Start up: Google’s ad stop, hacking phishers, the lost phone mystery, the adblocking browser and more

A game with these will give you an insight into production processes. Photo by judy_and_ed on Flickr.

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A selection of 10 links for you. Use them wisely. I’m charlesarthur on Twitter. Observations and links welcome.

Why is your team falling behind? Ask ‘The Penny Game’ » Atomicobject

Eric Shull:

The book Velocity describes an enlightening simulation, a model of a simple manufacturing line. The game uses pennies and dice to represent pieces of work flowing through stations in a factory. It may be simple, but the penny game can improve our understanding of how software teams work, how the interaction of variable processes affect the system as as whole.

In the penny game, pennies come in at one end of the line, are processed by each station, then exit at the other end. This would be rather mundane but for one complication: each station does not always process the same number of pennies.

In the simulation, rolled dice indicate how many pennies each station is allowed to move.

This is fascinating – and gives you real insight into the problems that have to be overcome in manufacturing to tight deadlines. Imagine now if you were processing millions of “pennies”, except they were phones.
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Google disabled 49% more ads in 2015 » WSJ Digits blog

Alistair Barr:

More than 1,000 of Google’s 60,000 employees monitor and remove ads, an important task because the company gets about 90% of its revenue from advertising. It’s also been hit financially for not adequately monitoring ads. In 2011, the company agreed to pay $500m to settle allegations by the U.S. Department of Justice that ads for Canadian online pharmacies contributed to the illegal importation of prescription drugs. In the settlement, Google acknowledged it acted “improperly.”

Google blocked more than 12.5m ads in 2015 for drugs that were unapproved or that made misleading claims, up from 9.6m a year earlier.

Ads making misleading weight-loss claims were a big source of user complaints last year, prompting Google to suspend more than 30,000 websites from its ad systems. It declined to give a comparable number for 2014.

Rob Leathern has the growth figure for ad disabling: it’s growing by 50% annually, but still a long way short of catching them all.
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How I stumbled upon thousands of Facebook passwords » Medium

“Rukshan”, a Colombo-based medical undergrad and hacker, received a Facebook phishing email and twiddled around with the phishing page:

after modifying the url I checked the folder which contained the php script that handles the post requests and I knew at that moment I hit the jackpot.

There was no index.html file to make sure no one else see the files in that directory or any .htaccess modification, well like I said phishing people are too bored to do all these tech stuff anyway, they’d rather get the passwords and go away.

So I opened the password.html file and I was greeted to the sight of hundreds of Facebook passwords, and by looking at the credentials one there was a pattern:

•Almost all of these accounts belonged to girls who are in their early 20s or teens.
• Almost all of the accounts belonged to females who are from Colombo.

Neat idea; neater still would be to wipe the files. But that would be one sizeable hack further (and probably illegal).
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Why don’t you have an Android version? (Or why we develop for iOS first) » Impossible Ventures

Joel Runyon:

Android users may download more apps, but they spend less money than iTunes users.

But that’s not just fake studies either, in our experience with Paleo (io) – a top 20 app in iTunes and ranked even higher in Google Play – we make about 3x the sales on our iTunes listing as we do on Google Play (even though we have a higher ranking in Google Play than iTunes).

Which brings me to the next point: apps are not free to make.

As an app developer, you have to spend time & money on this concept that you have in your head to bring it to reality. The  MVP on an app can cost anywhere between $2k and $20k to build and launch. It might not seem like much if you spend all your time raising VC money and have a $1M+ in the bank, but it can add up if you’re bootstrapping.

In fact, with every dollar you spend, there’s a very real cost (along with another equally as real, opportunity cost).

Of course the argument is completely different in Asia, where it’s generally Android-first (except in Japan, and who knows in China?).
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Finding the tennis suspects » Medium

Russell Kaplan, Jason Teplitz, and Christina Wadsworth:

The tennis world was sent reeling when BuzzFeed News and the BBC jointly published The Tennis Racket, which revealed “evidence of widespread match-fixing by players at the upper level of world tennis”. But BuzzFeed refused to publish the names of those players.

We dove into the data and found the names ourselves.

Unless you follow tennis really closely you won’t have heard of any of the names but one, and I do wonder if that one is thrown up by some weird quirk of the analysis. Seems robust, though. I think this might dissuade players – and administrators – from trying to hide this in future, knowing that there are people analysing public data for oddities. Will it put off the gamblers, though?
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Why do people keep coming to this couple’s home looking for lost phones? » Fusion

Kashmir Hill:

It started the first month that Christina Lee and Michael Saba started living together. An angry family came knocking at their door demanding the return of a stolen phone. Two months later, a group of friends came with the same request. One month, it happened four times. The visitors, who show up in the morning, afternoon, and in the middle of the night, sometimes accompanied by police officers, always say the same thing: their phone-tracking apps are telling them that their smartphones are in this house in a suburb of Atlanta.

But the phones aren’t there, Lee and Saba always protest, mystified at being fingered by these apps more than a dozen times since February 2015. “I’m sorry you came all this way. This happens a lot,” they’d explain. Most of the people believe them, but about a quarter of them remain suspicious, convinced that the technology is reliable and that Lee and Saba are lying.

“My biggest fear is that someone dangerous or violent is going to visit our house because of this,” said Saba by email. (Like this guy.) “If or when that happens, I doubt our polite explanations are gonna go very far.”

It’s billed as “a tech mystery”, and it really is.
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Brave is the name, ad-blocking the game of new browser » Computerworld

Former Mozilla CEO (for 11 days) Brendan Eich is behind a new browser for desktop and mobile which blocks all ads and tracking by default:

“We are building a new browser and a connected private cloud service with anonymous ads,” Eich said.

In effect, Brave will first scrub websites of most of their ads and all tracking, then replace those ads with its own. But the latter will be aimed not at individuals but at the anonymous aggregate of the browser’s user base. If enough people gravitate to the browser, Brave will share its ad revenue with users and content publishers.

“We will target ads based on browser-side intent signals phrased in a standard vocabulary, and without a persistent user id or highly re-identifiable cookie,” Eich said. “By default Brave will insert ads only in a few standard-sized spaces. We find those spaces via a cloud robot.”

No user data will be recorded or stored by Brave, Eich promised.

Elsewhere, Eich said that 55% of Brave’s revenue would be shared with site publishers, and 15% with users, who could then turn that money over to their favorite sites or keep it.

Al Hilwa, an analyst with research firm IDC, applauded the concept of creating an alternate revenue stream from traditional advertising, but wondered whether the browser could compete, even in the niche that Eich described. “This is a laudable idea, but fighting ‘free’ is always risky,” said Hilwa in an email reply to questions.

Not sure the world has an appetite for a new browser, but one can envisage adblocking becoming built in and then enabled, just as pop-up blocking in browsers went from “pop-up what?” to “optional” to “on by default”.
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Apple pushes to bolster market share in India » WSJ

Newley Purnell:

India’s smartphone market is expanding quickly and by next year it should overtake the U.S. as the world’s second-biggest behind China, according to research firm IDC.

Just 35% of mobile phones sold in India now are smartphones, meaning there is room for growth as people upgrade from basic devices. Indian consumers, however, tend to purchase inexpensive devices: The average smartphone selling price in the country is likely to fall to $102 in 2018 from $135 in 2014, IDC says.

Apple’s problem has been that the sweet spot for smartphone sales in India has been handsets that cost less than $150. In a country where the average person earns about $1,500 a year and even middle-class consumers make less than $8,000 a year, the standard iPhone — which usually costs between $500 and $1,000 without a data plan — was just too expensive for most people to consider.

“Buying an iPhone is so expensive,” said Sakshi Maurya, a 20-year-old university student in New Delhi. She said she doesn’t understand why an iPhone is five times as expensive as some locally available Android phones. “It’s a luxurious thing.”

India poses a particular marketing challenge for Apple: it’s a mixture of very tech-savvy buyers and low-income buyers. Which does it target first, and how?
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iPhone 6S/6S Plus underperform year-ago sales » Consumer Intelligence Research Partners

CIRP finds that the new iPhone 6s and 6s Plus accounted for 67% of total US iPhone sales, with iPhone 6s at 48% and iPhone 6s Plus at 19%. In the December 2014 quarter, iPhone 6 and 6 Plus accounted for 75% of total US iPhone sales with 30% iPhone 6 Plus.

“The iPhone 6s and 6s Plus did quite well,” said Josh Lowitz, CIRP Partner and Co- Founder. “Yet, they did not dominate the same way that iPhone 6 and 6 Plus did a year ago. The total share of the new flagship models fell below the share of the then-new phones in 2014, and the large-format iPhone 6s Plus share of sales dropped compared to the iPhone 6 Plus as well. Customers continue to choose the year-old iPhone 6 and 6 Plus, and even the two-year old iPhone 5S.”

CIRP can’t say whether total sales are higher or lower (it samples 500 buyers of Apple devices in the previous quarter), just the mix. This looks like a subtle price deflation of the iPhone as people opt for 2014’s models over 2015’s – after all, they look the same to other people, even if the newer models has extra features.
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Issue 3434 – android – Add APIs for low-latency audio – Android Open Source Project – Issue Tracker

On Tuesday, Apple released its “Music Memos” app, which is intended to let musicians (of any standard) record little musical thoughts that come to them on the guitar or piano directly to their iPhone or iPad, and add musical accompaniment.

Android doesn’t have that, because as has been noted here before its audio latency is too long – over 10 milliseconds, which is the longest pro musicians can bear. So how long have developers been prodding Google to improve Android’s audio latency?

I am developer of real-time audio signal processing applications. I am interested in creating
applications for sale in the android marketplace, but found that android has no method for real-
time low latency audio.

This is the first entry in a bug/feature request which continues to the present (latest entry is June 2015). The date of the entry? July 31, 2009 – slightly over nine months after the first Android phone. Is six and a half years a long time for a feature request to lie open? (And here’s Google’s official list of device latencies. Look for any at 10ms or below.)

Apple effectively gets 100% of the professional audience through this feature.
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Errata, corrigenda and ai no corrida:

HTC won’t forecast this quarter’s revenues. But don’t worry, we can. (They’re bad.)

Too much of this, not enough selling phones: that’s HTC’s problem. Photo by caribb on Flickr.

HTC, in its Q3 earnings call, declined to give any forecasts for its revenues or profits in the current quarter: “it’s our intention that we will not be providing financial forecast in the coming quarters,” said Chialin Chang, CFO and president, global sales, complaining that the guidance they used to give was far too detailed – gross margin, earnings per share, revenue. But he would offer this: “I will say the following. We are expecting – I’d like to expect Q4 result as compared to Q3 result to see the incremental improvement on revenue and the net income.”

(Actually, I challenge anyone to read that transcript and get any sense out of it. Sure, English isn’t Chang’s first language – it might not be his second language – but he seems competent enough to talk a lot in it. He just doesn’t actually explain anything. And what a sad little call; only two analysts on it, based on the questions.)

Law of averages

Still, even if HTC isn’t going to predict its revenues, we can. That’s because the Taiwan Stock Exchange makes listed companies report monthly revenues. And there’s a pattern to companies’ sales, especially those which are quite seasonal and predictable, like HTC. February is smaller than January; March is bigger than February; April’s about the same; and so on.

Using the monthly data from the past nine years, I’ve generated the “average” forecast for HTC’s revenues by month over the year. And we’ll use this to forecast this quarter’s revenues (and maybe profits).

Here’s how HTC’s year goes, from month to month, on average over the past nine years:

HTC average monthly revenue

Past financial data lets us see how HTC revenues change by month, on average

You’ll notice that the “next January” mark is lower than the previous one – which is just one of those things; on average, the revenue has grown by 3% over the year, then fallen by 17% the next January. Shrinking, in other words, which it has been doing since 2010.

But this is a pretty simple model. How good is it at predicting? How does it fare when we compare it with HTC’s revenue this year?

Here is the comparison, where we only use the data up to 2014 for the forward guidance:

HTC monthly revenues forecast

There’s an error, but it’s not gigantic; around 10%

So the aggregate error in revenue from forecast over the year is 10% – the highest value being around 12%. (I’ve used absolute values for the error, rather than averaging the plus and minus.)

But what if we feed in the results from 2015 too? It improves the graph a little:

HTC monthly data forecast for 2015

If we go up to the September-October data point, the aggregate error reduces further

I’ve changed the colour for the aggregate error: 8.7% for total revenues over the year so far. Not so bad.

Given this, what can we say about HTC’s revenue to the end of this year in two months? We’ve just had the October revenues, so we can look forward to the rest of the year. On the adjusted basis, using the new data, my forecast comes in at NT$26.64bn (about US$830m). That’s down from $47.9bn in the same period a year ago – a forecast decline of 45%.

Bear in mind there’s a likely error either way of 10% – so I’m forecasting NT$29bn-$23.9bn. (The midpoint figure would satisfy Chang’s wish for incremental improvement in revenue.)

And profit? Pretty hard to say, but assuming that things continue as they have at HTC, its gross margin will be 18%, so about NT$4.79bn; that’s NT$1bn more than the previous quarter, so the loss will be about that much less – so probably NT$4bn (around US$125m), which would also satisfy Chang’s vague wishes.

Obviously these are forecasts, based on single chunks of data, though they have been pretty accurate so far this year. If the HTC A9 takes off, or if the Vive VR set is a hit, I’d be completely wrong. I don’t see any obvious signs of that though.

The inventory squeeze

More generally, HTC is a company in crisis, with no obvious reason to exist and little to differentiate it from any other Android OEM. You can see the incredible pressure on it in its inventory/revenue numbers, which measure how much stuff it has sitting in the backroom compared to how much stuff it has sold. This ratio has now hit a historic high of nearly 100%, as of the end of the third quarter:

HTC's inventory ratio is at a historic high

Revenue is low but inventory is high: the signs of a company in stress

High inventory/revenue levels tend to mark out a company in severe stress. It can mean that it has lots of wonderful new finished products in the warehouse just waiting to be sprung on the world, which will fall on it with delight. But usually it doesn’t because you have to distribute those things to wholesalers who will sell them. And historically, HTC hasn’t been a rabbit-from-hat sort of company, as the graph suggests.

Clearly this isn’t a situation that can go on indefinitely. HTC says that it has things coming down the chute – there’s the HTC Vive, its virtual reality offering. Much handwaving from Chang in the earnings call, but nothing concrete. And if HTC really thinks that VR is going to bring its business back into profit in 2016, well, I don’t see it; these are high-priced devices with an uncertain market, regardless of the quality of HTC’s offering.

Of course that could have been said back when HTC was preparing its first Android smartphone. But the difference was that HTC had already been making smartphones (for Windows Mobile) for some years.

Overall, the best summing up of this came from The Verge, where Vlad Savov’s story had the deathless headline: “HTC will no longer give guidance for the future it doesn’t have”. Quietly brilliant, that one.