By Jessica E. Vascellaro and Ian Sherr

When thousands of fans line up for Apple Inc.’s opening of its Grand Central Terminal store Friday, many won’t be queuing to ogle iPads.

They’ll be there for the T-shirts.

Since Apple opened its first stores in 2001, it has handed out tees sporting the new store’s name to the first 1,000 or so people through the door.

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(Originally published Dec. 9, 2011 on the front page of the Wall Street Journal.)

By Ian Sherr

Videogame retailer GameStop Corp. plans to begin selling tablet-style computers as part of an effort to expand its gaming device offerings.

The company plans to begin selling tablets based on Google Inc.’s Android mobile operating system during the holiday season at 200 of its U.S. stores on Friday. GameStop’s pilot program will include specialized tablets made by Asustek Computer Inc., Acer Inc. and Samsung Electronics Inc.

The devices, which will sell for their typical sticker prices in competing stores, will come with a set of seven free games, including Electronic Arts Inc.’s “Dead Space” sci-fi shooter and “Madden NFL” football game, as well as links to the GameStop’s mobile application store, called “Kongregate Arcade,” and the Android app marketplace.

“Customers have been telling us that they like to game on multiple devices,” said J. Paul Raines, GameStop’s chief executive. “We believe there is a gaming opportunity on tablets.”

Analysts are more skeptical, citing poor sales of Android-based tablets and a dearth of games that have enticed the dedicated gaming audience that GameStop tends to attract. Cost is another factor, said Michael Pachter, an analyst at Wedbush Securities, who added that any asking prices around $400 or $500 will be challenging.

“I don’t think anyone is going to buy one,” he said.

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(Originally published Oct. 31, 2011, in 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 and Nick Wingfield

On a Tuesday afternoon last month, engineers working for Sony Corp. were baffled when several servers running the company’s PlayStation Network suddenly turned themselves off and then back on.

At the time, the unexpected rebooting seemed like an odd malfunction. The next day, however, the engineers found the first evidence that an intruder had penetrated Sony’s systems, prompting the Japanese company to take what it calls “the almost unprecedented step” of shutting down the popular online gaming network.

Sony Chief Executive Howard Stringer issued a public apology this week for what the company later disclosed was a data breach that compromised more than 100 million user accounts on three public networks, and a delay in informing users of the theft. Sony says the loss included users’ names, birthdates and passwords. It also hasn’t ruled out the loss of credit card numbers associated with the Sony PlayStation network.

Some analysts believe the incident, which has drawn the attention of authorities around the world, will cost the company more than $1 billion for measures that include new security and a $1 million insurance policy for any victims of identity theft. The company hasn’t provided its own estimate of the cost. It also hasn’t resumed operating the network, but has said it is in final testing and is expected to do so within days.

“Taken as a whole, the number of customers affected, the PR impact and now the legislative inquiries,” this ranks “at the top” of data breaches to date, said Cynthia Larose, an attorney specializing in privacy matters with Mintz Levin in Boston.

PlayStation Network, which is accessed by owners of Sony game consoles, uses 130 server systems, 50 software programs and has 77 million user accounts, according to a letter that Kazuo Hirai, president and group chief executive of Sony Computer Entertainment Inc., sent Wednesday to a U.S. congressional committee. That letter, and a similar account included in a letter Friday to Sen. Richard Blumenthal (D., Conn.) provide the most detailed accounts of the incident.

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(Originally published May 7, 2011, in the Wall Street Journal.)

By Ian Sherr

New details emerged about Sony Corp.’s investigation into one of the biggest data breaches in history, as the company attempts to piece together who stole personal information from more than 100 million accounts on its online game networks.

At least some of the attacks came from a Malaysia-based server, a person familiar with the matter said, though it wasn’t clear if any of the hacking was actually done from there, or whether only the server there was used.

On Tuesday, a U.S. spokesman for Sony confirmed some of the companies helping to investigate the breach and secure its network against further intrusions. The security firms named are Protiviti Inc., Guidance Software Inc. and Data Forté Corp., which specialize variously in forensic computer investigations and security consulting.

The company has also retained the services of the law firm Baker & McKenzie in connection with the matter. Representatives of the law firm and two of the security firms didn’t respond to requests for comment. Guidance Software declined to comment.

Political pressure on Sony for a more complete accounting of its handling of the data breach has been increasing. Sen. Richard Blumenthal (D., Conn.) on Tuesday sent a letter to Sony executives saying he is “deeply concerned about the egregious inadequacy of Sony’s efforts thus far to notify its customers of these breaches or to provide adequate protections for users whose personal and financial information may have been compromised.”

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(Originally published May 4, 2011, in the Wall Street Journal.)

By Ian Sherr

Plaintiffs lawyers are targeting Sony Corp. with class-action suits after a breach of the company’s online-game network compromised the personal information of millions of users.

In one lawsuit, filed in the U.S. District Court’s Northern District of California, videogame player Kristopher Johns said Sony’s security was negligently poor and the company failed to encrypt personal information.

The lawsuit, which was filed Wednesday against Sony’s U.S. entertainment unit and seeks class-action status, also alleges Sony failed to notify customers of the breach in a timely manner.

“This has caused, and continues to cause, millions of consumers fear, apprehension, and damage,” the filing said.

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(Originally published April 29, 2011, on the Wall Street Journal website.)