. The company announced that its 17-inch laptops would be scrapped, and showed off a redesigned MacBook Pro with Retina display. Previously only available in a 15-inch size, a 13-inch model was quickly produced to capitalise on its success. The MacBook Air also received a minor refresh to support the new Ivy Bridge Intel processors.
The iMacs got a brand new design that sees it even thinner than before (5mm at its thinnest point), and a smaller monitor depth due to a new manufacturing process. While the screen sizes remain the same, they now include NVIDIA cards as standard, USB 3.0 ports and includes an SSD option. The Mac Mini was also due for a refresh, and again was due to Ivy Bridge.
Then we had the iPad changes – and there was a reason why we left this last. Apple did refresh the product line back in March with the “new iPad”. The 3rd-generation included a faster processor, a better camera, the Retina display and LTE support. However, that LTE support was only for those living in America. Apple got in big trouble for not clarifying that in Australia from the Australian Competition and Consumer Commission. It didn’t help when it claimed that the HSPA+ networks were 4G, despite the fact that the telcos were calling this as 3G. Apple eventually lost the case, and was ordered to pay $2.25 million in fines.
But less than a year in, Apple dumped it and announced a brand new generation. It was a major refresh in itself, with Apple adding a brand new processor, the Lightning connector, and LTE support internationally (basically, meaning that it will work on Telstra’s and Optus’ 4G networks, unlike the last one). The move towards LTE wasn’t that surprising, given that the iPhone 5 included it. But just weeks after the iPhone announcement and not months was unexpected.
Also coming out was the iPad mini – Apple’s long-awaited and much rumoured 7.9-inch tablet. It was not just a simply a smaller iPad, it featured a brand new design and is 53% lighter than the iPad 4. It features a dual-core A5 processor, 5-megapixel camera, Lightning connector and LTE support. Jobs was reportedly against the idea of such a tablet, until recently. And now with Google’s Nexus 7 tablet and Amazon’s Kindle Fire making it more attractive (especially given that they are running Android), Apple’s iPad mini is the perfect competitor against them.
Legal issues with Android
It wouldn’t be an Apple recap if we didn’t mention the big Apple/Samsung war that is occurring right now. Started in April 2011 when Apple accused their South Korean rival (and also a supplier of some parts) of copying the look and feel of the iPad and iPhone with the Galaxy line of phones, this basically engulfed almost every single mobile device and tablet that both sides made.
The big one was in a San Francisco court, where both Scott Forstall and Phil Schiller made appearances in front of the jury. On August 24, after less than 24 hours of deliberation, the jury ruled in favour of Apple, awarding it $1.05 billion dollars. It found that Samsung did infringe on its utility and design patents (except on the iPad design), found that Samsung “diluted” Apple’s trade dress and found that Apple did not infringe on Samsung’s own patents. In a small victory, Samsung was not found to have violated antitrust laws with its patents that are essential to the UMTS standard.
However, during the trial, you had to feel sorry for Judge Lucy Koh, who had to sit there and see two tech companies bicker. Expect more coming in the next year or so, because there is another trial against Samsung and Apple – this time targeting the Galaxy S III, the Galaxy Note and the Galaxy Tab 10.1.
In other parts of the world, Apple saw different results. A German court threw out both Apple and Samsung’s cases involving the “slide to unlock” feature back in March, despite winning a similar case just a month before against Motorola. In September, that same court ruled that Samsung did not violate its patents relating to its touchscreen technology.
In Japan, the Tokyo District court ruled in August that the Galaxy smartphone did not violate on a patent that describes music and video syncing between devices and servers. In Samsung’s home country, South Korea, the Seoul Central District Court ruled that both had violated each other’s patents (Apple on two Samsung patents, Samsung on one Apple patent), awarding small damages to both companies and a temporary ban on the infringing patents. Apple’s claim that Samsung copied their design were denied.
And in Britain, their claim that Samsung did copy their design was also rejected, on the basis that Samsung’s products were “not as cool” as the ones made by Cupertino. While Samsung didn’t want that to be the case, a victory is a victory regardless. The judge also ruled that Apple had to publish an apology saying that it was wrong that Samsung infringed on its design. Apple did so in October, in a “sorry-I-punched-you-in-the-face-but-you-deserved-it” sort of manner, and wasn’t backing down from its claim:
However, in a case tried in Germany regarding the same patent, the court found that Samsung engaged in unfair competition by copying the iPad design. A U.S. jury also found Samsung guilty of infringing on Apple’s design and utility patents, awarding over one billion U.S. dollars in damages to Apple Inc. So while the U.K. court did not find Samsung guilty of infringement, other courts have recognized that in the course of creating its Galaxy tablet, Samsung willfully copied Apple’s far more popular iPad.
It was quickly removed, and the judge forced them to correct it.
Meanwhile, both Apple and HTC managed to settle their dispute. Started back in 2010, both companies were ordered to mediate their disputes in May this year. In November, both announced they had reached a settlement and a ten-year licensing arrangement on current and future patents. However, the financial settlement was not disclosed.
While it does not have much of an impact on Apple, it does for HTC. The company has been struggling due to increased competition, especially on the Android front. The fact it has now settled this matter probably gives them a sigh of relief, but also allows them to innovate without fear of retaliation from Apple.
For years, Apple and its fanboys have been proclaiming that Mac OS X was the most secure operating system out there because it didn’t get any viruses, unlike its Microsoft-developed counterpart. That dream shattered in 2012 with the Flashback trojan.
The trojan had infected half a million Macs by April 4. The original variant tried to trick a user into installing something that looks like an installer for Adobe Flash; however, the variant around April had a unique property. You didn’t need to download it accidentally, you just needed to visit an infected website because it was using a Java vulnerability.
Java, in recent years, has had a number of security problems – most notably this year. Kaspersky recently called it “the most frequently exploited software” of the year, surpassing Adobe Flash Player and Adobe Reader. (In fact, the latest security tip is basically – remove it from your computer, and don’t install it unless you need it).
However, this exploit was patched in February for Windows and Linux versions of Java. So why did it take this long? Apple controls the Java patch release cycle since it is integrated in the operating system. While it means that you don’t have to install it, Apple has a bad track record of not updating them.
Turns out, that proved to be a good thing. Because another Java exploit for the Mac was found in August, and only affects those running Java 7. Most users probably didn’t bother updating the version found on Version 10.6 or below (or installed it for version 10.7 or above) – which runs on Java 6, which is not affected by this vulnerability.
This won’t be the last time we will hear it. Macs are appearing to be the target of hackers now and, since the myth was that they were virus-free was broken because of Flashback, are likely to see an increase in malware.
“It’s not only generalised attacks – such as the 700,000-strong Flashfake botnet – that pose a threat; we have also seen targeted attacks on specific groups, or individuals, known to use Macs. The threat to Macs is real and is likely keep growing,” Kaspersky’s Costin Raiu and David Emm warn.