How Apple cuts costs in building its gadgets

Workers labor on a production line at Foxconn's Longhua plant, which employs 300,000 people and makes products for Apple

 (CNN) -- On the backs of iPods, iPhones and iPads, and on the bottom of Mac laptops, an inscription reads: "Designed by Apple in California. Assembled in China."

The parts themselves come from more than 150 companies from various parts of the world. The majority of those antennas, glass, metal, sensors and silicon are manufactured overseas.

How Apple finds parts and manufactures its products, almost entirely abroad, is standard protocol in the technology industry. Electronics companies say Asian manufacturing plants are more affordable and more versatile than those found anywhere else in the world.

But as the most valuable tech company in the world, Apple is seen by many as a role model in business. And its reliance on cheap overseas labor -- most notably at factories in China run by manufacturer Foxconn -- has come under increased scrutiny in recent media coverage by CNN, The New York Times and other outlets.

Foxconn, owned by Hon Hai Precision Industry, counts Apple among its business clients, which also include Amazon.com, Hewlett-Packard, Microsoft and many other tech giants. Apple has reported violations at its facilities, and Foxconn has come under fire for a slew of worker suicides in 2010 and conditions that workers-rights groups say are inhumane.

Workers at Foxconn and other plants in Asia must stay busy to keep up with the world's seemingly insatiable demand for Apple products.

During the last three months of 2011, Apple sold 37 million iPhones, 15.4 million iPads, 15.4 million iPods and 5.2 million Mac computers, according to the company's financial report. That netted Apple $46.3 billion in revenue and $13.1 billion in profit, which is double what Apple made during the same period a year before.

Where does all that profit come from?

Take the iPhone, for example. The iPhone 4S sells for $199 if the customer signs a two-year cellular contract. But AT&T, Sprint Nextel and Verizon Wireless pay Apple much more for the phones in order to sell them at a lower price, a process called subsidizing. To get a so-called "unlocked" or contract-free iPhone, expect to pay at least $649 to Apple.

The costs of parts and manufacturing for Apple's iPhone 4S is estimated to be $196, according to industry research firm IHS iSuppli. That's $453 less than Apple charges for a contract-free phone. Marketing and research can add up, but no matter which way you cut it, Apple is making a sizable profit on each phone it sells, said iSuppli analyst Tom Dinges.

Apple has more than 60,000 employees, most of whom work in its retail stores. To build parts and assemble products, Apple has a long list of partners. That's partly done to avoid being dependent on any one manufacturer and to get favorable deals on each part from the many competing companies.

Still, Apple tries to minimize the number of companies with which it signs deals, Dinges said. That way, Apple wields more influence because it's among the biggest-spending clients, he said.

"They'd rather be a mile deep in a supplier than divide the business up amongst five," Dinges said. "You're going to take care of your biggest customers first."

In its supplier report, Apple says 156 companies account for 97% of the money spent on materials, manufacturing and assembly for its coveted gadgets. When the client is a powerhouse like Apple, winning a contract to be one of those 156 is a major event. In Wall Street parlance, it moves stock.

Being anointed by Apple boosts a supplier's credibility, but Apple is a shrewd negotiator, from how it develops an iPad to how it leases or builds the retail store it's sold in. This reportedly forces Apple's partners to push workers and cut corners in order to wring profits.

Apple told CNN in a statement that its expectations for suppliers to operate responsibly increase each year. Apple says it conducted 229 audits of suppliers last year and reported its findings publicly online.

"We care about every worker in our worldwide supply chain," Apple said in the statement. "We insist that our suppliers provide safe working conditions, treat workers with dignity and respect, and use environmentally responsible manufacturing processes wherever Apple products are made. Our suppliers must live up to these requirements if they want to keep doing business with Apple."

Should you feel guilty for buying your iPhone?

People stage a protest against Foxconn, which manufactures Apple products in mainland China, in May 2011 in Hong Kong.

STORY HIGHLIGHTS

• Some people are considering a boycott of Apple over conditions in Chinese factories
• A recent New York Times story shed some light on horrifying working conditions there
• Poll suggests consumers may not pay higher prices for Apple products made in U.S.

(CNN) -- Last week, The New York Times gave us an inside look at what it's like to work at Foxconn, the manufacturing company that owns several China-based factories that crank out Apple's iPads, iPhones and iPods by the millions.

The story is full of examples of horrifying working conditions in Foxconn's factories that would never fly here in the United States. Here are some of the more troubling ones from the Times story:

Foxconn is a 24-hour operation. Employees work six days a week, sometimes in 12-hour shifts. They're on their feet for so long that their legs begin to swell. There are underage workers. They live in crowded dorms on the factory's campus. In recent years, there have been reports of workers leaping from buildings in apparent suicides.

And so on.

The story even describes the gruesome death of one Foxconn worker after an explosion in a facility that made iPads in Chengdu, China. The worker's "skin was almost completely burned away" by the blast, the Times reports. He died a few days later with his family by his side.

 

Apple threatened with product boycott
 

 
Report: Chinese workers threaten suicide

 

Foxconn denies the reports that working conditions are like what the Times describes. Apple refuses to comment on the record, but a leaked e-mail from CEO Tim Cook to all Apple employees says the company is committed to worker safety and that it takes all those claims very seriously.

So knowing all that, should we be concerned about where our iPhones and other gadgets come from and how they're made? Or is the human cost so far removed from us here in the United States that we're willing to look over it in favor of whatever fancy new touchscreen gadget Apple releases next?

The issue even has some people throwing around the idea of a boycott. One effort, hosted on the website Change.org, has collected more than 145,000 signatures from people calling on Apple to better protect its workers.

While those efforts sound noble, there's no way boycotting Apple gadgets will actually work.

Let's start with why people keep snapping up Apple's iPhones and iPads by the millions each week in the first place.

When it comes to smartphones and tablets, Apple still makes the best there are. With the iPhone and the iPad, the company set a new standard that other tech giants such as Google and Microsoft are still struggling to imitate. Apple can't make them fast enough. On launch days, people queue up in massive lines so they can be one of the first to get a new iPhone or iPad.

Even if consumers do know about what it took to make their new gadget, as many likely do thanks to the widespread reports on working conditions overseas, it's obviously not enough to keep them from getting caught up in the fervor of an Apple product launch.

I can't see that ending just because of a new story in The New York Times or a proposed boycott.

But it's not just about the massive popularity of Apple's gadgets that keep people buying. It's the price.

The latest and greatest iPhone model, the 4S, costs $199. iPads start at $499. One of the biggest reasons Apple can sell its stuff at such low prices is because they're produced on the cheap in China, sometimes by sacrificing good working conditions to make it happen. (If you believe the reports.)

Those cheap production costs are why a lot of the anger comes from the fact that Apple is a massively profitable company. Right now it has almost $100 billion sitting in the bank. It could use some of that cash to put more pressure on Foxconn and others to improve working conditions overseas.

A successful boycott could force Apple to make those changes, but consumers will have to sacrifice something, too.

In a poll from the Times that ran with its Foxconn story last week, most consumers thought companies such as Apple should make products in the U.S. but still absorb the added manufacturing costs.

In other words, consumers don't want to pay more for iPhones and iPads than they already do just to ensure factory workers get better working conditions. It's all about money.

So even if Apple moved production to the U.S. or managed to heavily invest in China and improve working conditions there, it would likely result in higher prices for consumers. For a profit-driven company such as Apple, there's almost no chance it would want to absorb those costs itself.

Yes, a lot of the heat on this issue has been put on Apple. But keep in mind it's not alone. Foxconn and similar manufacturers in Asia make gadgets for several other major consumer brands. It's not like suddenly switching from the iPhone to another smartphone will improve the lives of those who make it.

You may feel guilty buying an Apple product, but the problem won't be fixed until all electronics makers change, too.

In the end, consumers would be the ones who have to pay to make working conditions better for the people who make your iPhone. And it seems unlikely there are enough of you out there willing to do that.

Don't use our software, security firm Symantec warns customers

• Symantec is advising customers to disable one of its products, after hackers revealed the theft of the underlying code powering the software earlier this month.
  The security firm said the theft occurred in 2006, compromising 2006-era version of Norton Antivirus Corporate Edition, Norton Internet Security and Norton SystemWorks. More important was the theft of the code behind the remote access package pcAnywhere, which could allow malicious users to gain complete access to systems and data, experts warn.

“Symantec recommends disabling the product until Symantec releases a final set of software updates that resolve currently known vulnerability risks,” the company wrote in an online statement about the hacking.

The new advice is a marked change from earlier comments from the company, which at first downplayed the significance of the hacking, said Ira Victor, a security expert with Data Clone Labs in Nevada.

“At first, Symantec said that customers do not need to take additional actions in light of the breach,” Victor told FoxNews.com. “Now Symantec has changed their tune.”

Indeed, experts queried by FoxNews.com in January labeled the incident more of a business risk than anything else -- one that may lead to a loss of confidence in Symantec and potential loss of market share for the publicly traded firm.

"The headline is very embarrassing to Symantec," Anup Ghosh, founder and CEO of Virginian security firm Invincea, told FoxNews.com at the time. "But this has now become the normal in securities. Every single corporation is susceptible to threats."

The company’s new advice suggests the security breach may have been more significant than Symantec had believed at first.

“It’s possible that Symantec ‘hardcoded’ encryption keys into PCAnywhere,” Victor said. “If true, that would be a serious security mis-step.”

In the newly released security advisory, Symantec offers suggestions for tightening security in light of the code theft. Victor suggests four additional steps to greater protection:

1. Do not use a "suite" of security protection from any one firm. A mixture of best of breed security is more secure.

2. Usernames and passwords alone are not enough protection for remote access. A single-use password system makes unauthorized remote access exponentially harder for cybercriminals.

3. Do not run computers in "Administrator" mode. Run systems in "User mode" so that malware does not install automatically.

4. Businesses should deploy application "whitelisting." This will prevent unauthorized malware from running on computers.

Not lovin' it: McDonald's Twitter campaign hijacked by haters

• McDonald's has become the subject of an outburst of vitriolic hatred on Twitter after critics hijacked a promotional hash-tag created by the fast-food giant.

Opponents accused the burger franchise of making customers vomit, serving pig meat from gestation crates and dishing up a burger containing a finger nail. One fierce critic claimed he would rather eat his own diarrhea than visit the famous "golden arches''.

McDonald's last week launched a campaign featuring paid-for tweets, which would appear at the top of search results. An initial hashtag #MeetTheFarmers featured wholesome stories about farmers. The global chain then sent out two tweets with the general hashtag #McDStories.

But within minutes the hashtag took on a life of its own.

Detractors seized on #McDStories as an opportunity to document their alleged horror stories at the golden arches.

@jfsmith23 wrote: "Watching a classmate projectile vomit his food all over the restaurant during a 6th grade trip.''

One of the worst was @MuzzaFuzza who wrote: "I havent been to McDonalds in years, because Id rather eat my own diarrhoea.''

Social media director Rick Wion told PaidContent.org: "Within an hour, we saw that it wasn't going as planned. "It was negative enough that we set about a change of course.''

Twitter refines technology to censor tweets in individual countries

SAN FRANCISCO –  Twitter has refined its technology so it can censor messages on a country-by-country basis.

The additional flexibility announced Thursday is likely to raise fears that Twitter's commitment to free speech may be weakening as the short-messaging company expands into new countries in an attempt to broaden its audience and make more money.

But Twitter sees the censorship tool as a way to ensure individual messages, or tweets, remain available to as many people as possible while it navigates a gauntlet of different laws around the world.

Before, when Twitter erased a tweet it disappeared throughout the world. Now, a tweet containing content breaking a law in one country can be taken down there and still be seen elsewhere.

Twitter will post a censorship notice whenever a tweet is removed. That's similar to what Internet search leader Google Inc. has been doing for years when a law in a country where its service operates requires a search result to be removed.

Like Google, Twitter also plans to the share the removal requests it receives from governments, companies and individuals at the chillingeffects.org website.

The similarity to Google's policy isn't coincidental. Twitter's general counsel is Alexander Macgillivray, who helped Google draw up its censorship policies while he was working at that company.

"One of our core values as a company is to defend and respect each user's voice," Twitter wrote in a blog post. "We try to keep content up wherever and whenever we can, and we will be transparent with users when we can't. The tweets must continue to flow."

This screen shot shows a portion of a Twitter blog post in which the company announced it has refined its technology so it can censor messages on a country-by-country basis.

Twitter, which is based in San Francisco, is tweaking its approach now that its nearly 6-year-old service has established itself as one of the world's most powerful megaphones. Daisy chains of tweets already have played instrumental roles in political protests throughout the world, including the Occupy Wall Street movement in the United States and the Arab Spring uprisings in Egypt, Bahrain, Tunisia and Syria.

It's a role that Twitter has embraced, but the company came up with the new filtering technology in recognition that it will likely be forced to censor more tweets as it pursues an ambitious agenda. Among other things, Twitter wants to expand its audience from about 100 million active users now to more than 1 billion.

Reaching that goal will require expanding into more countries, which will mean Twitter will be more likely to have to submit to laws that run counter to the free-expression protections guaranteed under the First Amendment in the U.S.

If Twitter defies a law in a country where it has employees, those people could be arrested. That's one reason Twitter is unlikely to try to enter China, where its service is currently block. Google for several years agreed to censor its search results in China to gain better access to the country's vast population, but stopped that practice two years after engaging in a high-profile showdown with Chain's government. Google now routes its Chinese search results through Hong Kong, where the censorship rules are less restrictive.

In its Thursday blog post, Twitter said it hadn't yet used its ability to wipe out tweets in an individual country. All the tweets it has previously censored were wiped out throughout the world. Most of those included links to child pornography.

Google+ opens doors to teenagers

• Sept. 21, 2011: The Google website invites all users to join the company's new social network, Google+, which is finally open for all comers.

Tech titan Google will now allow 13- to 17 year-olds to join its social network Google+, the company announced Thursday, Jan. 26. 

Previously, only users 18 and older were allowed to join the social community. Taking into account the wider market, Google+ also added new security and privacy enhancements. Google's move to make room for a vaster market follows the footsteps of competitor Facebook, which similarly allows users ages 13 and up to join its social network.

Google+ has already found a sweet spot among trendy technophiles who regard it as a more intelligent social community. Yet Google+ -- which soft-launched June 28 as "invitation only" -- boasts only 62 million users, an impressive amount that's a mere fraction of rival Facebook's 800 million worldwide users.

According to an Ogilvy PR study, 73 percent of teens already use social media -- but will these devoted Facebookers and Tweeters adopt a new network? Google is betting on it, pitching the social network as a safer, more-controlled way for teens to share.

"Sadly, today's most popular online tools are rigid and brittle by comparison, so teens end up over-sharing with all of their so-called 'friends,'" President of Google+ product Bradley Horowitz wrote in an online blog post unveiling the changes. 

That's because Google+ allows users to organize their connections into different 'circles' and create unique privacy settings for each circle. For instance, one user could have 'circles' for 'coworkers,' 'family,' 'acquaintances' and 'close friends.' Google pitches this 'circle' system as a more streamlined, more-controlled way to share and manage information-sharing.

In this sense, Google+ could appeal to teens looking to hide photos, videos and angry posts from voyeuristic parents. Of course, on the other hand, this same selective-sharing could ignite a stronger debate about parental controls, minors on social media and the overriding security phobias of sharing personal information on the Internet.

So will teenage subscribers help Google+ leapfrog over Facebook, or will the tech titan remain the in second place? Only time will tell. 

Apple wrestles with its 'China problem'

•  
  The Apple logo is seen during an announcement at Apple headquarters in Cupertino, Calif.

CUPERTINO, Calif. –  Apple began last week by basking in record quarterly profits, but then ended the week in a public relations retreat after reports of exploited workers in factories in China assembling its hot-selling iPads and iPhones.

For now, the media spotlight is on Apple and its Taiwanese contract supplier Foxconn. But China's leaders will also be shifting uncomfortably as the gaze of the international media turns to the harsh underbelly of its manufacturing economy.

Behind China's remarkable economic progress toil an estimated 120 million migrant workers, typically living and working in austere factory complexes.

Two decades into China's industrial transformation, questions are being asked about how much responsibility authorities shoulder for its hukou (household registration) system that effectively institutionalizes migrant workers as second-class citizens in their own country.

But for now, it is Apple in the firing line. The New York Times ignited media interest after a story on unsafe working conditions, as well as seven-hour days and cramped dormitories at Apple's Foxconn supplier in China.

The public relations drubbing was ramped up another degree by Jon Stewart's Comedy Central, with a disturbing "Fear Factory" satire on the lot of the workers behind Apple's prodigious profits.

The problem for Apple is that beneath the humor and the shock headlines, there is enough truth about worker conditions in mainland Chinese factories to offend many of its customers and ultimately damage its premium brand.

At the same time, apportioning blame and improving the current situation is much less simple.

Apple's Chief Executive Tim Cook has expressed "outrage" at reports of unsafe working practices at suppliers and has promised to step up audits. It should also be remembered that Apple is just one of many international companies -- such as Nokia, Dell and Microsoft -- that use Foxconn as an assembly supplier.

Foxconn, which employs over a million workers in China, has been in the headlines before after a spate of worker suicides at its factories in 2010.

It later set up helplines and safety nets to stop employees jumping, as well as raising salaries. Basic pay was increased to 2,000 yuan (US$315) a month, up from 1,200 yuan (US$189).

The company tends to attract attention because of its size, with over 300,000 working and living in its Shenzhen complex that is the size of small town.

While home for workers is most likely still a cramped, shared dormitory, in the past decade Shenzhen has transformed with new skyscrapers, subways and streets packed with new cars.

The depressing prospect for migrant workers is they are prevented from joining this new China. Thanks to the decades-old hukou system, they cannot enjoy resident perks such as housing, education and medical benefits available to locals.

This suits provincial authorities, who avoid bearing the costs of providing these services or the infrastructure that an influx a population the size of Foxconn's plant in Shenzhen would require. Meanwhile, they still get the tax revenue from the business located locally.

Such a system might have been justified when China was starting out on its path of industrialization. But holding back a permanent rump of citizens as factory cannon fodder is inevitably going to lead to rising tensions.

Another unpalatable consequence of the hukou system on such a scale is it makes it difficult for migrant families to resettle. It is estimated 58 million children of migrant workers are left behind with relatives or in care.

Apple and other multinational will argue they are just following the rules laid out by the authorities in China or whatever country.
Understandable perhaps, but how long will it be good enough, especially if this situation begins to offend Apple's socially responsible consumers?

After all, if consumers are willing to demand eggs from chickens that were not factory farmed, it is not much of a stretch that they might demand smartphones assembled by workers with some basic dignity.

companTech ies team up to combat email scams

• Facebook is teaming up with its tech peers to fight scams.

NEW YORK –  Google, Facebook and other big tech companies are jointly designing a system for combating email scams known as phishing.

Such scams try to trick people into giving away passwords and other personal information by sending emails that look as if they come from a legitimate bank, retailer or other business. When Bank of America customers see emails that appear to come from the bank, they might click on a link that takes them to a fake site mimicking the real Bank of America's. There, they might enter personal details, which scam artists can capture and use for fraud.

To combat that, 15 major technology and financial companies have formed an organization to design a system for authenticating emails from legitimate senders and weeding out fakes. The new system is called DMARC -- short for Domain-based Message Authentication, Reporting and Conformance.

DMARC builds upon existing techniques used to combat spam. Those techniques are designed to verify that an email actually came from the sender in question. The problem is there are multiple approaches for doing that and no standard way of dealing with emails believed to be fake.

The new system addresses that by asking email senders and the companies that provide email services to share information about the email messages they send and receive. In addition to authenticating their legitimate emails using the existing systems, companies can receive alerts from email providers every time their domain name is used in a fake message. They can then ask the email providers to move such messages to spam folder or block them outright.

According to Google, about 15 percent of non-spam messages in Gmail come from domains that are protected by DMARC. This means Gmail users "don't need to worry about spoofed messages from these senders," Adam Dawes, a product manager at Google, said in a blog post.

"With DMARC, large email senders can ensure that the email they send is being recognized by mail providers like Gmail as legitimate, as well as set policies so that mail providers can reject messages that try to spoof the senders' addresses," Dawes wrote.

Work on DMARC started about 18 months ago. Beginning Monday, other companies can sign up with the organization, whether they send emails or provide email services. For email users, the group hopes DMARC will mean fewer fraudulent messages and scams reaching their inbox.

The group's founders are email providers Microsoft Corp., Yahoo Inc., AOL Inc. and Google Inc.; financial service providers Bank of America Corp., Fidelity Investments and eBay Inc.'s PayPal; online service companies Facebook, LinkedIn Corp. and American Greetings Corp. and security companies Agari, Cloudmark, eCert, Return Path and the Trusted Domain Project.
Google uses it already, both in its email sender and email provider capacities. The heft of the companies that have already signed on to the project certainly helps, and its founders are hoping it will be more broadly adopted to become an industry standard.

Thailand, China embrace Twitter censorship policy

Twitter has embraced censorship, many fear -- and the world’s most repressive regimes are applauding the move.

The short-messaging service announced on Thursday what it called a commitment to free speech, a technology update that allows it to censor messages on a country-by-country basis. The move had Internet users up in arms over the weekend, with many joining in a Twitter “blackout.”

But it’s earning applause in countries that endorse censorship.

“It is impossible to have boundless freedom, even on the Internet,” read an editorial published Monday on the website of state-run Chinese newspaper Global Times. “Twitter might have … already realized the fact and made a choice between being an idealistic political tool as many hope and following pragmatic commercial rules as a company.”

The so-called “Great Firewall of China” is widely described as a black eye on Internet freedom. And China was not alone. 

Technology minister Anudith Nakornthap said Monday in an article in the Thai newspaper Bangkok Post that the new policy was a "constructive" development. The Southeast Asian country routinely blocks websites with content deemed offensive to the Thai monarchy.

Anudith said it was good that Twitter "felt responsible to cooperate with governments to make sure basic rights are not violated through the use of social media."

Thailand's task force that monitors anti-monarchy content has blocked 1,156 websites since December.

Twitter has been a tool of free speech and dissent around the world and its policy change last week ignited global outrage. The U.S. State Department credited Twitter with being upfront about the policy but reserved comment otherwise.

Twitter sees the censorship tool as a way to ensure that individual messages, or tweets, remain available to as many people as possible while it navigates a gauntlet of different laws around the world.

Before, when Twitter erased a tweet it disappeared throughout the world. Now, a tweet containing content breaking a law in one country can be taken down there and still be seen elsewhere.

Twitter will post a censorship notice whenever a tweet is removed. That's similar to what Internet search leader Google Inc. has been doing for years when a law in a country where its service operates requires a search result to be removed.

Meanwhile, foreign dissidents and activists fear the new policy will stifle free speech and are threatening an ongoing boycott of Twitter, reported the Los Angeles Times.

Megaupload users face data deletion US prosecutors warn

US prosecutors have said that data belonging to Megaupload users and stored by third parties could be deleted as soon as Thursday.

 

Visitors to megaupload.com are now presented with a message from US law enforcement

 

 Users have been unable to access data since the file-sharing service was raided.
The warning was made in a letter filed by the US Attorney's Office.
Megaupload's lawyer Ira Rothken told the Associated Press that at least 50 million users had data which could be deleted.
Mr Rothken said that freezing of Megaupload's funds meant it was unable to pay those who were storing its data.
'Cautiously optimistic' In the letter US prosecutors said that the data which might be deleted was being held by the storage companies Carpathia Hosting and Cogent Communications Group.
"It is our understanding that the hosting companies may begin deleting the contents of the servers beginning as early as 2 February," it said.
The letter explains that in its investigations the US "copied selected data" but did not remove any servers from the premises of either company.
It goes on to note that the data "remains at the premises controlled by, and currently under the control of Carpathia and Cogent.
"Should the defendants wish to obtain independent access... that issue must be resolved directly with Cogent or Carpathia."
However, in a statement Carpathia said: "Carpathia Hosting does not have, and has never had, access to the content on Megaupload servers and has no mechanism for returning any content residing on such servers to Megaupload's customers.
"The reference to the 2 Feb 2012 date in the Department of Justice letter for the deletion of content is not based on any information provided by Carpathia to the US Government."
The company said that users seeking to recover their data would need to contact Megaupload.
Cogent has not responded to an email sent by the BBC.
Earlier Megaupload's lawyer, Mr Rothken had told the Associated Press that he was "cautiously optimistic" that a deal could be done to save the data from being wiped.
He said that the information would be needed by the defence.
Legitimate data Megaupload was shut down on 19 January.
It had about 150 million registered users, making it one of the most popular file-sharing services in the world.
US authorities are seeking to extradite founder Kim Dotcom, also known as Kim Schmitz, and three other defendants from New Zealand to the US.
Prosecutors have accused it of costing copyright holders more than $500m (£320m) in lost revenue.
But a number of users have said that they have been unable to access legitimately uploaded material as a result of the legal action.
After the shutdown one user tweeted, "I'm vehemently against copyright infringement: the files I lost were created & owned by me for my job."

Israel tops cyber-readiness poll but China lags behind

Israel handles over 1,000 attacks every minute, government advisors said

Israel, Finland and Sweden are seen as leading the way in "cyber-readiness", according to a major new security report.

The McAfee-backed cyberdefence survey deemed China, Brazil and Mexico as being among the least able to defend themselves against emerging attacks.

The rank is based on leading experts' perception of a nation's defences.

The report concluded that greater sharing of information globally is necessary to keep ahead of threats.

It also suggests giving more power to law enforcement to fight cross-border crime.

The UK, with a grading of four out of five, ranks favourably in the survey - along with the USA, Germany, Spain and France.

'Subjective view'

The rankings are based on the perceived quality of a country's cyber-readiness - the ability to cope with a range of threats and attacks.

"The subjectiveness of the report is its biggest strength," explained Raj Samani, McAfee's chief technology officer.

"What it does is give the perception of cyber-readiness by those individuals who kind of understand and work in cyber security on a day-in, day-out basis."

A five-point scale was used to rank countries - none of which achieved a perfect rating. Graphic provided by McAfee

 

A good score depends on having basic measures like adequate firewalls and antivirus protection, and more complex matters including well-informed governance and education.

Sweden, Finland and Israel all impressed the report's experts - despite the fact that the latter receives reportedly over 1,000 cyber attacks every minute.

Isaac Ben-Israel, senior security advisor to Israel's prime minister Benjamin Netanyahu, is quoted in the report as saying: "The hacktivist group Anonymous carries out lots of attacks but they don't cause much damage. The real threat is from states and major crime organisations."

He added that the country has set up a cyber-taskforce responsible for assessing threats to key infrastructure such power production and water supplies.

'Enhancing co-operation'

At the other end of the security scale, Mexico ranked as least prepared to cope with the cyber threat - a situation which is blamed on the country's authorities needing to overwhelmingly focus on the country's gang and drugs problems.

China is regarded by some Western observers as an aggressor in cyberspace.

But one expert Peiran Wang said the country was itself vulnerable because it lacked a joined up strategy.

 

Mexico's drug problems means available resource is put into real world policing - and not on cybercrime

 

"The Ministry of Public Security, the Ministry of Industry, the Ministry of State Security and even the military are involved and they don't communicate well," said Peiran Wang, a visiting scholar at Brussels' Free University.

In the UK, the report praised a £650m investment programme in cyber security.

However, the Home Office's plans were criticised by information security expert Peter Sommer.

"A great deal depends on co-operation from the private sector, which controls about 80% of the critical national infrastructure.

"Over half of the new funding will go to the 'secret vote', the intelligence agencies, where value for money will be difficult to investigate. I would have preferred more emphasis on public education - helping potential victims help themselves."

Cybercrime fighters

Among the report's conclusions is the recommendation that greater efforts be made to improve cross-border law enforcement.

"Cybercriminals route their connection through multiple different countries," said Mr Samani.

"If criminals are particularly clever, they go through countries where they know there isn't any co-operation."

 

In the UK, millions has been pledged by foreign secretary William Hague to fight cyber issues

 

"The bad guys share information - we need to do the same as well."

Dr Joss Wright from the Oxford Internet Institute welcomed the report's findings. However, he had serious doubts over the feasibility of its suggestions.

"They're recommendations that people have been saying for maybe 10 years," he told the BBC.

"I would love to see good information sharing - but when you're talking about national security, there's a culture of not sharing.

"They're not suddenly going to change 70, 100, 1000 years of military thinking."

Google seeks to clarify new privacy policy

(CNN) -- Seeking to blunt a sharp backlash to recent privacy policy changes, Google has offered to share "the real story" about a system that compiles information about users based on their activity on all of Google's sites and products.
This week, Google announced new privacy settings. They spell out the fact that the company collects and compiles data about its users based on their activity on its various sites -- from its search page to Gmail to YouTube to phones running its Android operating system.
The announcement gave some privacy advocates cause for alarm, even though Google says the information is assembled to enhance user experience, such as better targeting ads that will be of interest to its customers.
Perhaps most notably, eight members of Congress, both Democrats and Republicans, wrote a letter to Google CEO Larry Page asking for clarification about the changes.
"While Google suggests that the purpose of this shift in policy is to make the consumer experience simpler, we want to make sure it does not make protecting consumer privacy more complicated," reads the letter. The lawmakers also noted that because of Google's global reach, the change "potentially touches billions of people worldwide."
It asks Google to share what kind of data it currently collects and explain how information collected under the newly announced system will be used.
In a post on the company's public policy blog, Google's Betsy Masiello wrote that there have been misconceptions about the changes.
"A lot has been said about our new privacy policy," she wrote. "Some have praised us for making our privacy policy easier to understand. Others have asked questions, including members of Congress, and that's understandable too."
Among the points that Masiello makes in the post:
_ Users don't have to be logged in to use many of Google's products, including search and YouTube. No data is collected when a user is not logged in.
_ When logged in, users can edit or turn off their search histories, switch Gmail chat to "off the record," use "incognito mode" on the Google Chrome browser or employ other of Google's privacy tools.
_ Quite simply, Web users don't have to use all of Google's products.
She noted that Google won't be collecting any more data about users than it was before.
"We're making things simpler and we're trying to be upfront about it. Period," she wrote.
Not everyone was convinced.
While noting that there are some advantages to having your information stored in one place, Brent Rose wrote for tech site Gizmodo that there are some scary aspects to it as well.
"There are certainly reasons to be concerned about keeping all of your eggs in one basket. It means there's a single point of failure, which makes me nervous," Rose wrote. "The fact that you can't opt-out of shared search data, and that Google will know more about you than your wife? That's a little creepy."

S Moon Base Pledge From White House Hopeful

Presidential candidate Newt Gingrich has tried a new tactic to win voters - by promising to establish a permanent US base on the Moon by 2020 if he is elected.

He told a crowd near the Kennedy Space Centre, on Florida's so-called Space Coast, that he wants to build a commercial space industry that can enjoy the kind of boom airlines saw in the 1930s.

Republican Mr Gingrich, who is battling other candidates for the top job at the White House, also wants to expand the exploration of Mars.

Gingrich wants a return to glory for the US space programme

The announcements won applause from hundreds of local aerospace bosses and community leaders, who have seen the space industry badly hit by federal cuts under Barack Obama.

"We want Americans to think boldly about the future," said Mr Gingrich during the campaign rally.

"By the end of my second term we will have the first permanent base on the Moon and it will be American."

Mr Gingrich said he would offer financial prizes – worth 10% of Nasa's $18bn (£11.5bn) budget - to help stimulate investment in space missions from private firms.

Thinking big: Newt Gingrich was campaigning on Florida's Space Coast

Since the space shuttle programme came to an end last year, the US has been reliant on Russia to fly its astronauts on piggy-back missions to the International Space Station – at a cost of some $60m (£38m) per person.

A total of 12 Americans have left their footprints on the Moon in six manned missions, though the US last sent astronauts to land there in December 1972.

The race to put the first man on the Moon began in May 1961, when then-US president John F Kennedy announced America's ambitious goal.

Mr Gingrich is in a close battle with Republican candidate Mitt Romney ahead of the presidential primary in Florida on Tuesday.

Mr Romney said earlier this week that space exploration should be a "priority".

Nokia Loses Smartphone War Amid £1bn Loss

Nokia has reported a billion pound loss for last year as the world's largest mobile phone maker struggles to maintain its market position.

The Finnish company posted a net loss of £1.01bn in 2011, compared to a £1.5bn profit for 2010.

It suffered a £90m shortfall in the final three months of last year, in stark contrast to a profit of £625m in the same period a year earlier.

Nokia phones are still the industry's biggest seller, but Apple iPhones and Google Android phones are overtaking it in the growing smartphone market.

Nokia has attempted a comeback with smartphones using Microsoft Windows software, which hit stores in Europe and Asia in November and the US in January.

Nokia Share Price 1-Year Chart

But despite selling one million of the new Lumia phones it has failed to compensate for an overall sales drop of 21% in the fourth quarter of 2011.

Analyst Nick Dillon from research firm Ovum said: "More than one million shipped Windows Phones to date is more than some were expecting, [but] it's not going to worry Apple or Google."

In an interview with Sky News, he added: "There's still a chance for [Nokia], but the longer it leaves it the more entrenched those competitors will be."  

Apple recently announced record iPhone sales and the best quarterly trading period in the company's 35-year history. 

Michael Schroder, an analyst at FIM, added: "The report highlights that the start of the Windows strategy is slow, and we have very little concrete data to predict its success at this point.

"Uncertainty is still great.

Smartphone war: Nokia hopes to match the popularity of the Apple iPhone

"These are critical times for the future of the whole company. The next months will be extremely important."

But Nokia CEO Stephen Elop remained buoyant.

He said: "From this beachhead of more than one million Lumia devices, you will see us push forward with the sales, marketing and successive product introductions necessary to be successful."

Twitter has said it will start blocking tweets in specific countries rather than withholding them across the whole network.

Twitter has said it will start blocking tweets in specific countries rather than withholding them across the whole network.

 

Tweets will be restricted on a country-by-country basis

Until now, the microblogging site had to remove a Tweet from across the service if it got a request from a government.

But the company said it now has the ability to block selectively messages from appearing to users in a particular country.

It said examples may include "pro-Nazi content" in France and Germany, where such material is banned.

The move to censor certain tweets is a significant change from its position during the Arab Spring in 2011, where protesters in Tunisia, Egypt and elsewhere used Twitter to co-ordinate demonstrations.

As the protests gathered momentum last January, Twitter signalled it would take a hands-off approach to censoring content in a blog post entitled The Tweets Must Flow.

Websites like Twitter helped garner support for protests in Egypt

"We do not remove tweets on the basis of their content," the blog post read.

It added: "Our position on freedom of expression carries with it a mandate to protect our users' right to speak freely and preserve their ability to contest having their private information revealed."

But now a new blog post by Twitter said: "Starting today, we give ourselves the ability to reactively withhold content from users in a specific country while keeping it available in the rest of the world."

The firm also admitted that even with the possibility of such restrictions, Twitter would not be able to co-exist with some countries.

"Some differ so much from our ideas that we will not be able to exist there," it said.

Twitter went on to say that in the interest of transparency, it had built a mechanism to tell users a tweet was being blocked.

Robot cleaner a 'game changer' for hospital infection epidemic

 NEW YORK (CNNMoney) -- Hospitals are supposed to be the place where the sick get well. They can also be where the sick get sicker, thanks to the virulent bacteria and viruses that live there.

At any given time, 1 in 20 hospital patients is battling an infection that they got on site, according to the Centers for Disease Control. Hospitals now pay greater attention to hand hygiene -- Purell dispensers have become ubiquitous -- but their main infection control methods haven't changed much for decades. Most rooms are still disinfected by housekeepers armed with chemical cleaners.

Enter the Xenex, a mobile, robotic device that combats germs with blasts of light. It looks like Star Wars' R2D2 with a handle, but it's a killing machine -- if you're a microorganism. Set it loose in a hospital room and it will chirp and click its way through a cleaning routine of strobe-like pulses. Those flashes are what's called "pulsed xenon UV," a type of ultraviolet light that sterilizes and kills microbiological contaminants.

Epidemiologists Julie Stachowiak and Mark Stibich developed the technology that powers the Xenex at the Houston Technology Center. To commercialize the system, they needed to build a business. That's where Brian Cruver, a former Enron trader, came in. After starting his career at the company that became infamous for its corruption -- a story Cruver told in the book Anatomy of Greed -- Cruver shifted his career toward entrepreneurship.

"I wanted to get involved with ventures that did some good," he says.

Cruver joined Xenex in 2009 as the company's CEO. The Austin-based venture now has 30 employees and has raised about $5 million from investors.

The Xenex disinfects a hospital room in about five to 10 minutes, focusing on high-touch surfaces like tray tables, telephones, and bedrails. After housekeepers finish cleaning a room, they wheel the machine in and hit go. "It's easier to use than a vacuum cleaner," Cruver says.

It also works. At Cooley Dickinson Hospital in Northampton, Mass., 1 in 129 patients came down a hospital-acquired infection in 2010. Last January, Cooley began using the Xenex device. It subsequently saw a 67% drop in infections from C. diff, a toxic superbug that can cause diarrhea, sepsis and death.

"We think we might have saved five lives and prevented two colostomies," says Dr. Joanne Levin, medical director of Cooley's infection prevention program. Dickinson now has two Xenex machines and is getting a third this year, with the goal of using it in every room.

An average-sized hospital, with about 120 beds, would need two Xenex devices to clean all its rooms. Each one costs about $80,000, and can be bought or leased.

That's not cheap -- but infections aren't either. It costs U.S. hospitals about $35 billion a year to treat hospital-acquired illnesses. The price tag for treating one case of a common bug, MRSA (methicillin-resistant Staphylococcus aureus), is about $28,000, according to Dr. Mary Jo Cagle, the chief quality officer of Cone Health, a five-hospital healthcare system in North Carolina.

Since four of Cone's hospitals began using the Xenex last January, the chain has reduced its incidence of MRSA infections by 35% hospital-wide, and lowered it to zero in the intensive care units.

"This has been a game-changer for us," Cagle says.

Xenex's market is potentially huge. In the U.S. alone there are about 5,800 hospitals. Xenex's technology is currently in around two dozen hospitals, and the company hopes to have it in 240 by the end of this year. It's also moving into Europe and Asia.

Ramanan Laxminarayan, director of the Center for Disease Dynamics, Economics & Policy in Washington D.C., says that as long as Xenex's technology is cost effective for hospitals, he sees little downside. "It already has an advantage in the marketplace because it doesn't require doctors or nurses to change their behavior or do more," he says.

Cone Health estimates that it has saved nearly $3 million by using the Xenex device.

"Rooms are cleaned faster and are safer now," Cagle says. "When you're talking about critically ill patients, just getting them into a room 15 minutes faster can mean the difference between life and death." 

AT&T outduels Verizon in iPhone

 NEW YORK (CNNMoney) -- AT&T handily beat Verizon in the battle for iPhone customers last quarter, but the company lost $6.7 billion in large part due to its failed merger with T-Mobile.

The nation's second-largest wireless company said Thursday that it sold 7.6 million iPhones during the holiday quarter, which bested arch rival Verizon's (VZ, Fortune 500) 4.2 million. Despite the fact that Apple's (AAPL, Fortune 500) iPhone has been available on multiple carriers for almost a year, AT&T (T, Fortune 500) has continued to outpace its rivals every quarter.

Sprint Nextel (S, Fortune 500), which began to sell the iPhone last quarter, will report its sales figures on Feb. 8.

Verizon Wireless had a very good quarter, adding 1.2 million new customers under contract. AT&T added only 717,000. But AT&T bested its competitor for the most lucrative customers in the high-end smartphone market by a sizable margin.

AT&T sold a stunning 9.4 million smartphones in the quarter, 50% above its previous quarterly record and more than the 7.7 million sold by Verizon. About 82% of AT&T's phones sold last quarter to customers with two-year contracts were smartphones, higher than the 70% Verizon sold to its contracted customers.

As a result, 57% of AT&T's wireless customers under contract are now smartphone customers, compared to 44% for Verizon. AT&T's average revenue per user was $63.76, much higher than Verizon's $53.14.

But the flip side of that success is that, like Verizon, all that smartphone growth is coming at a steep cost. Both companies pay heavy up-front subsidies to manufacturers to bring the cost of smartphones down to roughly $200. Sprint for instance, recently said it expects to lose money on the iPhone until 2015.

AT&T's wireless service profit margin was squeezed to 38% -- down from almost 41% a year ago. Verizon performed only slightly better with a 42% wireless service margin.

Shares of AT&T fell 2% on Thursday.

To address the issue, AT&T recently raised rates on its smartphone and tablet service by about $5 per month.

AT&T said it is also looking for cost savings elsewhere. For instance, it is continuing to deploy its more efficient 4G-LTE network, which the company said can add between 30% and 40% more capacity than 3G.

But the wireless giant said it continues to lobby the government to free up wireless spectrum, which it says is key to making its network more efficient.

"LTE is not the silver bullet," said Randall Stephenson, AT&T's CEO, on a conference call with analysts. "We continue to advocate for more open options to come as soon as possible."

Last year, AT&T attempted to buy T-Mobile for $39 billion in order to acquire more spectrum. But that deal failed to gain the government's approval due to antitrust concerns. So AT&T was forced to pay T-Mobile's parent company a break-up fee of $4 billion last quarter.

AT&T also incurred separate, one-time losses from its benefit plan and investments. Combined, AT&T lost $6.7 billion in the quarter, compared to a $1.1 billion gain a year earlier.

Excluding those one-time items, AT&T earned 42 cents per share, just shy of the 43 cents forecast by analysts surveyed by Thomson Reuters.

Sales grew 4% to $32.5 billion, higher than the $32 billion expected by Wall Street analysts.

Study: Multitasking hinders youth social skills

(CNN) -- FaceTime, the Apple video-chat application, is not a replacement for real human interaction, especially for children, according to a new study.

Tween girls who spend much of their waking hours switching frantically between YouTube, Facebook, television and text messaging are more likely to develop social problems, says a Stanford University study published in a scientific journal on Wednesday.

Young girls who spend the most time multitasking between various digital devices, communicating online or watching video are the least likely to develop normal social tendencies, according to the survey of 3,461 American girls aged 8 to 12 who volunteered responses.

The study only included girls who responded to a survey in Discovery Girls magazine, but results should apply to boys, too, Clifford Nass, a Stanford professor of communications who worked on the study, said in a phone interview. Boys' emotional development is more difficult to analyze because male social development varies widely and over a longer time period, he said.

"No one had ever looked at this, which really shocked us," Nass said. "Kids have to learn about emotion, and the way they do that, really, is by paying attention to other people. They have to really look them in the eye."

The antidote for this hyper-digital phenomenon is for children to spend plenty of time interacting face-to-face with people, the study found. Tweens in the study who regularly talked in person with friends and family were less likely to display social problems, according to the findings in the publication Developmental Psychology.

"If you eschew face-to-face communication, you don't learn critical things that you have to learn," Nass said. "You have to learn social skills. You have to learn about emotion."

The Stanford researchers were not able to determine a magic number of hours that children should spend conversing per week, Nass said. Social skills are typically only learned when children are engaged and making eye contact, rather than fiddling with an iPod during a conversation, he said.

FaceTime and Skype are not replacements for actual face time because other studies have found that people tend to multitask while on video calls, Nass said.

Nass is a self-described technologist of 25 years, who has worked as a consultant with many major electronics firms, including Google and Microsoft. He said the findings disturbed him.

A few years ago, Nass worked on a study about how multitasking affects adults. He found that heavy multitaskers experience cognitive issues, such as difficulty focusing and remembering things. They were actually worse at juggling various activities, a skill crucial to many people's work lives, than those who spent less time multitasking, Nass said.

Google seeks to clarify new privacy policy

(CNN) -- Seeking to blunt a sharp backlash to recent privacy policy changes, Google has offered to share "the real story" about a system that compiles information about users based on their activity on all of 

Google's sites and products.

This week, Google announced new privacy settings. They spell out the fact that the company collects and compiles data about its users based on their activity on its various sites -- from its search page to Gmail to YouTube to phones running its Android operating system.

The announcement gave some privacy advocates cause for alarm, even though Google says the information is assembled to enhance user experience, such as better targeting ads that will be of interest to its customers.

Perhaps most notably, eight members of Congress, both Democrats and Republicans, wrote a letter to Google CEO Larry Page asking for clarification about the changes.

"While Google suggests that the purpose of this shift in policy is to make the consumer experience simpler, we want to make sure it does not make protecting consumer privacy more complicated," reads the letter. The lawmakers also noted that because of Google's global reach, the change "potentially touches billions of people worldwide."

It asks Google to share what kind of data it currently collects and explain how information collected under the newly announced system will be used.

In a post on the company's public policy blog, Google's Betsy Masiello wrote that there have been misconceptions about the changes.

"A lot has been said about our new privacy policy," she wrote. "Some have praised us for making our privacy policy easier to understand. Others have asked questions, including members of Congress, and that's understandable too."

Among the points that Masiello makes in the post:

_ Users don't have to be logged in to use many of Google's products, including search and YouTube. No data is collected when a user is not logged in.

_ When logged in, users can edit or turn off their search histories, switch Gmail chat to "off the record," use "incognito mode" on the Google Chrome browser or employ other of Google's privacy tools.