2011-04-25 Your iPhone is tracking you. Do you care?

Intelligence Report - 04/25/2011
By Mark Glaser & Corbin Hiar




Your iPhone is tracking you. Do you care?

A couple researchers were looking for data that would be fun to map. They found a file called "consolidated.db" on the iPhone and iPad that secretly tracks their location, sending data to Apple twice per day since last June. Fancy that. Privacy experts and legislators were none too pleased with the existence of this file, even though it wasn't clear what Apple was doing with it. Of course all cell carriers know where you are and can track your location, but there's one key distinction, according to the researchers, Alasdair Allan and Pete Warden: "The cell phone companies have always had this data, but it takes a court order to access it. Now this information is sitting in plain view, unprotected from the world." Allan and Warden suggest that people encrypt their iPhone backups using iTunes to help protect their data. The researchers also created a helpful iPhone app called "iPhone Finder" that will let you map your location using the "consolidated.db" file on your iPhone or iPad. The reaction to the news of Apple tracking people was predictably split, with privacy experts on one side and techies (and legal investigators) on another. "This is a worrying discovery...The existence of that data creates a real threat to privacy," Privacy International's Simon Davies told the Guardian. Lawmakers such as Sen. Al Franken (D-Minn.) and Rep. Edward Markey (D-Mass.) both demanded that Apple answer questions about the tracking and what it was doing with that data. But investigators have known about the file and have been using it to track criminals for months. "I've analyzed so many iPhones I've lost track," one digital forensics specialist told the San Jose Mercury News. Using the iPhone's tracking file "is part of the standard analysis for me," he said. The Wall Street Journal found that Apple wasn't alone in tracking, and that an HTC Android phone "collected its location every few seconds and transmitted the data to Google at least several times an hour." But will it all matter in the end? "After reading all the articles on this subject yesterday, did you immediately switch off your iPhone and promise yourself never to use it again? No, thought not. Neither did I," wrote Time's Giles Turnbull.


Earnings Roundup: Yahoo, Apple, Google, NYT, Gannett

When it comes to earnings, the narrative usually is that Google is going gangbusters and everyone else is left for the scraps. For the first quarter of 2011, that was again the narrative, but... there's actually a "but" this time. Google did earn $2.30 billion on $8.58 billion in revenues, a 27% increase over the year-ago quarter, *but* the $8.08 per share earnings was less than the $8.11 analysts expected. Plus, Google might be losing search share to Bing (see Research item, below). Surprisingly it was much-scoffed-at Yahoo that was beating analyst expectations by a penny with earnings of $223 million, though net revenues were down 6%. Display ads were up 6% on the quarter, or 10% excluding partner commissions. One thing that didn't stray from the earnings narrative was the continued dominance of Apple, especially in iPhone sales. Apple profits were up a whopping 95% at nearly $6 billion, with revenues up 83%, selling 18.6 million iPhones (thank you, Verizon!). The only slight downside for Apple was a parts shortage that meant less iPad sales than expected, 4.69 million vs. 6.2 million. Meanwhile, newspaper companies continued to struggle overall, despite some gains in digital revenues. The New York Times Co., for example, saw net income drop 57% in the quarter to $5.4 million, with a weakness in print revenues. NYT's digital advertising revenues were up 4.5% in the quarter, but its About.com division had a 10.2% drop in revenues, possibly due to the recent Google algorithm change, according to the NY Times' Jeremy Peters. Peters reports that NY Times digital revenues now make up 28% of overall revenues, up from 25.6% in the year-ago quarter. It was a similar story at Gannett, where profits and print ad revenues were down, but digital was doing well. PaidContent's David Kaplan found that digital revenues were up 12.1% but costs were up 3.1% too. Gannett's CareerBuilder and PointRoll divisions both had strong quarters, and digital revenues now make up 20% of all Gannett revenues. The brightest spots were Gannett's Community Publishing digital revenues, up 13.3%, and USA Today's online revenues, up 19.2%.

Trove, News.me take on well funded Flipboard

Welcome back to the RSS news reader war, reconfigured for a social world. A few years back, the question was whether you used Netvibes, Google Reader or My Yahoo to see your favorite blog and news headlines in one place. Now it's a world of iPad apps like Flipboard, Zite and Pulse that aggregate and display your favorite news sources and social feeds in one place. While much has changed, the one constant is that no one has figured out a business model for aggregating headlines and blurbs. Flipboard is Exhibit A, a much lauded app that recently got a $50 million second round of funding, valuing the company at $200 million despite having $0 million in revenues. AllThingsD's Kara Swisher reports that Flipboard investors include Comcast’s venture arm, Kleiner Perkins, Index Ventures, Twitter co-founder Jack Dorsey, Facebook co-founder Dustin Moskovitz, actor Ashton Kutcher and the investment company of former News Corp. exec Peter Chernin. Adding to the star power is a Flipboard deal with Oprah's OWN network to feature her content on the app. In this war, however, publishers are not all sitting idly on the sideline, making legal threats (except in the case of Zite). The Washington Post bought a startup called iCurrent, and used their aggregation know-how to launch Trove, which uses your Facebook data as well as your up/down votes to create channels of content for you. And the New York Times and Betaworks collaborated on a new iPad app called News.me that will provide a way to "look over the shoulders" of influencers to see what they're reading and recommending (largely on Twitter). News.me stands out by actually charging 99 cents a week or $35 a year for the service. "Whoever wins this particular race...the future of media consumption is going to look a lot more like a smorgasbord of sources and content, personalized and recommended by friends and our social graph, and a lot less like that megaphone traditional media outlets used to have and control," wrote GigaOm's Mathew Ingram. "In a sense, Trove and News.me both came from attempts by publishers to try to figure out how to get out in front of that trend, and that’s a good thing."


Pay Wall Roundup: New Yorker 'Like' wall; KQED pledge wall

The New York Times gets all the chatter for its pay wall, but let's not forget about the experimentation around the edges. It's obvious there won't be a one-size-fits-all solution for paid content (never was, never will). Two great examples of thinking outside the wall come from the New Yorker and San Francisco public media station KQED. The New Yorker put a new essay by Jonathan Franzen online, and as usual you could only access it if you were a print subscriber to the magazine. What was unusual was that you could also access it for free -- as long as you "liked" the New Yorker on Facebook. The "like" wall did surprisingly well, giving the New Yorker 17,000 more fans on Facebook and counting. Plus, the move generated buzz in various media outlets and more than 3,300 tweets about it, according to Business Insider's Noah Davis. "David Remnick has to 'like' those figures," Davis wrote. Across the country in San Francisco, KQED announced a new innovation called the "pledge-free stream." If you pay membership dues of $45 or more, you could access a special audio stream online or on your smartphone that would have no pledge drive, no begging. "We had to build a better system for people to donate," KQED's Don Derheim told CNET. "And maybe this is it. We think it's part of the evolution of on-air fundraising." In metered pay wall news, the New York Times announced it had signed up 100,000 people for its metered wall in its first month, already a third of the way to its goal. However, the site has lost 5% to 15% of traffic in that time, and marketing costs for the wall will run about $13 million for the rest of the year, according to NYT Co. honcho Janet Robinson. FT.com, meanwhile saw, digital subscriber growth of 8.1% in the quarter (vs. the start of 2011), hitting 224,000 subs. Last year, FT.com had a whopping 71% growth in digital subscribers.


IAB: Online advertising hits record high

The turn-around continues in online advertising, and it's display and mobile ads leading the way instead of search. The latest report from the IAB and PricewaterhouseCoopers found that online advertising grew 15% in all of 2010 to hit $26 billion, outpacing newspapers, cable TV, broadcast TV and radio for the year. The growth last year was driven by a 24% rise in display ads, including banners and rich media ads, while search only grew 12%. For the first time, the IAB counted mobile ads, which hit $550 million to $650 million for the year. "Online advertising has reached a level of maturity comparable to other mediums that have been deemed as significant ad platforms," said Sherrill Mane, a senior vice president at IAB. "The fact that it's still able to post double-digit growth speaks to the power of the Internet at a time when the economy is still struggling."

Is Bing catching Google in search?

This is the tale of two research firms having two different outcomes when measuring search. On one side is Experian Hitwise, which found that Bing clocked 30% of all searches in the U.S. in March, up from 23.6% just six months ago; while Google search share was 64.4%, down from 72.1% in the same period. Mashable went so far as to project Bing actually *catching* Google and passing it in searches by January 2012. "Of course, this assumes sustained growth and sustained losses on the parts of both search engines. In a volatile market, it is extremely unlikely that we’ll see these exact numbers over the next year," wrote Mashable's Christina Warren. On the other side is comScore, which found that Google's share of "explicit core search" was at 65.7% last month, up 0.3% month-over-month, while Microsoft gained 0.3% and Yahoo declined 0.4%. Explicit core search "excludes contextually driven searches that do not reflect specific user intent to interact with search results." The most likely scenario is that Microsoft and Google will both end up gaining at the expense of smaller players.

Of Note

Magazine Publishers Scramble To Streamline Their App Production (PaidContent)
Despite the hurdles, major publishers are building apps and are scrambling to streamline production and technology to make that process easier and cheaper

In Silicon Valley, Investors Are Jockeying Like It's 1999 (WSJ)
The momentum is driving a wave of deal envy and trash talking -- complete with power plays, personal feuds and turf wars among Wall Street bankers and speculators

Proposed Privacy Law Serves Notice to Online Ad Companies (AdAge)
Sens. John McCain and John Kerry introduced a privacy bill that aims to protect consumers' data online, and will centralize various privacy efforts

Agencies Express Hope And Concern for 'Facebook Studio' (ClickZ)
Agencies are having slightly different reactions to Facebook Studio, the online community for case studies, creative samples, and awards launched by the social media giant

Google: 3 Billion Android Apps Installed; Downloads Up 50 Percent From Last Quarter (TechCrunch)
Downloads of Android apps are up 50 percent from Q4 2010, and 350,000 Android devices are being activated per day


openquoteThere's no shortage of drama at Twitter these days: Besides the CEO shuffles, there are secret board meetings, executive power struggles, a plethora of coaches and consultants, and disgruntled founders.closequote

Jessi Hempel, Fortune senior writer

Trouble @Twitter (Fortune)


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