By Ian Sherr

Apple Inc.’s claims that some smartphones running Google Inc.’s Android software copy its inventions are approaching their first big judgment day in the U.S.

The International Trade Commission in Washington on Wednesday is expected to rule on whether some phones made by HTC Corp. violate Apple’s patents. The ruling could lead to a ban on handsets sold by the Taiwanese company, which uses the Android operating system and had the second-largest share of smartphone subscribers in the U.S. market for the three months ended in October, according to research firm Nielsen.

HTC isn’t alone. Apple has been tangling in courts with other prominent Android device makers, including Samsung Electronics Co. and Motorola Mobility Holdings Inc. The cases reflect the Cupertino, Calif., company’s belief that many competing smartphones violate features that Apple popularized with its iPhone and iPad tablet computer.

Apple isn’t the only one complaining. The smartphone market has experienced a surge in patent litigation over the past few years as large and small players seek to hobble competitors or take share of their success through damage awards or negotiated settlements.

It’s an attractive opportunity. More than 645 million smartphones are expected to be sold world-wide next year, according to research firm Gartner Inc., jumping nearly 40% from this year’s forecast. By comparison, sales of personal computers are expected to grow 4.5% to about 370 million units next year.

By Ian Sherr

When Whole Foods Market Inc. opened a store in San Francisco’s Haight-Ashbury early this year, many locals and community leaders hoped it would help improve a grungy corner of their famous neighborhood. Nearly a year later, they’re still waiting.

Since the upscale market opened in February across from a section of Golden Gate Park known as Alvord Lake, known for attracting drug dealers and homeless people, crime within a 500-foot radius of the store has shot up, according to the San Francisco Police Department. At the same time, Whole Foods hasn’t lifted the overall neighborhood’s business prospects, sales-tax receipts data from the San Francisco Comptroller’s Office show.

While the Whole Foods store has brought new customers to the neighborhood, changing the feel of the area, “the riffraff hasn’t gone away,” says Joe Goldmark, who co-owns an Amoeba Music store across the street from the store.

For its part, Whole Foods has tried to meet these challenges. It hired security guards and one plainclothes officer who are at the store throughout the day. The store’s management also regularly confer with police about crime in the area.

The company has also tried to help improve the local economy in Haight-Ashbury by partnering with local food producers in its efforts to offer healthy food to customers. “We’re always concerned about the neighborhoods we’re in,” said Libba Letton, a Whole Foods spokeswoman, who added that the store’s managers are always looking for more ways to help the community.

Whole Foods’ experience in Haight-Ashbury so far shows how nearly a half-century after the 1960s “Summer of Love,” when thousands of people swarmed the neighborhood as part of the counterculture movement, the area is still grappling with the uneven gentrification unfolding there.

Today, vacationers flock to the area to snap pictures of the famous intersection at Haight and Ashbury streets. The neighborhood has become a destination for tech workers, as well as aging hippies and runaway youths. Amid that mix, property values have risen over the years, but some areas, like the end of Haight Street that Whole Foods inhabits, have improved at a snail’s pace.

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(Originally published Dec. 8, 2011, in the Wall Street Journal.)

By Ian Sherr

Sony Corp. is preparing to release its first major game for the PlayStation Network online gaming service since hackers broke in and stole account information from millions of users earlier this year.

The game’s release marks a milestone for the Japanese electronics giant in its ongoing recovery from the hacking attacks that occurred in mid-April, which compromised the personal information of roughly 77 million accounts in the system.

Sony voluntarily shut down its network for roughly a month, slowly bringing back different levels of functionality over time. The company said 94% of preoutage activity returned immediately, and that it hit 100% over the summer. The company says it has also added 3 million accounts since the outage.

This holiday season, led by Sony’s “Uncharted 3: Drake’s Deception,” will be the next test of the system. The game will be released on Nov. 1, and will join this year’s slate of high-profile games that rely heavily on network components, including Activision Blizzard Inc.’s “Call of Duty: Modern Warfare 3″ game and Electronic Arts Inc.’s “Battlefield 3.”

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(Originally published Oct. 27, 2011 in the Wall Street Journal.)

By Don Clark and Ian Sherr

Apple Inc. has lost its visionary at a time when the company is headed into battle with its most serious challengers yet—and has shown some rare signs of vulnerability.

The day before Steve Jobs died, his successor, Tim Cook, took the stage to sell the world on Apple’s newest iPhone. Though executives spent 90 minutes touting a raft of new features, the gadget didn’t create the sort of immediate buzz Mr. Jobs’s recent creations have enjoyed.

That muted response was ill-timed for Apple: Just a week earlier, Amazon.com Inc. unveiled its Kindle Fire, which costs less than half as much as the iPad and is seen by analysts as the most credible threat to Apple yet in the tablet-computer market.

Rival Google Inc., meanwhile, has used its free Android software to edge past Apple in the market for the operating systems that power smartphones. It has also struck a $12.5 billion deal to buy Motorola Mobility Holdings Inc., pitting the Internet giant directly against Apple in the handset market.

Apple still sells more smartphones than any competitor, and also leads by a wide margin in the tablet market that has emerged since Mr. Jobs unveiled the iPad in 2010.

“IPhone is the number one smartphone in the world and continues to be number one in customer satisfaction,” an Apple spokeswoman said in response to questions about the competition. As for the Kindle Fire, she noted others have introduced tablets with seven-inch screens and a limited number of apps, and “none of them have gained significant traction against iPad’s incredible momentum.”

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(Originally published Oct. 7, 2011 on the front page of the Wall Street Journal.)

By Ian Sherr

One day five months ago, Karim Hijazi saw an unusual sight while reading his work email. A message that had been marked as “read” was suddenly marked “unread.”

What the founder of Unveillance, a computer-network security firm, soon learned was that hackers had broken into his account.

The hackers gained access to his email by stealing log-in information from an insecure website, which they then matched up with a password they found on the Internet. After downloading all of his emails, the hackers sent Mr. Hijazi a message demanding he share sensitive security information with them. When he refused, the hackers released his emails on the Web.

“It was like a baby with a gun,” he says.

Mr. Hijazi is one of the latest victims of computer hackers focused on getting into websites, corporate networks and email accounts by using legitimate passwords. Many break into poorly secured websites, steal databases filled with personal information and then comb through that data for log-in information for companies, government agencies and banks.

The growing frequency of these attacks has pushed companies to seek other forms of data protection than simple passwords.

Demand for additional barriers and detection programs is already large. Sales of these types of products topped $900 million world-wide last year, according to International Data Corp., and the Framingham, Mass.-based research firm expects the market to double by 2015.

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(Originally published Sept. 26, 2011 in the Wall Street Journal.)

By Ian Sherr

The TouchPad is dead. Long live the TouchPad.

Hewlett-Packard Co. said it will temporarily resume manufacturing of its ill-fated tablet computer just 11 days after killing its iPad rival as part of a sweeping corporate overhaul.

The resurrection of the TouchPad follows a spike in demand after H-P, desperate to clear out unsold inventory that had piled up at retailers, slashed the price of the low-end model from $399 to $99.

The decision to discontinue the TouchPad came less than two months after the tablet first went on sale in July, but made little traction against Apple Inc.’s iPad despite an earlier 20% price drop. H-P executives said sales were too weak to justify continued investment.

H-P didn’t say what it would charge for the new batch of TouchPads, but cautioned potential buyers there might not be enough to go around.

“We don’t know exactly when these units will be available or how many we’ll get,” H-P spokesman Mark Budgell wrote on a company blog. “We can’t promise we’ll have enough for everyone.” The company said it is pleased by the response it has gotten so far.

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(Originally published Aug. 31 2011 in the Wall Street Journal.)

By Ian Sherr

Investors may be undervaluing Apple Inc. even as its shares near all-time highs on the strength of hit gadgets like the iPhone and iPad.

On Wednesday, investors had a new reason to re-evaluate one of the most popular destinations for equity investments: the resignation of co-founder Steve Jobs as chief executive.

Apple shares on Thursday eased $2.46, or 0.7%, to $373.72 in 4 p.m. Nasdaq Stock Market trading, as investors paused to consider how the company might change, even though Mr. Jobs’s departure wasn’t unexpected.

The ebb in Apple’s share price will likely prove fleeting, analysts and investors say. The company has built commanding positions in its mobile-device business, enjoys margins that are the envy of other manufacturers and has created a brand as closely associated with technology as that of Nike Inc. is with athletic equipment. The company also has $76 billion in cash that accounts for more than a fifth of its market valuation.

Analysts at Goldman Sachs expect Apple’s shares to grow by nearly a third to $490 over the next 12 months, a view broadly shared in the analyst community.

“Apple is priced like they’ve taken all the market share they can and I think that’s crazy,” said Kevin Landis, president of SiVest Group, which owns Apple shares. “It’s on its way to being the most innovative and dominant consumer electronics company in the world, and the lock they have on the market is breathtaking.”

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(Originally published August 26, 2011 in the Wall Street Journal.)

By Ian Sherr

Hewlett-Packard Co. wants to persuade appliance and car manufacturers to use its webOS operating system in their products. But the software’s late arrival to the market and relatively small footprint are prompting companies to pause before licensing the platform.

In June, Leo Apotheker, chief executive of the electronics giant based in Palo Alto, Calif., said his company plans to begin talks with various companies to gauge interest in webOS, which powers H-P’s TouchPad tablet computers and Pre smartphones.

H-P says webOS, which uses touch commands and connects to the Internet, can make machines easier to use while adding functionality that customers have come accustomed to in their mobile gadgets.

For example, a touch screen could replace the buttons on a stove, displaying recipes pulled from the Internet. Similarly, a refrigerator could be programmed to make extra ice during certain times of the day.

“We’re looking at expending the base and bringing to the webOS community an ecosystem that inspires developers out there,” said Stephen DeWitt, who is in charge of webOS for H-P. He said there is already an “enormous amount of interest,” but declined to name companies that might potentially license the software.

H-P hopes that getting webOS on appliances and in cars will create an ecosystem of devices and accessories around the operating system. That will encourage developers to write programs that can be used on those products, spurring a market of software like Apple Inc. has done with its App Store bazaar. Analysts say H-P also hopes that licensing the software to manufacturers will create a regular and predictable revenue stream.

The company’s ambitions, however, face a host of challenges from already-specialized software makers and companies uninterested in putting an advanced operating system in their products, analysts and industry insiders say.

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(Originally published Aug. 16, 2011 in the Wall Street Journal.)

By Ian Sherr

People don’t have tablet fever; it seems they simply have a mania for iPads.

The latest evidence: Hewlett-Packard Co. is dropping the price of its TouchPad tablet by 20% little more than a month after it hit stores, as the computer giant tries to goose sales of its answer to Apple Inc.’s iPad.

H-P, Motorola Mobility Holdings Inc. and Research In Motion Ltd. have all jumped into the tablet market this year, trying to close the gap with Apple.

The electronics giant created a multi-billion-dollar business last year when it launched the iPad—and has since seen its profits and market value swell as others have tried to keep pace.

Rivals have been routed so far. Motorola cut the price of its Xoom tablet after its February launch, released a cheaper model and warned shipments will decline this quarter. RIM’s PlayBook was delayed until April and still isn’t being offered for sale by the two biggest U.S. wireless carriers.

Samsung Electronics Co., which was the quickest to market an iPad rival and has shipped millions of tablets based on Google Inc.’s Android software, is now embroiled in a patent dispute with Apple that threatens sales of its Galaxy Tab in most of Europe.

Apple, meanwhile, says it is having difficulty keeping up with demand and selling every iPad it can manufacture. Five months after its release, its iPad 2 can be hard to find in retail stores. The company said it shipped 9.3 million iPads in the June-ended quarter.

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(Originally published Aug. 12, 2011 in the Wall Street Journal.)

By Ian Sherr

Aiming to take a bite out of Apple Inc., Sony Corp. is revamping its retail stores, integrating the Japanese electronics behemoth’s sprawling product line into a sleek and fresh new look.

On April 1, Sony opened a self-branded store, in the high-end Westfield Century City Mall in Los Angeles. The store, with hardwood floors and sleek lighting fixtures, echoes Apple’s airy retail concept.

Sony’s Los Angeles store is the first in a series that is expected to replace the company’s existing chain of retail shops, called Sony Style. The Tokyo-based company hopes the renewed retail presence will reinvigorate enthusiasm for products, like its Vaio laptops and Walkman music players, both of which have been lapped by Apple’s competing devices.

Sony wants the retail effort to set its computers and televisions apart in the minds of buyers. That was one of the strategies behind Apple’s chain of stores, which helped solidify consumer identification of its products.

“It’s not an electronics store,” said Phil Molyneux, president of Sony Electronics in the U.S. “It’s a Sony Store.”

Sony’s new retail outlets mark a complete rethinking of its existing strategy. The roughly 30 existing Sony Style stores in the U.S. are cluttered. Many have dark lighting, resulting in a heavy mood. The new store designs take a different tack.

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(Originally published June 15, 2011, in the Wall Street Journal.)