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.)

By Yukari Iwatani Kane and Ian Sherr

Steve Jobs turned Apple Inc. into the world’s most valuable technology company with high-tech products like the iPad and iPhone. But one anchor of Apple’s success is surprisingly low tech: its chain of brick-and-mortar retail stores.

A look at confidential training manuals, a recording of a store meeting and interviews with more than a dozen current and former employees reveal some of Apple’s store secrets. They include: intensive control of how employees interact with customers, scripted training for on-site tech support and consideration of every store detail down to the pre-loaded photos and music on demo devices.

More people now visit Apple’s 326 stores in a single quarter than the 60 million who visited Walt Disney Co.’s four biggest theme parks last year, according to data from Apple and the Themed Entertainment Association. Apple’s annual retail sales per square foot have soared to $4,406—excluding online sales, according to investment bank Needham & Co. Add in online sales, which include iTunes, and the number jumps to $5,914. That’s far higher than the sales per square foot and online sales of jeweler Tiffany & Co. ($3,070), luxury retailer Coach Inc. ($1,776), and electronics retailer Best Buy Co. ($880), according to estimates.

With their airy interiors and attractive lighting, Apple’s stores project a carefree and casual atmosphere. Yet Apple keeps a tight lid on how they operate. Employees are ordered to not discuss rumors about products, technicians are forbidden from prematurely acknowledging widespread glitches and anyone caught writing about the Cupertino, Calif., company on the Internet is fired, according to current and former employees.

Behind Apple stores is Ron Johnson, 52, who J.C. Penney Co. confirmed Tuesday would become its new CEO in November.

Apple’s retail success is fueled to a large extent by demand for the company’s products. Retail analysts say many of Apple’s advantages over rivals such as Best Buy are technical: It sells a single brand, has far fewer products and has only a few hundred stores compared to Best Buy’s more than 4,000. As the company continues to expand, some analysts expect it to face more pressure to consistently execute good customer service. Some former employees say they have already seen the quality of Apple retail staff decline as the retail network has expanded and has fewer enthusiastic fans to choose from.

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(Originally published June 15, 2011 on the front page of the Wall Street Journal.)

By Ian Sherr

Microsoft Corp. and Apple Inc. have both hired linguists to serve as experts in the tech titan’s ongoing battle over whether or not the government can grant a trademark for the term “app store.”

Microsoft on Tuesday filed its latest argument with the U.S. Patent and Trademark Office, which included the opinions of a linguistic expert who supported the software giant’s argument that the term “app store” was generic and shouldn’t be trademarked by Apple.

“The compound noun app store means simply ‘store at which apps are offered for sale,’ which is merely a definition of the thing itself—a generic characterization,” linguist Ronald Butters wrote.

An Apple spokeswoman declined to comment.

Microsoft hired Mr. Butters to counter Apple’s own linguistic expert, Robert Leonard, who asserted that the electronics giant’s “App Store” was a proper noun and deserved to be trademarked, even though the words are generic when separated.

The legal tussle has become a prime example of how litigious the technology industry has become following the rapid sales growth of smartphones and tablet computers. Nearly all mobile-device makers are actively suing or defending themselves in lawsuits against one another.

Apple, in particular, has been the target of lawsuits from a variety of companies spanning from device makers like Nokia Corp. and patent holders such as Eastman Kodak Co., all looking to either block the consumer electronics giant’s efforts or grab some share of its success.

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(Originally published March 30, in the Wall Street Journal.)

By Ian Sherr

Carmakers are taking apps for a spin.

Automakers from General Motors Co. to Hyundai Motor Co. are using the Consumer Electronics Show to announce plans that will transform dashboards into mini-computers running Internet-connected programs.

For example, Ford Motor Co. debuted an app that will allow owners of its new Focus electric car to schedule charging times from a smartphone. Toyota Motor Co. unveiled a program that lets motorists make reservations via booking site OpenTable.com.

The auto industry’s embrace of apps comes as carmakers look for new ways to differentiate their vehicles from the competition’s. “Internet-connected autos will be among the fastest-growing segments in four years,” said Gartner Inc. analyst Thilo Koslowski.

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

By Ian Sherr

Three-dimensional televisions are getting another “D” — discount.

Just a year ago, many 3-D TVs cost $1,000 more than regular sets. But during the recently ended holiday season, the gap halved and is set to shrink further.

Now, television makers, many of which had hoped 3-D would boost sales, are sandwiching the technology into their premium televisions while accepting a smaller premium for it. Like thinner displays, energy efficiency and high-definition, 3-D is becoming a “me-too” feature.

“Prices for 3-D TVs will definitely go down this year,” Skott Ahn, chief technology officer and president of LG Electronics Inc., said at the Consumer Electronics Show in Las Vegas. Mr. Ahn said LG would cut the premium it charges for 3-D TVs by 20% this year and build the technology into all of its new models by 2012.

The muted expectations for 3-D television mark a U-turn from last year’s enthusiastic embrace of the technology. Television makers rushed to bring the third dimension into living rooms after witnessing the success of the movie “Avatar.” Walt Disney Co.’s ESPN unit launched sports broadcasts in 3-D. Even Gucci Group N.V. designed stylish eyeglasses for 3-D viewers, hoping to cash in on the expected popularity of the televisions.

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(Originally published January 6, 2011, at Dow Jones Newswires and on WSJ.com.)