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Two months ago we reported that the U.S. Department of Defense had ordered as many as 650,000 iPads, iPhones, and iPod Touches from Apple.

Now, after passing Pentagon tests, the devices are actually approved for use.

Before authorizing any devices for use in security-conscious military environments, the military requires a very specific and detailed implementation and deployment plan. A large part of that is the creation of policy for approved use as per DoD Directive 8100.02, which says that cellular devices are not allowed into areas where classified information is discussed, stored, or processed without written approval.

And until that happened for the Apple devices, the hundreds of thousands of phones and tablets were in administrative limbo.

“Most of them have not been deployed and are still sitting in a warehouse,” a source I talked to a month ago said. “They haven’t yet been able to build an implementation guide on how to use them.”

Today’s decision, however, paves the way for the U.S. military to actually use the devices in secure areas, and potentially expand their purchase order. It marks a turning point away from BlackBerry devices, which have been considered more secure, and which to date have formed the vast majority of government-issued mobile phones.

The problem with clearing smartphones for use in top secret environments is that they are, essentially, full of radios: Bluetooth, WiFi, cellular.

“With standard consumer devices, there’s no way to prove that the Wi-Fi is turned off,” my source told me.

One solution the DoD had previously implemented for iPads was to hand them off to a second party after delivery from Apple to crack open the cases and “snip the Wi-Fi radio” to disable it, and then close them up again. Apparently, the DoD reached a special agreement with Apple to maintain warranty eligibility, which would normally be voided after opening the case.

Today’s approval, however, is for a version of iOS 6 that has likely been customized by Apple and certified by military technologists to ensure security compliance without actually having to snip wires.

Interestingly, according to Bloomberg, the military plans to create its own app store for military applications, which would allow DOD personnel to use commercial hardware but employ tested and approved applications.

photo credits: The U.S. Army via photopin cc, Devindra Hardawar/VentureBeat

Filed under: Business, Gadgets, Mobile, Security

Sometimes there is method to the Cupertino madness.

While analysts, Wall Street, former Apple employees, and yes — journalists — have been raking Apple over the coals for its agonizingly slow product release cycle and lack of response to the growing market for larger screens, Tim no-new-products-until-this-fall Cook has held his fire.

That’s probably at least partly due to the fact that that “growing” market might indeed be growing, but not all that quickly. In fact, according to mobile advertising company Tapjoy, fablets only make up a tiny four percent of the market.

“Fablets don’t fill a market need that is most valuable to end users,” Brian Sapp, a director at Tapjoy, told me yesterday. “They fall in a grey area … the device manufacturers want to make larger screens, but most users just don’t care.”

Source: Swipe Telecom

Swipe Telecom’s 5-inch F3 fablet

Tapjoy is a pretty credibly source of mobile market data — the company’s monetization solutions live in tens of thousands of apps, and thereby on over a billion devices globally, the company told me. That’s a big sample size from which to draw conclusions.

“Users,” Sapp concludes, “want a phone that fits in their pocket.”

There is very likely some regional lumpiness to that data, with fablets being more popular in some areas (I suspect Asia, for one). But four percent is not a big number, and it’s not the kind of massive market that Apple typically looks for.

In addition, Apple is much more concerned with making great products than flip-flopping in the wind of what’s popular du jour, and usability experts point out that already on iPhone-sized screens, some areas are hard to manage one-handed, and to both access virtual controls and initiate standard on-screen gesture motions.

Which, of course, makes fablets two-handed beasts.

One caveat, however.

While fablets may be a small slice of the market, phones that are bigger than iPhone are not. The super-successful Galaxy S III and Galaxy S4 are both bigger than iPhone 5. And Samsung, which shipped 400 million phones in 2012 and 82.2 million smartphones, tablets, and notebooks in the first quarter of 2013, knows something about what customers want too.

“Market share is important and unit share is important,” Cook said on the company’s last earnings call. “But we’re all about customer experience and enriching lives.”

Which means it is very likely that a larger iPhone will be coming at some point in 2013, closer to fall. Just not as big as some pundits might like.

And … it probably will still fit in your pocket.

Filed under: Business, Gadgets, Mobile

Editor’s note: Derek Andersen is the founder of Startup Grind, a 40-city community bringing the global startup world together while educating, inspiring, and connecting entrepreneurs.

I remember when the press first hit about Nest Labs, the guys behind the iPod/iPhone were taking on thermostats everywhere! A collective “huh?” went through the tech industry. It felt like the tech version of the Avengers got together to build an office park, not save the world. After sitting down with Nest co-founder Matt Rogers at Google For Entrepreneurs‘ office a few weeks ago, I learned the backstory and vision of a company on a mission to build one of the world’s only great hardware/software companies in the world.

There are hard workers, there are really hard workers, and then there are the Matt Rogers of the world. If you think you work hard, please read/watch our entire interview then reevaluate. He had a quick start with his first Mac product interactions being at age three. As a child growing up in Gainesville Florida, when asked what he wanted to be someday, Matt would respond “I want to work at Apple.” At 16 he was building robots and entering them into competitions with his classmates. As a sophomore at Carnegie Mellon, he agreed to basically do anything (anything being to help draw bones in CAD for a robotics hand project) to get a chance to work with with the robotics lab. His Junior year he applied via Monster.com, and pestered employees until he got accepted for an internship at Apple. That summer he took on the worst grunt work project imaginable (he rewrote all the software for manufacturing for iPod), and had three months for what he described as a “one year project” — seven days a week, 20-hour days, and “basically not sleeping.” How did it pay off? Apple awarded him a cash bonus as an intern, what VP of iPod at the time and eventual Nest co-founder Tony Fadell said was something, “He had never done before.”

Apple

After school he returned to Apple and spent the next few years working on the firmware for iPod nano and iPod classic. After his first weekend back at Apple, and spending Saturday and Sunday getting moved in and buying furniture, his manager approached him saying, “Where have you been?” Matt responded, “I went to buy furniture.” He replied, “You should have been here.” He responded, “Oh. I didn’t even know!” Matt said that this, ”Set the pace for how iPod would be for the next five years.”

In December 2005, Matt and a small team started working on the first iPhone concepts in a project called “Purple.” At the time no one in the company knew what was going on, not even some of their own managers. They built the initial prototype in four months. It wasn’t good enough so they started again.  That second version was the one Steve Jobs would unveil on stage at MacWorld in January 2007. Four weeks previous to that, 25-members of the team went to China hand-building from scratch each of the first 200-devices to be shown at MacWorld. The team was divided into day shift and night shift to hit the deadlines, working through Christmas and returning after New Year’s Day.

The Founding of Nest

After shipping the iPhone, Matt led work on nano, Shuffle, and parts of the iPhone, iPad, and Apple TV projects. By late 2009 he had hired 40 people and managed teams building these products, all in his mid-late twenties. That fall he had a two-hour lunch with Tony Fadell, his former boss at Apple who had left in 2008. Matt told Tony he wanted to start a company. “What do you want to do?” Tony replied. “I want to build a smart home company.” Tony’s response? “You’re an idiot. No one wants to buy a smart home, they’re for geeks.” But it turned out Tony was already building a smart home in Tahoe, with solar panels, geothermal heat pumps, and more. Tony honed in and focused on a single idea. “Why don’t you just build me a thermostat?” Matt replied, “Why not? We could build an iPod?” Tony responded, “We’ll do it in six months.”

Tony and Matt have what appears to be the ideal co-founder relationship, stemming from his early internship days at Apple. “We think very much alike, to the point where we complete each other’s sentences. I don’t know if I would be able to do it without him.”

But was this the idea to risk a promising future at Apple on? Matt had elevated from intern to Senior Manager in just a few short years. “The more we dug, the more we realized, this is a company we must go start. We could save 10 percent of energy, solve an epic problem, no innovation, multibillion dollar market. Why would we not do this?”

Matt quit his job in spring 2010, rented a garage in Palo Alto, and started cranking in secret. Matt would visit with old colleagues and say “Hey will you quit your job? Will you come work (for free) with us on a new project I can’t tell you about?” The first ten hires worked for free for six months before finally raising money in October 2010. They bootstrapped with money from Tony and some from Matt. “We were all working basically severn days a week, twelve hours a day, it was crazy. Not everyone was living in the office – people have families, so they’d go home for dinner and then come back. It was craziness.” Everyone worked on Thanksgiving only taking a few hours off. Matt claims no one got divorced over the extreme conditions, adding that “all the wives are happy now.”

Still no one knew that Tony was even involved. “In the early days when we were fully stealth. “We had no website, no LinkedIn, we had nothing. Zero outbound communication. I wouldn’t even tell people that (Tony was involved). For all they knew, I was the only founder. To get people in the door the first time meant I did a lot of lunches, a lot of coffees to get people excited. I wouldn’t tell people on the first date – I’d show a little leg, but I wouldn’t go all the way.”

So here is Nest, in stealth, building an incredibly difficult hardware/software product, with limited funding, but still managing to assemble a killer engineering team in the midst of a talent war with Facebook, LinkedIn, Groupon, and Twitter exploding all around. “It was a mixture of my old team at Apple, my old professor from CMU and a few folks from Tony’s early days at General Magic twenty years earlier. One guy was a VP at Twitter, one was running Microsoft User Experience. Unlike most startup teams the average age of our team was about 40. I think I was the youngest.”

A year after raising a Series A from Kleiner Perkins, Google Ventures, Lightspeed, Shasta, and others, they shipped their first product. This spring Nest was widely rumored to have raised $80MM at an $800MM valuation and shipping 50,000 thermostats each month. This company that was in a garage in 2010 is now +200 employees, and selling products in Lowe’s, Apple Stores, Best Buy, and about half their inventory is sold online. The company is not without controversy, having been sued by Honeywell for patient infringement, and as one friend in the home automation industry recently told me, “Everyone is watching Nest.” They also recently acquired venture backed energy dashboard MyEnergy.

Building HARD-ware

Nest launched their first product a year after raising Series A, 18-months after their inception, with 75-employees and having spent $10MM. “That’s with a team of extremely senior guys who have all done this a dozen times before. The difference between doing it a dozen times before at Apple, Samsung or Google and doing it on your own, is that there’s no backup. At Apple we worked on the project for a year, got it ready and hand it over to the operations team to go scale and shoot to the moon with. We all had roles we played at previous companies and that all went out the window at Startup Land. You have an HR hat, facilities hat, janitor hat, doesn’t matter, you have do it.”

Is it any surprise that there are so few hardware startups the Valley? Or that most entrepreneurs choose an app or a website over a hardware device? Entrepreneurship is hard enough not to have to layer in these complications. Matt adds, “I don’t believe I could build Nest if Tony and I didn’t have all that experience at Apple. It’s really hard to pull off fully integrated consumer electronic devices. It’s also really expensive to build a consumer electronic product. You have to build prototypes but you have to build tools. You have to get a manufacturing line set up. You have to front inventory costs. It’s crazy expensive.”

When our interview finished a few weeks ago, I walked Matt out to his car. It was 9pm, and he was cheerfully headed back to work for yet another late night at Nest. After hearing about the culture and work ethic at Nest, his attitude simply reminded me of how he described working a holiday a few years previously. ”That’s what it takes,” he casually said. And if you really want to change the world I couldn’t agree more.

Apple faces a whole lot of inbound requests to unlock iPhone devices from law enforcement officials, according to a new report from CNET. Seized iPhones with a passcode lock are apparently secure enough to frustrate a lot of police agencies in the U.S., resulting in a wait list that Apple has put in place to help it deal with unlock requests from the authorities.

The waiting list was long enough that it resulted in a 7-week delay for a recent request by the ATF last summer, according to the CNET report. The good news for iPhone owners is that the ATF in that instance turned to Apple as a last resort, after trying to find a law enforcement body at either the local, state or federal level that had the capability to unlock the phone in-house for three months to no avail. The bad news is that an affidavit obtained by CNET, the decryptions seem to take place without necessarily requiring a customer’s knowledge, whereas with Google there’s a password reset involved that notifies a user via email of the unlock.

Apple can reportedly bypass the security lock to get access to data on a phone, download it to an external device and hand that over to the authorities, according to an ATF affidavit, which means that ultimately, the information on an iOS device isn’t 100 percent secure. But overall, repeated reports peg Apple devices as particularly resistant to prying eyes operating in law enforcement.

A previous report from CNET also identified iMessage as resilient in the face of outside surveillance attempts, especially compared to more common text communication methods like SMS. Combined, the reports suggest that Apple’s technology for its mobile devices is especially good at repelling unwanted advances, which is great for privacy buffs, though the policies around when and why Apple does share that information needs more fleshing out.

We’ve reached out to Apple to see if they have any official comment on the unlock queue from law enforcement and how they proceed with requests, and will update if we hear more.

Manufacturer and Apple supplier Pegatron is increasing its China-based workforce by 40 percent over the second half of 2013, according to a Reuters report.

Since the company already employs 100,000 workers to manufacture components and devices for customers like Apple, Dell, and HP, that translates to 40,000 new workers. And since Apple is widely expected to be releasing not only an updated iPhone 5 but also a cheaper, plastic-bodied iPhone in the fall-to-winter time frame, that translates to speculation that Pegatron is gearing up for big orders.

This fits both with Apple CEO Tim Cook’s announcement during the company’s recent earnings call that Apple would not bring out any new products until the fall and with recent rampant rumors of new iPhone models.

And, says Reuters, Pegatron’s CFO Charles Lin indicated that 60 percent of the company’s 2013 revenue would come from the second half of the year.

Apple needs new products, badly.

Canalys’ numbers for smartphone, tablet, and laptop sales for the first quarter of 2013 show that Apple’s growing only 7.6 percent in smartphone sales, while the industry is growing at a 64.3 percent pace. And while Apple sold 37 million iPhones, Samsung shipped is growing its smartphone shipments by 64.3 percent.

Apple’s not interesting in market share for the sake of market share, but at some point market share has to impact the overall health of an ecosystem. And without a strong app, media, and device ecosystem, smartphone manufacturers are in deep, deep trouble.

photo credit: jurvetson via photopin cc

Filed under: Business, Gadgets, Mobile

Global shipments of smartphones, tablets, and laptops hit 308.7 million in the first quarter of 2013, with 216.3 million smartphones, 50.5 million laptops, and 41.9 million tablets shipped, according to the latest numbers from Canalys.

Once again, Android accounted for 75.6 percent of all smartphone shipments, and once again, Samsung is killing it.

The Korean smartphone king grew smartphone shipments by 64.3 percent year-over-year while shipping 82.2 million tablets, smartphones, and notebooks combined. Meanwhile, mobile rival Apple grew its iPhone shipments by a shockingly low 6.7 percent, hitting single digit growth in a market which has overall growth of 37.4 percent.

Let me say that again: Apple is at single digit growth in a market growing at almost 40 percent.

Source: John Koetsier

Android meets Wall-E.

If there’s any doubt why Apple’s stock in moldering in the mid-400′s after hitting highs last year of over $700, that’s why. And with Tim Cook basically telling Wall Street that Apple won’t ship any significant new products until this fall, or even 2014, the situation is not likely to change.

‘Despite its slowing growth, Apple still shipped over 37 million iPhones,’ Canalys analyst Pete Cunningham said in a statement. ‘But HTC and Samsung have raised the bar with their latest handsets and Apple needs to respond with its next iPhone. The iPhone user interface is now six years old and badly in need of a refresh.”

Tablets are one area of slight comfort for Cupertino.

Apple retains 46.4 percent of the tablet market, Canalys says, shipping 19.4 million tablets. That’s down from 58 percent market share in the first quarter of 2012, and once again, in a market growing at over 106 percent year-over year, Apple grew less than others — about 60 percent growth year-over-year.

‘Spearheaded by Google and Amazon, the commoditization of the tablet market has happened far quicker than that of the wider PC market,’ Canalys analyst Tim Coulling said.

The upshot?

Without significant new Apple products, major new product categories, and a much more intense Apple effort to produce a wider range of phones and tablets that the market is looking for right now, Apple share will continue to drop.

And one other interesting tidbit in the Canalys data:

Calculating operating system share over all “smart devices,” lumping in smartphones, tablets, and laptops does provide interesting insights. With that view of the industry, Microsoft ends up with an 18.1 percent OS market share — a very different proposition than high-90-percent share in the laptop/desktop world.

Image credit: Louish Pixel/Flickr

Filed under: Business, Gadgets, Mobile

This sponsored post is produced by StackSocial.

Want to get an iPhone or iPad app on the App Store, but don’t want to take the extensive process to learn how to code it? Have you considered outsourcing it, but don’t want to fork over the cash to build it? Then this is the course for you.

With this course, you’ll learn how to build and release an iPhone or iPad app from scratch with absolutely no programming required. And VentureBeat has it for the low price of $79 – but only for a limited time.

This online course is jam-packed with more than 180 step-by-step video tutorials where you will learn how to prototype, design, and release apps onto the app store.

Who is this course for?

• Beginners who want to make and release apps today
• People who want to release apps and add them to their resume
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• Designers who want to rapid prototype app ideas
• Small businesses who don’t want to hire a developer

What will you learn?

• How to prototype, design, and release apps into the app store
• The entire process from idea creation to production to release
• How to avoid and overcome app development pitfalls
• How to create a mock proposal to potential clients so you can start making apps for other people

Who created this course?

John Bura is the man behind this course – and he is a master of his craft. Not only has he been developing games and apps since 1997 but he’s also been teaching for the last 10 and now is the proud owner of Mammoth Interactive.

His company produces leading technologies for XBOX 360, the iPhone & iPad, Android, and HTML 5. He’s positive energy has been pumped into more than 40 commercial games and several of his games have risen to #1 in the Mac app store.

What you’ll need

• A Mac computer
• Recommended to use Apple’s Lion OS X operating system along with the most current version of Xcode (free in the App Store)
• Sign up for a free Buzztouch account (web-based software you’ll use to create your apps)
• A developer’s account (you can sign up in the Mac App Store)

Note: You can get all of the important reminders surrounding this offer by visiting the VB Store page.

This course will put you in a great position to learn the entire process from idea creation to production to release. And while every project has pitfalls, this course will provide you with creative and technical commentary that is designed to help you avoid the pitfalls of production.

This course provides a whole lot for very little cost thanks to VentureBeat. It normally sells for $497, but for a very limited time, we got it on special just for you…for only $79. Grab it from the VB Store while you can!

Filed under: Entrepreneur

Once again, news from a supplier is fueling rumors about Apple’s future product roster. This time it’s manufacturer Pegatron’s announcement that it will increase its number of workers in China by up to 40 percent in the second half of this year. The hiring blitz at the company, which produces iOS devices, has led to new round of speculation that a cheaper iPhone is in the works.

Suppliers have told Reuters that Apple is developing a cheaper iPhone in order to target emerging markets such as China and India. The less expensive version of the smartphone is expected to launch by the third quarter.

Pegatron’s financial performance is closely tied to the Apple products it makes. Just yesterday the company forecast its biggest drop in consumer electronics revenue in six quarters due to falling demand for the iPad Mini. Pegatron said its second quarter revenue will decrease 25 percent to 30 percent from the previous three months.

Other signs that Pegatron is expecting orders for a cheaper iPhone is chief financial officer Charles Lin’s disclosure that more than 60 percent of the company’s 2013 revenue will come from the second half of the year. Pegatron president and chief executive officer Jason Cheng said earlier this week that revenue from communication products will contribute up to 40 percent to the total in second half of 2013, compared to 24 percent in the first quarter.

Apple CEO Tim Cook said last month that the Cupertino company will start rolling out new products this fall and throughout 2014, including devices in “exciting new product categories.” Though its unclear exactly what Apple will be unleashing in a few months, many analysts believe that it will launch a cheaper iPhone instead of a larger-sized “phablet” that would compete with Samsung’s Galaxy Note.

A less expensive handset will allow Apple to compete with cheaper devices running on Android in emerging markets, but analysts’ opinions on how much of an effect a less pricey iPhone would have on Apple’s earnings vary widely. The company posted its first year-over-year earnings decline since 2003 in the second quarter, reporting $43.6 billion in revenue (up from $39.2 billion in the year-ago quarter) along with $9.5 billion in quarterly net profit.

Enders Analysis’ Benedict Evans said “a blockbuster new Apple phone that almost doubles unit sales and blows a hole in the middle of the Android market might only add 5 percent to Apple’s gross profits.”

On the other hand, Morgan Stanley analyst Katy Huberty believes a cheaper version can potentially add another 20 percent to the 10 percent market share iPhone currently holds in China. “Even in a scenario of low 40 percent gross margin and 1/3 iPhone cannibalization rate (flattening legacy iPhone shipment growth, which we view as conservative, the iPhone Mini adds incremental revenue and gross profit dollars,” she wrote in a recent investors note.

Once again, news from a supplier is fueling rumors about Apple’s future product roster. This time it’s manufacturer Pegatron’s announcement that it will increase its number of workers in China by up to 40 percent in the second half of this year. The hiring blitz at the company, which produces iOS devices, has led to new round of speculation that a cheaper iPhone is in the works.

Suppliers have told Reuters that Apple is developing a cheaper iPhone in order to target emerging markets such as China and India. The less expensive version of the smartphone is expected to launch by the third quarter.

Pegatron’s financial performance is closely tied to the Apple products it makes. Just yesterday the company forecast its biggest drop in consumer electronics revenue in six quarters due to falling demand for the iPad Mini. Pegatron said its second quarter revenue will decrease 25 percent to 30 percent from the previous three months.

Other signs that Pegatron is expecting orders for a cheaper iPhone is chief financial officer Charles Lin’s disclosure that more than 60 percent of the company’s 2013 revenue will come from the second half of the year. Pegatron president and chief executive officer Jason Cheng said earlier this week that revenue from communication products will contribute up to 40 percent to the total in second half of 2013, compared to 24 percent in the first quarter.

Apple CEO Tim Cook said last month that the Cupertino company will start rolling out new products this fall and throughout 2014, including devices in “exciting new product categories.” Though its unclear exactly what Apple will be unleashing in a few months, many analysts believe that it will launch a cheaper iPhone instead of a larger-sized “phablet” that would compete with Samsung’s Galaxy Note.

A less expensive handset will allow Apple to compete with cheaper devices running on Android in emerging markets, but analysts’ opinions on how much of an effect a less pricey iPhone would have on Apple’s earnings vary widely. The company posted its first year-over-year earnings decline since 2003 in the second quarter, reporting $43.6 billion in revenue (up from $39.2 billion in the year-ago quarter) along with $9.5 billion in quarterly net profit.

Enders Analysis’ Benedict Evans said “a blockbuster new Apple phone that almost doubles unit sales and blows a hole in the middle of the Android market might only add 5 percent to Apple’s gross profits.”

On the other hand, Morgan Stanley analyst Katy Huberty believes a cheaper version can potentially add another 20 percent to the 10 percent market share iPhone currently holds in China. “Even in a scenario of low 40 percent gross margin and 1/3 iPhone cannibalization rate (flattening legacy iPhone shipment growth, which we view as conservative, the iPhone Mini adds incremental revenue and gross profit dollars,” she wrote in a recent investors note.

Sharp, Japan Display, and Samsung rival LG Electronics are tooling up for Apple iPhone 5S production runs which will begin in earnest in June, according to a report out of Japan.

Ramping up production in June and July will stock Apple’s shelves for a late summer or early fall launch, when Apple typically sells millions of devices in just a few days. That timetable is in line with Tim Cook’s statements during Apple’s last earnings call, in which Cook warned investors not to expect any major new product launches this summer:

“Our teams are hard at work on some amazing new hardware, software and services we can’t wait to introduce this fall and throughout 2014,” he said at the time.

Japan Display and LG have long made screens for Apple’s smartphones, while Sharp was added just late last year as Apple continues to diversify its list of manufacturers in an attempt to ensure adequate production capacity — and to limit reliance on any one particular partner.

The most critical point in the report?

The liquid crystal panel of the next model “iPhone (iPhone) 5″ Apple, specification is close to the current and the “iPhone 5″.

In other words, the 5S is the same size and shape as the 5, which means that this particular product is not the iPhone mini or iPhone maxi that have recently been rumored. Which doesn’t, of course, mean that Apple is not sourcing components for those potential products from other manufacturers.

According to the report, the factory Sharp will be using has a production capacity of 600 million units a month. Apple will not even need even a reasonable fraction of that, and the factory has been chronically under-utilized.

This is good news for Sharp, Japan Display, and Japan in general. Electronics manufacturers in Japan have seen Korean companies like Samsung take their lunch and eat it too, and have had to cut staff, offload underperforming business units, and cut back expenses.

It’s also good news for Apple fans who are looking forward to some juicy new iTech.

Image credit: Devindra Hardawar/VentureBeat

Filed under: Business, Gadgets, Mobile