Facebook changes creeping out some customers

At the F8 conference yesterday, Facebook CEO Mark Zuckerberg showed off some of the most drastic changes ever made to the company's service. And though Zuckerberg is excited by those changes, many folks across the Web aren't so quick to celebrate.

The fear among some users relates to what some say could become a potentially worrisome privacy situation on the social network, led by Timeline and changes to Open Graph.
Timeline provides users with a way to view "the story of your life," according to Zuckerberg, including a collection of all the "stories" uses have shared on Facebook over the years, as well as the pictures they've posted and the applications they've used.
Facebook's updated Open Graph will make the social network far more "sticky." Zuckerberg said users will have the ability--thanks to Timeline and a new addition, Ticker--to see what a friend is doing, like watching a movie on Netflix or listening to a song on Spotify, and engage in that same activity from within the social network. The Facebook CEO said he believes the improvements will help create "a completely new class of social apps" that will let users share every single facet of their lives on the social network.

"All those activities people perform with these apps--listening to a Bjork tune, reading about same-sex marriage laws, cooking Arroz con Pollo, running four miles, donating to Amnesty International--will be stored permanently and made accessible (if the user allows it) on a greatly enhanced profile page that will essentially become a remote-control autobiography," Wired's Steven Levy wrote about the update.
It's that concept of Facebook becoming an "autobiography" that's scaring some folks.
"Is there any way I can upload my browser history, bank statements, and medical records to Facebook?" Twitter user @adrianshort asked today. "Might as well do this properly."
Those sentiments were echoed earlier today by CNET commenter "OneAmazedHuman" who said that the social network's additions are making some people consider leaving the site.
"Frankly, after this last round of messing around with Facebook, there are a whole lot of us thinking seriously about dumping it," OneAmazedHuman wrote. "[I] hate everything they threw at us lately. What happened to 'If it ain't broke, don't fix it?'
"Facebook is getting too intrusive and sneaky," OneAmazedHuman continued. "If I can find another place to play Scrabble, I'm probably out of there. I can live without it nicely. When it was fun, it was fun. It isn't that anymore. Thanks, Zuckerberg. Why didn't you just create something new to mess around with and leave Facebook as is?"

However, there are some people who have already left Facebook because of the changes. One Twitter user, @qwghlm, tweeted earlier today that "after F8 last night, I decided to finally quit Facebook." CNET commenter "JamesOnTheWay" said that he too dropped Facebook and has moved over to Google+.

Drastic measures aside, there are some who are taking a wait-and-see approach to Facebook's changes. Twitter user @JulesHanna tweeted yesterday that the F8 presentation "reinforced my belief that Facebook's becoming the operating system of the human Web. Brilliant, yet alarming in its implications."

Though the outcry over Facebook's changes is strong, the company has survived such complaints in the past. In 2009, following a major redesign of the site, the social network was hit hard by users who complained about the changes. At the time, a Facebook app that polled users on their thoughts about the changes found that hundreds of thousands of users were upset by the move. And like now, many of those folks said that they would leave the social network.
That said, at that time, Facebook had more than 175 million users. At the F8 conference yesterday, it was revealed that Facebook now has over 800 million members worldwide. So if those departures did, in fact, occur, they certainly weren't crippling to the social network.
Also playing into Facebook's favor this time around, there isn't near-universal outcry over the changes like there was in 2009. In fact, there are some people that are quite pleased with the company's modifications.

"Got my new Facebook timeline looking good," Twitter user @angelarenee09 tweeted today. "Love these fun changes!"
So, while that might just be one opinion, it's quite clear that in the social world, everyone has a different idea of what's good and bad. And Facebook--for better or worse--is learning that all over again today.
Facebook did not immediately respond to CNET's request for comment on user reaction to the changes.

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Google Wallet opens for business

Google Wallet, which will allow people to tap or swipe their phones to pay for things, officially launches today on its first smartphone, the Samsung Nexus S offered on Sprint Nextel.

While several other companies, including credit card giants Visa and American Express, as well as mobile wireless carriers, have also announced plans to launch their own digital wallets, Google is the first to take its digital wallet to market.
Citibank, MasterCard, and Sprint are the initial launch partners for the service. What this means for users is that, initially, virtually the only credit cards that will work with Google Wallet are Citibank MasterCards. Google is also offering a Google Prepaid MasterCard as well, a workaround for people who may not have a Citibank MasterCard. People who want to use this card can preload money from other credit cards onto the Google prepaid card. And then they can make purchases using the phone.

Sprint is the first official carrier partner since it is the carrier offering the Nexus S 4G. But as other Android smartphones equipped with NFC (near-field communications) technology come on the market, other devices on other carriers will eventually be able to use the service too.
Google also said today that it has licensed NFC technology from other major credit card companies: American Express, Visa, and Discover. This means that upcoming versions of Google Wallet will support those credit cards as well.

"In the future, our goal is to make it possible for you to add all of your payment cards to Google Wallet, so you can say goodbye to even the biggest traditional wallets," said Osama Bedier, vice president of payments at Google.

Google hasn't said how long it will before it expands the Google Wallet offering beyond its initial launch partners. For consumers to load other credit cards, Google will also have work out agreements with various payments that issue the credit cards. John Partridge, president of Visa, said in an interview that it would likely be a matter of months before all the necessary work is completed to put a Visa credit card in Google Wallet.

"What has to happen next is that the banks have to have to agree to give access to their payment credentials," he said. "Those discussions are already under way. But in terms of logistics, I'd say it's a matter of months. Not a long period of time."
Google announced the new virtual payment system in May.

How it works

The way Google Wallet works is simple for users. There is a chip embedded in the phone that uses NFC technology, which allows for secure communication between devices at very short distances.
MasterCard has PayPass terminals at more than 144,000 merchants throughout the country, including in New York City taxi cabs. And Google Wallet should work on all of them. MasterCard has included a free app as part of the Google Wallet experience that helps customers locate PayPass terminals.

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Who stole Netflix's mojo?

Even if you believe that splitting Netflix into two services and raising prices is the right plan for the company in the long term, the moves in the near term have many subscribers asking whether managers value them.

"Reed is the visionary, and Barry was the balanced business guy. Barry was to Reed like Steve Ballmer was to Bill Gates."
--Michael Pachter, analyst

Many Netflix users are outraged for the second time in the past three months. CEO Reed Hastings offered an apology last night in a letter to customers as well as in a video message for the way the company announced a price increase in July. He didn't say he was sorry for the actual price hike, and more importantly, he also said Netflix was splitting itself into two separate services. The new Netflix will be involved in streaming video over the Web exclusively, while the other service, called Qwikster, will oversee DVD by mail.
Some analysts and customers argue that Netflix has made plenty of other missteps in the past several months. The company couldn't close a licensing agreement with Starz, the pay-TV service that owns Web distribution rights to content from Sony Pictures and Disney. That means Netflix's streaming library will offer even fewer films from the top Hollywood studios. Much of Hollywood is lukewarm about Netflix's business model and the company has struggled to acquire streaming rights for popular films.

Then, last week Netflix acknowledged that it was overly optimistic about how the price increase would affect subscriber numbers. Netflix announced two months ago that it would break up a popular hybrid subscription plan that enabled users to rent DVDs as well as provide access to the company's streaming-video library, all for $10 a month. Many customers were angered when Netflix said beginning this month it would split movie streaming and DVD rentals into two separate plans, each costing $8 per month.

That meant for former hybrid users the price went from $10 to $16 each month if they wanted to continue receiving discs and streaming. Netflix underestimated the reaction. Last week the company said that 1 million fewer U.S. subscribers will be around in the third quarter than it initially predicted in July. This marks the first time that Netflix will see a drop in subscribers in sequential quarters in four years.

Nothing, though, is as damaging to customer relations as the latest decision to "complicate" the Netflix experience, says Michael Pachter, a financial analyst with Wedbush Morgan Securities. The simplicity of ordering a disc or watching a movie via the Web streaming service for one low price is one of the reasons Netflix's service was so attractive to consumers. Now, Hastings has done away with that.

Hastings said in his letter to customers: "A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated."
Pachter said: "This tells me that you won't have a connection between the sites. That means at Qwikster you're not going to know what's available for streaming at Netflix and you will have to make two trips to find out. The first rule for marketers is don't make things more complicated for consumers. This is like if Amazon removed the 1-click buying button. This is the dumbest mistake I've seen the company or really anybody make in a long time...it's a joke."
Wow. That anybody is calling Netflix "dumb" is astonishing. This is a company that has seemingly had stardust sprinkled over it for much of the past decade. Hastings and his management team chased much larger traditional rental services Blockbuster and Movie Gallery into bankruptcy. Instead of standing pat with their DVD-by-mail service after their triumph, managers leaped into online streaming well before competitors. The service has seen explosive growth the past two years. Wall Street rewarded Netflix by sending the stock to $304 a share in July.
But as of today, the stock is down more than half that. In midday trading, Netflix shares were down 4.8 percent, or $7, to $147. How did this happen? Why does the company seem to be suddenly stumbling? What changed?

Here's one place to look: Outside observers note that the management team that was largely unchanged for a decade and helped forge all the victories over Blockbuster and rivals has lost some key members in the past year. First, Barry McCarthy, the company's chief financial officer, left in December and was replaced by David Wells. Ken Ross, Netflix chief of worldwide corporate communications, retired and was succeeded in January by Jonathan Friedland, who was previously senior vice president of corporate communications at Disney.

Certainly, Wells and Friedland are well-respected but all the indications are that the departures of McCarthy and Ross are being felt.
According to insiders, Hastings listened and respected McCarthy's judgment, and the former CFO often used his clout to stand up to the CEO when he thought he was wrong. McCarthy did not respond to interview requests.
"Reed is the visionary, and Barry was the balanced business guy," Pachter said. "Barry was to Reed like Steve Ballmer was to Bill Gates."
McCarthy's influence might have helped the company avoid the recent goof on its subscriber projections for the third quarter. He didn't oversee that kind of data crunching but he might have had a say in how it was presented and when. This is the kind of thing he would have studied closer, said insiders. Those with knowledge of the company's processes said the company made the predictions public though managers had based them on insufficient data and study. This is basic blocking and tackling for the company. In the past, Netflix has won praise for its ability to use the information it collects on users to help it make smart moves.
A mistake like that is something that insiders say McCarthy might have helped prevent.
After 11 years at Netflix, McCarthy had also earned respect and trust on Wall Street and with the company's major investors. He might have helped soften the blow to the company's stock from some of these setbacks.

As for the change in tone in Netflix's communications to customers, Hastings acknowledged in his post last night that the company's message about the price hike, delivered via a blog post from a mid-level manager and that offered little explanation or insight, was wrong.
"When Netflix is evolving rapidly," Hastings said in his letter to customers last night, "I need to be extra-communicative. This is the key thing I got wrong. In hindsight, I slid into arrogance based upon past success."
But who is supposed to help Hastings sound the right tone with customers? It used to be Ross, but now it is Friedland. That said, it can't be forgotten that regardless of what kind of job they're doing or what McCarthy or Ross would have done differently, Hastings has always held the final say on big decisions, say insiders.
So, the past three months have been a rough patch for Netflix but it was probably unrealistic to expect that the company's attempt to usher in a completely new way to rent videos would occur without some bumps. Acquiring streaming rights for sought after movies and TV shows was always going to be harder than obtaining DVDs, which the company could buy from a multitude of other retailers and sources whenever the studios tried to limit Netflix's ability to obtain them.
To stream content, however, there is no way around the studios.
But Hastings has shown for the better part of a decade that he's one of the most creative thinkers and strategic planners in the tech sector and if anybody can pull off the breaking up of Netflix services and operate a successful streaming subscription offering, it's him.
We can't forget that the online video sector is brand new and its development has a long way to go. There's still plenty of time for Hastings to pull the company out of this rough patch.

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Obama/Air Force One flight plan shows up on blog

As tomorrow's September 11 anniversary dominates headlines and a former Air Force One pilot recalls his nervousness during the attacks, Japan is in damage-control mode over the posting of President Obama's flight plan to an air traffic controller's personal blog.

Japan's Transportation Ministry said today that an air traffic controller at the Tokyo International Airport at Haneda could be charged for leaking national secrets, the New York Times reports.

In November, during a visit to Asia by President Obama, the controller posted detailed flight plans for Air Force One--plans usually kept secret--along with information about an American military drone that was taking radiation readings near the earthquake-hobbled Fukushima Daiichi nuclear plant.

Japanese officials said they learned of the leak Monday.


President Obama meets with staff in the conference room aboard Air Force One in April 2009.


The controller apparently posted the 12 pages of information simply to show his friends, the Times reports, in what seems to be yet another example of someone displaying remarkable cluelessness as to the sensitivity of data and the public nature of the Web.

Earlier this week, a prestigious hospital confirmed that a spreadsheet containing private patient data had wound up online as, it seems, a component of a student's homework assignment. And the Times points out that the flight plan leak recalls an episode in 2007 when a Japanese Navy officer copied classified data about a U.S. radar system and handed it out on CD-ROMs to classmates at his naval school.

The flight plan data, which contained numerical information and a map and has since been removed, was likely unintelligible to the layperson, the Times reports.

But with the specter of September 11 currently looming large, the news could rattle a few nerves. CBS' "Early Show on Saturday" ran an interview today with former Air Force One pilot Mark Tillman, who talked about his fears at the time of the terrorist attacks.

"I was very concerned," Tillman told the show's anchors. "Obviously, I've got the president of the United States on board, so obviously, you have to assume that we are a target."

Citing Japan's Yomiuri Shimbun newspaper, the Times says Japanese Prime Minister Yoshihiko Noda, who's scheduled to meet with President Obama this month, may offer a personal apology for the leak.

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Adobe's good WEEK

This is typically the time of year when Apple breaks out its latest crop of iPods and updates to its iTunes software. Now all signs point to Apple gearing up for the launch of its next iPhone instead. Given that, it's worth briefly turning our attention to Adobe, which had a particularly good week on Apple's platforms.

Let's start off with Adobe's Flash, which continues to not run on Apple's iOS hardware. Despite that hurdle, Flash-derived game Machinarium this week hit the No. 1 spot in Apple's paid apps category on the App Store. The $5 title, which was originally launched on Adobe Flash, was recompiled for Apple's iOS, giving gamers a chance to play a game they couldn't in the browser that ships on the iPad.

Adobe also updated its Flash Media Server software this week, adding support for Apple's iOS. As David Meyer explains over on ZDNet, the software now lets broadcasters stream Flash video content in Apple's HTTP Live Streaming format, so it will work on iPhones, iPads and iPods. Worth noting is that the technology is only good for video content, and not things like Flash-based sites and games, where products like iSwifter, Skyfire, and Photon can fill in the gaps using a similar streaming-based approach.

Finally, there's Adobe Premiere, which the company says has seen a sales pick-up following Apple's introduction of Final Cut Pro X in June. In a press release covering its announcements at the IBC Conference in Amsterdam this week, Adobe said it has seen 45 percent growth of its Creative Suit 5.5: Production Premium product on the Mac. Adobe attributed that gain to the Final Cut switcher program it introduced in July that gives Apple Final Cut Pro and Avid Media Composer users a 50 percent discount for switching.

Read on to find out all of this week's big Apple news and rumors, and to check out my answers to your Apple-related questions.


Apple news of the week

SF police launch probe into iPhone prototype search
A representative for the San Francisco Police Department told CNET this week that the department has started an internal investigation into how officers assisted two Apple security employees in the July search of an SF home for a lost phone prototype.


Cava22, the San Francisco tequila lounge where an apparently unreleased iPhone went missing, sparking a hunt by Apple internal security.

Apple's Hong Kong store to open soon
Apple is expected to open up its first store in Hong Kong later this month. The 20,000-square-foot store is located in the city's International Finance Center Mall.

Apple begins charitable matching program for employees
Apple this week began a new charity program, matching employee contributions to nonprofit organizations dollar-for-dollar, up to $10,000 a year per employee. According to an internal memo captured by Macrumors, the new program begins next week.

Deutsche Telekom begins offering iPhone 5 reservations
In an unusual move, European carrier Deutsche Telekom this past weekend started offering customers a way to reserve the iPhone 5--that is, as long as they didn't call it that by name when asking for a reservation. Apple, of course, has not officially announced the device.

Germany's ban on Samsung's Galaxy Tab 10.1 upheld
A German court banned the sale of Samsung's Galaxy Tab 10.1 for infringing on Apple's patents. Apple won a preliminary injunction seeking similar ends last month, and this week's decision marks a more permanent ban. Samsung has said it will appeal the ruling. In related news, Apple sued Samsung in Japan this week, seeking a ban on its Galaxy S and S II smartphones, and the Galaxy Tab 7 tablet.

Apple tops J.D. Power rankings in smartphone customer satisfaction
For the sixth consecutive time, Apple's smartphones ranked highest in customer satisfaction, according to a survey by J.D. Power and Associates. Apple scored 838, ahead of Samsung, which pulled 718 and also managed to top the ranks in feature phones (or non-smartphones).

Apple rumors of the week

Is this the first public photo taken by an iPhone 5?
A photo of a plate of sushi taken by an Apple engineer made waves this week, shortly before being pulled down. Spotted by mobile news site Pocketnow, the photo was posted to Flickr and identified as being taken on an iPhone 4, but its EXIF data painted a slightly different picture, with specs that matched up to a camera with a larger sensor. The assumption then is that it was captured with the camera of Apple's next iPhone, which is expected to sport an 8 megapixel sensor, up from the iPhone 4's 5-megapixel camera.

Sprint iPhone to get unlimited data plan? Building on reports from last month that Sprint would be getting Apple's next iPhone, Bloomberg chimed in this week with a report saying the device will be eligible for Sprint's unlimited data plan. As my colleague Roger Cheng argues, this could be a limited time offer based on what other carriers have done after getting the device.

Apple's Thunderbolt Display, announced in July, is reportedly on its way to retail stores.

Apple's Thunderbolt Displays on the way to retail stores?
In an unverified report, Macrumors this week said Apple has started to ship its 27-inch Thunderbolt Display to its stores and resellers, hinting that its release is imminent. The $999 display, which replaces Apple's LED Cinema Display line, was originally unveiled in July alongside a handful of other hardware updates. It was the only one of the bunch that wasn't immediately available at the time.

Apple cooking up an "X" overhaul to Logic Pro?
Japanese Apple tracking site Macotakara this week reported that the next version of Logic Studio, Apple's professional audio suite, will get a similar treatment to what the company did with Final Cut Pro X. That includes integrating previously separate applications, while selling others on their own. Logic Studio saw its last update in July 2009.

Apple put $800 million bid on Dropbox, report claims
Noting that its information is "gossip that isn't perfectly sourced," Business Insider says Apple was one of two companies that put down an offer to acquire file storage and sync service Dropbox ahead of its latest round of funding. Apple's upcoming iCloud service arguably competes with Dropbox in some areas, but the idea of it being acquired opens up an interesting "what if?"

Apple thinning the battery for the iPad 3?
This week the Taiwan Economic News reported that battery suppliers Simplo technology and Dynapack International Technology had cooked up a battery that was thinner, lighter, and longer-lasting than the iPad 2's battery, and that's expected to be used in Apple's next tablet. If past launches are any indication, that device should be rolling out early next year.


This week in Apple history

This week in 2003, Apple sold its 10 millionth song on the iTunes Music Store. That benchmark came four months after the store's launch. What was the song? Avril Lavigne's "Complicated." Apple would go on the following month to release a version of iTunes for users on Microsoft's Windows operating system, and announce that it had sold another 3 million songs.

Last February, Apple's music store served up its 10 billionth song sold. The company rewarded buyer Louie Sulcer of Woodstock, Ga., with a $10,000 iTunes gift card.

Reader question of the week

Jenny H. asks:

"Laptop or iPad for high school student use? I have two children within a year of each other and they want iPads for school use, and I see them as entertainment devices. They say they are educational devices. Is this accurate? I want to put the right technology in their hands and consider this a crucial platform-inaugural. Please advise. All over the Web there is no tool I can find that will allow me to compare the two directly."

There are definitely two sides to this argument, and there are good points on both. My honest advice is to go with a laptop, since Mac OS X is far better at multitasking than iOS currently is.

If the main use of the machine is for taking notes, writing papers, and things like Web browsing and chatting, Mac OS X does a better job at letting you do them concurrently. Though iOS has certainly become more capable of the juggling act, it's not quite as polished.

On the flip side, some high schools have begun implementing textbook programs through eBooks, as well as outfitting their students with Apple's iPad. The thing is, these schools are picking up the cost of the device, like Woodford County High in Woodford County, Ky., which distributed iPads to 1,250 of its students last month.

As for giving the two devices hands-on time, your best bet is to go to a retail store that carries display models of both.

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Welcome to Challengers, a blog about the next big things

Out with the old. In with the new. That's been the way of the personal technology industry for as long as there's been a personal technology industry. (I cut my computing teeth on Radio Shack's TRS-80--a personal computer that helped render the original personal computer, MITS' Altair, obsolete in the late 1970s.)

It's also the beat I'll cover here in Challengers. This blog is focused on new things--companies, products, services, and technologies--that aim to go head-to-head with established ones. I'll explore what makes them different and, in theory at least, better. And while I'm not in the business of making predictions, I will ponder the new arrivals' odds of success. (For every one that changes the world, there are scads more that never live up to their creators' expectations--anyone remember Iomega's Pocket Zip or the FlipStart PC?)

I've written about technology for a couple of decades now, and for most of that time I've followed CNET--as a reader and, for many years, a competitor. It feels great to finally see my name on the same page as that red logo. (These days, I also run my own site, Technologizer, and contribute to Time and AllBusiness.com.) See you again soon, and frequently. In the meantime, I'd love to know which emerging innovations you're most excited about--and which ones you think don't stand a chance.

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Sprint offers the most data bang for the buck

If you're a heavy data user, Sprint offers the most bang for your buck, according to a study released today.

For $1, you get 12.5 megabytes of data, which breaks down to 8 cents per megabyte, by far the best among the national carriers. Surprisingly, T-Mobile offers the worst deal at 4.3 megabytes for every dollar spent, or 23 cents per megabyte.

That's based on a study of "real world" prices conducted by Validas, which provides automated wireless bill analysis and reduction services to consumers and companies.

AT&T, meanwhile, came in second at 5.6 megabytes for every $1 spent, or 18 cents per megabyte, while Verizon Wireless offered 5 megabytes per data, or 20 cents per megabyte.

The study looked at how much, on average, a customer spent on a smartphone data plan and looked at how much data was consumed at each carrier. Sprint got the best stats because more of its customers are on a higher-speed 4G network: a faster connection means more data consumed. The carrier also offers attractive data rates and a completely unlimited plan, which has liked drawn in heavy users.

Sprint doesn't offer the best prices on an absolute prices. For that, you would have to go to T-Mobile, which has been slashing its smartphone plans as it seeks to win back customers. But on a per-megabyte basis, you end up getting more value from Sprint.

Since last year, AT&T has used a usage-based pricing system, which limits how much data can be used without paying overage fees. Verizon switched to a similar model in July.

T-Mobile doesn't have limits on data usage, but has long employed a practice called throttling, which limits a person's connection speed when data consumption hits a certain level.

AT&T and Verizon have both changed their own policies to allow for the throttling of excessive users.

Beyond Sprint, Validas notes that the prices are high largely because the connection speed for wireless service is so slow. Consumers would use more data if they were able to.

"It's not that people don't want to use the data--it's that they're hampered by slow network speeds," the report says.

The other carriers are starting to catch up. Verizon Wireless deployed its faster 4G LTE network late last year, and began selling smartphones for the service earlier this year. The study based its usage and plans on the first half of the year, where there were likely too few Verizon 4G customers to move the needle. AT&T plans to launch its own 4G LTE network in the coming weeks.

For Sprint, the combination of an unlimited data plan and a reasonable smartphone plan gives it an attractive combination to sell to customers. Just as long as they keep that unlimited plan going.

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