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Thursday, December 6, 2012

Apple and Samsung Tangle on Damages and Juror

SAN JOSE, Calif. - Samsung and Apple lawyers butted heads over the more than $1 billion in damages that a federal jury awarded Apple in August, but the judge in the case issued no new rulings in the case.

Samsung lawyers spent hours dissecting how the jury arrived at the enormous damages award, one of the biggest ever in a patent case, arguing that figure was excessive. Apple, for its part, asked Judge Lucy Koh for injunctions that would prevent Samsung from selling various products that were found by the jury to have infringed on Apple patents.

The most heated portion of the hearing was over Velvin Hogan, the jury foreman in the trial, whom Samsung has accused of mis conduct for not revealing before the trial that he was involved in a lawsuit against Seagate, a disk drive maker with which Samsung has a partnership.

John Quinn, a lawyer for Samsung, said Mr. Hogan had an agenda coming into the case and was “deliberately dishonest” for not revealing that he was involved in the Seagate lawsuit. Since Mr. Hogan disclosed during jury selection that he was previously employed by Seagate, Judge Koh asked Mr. Quinn why Samsung's legal team didn't ask about his relationship with the company.

“We were under the impression there were no issues between him and Seagate, at least no legal issues,” Mr. Quinn responded.

William Lee, a lawyer for Apple, defended Mr. Hogan. He said Apple believed in the integrity of the jury's verdict and said that Samsung was seeking to tarnish Mr. Hogan's reputation to change the outcome of a case in which it was found guilty. “I think it's outrageous that he's being called a liar,” Mr. Lee said.

Mr. Hogan didn't respond to a call for comment.

After the discussion about Mr. Hogan, Judge Koh then concluded the day's hearing. “I will try to get these orders out as quickly as I can,” she said.

Planning His Legacy, Cisco Chief Maps an Expansion

SAN JOSE, Calif. - John T. Chambers has readied his last great act as the leader of Cisco Systems, fearing major changes in the technology business that could doom his company.

In an interview at Cisco headquarters this week, Mr. Chambers said that a worldwide revolution in mobile devices and sensors, connected to huge Internet computer systems, was roiling technology giants like Microsoft, I.B.M., Hewlett-Packard, SAP, Oracle and Cisco.

“Two or three of those will not be in that list five years from now,” said Mr. Chambers, who at 63 plans to retire in the next two to four years. “Transitions are happening at a faster pace than ever before.†

On Friday, Mr. Chambers will announce plans to take Cisco from simply making the boxes through which most of the Internet's traffic zips, to being a company that designs and sells software and services for a world of pervasive information technology.

Cisco, the chairman and chief executive says, will shift toward customers in government and large businesses, handling projects like designing and managing systems for efficient traffic and clean water across entire cities. Cisco's plan is to create networks of sensors and data analysis systems, working closely with government officials and civil engineering companies. And it will work with companies to set up efficient mining, manufacturing and distribution systems.

“It's a $4 trillion market,” he said. “The days of boxes are over.”

For many years Cisco was one of the fastest-growing technology companies, and it is still the largest player in the networking business. But its growth has shrunk b ecause of the global economic slowdown and new types of competition.

Mr. Chambers, who says his latest strategy will be a legacy for the next generation of Cisco leadership, has tried to fix this in part by acquiring companies that rely on high-profit-margin software and moving into growth areas like video.

Mr. Chambers has been reorganizing Cisco, consolidating a number of divisions and buying companies to prepare for his new strategy. Parts of the plan, however, seem to have large gaps, in particular how Cisco will move from a focus on technical engineering to producing social and economic results. “We've got some of the horses,” he said. “We need a lot more.”

The new focus, which will be echoed in a marketing campaign that starts Monday called “Tomorrow starts here,” was introduced at a meeting of Cisco's top 200 salesmen last weekend in Hawaii. Mr. Chambers and his top lieutenants worked on some of the organizational rules on his plane home, and broke the news to Cisco employees on Tuesday.

The underlying pressures behind the change, however, have been building for years. The boom in smartphones and tablets has increased the range of devices that a computer network has to manage, along with the amount and diversity of data, from two-way video to sensor data and social network updates. These devices are connected to supercomputing clouds, which collect and process enormous amounts of information at low cost.

The trend threatens large incumbent tech companies that grew up in a more predictable world. Oracle, once mainly a purveyor of databases, has moved into computer servers in response. Microsoft has invested heavily in building out its own cloud. Hewlett-Packard's ill-starred purchase of Autonomy for $11 billion in 2010, which resulted in a $8.8 billion write-down, was an effort to become a big player in data analysis.

I.B.M., which emerged from an earlier near-death experience with the help of a services strategy similar to that of Mr. Chambers, has spent $16 billion on analytics companies in the last five years.

For Cisco, which by some measures is in 80 percent of Internet systems, the threat is from start-ups using a technology called software-defined networking, or S.D.N. This makes it possible to instantly reconfigure millions of computer servers and data storage systems to handle different types of applications, so that a fast currency trading system can instantaneously be turned into a machine that serves thousands of videos.

A move into services could ease some of that pressure, because the start-ups do not have Cisco's corporate connections nor its deep range of products. What the firms do have, in abundance, is former Cisco talent.

Some of the biggest names backing and creating S.D.N. companies like Arista Networks, Big Switch Networks and Nicira are former senior executives at Cisco. In July, Nicira, which had almost no revenue, was acquired for $1.26 billion by VMware, a cloud computing giant that was a close collaborator of Cisco.

Mr. Chambers was dismissive of the shifting alliances. “We don't go into a market without a chance of a 40 percent share, and sustainable differentiation,” he said. “We wouldn't get into wiring oil rigs if we didn't believe we could get 40 percent.”

Mr. Chambers also said that Cisco's newest Internet switches were much faster than Arista's products, and that an internally financed S.D.N. project would beat back the competition.

Not surprisingly, the competition does not agree. “He's picking a point in time to say he's faster,” said Jayshree Ullal, the chief executive of Arista. “We've diversified to be about programmable networks, and he's still thinking about basic speeds.”

Mr. Chambers has in the past studied the personal biographies and decision-making habits of his competitors. Without prompting, he provided personal details about the life and choices of Ren Zhengfei, the founder and chief executive of Huawei, another Cisco competitor, and said he could do the same for many other competitors. “I've worked with Jayshree for years,” he said, “I can tell you what her next two moves will be.”

F.C.C. Calls on F.A.A. to Allow Electronics on Planes

Now the United States government is telling the United States government to allow devices on airplanes during takeoff and landing.

Julius Genachowski, chairman of the Federal Communications Commission, sent a letter to the Federal Aviation Administration Thursday, urging the agency to allow more electronics on airplanes.

According to The Hill, which obtained the letter, Mr. Genachowski said the F.A.A. should “enable greater use of tablets, e-readers, and other portable devices” during flights.

The letter, which was addressed to Michael Huerta, the acting administrator of the F.A.A., went on to promote the importance of allowing people to use these devices on planes as more Americans become increasingly reliant on devices for work and pleasure.

“They empower people to stay informed and connected wi th friends and family, and they enable both large and small businesses to be more productive and efficient, helping drive economic growth and boost U.S. competitiveness,” Mr. Genachowski wrote.

The F.A.A. did not respond to a request for comment.

Although there is no proof that devices like Amazon Kindles and Apple iPads interfere with an airplanes avionics, the F.A.A. has maintained strict rules about passengers turning off their devices during takeoff.

After repeated pressure from the public and media outlets, the F.A.A. has since relented. The agency said it would initiate a review of its policies about electronic devices in all phases of flight, including takeoff and landing. But this review process has been slow.

“This review comes at a time of tremendous innovation, as mobile devices are increasingly interwoven in our daily lives,” Mr. Genachowski said in the letter.

The last time any testing was done to review gadgets on planes was in 2006, long before iPads and most smartphones and e-readers existed. During the study, the F.A.A. found that “there was no evidence saying these devices can't interfere with a plane, and there was no evidence saying that they can.” Still, they chose to enforce strict rules about gadgets on planes during takeoffs and landings.

But not everyone has been forced to put their gadgets away. Earlier this year the F.A.A. approved iPads instead of paper flight manuals in the cockpit for pilots, but the agency still refuses to allow passengers to read Kindles and iPads during takeoff and landing.

YouTube Tries to Become More Like TV

At the end of the day, many of us flop on the couch and turn on the TV to channel surf. But if YouTube has its way, more of us will be channel surfing the online video service instead.

A majority of YouTube visits happen because someone clicks on a link from a friend or searches for a certain video. YouTube is trying to encourage casual users to use it more like diehards, who return every day or when they have a few minutes, to check in on their favorite channels. (Channels on YouTube are series of videos by the same creator, whether your sister posting baby videos, a YouTube celebrity or a professional producer like ESPN or PBS.)

YouTube's effort to get casual users to become more dedicated is critical as people increasingly use YouTube on mobile phones or televisions; it is more difficult to browse YouTube for interesting videos on those devices.

On Thursday, YouTube began rolling out a redesigned Web site that it hopes will nudge people to subscribe to channels and return daily. With the redesign, every time you visit YouTube on any device, you will see the latest videos from the channels to which you subscribe.

“Part of the goal is to start using YouTube just when you have 10 minutes to kill and you're bored, rather than waiting for someone to send you a link to a video or when you have a search in mind,” said Noam Lovinsky, director of product management at YouTube, which is owned by Google.

YouTube's site metrics show that people who subscribe return to the site more often and spend more time there, according to the company. But many people still do not understand what it means to subscribe to a channel, even though it has been an option since 2005.

“This pattern of behavior - the ability to program YouTube and then develop this habit to know, ‘Hey, even if I'm not sure what I want to watch, I've told YouTube what I like' and come back - increases watch time dramatically,” Mr. Lovinsky said. “It's our big bet for how to get to audacious TV-type watch time.”

On the redesigned YouTube, when a viewer clicks to subscribe, a box will pop up explaining what that means. The channel will appear in a list on the left side of every YouTube page you visit, so you can easily click on it anytime you use the site. Previously, it had appeared only on the homepage.

Once YouTube users spend some time selecting and subscribing to a group of channels, they will see them everywhere they use YouTube, whether on computers, tablets, smartphones, game consoles or TVs.

YouTube will also remind people about their subscriptions, alert them about new videos and show different versions of the site and different types of notifications based on the visitor's behavior. Power users, for example, could get alerts sent to their cellphones when one of their channels posts new videos, while casual users could see a new video pop up when they visit YouTube or receive e-mail no tices.

The new site also has a slightly different look, in keeping with the mandate of Larry Page, Google's chief executive, to make Google products simpler and more attractive. For instance, YouTube has muted elements other than the video player, so the video pops and other elements fade away until a user hovers over them, Mr. Lovinsky said.

The redesign, which is part of YouTube's continuing effort get people to spend as much time on YouTube as they do on TV, also reveals YouTube's missteps. Last year, in what YouTube called the biggest redesign in its history, it changed the background screen from white to light grey. Now, it is back to white. It also said that last year's redesign would make subscriptions more meani ngful, but has since found out that average users still don't know what subscribing actually does.

T-Mobile Will Sell Apple Devices in 2013

T-Mobile USA, the last major American carrier without an Apple product available for its customers, announced on Thursday that it had entered a partnership with Apple to begin selling Apple products to its customers next year.

Deutsche Telekom, the parent company of T-Mobile USA, announced the agreement in a press release, saying it would be making significant investments in its broadband infrastructure in the United States to support fourth-generation wireless speeds, also known as LTE. The latest iPhone works over such networks.

The company, however, did not give specifics about which devices would be sold or when customers could expect to see them on store shelves - perhaps because they are future models of Apple products that the company has not yet announced, or because T-Mobile USA is not sure when its network upgrades will be completed.

David Henderso n, a spokesman for T-Mobile USA, said that additional details “would be made available at a later date.”

Gene Munster, an analyst with Piper Jaffray, said that bringing the iPhone to its network is crucial for T-Mobile to stay competitive with rival carriers in the United States. He said that its prolonged delay was likely because of the network's relative immaturity compared to its peers. But he did not expect that adding bandwidth-intensive devices to T-Mobile would cause it to have the same reliability and connectivity issues that AT&T did when it first introduced the iPhone. He expected T-Mobile to sell Apple devices at roughly the same pace as Sprint, which sells between a million and two million Apple devices each quarter, or roughly six million by the end of 2012. By comparison, AT&T is expected to sell around 20 million Apple devices by the end of the year.

He also said it was “highly unlikely” that Apple would debut a device specific to T-Mobile. The deal is really about Apple “checking off carriers it needs to add to its list,” he said. “But the real holy grail for Apple is China Mobile.”

Does Apple\'s Tim Cook Want an Apple Television?

Apple customers have been yearning for it for years. And now, it seems, the chief executive of Apple, Timothy D. Cook, wants one too: an Apple-made television.

In an interview to be broadcast Thursday on “Rock Center With Brian Williams” on NBC, Mr. Cook slid a tiny hint across the table that such a product could exist someday.

“When I go into my living room and turn on the TV, I feel like I have gone backwards in time by 20 to 30 years,” Mr. Cook told Mr. Williams. “It's an area of intense interest. I can't say more than that.”

Apple has been trying to make its way into the living room since 2006, when the company announced the Apple TV, a small box that that can stream iTunes content to a television set. At first, when Steven P. Jobs, Apple's chief execut ive, announced the new product, he had high hopes for it as a part of Apple's core business.

Describing the products Apple sold at the time as legs on a chair, Mr. Jobs said,”We hope the iPhone is the third leg on our chair, and maybe one day Apple TV will be the fourth leg.” In early 2007, Mr. Jobs reiterated these comments in an interview with USA Today.

But it wasn't long before Apple downgraded its hopes and started referring to Apple TV as a “hobby.”

In an interview last year, Walter Isaacson, Mr. Jobs's biographer, said the former chief executive had discussed his goals to reinvent television. “He did talk about the te levision. He told me he'd ‘licked it' and once said, ‘There's no reason you should have all these complicated remote controls,'” Mr. Isaacson said. “He had three things that he wanted to reinvent: the television, textbooks and photography.”

As I noted last year, Siri, Apple's voice service, could play an important role in a television. Rather than fumble with peculiar remotes, you could simply talk to your television. Saying “Put on the latest episode of ‘Gossip Girl'” will leave the rest up to Siri.

The brief comment by Mr. Cook could be perceived by close Apple-watchers as a Steve Jobs Jedi mind trick. Mr. Jobs would often make small, innocuous statements about an unannounced product that would leave the Apple faithful arguing for weeks about what he meant.

Now, it seems, the specula tion around “if” Apple will release a more elaborate video-focused product will now move to “when” the company will announce one.

For PC Virus Victims, Pay or Else

For PC Virus Victims, Pay or Else

CULVER CITY, Calif. - Kidnappers used to make ransom notes with letters cut out of magazines. Now, notes simply pop up on your computer screen, except the hostage is your PC.

Security researchers Eric Chien, left, and Vikram Thakur at Symantec, where Mr. Chien has been tracking ransomware schemes.

Sometimes victims get a message, ostensibly from the F.B.I., accusing them of breaking the law and demanding a fine.

In the past year, hundreds of thousands of people across the world have switched on their computers to find distressing messages alerting them that they no longer have access to their PCs or any of the files on them.

The messages claim to be from the Federal Bureau of Investigation, some 20 other law enforcement agencies across the globe or, most recently, Anonymous, a shadowy group of hackers. The computer users are told that the only way to get their machines back is to pay a steep fine.

And, curiously, it's working. The scheme is making more than $5 million a year, according to computer security experts who are tracking them.

The scourge dates to 2009 in Eastern Europe. Three years later, with business booming, the perpetrators have moved west. Security experts say that there are now more than 16 gangs of sophisticated criminals extorting millions from victims across Europe.

The threat, known as ransomware, recently hit the United States. Some gangs have abandoned previously lucrative schemes, like fake antivirus scams and banking trojans, to focus on ransomware full time.

Essentially online extortion, ransomware involves infecting a user's computer with a virus that locks it. The attackers demand money before the computer will be unlocked, but once the money is paid, they rarely unlock it.

In the vast majority of cases, victims do not regain access to their computer unless they hire a computer technician to remove the virus manually. And even then, they risk losing all files and data because the best way to remove the virus is to wipe the computer clean.

It may be hard to fathom why anyone would agree to fork over hundreds of dollars to a demanding stranger, but security researchers estimate that 2.9 percent of compromised computer owners take the bait and pay. That, they say, is an extremely conservative estimate. In some countries, the payout rate has been as high as 15 percent.

That people do fall for it is a testament to criminals' increasingly targeted and inventive methods. Early variations of ransomware locked computers, displayed images of pornography and, in Russian, demanded a fee - often more than $400 - to have it removed. Current variants are more targeted and toy with victims' consciences.

Researchers say criminals now use victims' Internet addresses to customize ransom notes in their native tongue. Instead of pornographic images, criminals flash messages from local law enforcement agencies accusing them of visiting illegal pornography, gambling or piracy sites and demand they pay a fine to unlock their computer.

Victims in the United States see messages in English purporting to be from the F.B.I. or Justice Department. In the Netherlands, people get a similar message, in Dutch, from the local police. (Some Irish variations even demand money in Gaelic.) The latest variants speak to victims through recorded audio messages that tell users that if they do not pay within 48 hours, they will face criminal charges. Some even show footage from a computer's webcam to give the illusion that law enforcement is watching.

The messages often demand that victims buy a preloaded debit card that can be purchased at a local drugstore - and enter the PIN. That way it's impossible for victims to cancel the transaction once it becomes clear that criminals have no intention of unlocking their PC.

The hunt is on to find these gangs. Researchers at Symantec said they had identified 16 ransomware gangs. They tracked one gang that tried to infect more than 500,000 PCs over an 18-day period. But even if researchers can track their Internet addresses, catching and convicting those responsible can be difficult. It requires cooperation among global law enforcement, and such criminals are skilled at destroying evidence.

Charlie Hurel, an independent security researcher based in France, was able to hack into one group's computers to discover just how gullible their victims could be. On one day last month, the criminals' accounting showed that they were able to infect 18,941 computers, 93 percent of all attempts. Of those who received a ransom message that day, 15 percent paid. In most cases, Mr. Hurel said, hackers demanded 100 euros, making their haul for one day's work more than $400,000.

A version of this article appeared in print on December 6, 2012, on page B1 of the New York edition with the headline: For PC Virus Victims, Pay or Else.

John McAfee, Software Pioneer, Is Arrested in Guatemala

Mr. McAfee slipped over the border from his home in Belize, where police want to question him in a neighbor's death.