Start Up: Vertu dies (but will live?), Android misconceptions, the lawbot cometh, Razer’s optimism, and more

Guess whose hotels have had their booking and payment systems hacked three times since 2014? Photo by sandy kemsley on Flickr.

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A selection of 11 links for you. Use them wisely. I’m @charlesarthur on Twitter. Observations and links welcome.

British luxury phonemaker Vertu wound up with loss of 200 jobs • FT

Nic Fildes:


The liquidation of a company that made the world’s most expensive handsets comes months after a last-ditch attempt to revive the business by reducing the cost of its non-customised handsets from £10,000 and above to between £4,000 and £7,000.

The collapse of the business follows its sale in March to Murat Hakan Uzan, a Turkish exile based in Paris. The company was previously owned by an obscure Chinese company called Godin Holdings, and was rumoured to be on the brink of administration last year. The company failed to file its 2015 accounts, which raised alarm bells before the sale to Mr Uzan.

Mr Uzan inherited a business which he later discovered had an accounting deficit of £128m, according to a Daily Telegraph report. The manufacturing arm was placed into administration, before he tried to buy back the business for £1.9m — a plan that failed this week.

Mr Uzan will, however, keep the Vertu brand, technology and design licences. He plans to rebuild the luxury phonemaker, according to a person familiar with the situation.


Not sure that Vertu is worth rebuilding, to be honest.
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Misconceptions about Android — Tech Specs

Daniel Matte has a few points to make, of which this is probably the key one:


Malware on Android is often portrayed as an ever-growing, constant crisis. While Android does have tons of major security concerns, the overall issue is still hugely overstated.

Firstly, the term malware can mean absolutely anything. The vast majority of stories about mobile security spread FUD and sensationalism, to the detriment of readers. I won’t pretend to be a security expert, but even imperfect sandboxing probably goes a long way compared to the completely unsandboxed traditional PC application environments. It doesn’t seem clear to me whether Android or macOS is more secure overall, for example. As with many things, it probably depends.

There is however an extreme case: the Chinese market. Because Android is out of Google’s control in China, the OS genuinely is a security nightmare in the country. I remember waiting for a flight at the airport in Beijing and watching with amusement as some seemingly low-threat app started downloading itself onto my phone over the air. All I did was merely have Wi-Fi on; I hadn’t attempted to connect to any access points.


You should also note his points about force-quitting Android apps, touch latency, and why people perceive its scrolling and similar as “janky”.
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Hackers have been stealing credit card numbers from Trump’s hotels for months • The Washington Post

Abha Bhattarai:


Guests at 14 Trump properties, including hotels in Washington, New York and Vancouver, have had their credit card information exposed, marking the third time in as many years that a months-long security breach has affected customers of the chain of luxury hotels.

The latest instance occurred between August 2016 and March 2017, according to a notice on the company’s website, and included guest names, addresses and phone numbers, as well as credit card numbers and expiration dates. The breach took place on the systems of Sabre Hospitality Solutions, a reservation booking service used by Trump Hotels, but did not compromise the Trump Hotels’ systems.

“The privacy and protection of our guests’ information is a matter we take very seriously,” the notice said, adding that Trump Hotels was notified of the breach on June 5. Trump Hotels declined to comment beyond what was posted in the notice.


First infiltrated in May 2014; malware installed on networks. Informed of the breach in June 2015; posted a notice on website four months later (August 2015). Hacked again in November 2015. And in March 2016.

Sure the details about who has been going to these hotels will all get posted on Wikileaks soon, right?
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Joshua Browder’s parking ticket bot is expanding to 1000 areas of law • Business Insider

Shona Ghosh:


Lawyers can be really expensive, and for small disputes like fighting your landlord, claiming lost luggage for an airline, or a parking ticket, it can feel like a fight isn’t worth it.

Enter DoNotPay, the world’s first robot lawyer, built by young British entrepreneur Joshua Browder. DoNotPay hit headlines in early 2016 after then successfully appealing £2 million in parking tickets. The bot then expanded to help refugees, and now it’s expanding into 1,000 different areas of law in all 50 US states and across the UK.

According to MarketLine research, the US legal market alone is worth $292 billion (£227 billion).

Now Browder’s bot can help you ask for more parental leave, dispute nuisance calls, fight a fraudulent purchase on your credit card, and a host of other issues.

“I originally started DoNotPay two years ago to fight my own parking tickets and became an accidental witness to how lawyers are exploiting human misery,” said Browder. “From discrimination in Silicon Valley to the tragedy in London with an apartment building setting on fire, it seems the only people benefitting from injustice are a handful of lawyers.

“I hope that DoNotPay, by helping with these issues and many more, will ultimately give everyone the same legal power as the richest in society.”


Browder thinks it could be helpful to get landlords and developers to follow “basic safety regulations” too. It’s positive thinking, though landlords are pretty good at ignoring letters of all sorts.
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Microsoft to close Surface Hub manufacturing plant in Oregon • Petri

Brad Sams:


Microsoft has informed the state of Oregon that it intends to close location where it has built the Surface Hub. The plant was located in Wilsonville and will impact 124 jobs in that region.

In a letter to the state, as noted by OregonLive, Microsoft will close the plant with 61 job cuts coming on September 8 with 63 jobs being cut the following months. The reason Microsoft had a facility in the state is that it was part of Perceptive Pixel that the company acquired in July of 2012 and likely used that team to help build the Surface Hub.

As for the future of the Surface Hub, I don’t think this has much to do with the long-term outlook for that product. Early indications about the sales pipeline was that Microsoft could not make enough of them and feedback from users has been positive.

Further, references to Surface Hub 2 have shown up in some internal documentation from Microsoft which makes it appear that another device is on the horizon. As such, I do not think this is the end of the line for the Surface Hub.

When the company announced where they were going to build the Surface Hub, it was a point of pride for the company as they were making the device in the United States; an unusual move by modern standards. But, here we are, with the company closing down the facility as they likely found that they can produce the device elsewhere at a lower price point.


Going to guess that “elsewhere” is outside the US. Shh!
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Facebook’s Messenger ads are bad and must be destroyed • TechCrunch

Devin Coldewey:


Why so big? Did the ad department say they couldn’t sell anything that didn’t completely take over the app? Did they not want to ask for smaller assets after asking for ones at this size to begin with? Do they think people like ads as much as ad people do?

At least now there’s only one ad instead of a series you’re invited to explore. I’m guessing engagement with the carousel was abysmal — who would think, hmm, not enough ads in my chat feed?

To be fair, even good ads interrupt the user’s experience a little. But this is just way too much. As soon as you open the app, smack dab in the middle of the most-used main interface: an ad that takes up more of the screen than the content you opened the app to access. That’s intolerable.

I asked Facebook what its test users had said about the ads. A representative told me that “We monitored people’s engagement closely throughout the initial test and the results were promising…” and that “since we began testing in Australia and Thailand we have put people’s experience first, and we will continue to prioritize this as we roll out the Messenger ads test further.”

The idea that these ads resulted from putting people’s experience first is, of course, ridiculous. If Facebook were doing that, it would never have snipped Messenger off from the main app in the first place, much less burdened it with huge ads.

When I asked again what the users’ feedback had actually been, I received no response. I also asked if users could expect to see ads just one time, or every few threads, or what — but no info on that either. We’ll find out soon, but I’m guessing they’re keeping their options open on that one.

Is it possible to make ads that fit on a mobile screen alongside your messaging content? Sure! In fact, I would bet that Facebook looked at several designs that did just that and rejected them.


Gotta love the optimism of the marketing people who told the engineer designing that popup to include one saying “This ad is useful”. This probably happens as often as people winning the lottery twice in a row.
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American tech companies are so afraid of offending Indians that they’re censoring all their products • Buzzfeed

Pranav Dixit:


“Western companies trying to expand in India are being overcautious because of the huge investments they are making in the country,” Prithwiraj Mukherjee, professor of marketing at the Indian Institute of Management, Bangalore, told BuzzFeed News. “They don’t want to risk offending anyone’s sentiments in a diverse country like India.”

The country is a crucial market for Silicon Valley: There are now more internet users in India than there are people in the United States — and millions more will come online in the next few years. But as American tech companies pour billions into the country, they’re fumbling as they attempt to appeal to India’s already-online, Snapchat-savvy, English-speaking, Beyoncé-listening, urban millennials, while also trying to win over the country’s comparatively conservative millions.

Amazon Prime Video launched in India in December 2016, and was immediately blasted by angry Indian customers on Twitter for proactively censoring many TV shows and movies, including its own productions like Transparent. Worse, the censorship was arbitrary. Some nudity, like a sex scene a couple of minutes into the pilot of Transparent, was blurred out. In another instance, Amazon chopped one episode of its car show, The Grand Tour, in half to remove a plotline involving a car made of animal carcasses with a windshield of cow innards, presumably to avoid offending religious Hindus, who consider cows sacred. But most of Californication, a series well-known for its gratuitous nudity, survived Amazon’s airbrushing.


One has to feel this makes a change from just assuming that whatever’s right in the US is right in another country, though? India is a gigantic market, and reactions can be intense.
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Razer made PC hardware cool again. Just not profitable • Bloomberg

Tim Culpan on the Hong Kong-based PC company whose early investors include Intel and Foxconn:


In the past two years, Razer’s revenue growth averaged a mere 11.5%. That’s nice if you want to compare it with Acer and Asustek, which both posted declines, but isn’t the kind of top-line growth investors look for in a pre-IPO tech company.

And at least those two posted operating profits last year. The same cannot be said for Razer, whose profitability is going backwards.

Massive increases in marketing – more than double in two years – as well as continued funding of R&D pushed Razer into the red in 2015, with that loss surging last year.

In reality, the buzz that its marketing team has managed to create is providing diminishing returns. A closer look at the income statement shows that Razer’s gross margin is shrinking. One way to assess how much a brand name is really worth is by looking at how much markup a hardware company can extract above the cost of making the goods it sells. By this measure, Razer’s value is falling.

And while its Razer Blade laptops get top billing on the company’s product website, 76.2% of sales comes from peripherals such as keyboards, mice and audio devices. That makes Logitech International SA a better point of comparison.


As Culpan shows, Razer’s operating income has gone from positive in 2014 to negative in 2015 and 2016, principally due to huge marketing costs.
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Responding to the “Campaign for Accountability” report on academic research • Google blog

Leslie Miller, director of public policy:


we’re proud to maintain strong relations with academics, universities and research institutes, in our own name, so we wanted to take a few moments to respond to the report.

We run many research programs that provide funding and resources to the external research community. This helps public and private institutions pursue research on important topics in computer science, technology, and a wide range of public policy and legal issues. Our support for the principles underlying an open internet is shared by many academics and institutions who have a long history of undertaking research on these topics—across important areas like copyright, patents, and free expression. We provide support to help them undertake further research, and to raise awareness of their ideas.

These programs (and those run by other companies) augment the government and university-funded research that is the backbone of academic discourse in the United States.

We also run policy fellowship programs. Most other companies do this too; the difference with Google is that we list ours publicly on our policy website.


Miller notes that the Campaign for Accountability, which pointed to all this funding, doesn’t disclose its funding sources itself. However, the CfA isn’t trying to influence governments or persuade academics to write papers which broadly back its work.
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Profits are for suckers • DIGITS to DOLLARS

Jay Greenberg:


Scan the list of the latest IPOs, and the trend is clear. Of the last 20 technology IPOs only 3 companies were profitable in the year before going public, and many were not even close.

Call us old-fashioned, but we like profits. One of the first posts on this site covered the importance of profits. Companies that have profits control their destinies. Without profit, they operate at the mercy of people providing capital.

But clearly something has changed – the cost of capital has fallen off a cliff. Calculating a company’s cost of capital is complicated. The topic is an entire course at Business School. People get their PhDs looking at the subject, but a very rough way to calculate the cost of equity finance is to invert a company’s P/E multiple. So a company trading at a P/E of 10x has a 10% cost of equity, at 20x that cost is 5%. For a company trading at 200x, the cost of equity is basically 50bps. To put that in perspective, inflation is around 2% in the US, while the average multiple for an S&P 500 stock is 26.5X, or a 3.7% cost of capital. For the many companies going public on little or no profits, public market investors are paying companies for the privilege of investing in them.

In this kind of environment it makes all kinds of sense for companies to raise as much as possible. They are being paid to do so. There are many companies that probably ‘make’ more money from this equity float than they are making from the product or service they are selling.


Snap being an obvious example.
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Investigators look for links between Trump, Russia cyber operations • McClatchy Washington Bureau

Peter Stone and Greg Gordon:


Investigators at the House and Senate Intelligence committees and the Justice Department are examining whether the Trump campaign’s digital operation – overseen by Jared Kushner – helped guide Russia’s sophisticated voter targeting and fake news attacks on Hillary Clinton in 2016.

Congressional and Justice Department investigators are focusing on whether Trump’s campaign pointed Russian cyber operatives to certain voting jurisdictions in key states – areas where Trump’s digital team and Republican operatives were spotting unexpected weakness in voter support for Hillary Clinton, according to several people familiar with the parallel inquiries.

Also under scrutiny is the question of whether Trump associates or campaign aides had any role in assisting the Russians in publicly releasing thousands of emails, hacked from the accounts of top Democrats, at turning points in the presidential race, mainly through the London-based transparency web site WikiLeaks, .

Rep. Adam Schiff of California, ranking Democrat on the House Intelligence Committee, told McClatchy he wants to know whether Russia’s “fake or damaging news stories” were “coordinated in any way in terms of targeting or in terms of timing or in terms of any other measure … with the (Trump) campaign.”

By Election Day, an automated Kremlin cyberattack of unprecedented scale and sophistication had delivered critical and phony news about the Democratic presidential nominee to the Twitter and Facebook accounts of millions of voters, many in swing states, even in key precincts.


Given what we now know about the Trump campaign meeting Russia-linked folk, this becomes a more important question.
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Errata, corrigenda and ai no corrida: yesterday’s post about Fitbit buying a smartwatch maker dated from January. Since then, there hasn’t been any good news for Fitbit.

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