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Tuesday, January 29, 2008

String Theory Gets a Boost-Based On Neutral Hydrogen Absorption

This models a small region of the observable universe right after strings have formed, at around 10^{-36} sec, when the distances between them were still only a few times their thickness. Credit: Mark Hindmarsh
Ancient light absorbed by neutral hydrogen atoms could be used to test certain predictions of string theory, say cosmologists at the University of Illinois. Making the measurements, however, would require a gigantic array of radio telescopes to be built on Earth, in space or on the moon.
String theory -- a theory whose fundamental building blocks are tiny one-dimensional filaments called strings -- is the leading contender for a "theory of everything." Such a theory would unify all four fundamental forces of nature (the strong and weak nuclear forces, electromagnetism, and gravity). But finding ways to test string theory has been difficult.

Now, cosmologists at the U. of I. say absorption features in the 21-centimeter spectrum of neutral hydrogen atoms could be used for such a test.

"High-redshift, 21-centimeter observations provide a rare observational window in which to test string theory, constrain its parameters and show whether or not it makes sense to embed a type of inflation -- called brane inflation -- into string theory," said Benjamin Wandelt, a professor of physics and of astronomy at the U. of I.

Among the scientific theories that excite a great deal of controversy are those theories that deal with strings. And the idea of cosmic strings gets as much play as any in scientific circles.
Cosmic strings are present in many high-energy physics theories. They are thought to be spaghetti-like structures, each mile weighing perhaps as much as our entire planet. Despite the weight, widths are thought to be significantly smaller than an atom. However, their existence has yet to be detected. Now, though, a team of cosmologists has discovered some hints that cosmic strings exist.
“At the moment,” Martin Kunz, a scientist at the University of Geneva when the paper was written, tells, “what we have found slightly prefers, or at least does not disfavor, cosmic strings.” Kunz is part of a team led by Mark Hindmarsh of the University of Sussex in Brighton, U.K., using measurements of the cosmic microwave background radiation to search for evidence of cosmic strings. This team, which includes Neil Bevis at Imperial College in London and Jon Urrestilla at Tufts University in Medford, Massachusetts, USA, have reported their findings in Physical Review Letters: “Fitting Cosmic Microwave Background Data with Cosmic Strings and Inflation.”
As these strings move around,” Kunz explains, “they will cause perturbations, attracting matter behind them. These perturbations become visible in the comic microwave background radiation. If there are cosmic strings, they induce extra perturbations that could be indirectly detected.”

In order to determine whether cosmic strings might be possible, Kunz and his peers factored a variety of parameters into a supercomputer and created different models. “We made new simulations of traces of cosmic strings,” Kunz says. “We calculated perturbations from standard inflation and calculated them from cosmic strings. We did model comparisons.”

The result was that, after predictions were compared to cosmic microwave data from NASA’s Wilkinson Microwave Anisotropy Probe, it appeared that theories including cosmic strings offer the best explanation for the pattern of microwave radiation present in the universe.

Kunz cautions that cosmic strings are far from an absolute. “We need more data,” he insists. “While this result slightly favors cosmic strings, it isn’t conclusive.” Kunz says that better data may come from the Planck Satellite mission, which is due for launch this year by the European Space Agency.

“If we could detect strings,” Kunz points out, “it would tell us a lot about particle physics, and help us understand more about the fundamental structure of physics at very high energies, much higher than what can be probed in particle accelerators. Finding strings would be very helpful in areas of fundamental theory.”

Until more data is gathered, and more work done in the field, cosmic strings are likely to remain a subject of scientific debate. But this latest work on cosmic strings is encouraging for those who subscribe to string theory – a theory that could possibly tie quantum physics and gravity together, as well as provide a fundamental understanding of high-energy and condensed matter physics.

“What this does is show that cosmic strings could account for what we can detect in the universe,” Kunz says. “It doesn’t prove anything, and we do need more data. But it does show us that cosmic strings are worth looking at again. We haven’t detected them yet, but it’s something to watch for.”

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Space weather science rues cuts

The field of science dedicated to understanding "space weather" - which can pose hazards to satellites and aircraft - may be wiped out in the UK.

That is the verdict of experts responding to UK physics and astronomy cuts made as administrators seek to plug an £80m hole in their finances.

The UK is recognised as a world leader in solar-terrestrial physics (STP).

The science is crucial for protecting our communications networks against powerful outbursts from the Sun.

The organisation MIST (Magnetosphere, Ionosphere and Solar-Terrestrial) which represents the STP community in the UK, has issued a damning statement in which it says the cuts will prove catastrophic to this area of research.

Andrew Kavanagh, a space scientist at Lancaster University and member of the MIST council, said the STFC was "essentially scrapping an entire field of research in the UK".

Flares and coronal mass ejections - large clouds of ionised gas thrown off the Sun - along with their associated shock waves are among the solar phenomena which exert an important influence on the space environment.

They compress the Earth's protective magnetic "bubble" and trigger geomagnetic storms. The energetic particles from these solar outbursts can damage the electronics on satellites and cause communications black-outs in the polar regions.

Space weather also has implications for planes crossing the Arctic on trans-polar flights. The Earth's magnetic field funnels energetic particles into the polar regions, exposing passengers and air crews to higher radiation levels there.

Tracking the Sun's changing activity is vital for managing radiation doses and for protecting aircraft electronics. It is also of economic importance, since it costs airlines to deviate from flight paths.

Spending crisis

The Science and Technology Facilities Council (STFC), which looks after UK astronomy, has removed ground-based solar-terrestrial facilities from its future programmes.

The STFC argues it will continue to fund solar-terrestrial physics satellites through its subscriptions to the European Space Agency (Esa). But researchers point out that they require observations from both ground-based and space-based instruments to get the full picture.

Sources said they were not aware of any firm plans for forthcoming missions which fell into this category. An existing constellation of Esa satellites designed to study space weather, called Cluster, has been in space for eight years and its future funding is uncertain.

The STFC's delivery plan implies cuts to the funding of STP facilities and research at the universities of Lancaster, Leicester, Southampton, Aberystwyth, at University College London and at the Rutherford Appleton Laboratory in Didcot. The UK remains committed by an international agreement to the Eiscat project which operates radar facilities in Norway. However, resources to exploit these facilities will be withdrawn.

The STFC's problems have emerged out of the government's latest spending round which has left the council short of £80m in the three-year budget plan to 2011. Scientists say the problem has been compounded by the council's decision to claw back a further £40m for unspecified developments.

To manage its way out of this crisis, the STFC has announced its intention to close certain programmes and cut research grants. Science societies and union officials have warned the damage to UK physics and astronomy will be incalculable and will lead to hundreds of job losses.

'World-class research'

Stan Cowley, professor of solar planetary physics at the University of Leicester, commented: "This decision appears perverse in view of the existing and future potential [of this] high-impact world class research."

Solar-terrestrial physics is also vital for understanding climate change on Earth, particularly in placing firm limits on the effect of solar variations compared to the contribution made by greenhouse gases produced by human activities. Space weather also affects many other aspects of modern life, from oil drilling operations to power grids.

But prominent researchers from the STP community question why, when the government has invested considerable amounts of money into research and innovation, an applications-based science such as solar-terrestrial physics has been one of the first to be cut.

In its statement, MIST also expressed concern over what it described as "a lack of transparency in recent decision-making" within STFC.

STP researchers have attacked the lack of availability of records for minuted meetings concerning the decisions leading up to the funding cuts. With many projects competing for financial support, scientists point out that the process must be seen to be open and fair.

In evidence to the House of Commons Select Committee on Innovation, Universities and Skills, Professor Keith Mason, chief executive of the STFC, defended his organisation's record on consultation.

He added: "The period of time we are talking about is essentially a period where all the research councils are making bids to DIUS [Department for Innovation, Universities & Skills] for funding and one of the reasons for so-called secrecy - or at least keeping this under wraps - is that it was a negotiating situation."

The STFC was formed as a new research council on 1 April 2007 through a merger of the Council for the Central Laboratory of the Research Councils (CCLRC) and the Particle Physics and Astronomy Research Council (PParc).

The IHY-Africa Space Weather Science and Education Workshop will be held in Addis Ababa, Ethiopia during Nov 12-16, 2007. The meeting will follow the 2nd Africa SCINDA Workshop on Sunday 11th November. Both meetings will be held at the Ghion Hotel. The Workshop is under the auspices of IHY, in cooperation and collaboration with several other international and African national programs, including CAWSES, eGY, AMMA, and AFREF. The workshop is sponsored by several US and International Agencies.

Workshop Objectives: The purpose of the workshop is to facilitate scientific interaction and promote space science in Africa, with a strong educational focus. The space science community is currently exploring ways to increase the observational infrastructure in the African sector, and to encourage scientists in Sub-Saharan Africa to become involved in the science objectives, and to host instrumentation at their institutions. The new observational infrastructure will facilitate the study of space weather, spark interest in space science education and research, and encourage the next generation to become interested in the space sciences.

The workshop will provide an ideal opportunity to develop strong interactions with scientists in Africa. A strong educational focus is planned with a break-out group

Sessions will include:

I. Ionospheric Irregularities and Scintillations

II. Total Electron Content

III. Electrodynamics and the Plasmasphere

IV.Satellite and Ground-based Data

V. Panel Discussion

Helio founder and CEO Sky Dayton has announced he's stepping down at the cell phone provider

Sky Dayton Pulls an Earthlink, Steps Down as Helio CEO

Helio founder and CEO Sky Dayton (pictured right) has announced he's stepping down at the cell phone provider. The serial entrepreneur and Earthlink founder isn't going far though -- Dayton is moving into the role of company chairman. Meanwhile, Wonhee Sull, Helio's former president and chief operating officer, is slated to take the reins as CEO.

Although it might set off alarms for those following the MVNO provider, Dayton is no stranger to switching hats. He made the exact same move at Earthlink two years into his role as CEO, turning over the day-to-day operations to Charles Betty right as the ISP hit its stride.

So, does this mean that Helio and its MVNO business model are finally quickening pace?

"Helio has reached a point in its development where I feel the timing is right for this change," Dayton said of the move. "As we have for the past three years, [Sull and I] will continue to define Helio's direction and future."


Helio: Earthlink-who? We Boost SK Telecom Now

Trying to predict how Earthlink's downturn will effect its investment in mobile virtual network operator Helio is almost like reading tea leaves. Many were convinced that Helio's layoffs were a byproduct of Earthlink's lackluster Q2 performance were related, but then that turned out to be false.

But we knew that someday Earthlink was going to drop the axe. Our suspicions were confirmed last week when Earthlink's dismal Q3 report included the following: "EarthLink will not be required to participate in future funding rounds [in Helio], and will retain a meaningful ownership stake. The definitive amended joint venture agreements are expected to be finalized in the near future."

SK Telecom, Earthlink's partner in the Helio venture, has since stepped up to the plate and committed up to $270 million, but we were still skeptical of the state of the union. We finally got the chance to chat with our Helio contact today, and here's the scoop from their end:

We directly benefit from SK Telecom's pipeline of innovation, all in addition to their financial backing. SK Telecom's earlier announcement of additional funding for Helio is a ringing endorsement of our business showing they see our continued growth as a positive sign and our tremendous potential as we continue to scale. While EarthLink remains an enthusiastic investor, Helio is in a position to remain well funded through this growth phase with the full backing of SK Telecom.

Or put simply -- SK Telecom is Helio's new sugar daddy. The expensive nature of the MVNO business model has already thinned a lot of Helio's competition, so this doesn't come as much of a surprise. However, we're curious to see how long SK Telecom can bring home the bacon on this pricey venture without Earthlink's financial support.

AT&T, Verizon not affected by slow economy

WASHINGTON (MarketWatch) -- For AT&T Inc. and Verizon Communications Inc., business is pretty good and a slowing U.S. economy has not given executives any ulcers, at least not yet.
How would an anxious investor know? Well, the chief executives of both companies felt free to play hooky during conference calls for fourth-quarter results with Wall Street analysts. They left that task to the finance chiefs.
You can be sure that Randall Stephenson, in charge of AT&T (T:AT&T Inc

VZ, , ) boss Ivan Seidenberg would have been on the calls if the outlook for 2008 had begun to darken.
Instead, Seidenberg devoted a portion of Monday morning to a presentation to the company's employees. Stephenson, for his part, hung out with the global jet set last week in Davos, Switzerland, while his underlings handled investors and analysts.
Ironically, the talk in Davos involved worries about a U.S. economic slowdown, the effects of which would be felt worldwide. That's not the focus of AT&T or Verizon: They expect to do just fine, barring a sudden and dramatic economic dip.
There's been a lot of speculation about the potential impact of an economic slowdown," Verizon Chief Financial Officer Doreen Toben told analysts Monday after the company posted fourth-quarter earnings. "I would say that we have not seen a change in sales expectations through January." Read more on Verizon's results.
AT&T's finance chief, Richard Lindner, made the same point last Thursday during the company's call with analysts. See full story.
A necessary service
Concerns about the slowing economy took center stage in early January after Stephenson said at an investor conference that AT&T had disconnected more nonpaying customers. Although he also described the number of disconnections as immaterial, his words caused the biggest one-day drop in AT&T shares in five years.
So far in 2008, AT&T stock is down 13%, while Verizon is more than 14% lower.
Phone-industry executives have been in damage control ever since. While they downplay the threat from a slowdown, they are careful to hedge their bets. They know a recession would be more than just a mere speed bump.
"The economy is always a risk," Lindner pointed out.
Yet Lindner also noted that phone service is a vital utility for households and businesses, and that telecommunications companies are less susceptible than others in an economic downturn. While some subscribers on the margins might cancel service or fail to pay, most would continue to be customers in good standing.
The bigger question is whether customers will scale back on the addition of new services. Would they spend less on mobile services such as Internet access, a growing source of revenue for mobile operators? Or would customers scrimp on broadband? Wireless and data services have been the engines of growth in recent years.
Early in 2008, AT&T and Verizon say they have only seen small, isolated pockets of problems. Verizon's Toben said that she's been monitoring the housing market, mortgage delinquencies and unemployment rate.
"Obviously, we are monitoring numerous metrics very closely, and at this point we don't see any material changes," she commented.
Were material threats to sales growth arise, executives say, they still have tools available to maintain profits, particularly after years of hard to work to contain costs and develop more flexible business models. Verizon President and Chief Operating Officer Dennis Strigl said that the company could cut back on overtime, limitcontractor or travel-related expenses and even trim more jobs.
The point is Verizon is "very confident about 2008 despite all of the noise we're hearing about the economy," he added.
That's not to say all is hunky-dory at AT&T and Verizon. Both companies saw sharper declines than expected in local-phone lines during the fourth quarter. In the consumer market, the number of local lines served by Verizon was down a sharp 10.6% to 24.84 million from a year earlier, while AT&T reported a 5.6% drop to 35.05 million.
Most customers who've canceled wireline service chose to go entirely with wireless, or switched to phone plans sold by cable-television operators. Few customers disconnected service because of economic pressure, according to AT&T and Verizon execs.
One concern: More customers could choose to give up either mobile service or landline service to save money if they fell economically threatened.
At this point, executives say, there's no evident trend.

Cisco rolls out new data-center switch

SAN FRANCISCO (MarketWatch) -- Cisco Systems Inc. introduced on Monday a new data-center switch that the company says can copy all the searchable data on the Internet in less than eight minutes, or run 5 million concurrent high-quality videoconferences between New York and San Francisco.
Analysts say Cisco's (CSCO:Cisco Systems, Inc
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CSCO 24.10, -0.10, -0.4%) Nexus 7000 underscores the growing demand for more powerful computer-networking gear, especially with the rapid increase in video traffic in what has been described as Web 3.0.
"It's infrastructure for the next generation of data-center requirements," said analyst Roger Kay, president of Endpoint Technologies Associates. "In Web 3.0, a high proportion of the content is video, high-definition video even. And many software elements are delivered as a utility."
Cisco shares were up more than 1% midday Monday.
In a bid to keep costs down, many companies are pushing for more power-efficient networks. An emerging trend, called software on demand, lets companies buy computing power the way one purchases a utility such as water or electricity.
Cisco says that the new data-center switch would be able to copy all the searchable data on the Internet in 7.5 seconds, download Wikipedia's database in 10 milliseconds or download 90,000 Netflix movies in less than 40 seconds. It also can run 5 million concurrent transcontinental videoconferences using the company's Telepresence Collaboration systems, a company spokeswoman said.
The product will be available in the second half of 2008, according to Cisco.
Analyst John Anthony of Cowen and Co. said the new data-center switch "will undoubtedly drive sales for Cisco, although the timing of the revenue contribution is uncertain."
He also pointed out that a major Cisco competitor, Juniper Networks Inc. (JNPR:JNPR
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JNPR, , ) , is expected to introduce its own high-capacity switch as well.
"Given that both Cisco and Juniper will have significant new products in the marketplace, customer evaluations will likely take longer than normal," Anthony wrote in a research note.
Kay of Endpoint Technologies Associates said that Cisco also faces competition in this market from Brocade Communications Systems Inc. (BRCD:BRCD
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Gary Beach, publisher of CIO magazine, which is geared toward chief information officers, said that Cisco appears to be "making a big bet" on the new data-center switch at a time when big corporations are looking to improve the way they manage their networks.
"Large corporations are drowning in data that needs to be quickly dispersed in globally integrated enterprises," he commented. "Moreover, as budgets remain relatively flat, CIOs must continue to search for more efficient ways to manage their infrastructures."

Cisco's New Data Center Plan Looks Promising. What Will IBM Think?
Cisco Systems revealed a major offensive today in its ongoing assault on the data center market. And more than ever, it proposes a vision in which data centers are defined not by a computer architecture, be it mainframe or PC server farm, but around the network itself. That makes sense. After all, almost every kind of software is evolving from something that was written for a particular computing platform, into something that is written to be delivered as a service via the Internet. And not static services, either, but ones that can be adapted at a moment’s notice on a users’ whim—say, by adding a new widget to Facebook, or a new customer order on These days, the communication of information—not just the processing of information—is where the action is.

Specifically, the company announced the Nexus 7000, its biggest upgrade of the basic corporate network switch since Cisco started selling its now-ubiquitous Catalyst line in the mid-1990s. The box is so fast it can download all of NetFlix’ 90,000 movies in 38 seconds, or copy the entire searchable Web in 7.5 minutes, the company claims.

But the speeds and feeds of the new box are not the big change.

The real news is a new layer of software, called a fabric, that is designed to orchestrate the efforts of the various kinds of technology found within any data center. Rather than just oversee the Cisco gear that moves bits in and out of the building, this fabric can also be used to control the servers that process those bits, the storage gear that holds them, and the applications that do something useful with them.

If it works, Cisco would mark off a hugely strategic niche for itself, as a kind of king of virtualization. That's the name of a technology that's risen to prominence in recent years within pockets of the data center. VMWare, for example, has become corporate tech’s new darling thanks to software that lets companies spread work among all of their available servers, rather than have them sit idle waiting for their particular job to be called. In storage, gear from companies like Brocade plays a similar role. But until now, no company has figured out a way to easily coordinate these various pools of virtualized gear. With a Nexus, companies will be able to automatically create “domains” to describe a given combination of bandwidth, processing, storage and software, says Cisco senior vice president Jayshree Ullal.

It’s been a huge undertaking, she says. She first assigned 50 top techies to the job almost three years ago. Now there are more than 500 on the job. The company has spent nearly $250 million on the project—mostly on perfecting the ten million lines of code in the new software.

Given Cisco's proven ability to move into new markets and its vast cash reserves and market influence, I don't think Cisco will fail. But here’s my question: How will today’s kings of the Data Center feel about Cisco taking on this expanded role? Cisco assures me it's worked this out to everyone's satisfaction, and referred me to a number of its partners. Top executives at VMWare and Intel, for example, both said they welcome Cisco’s approach. “We don’t think it threatens us, because we work at a fundamentally different layer,” says Bryan Byun, VMWare's vice president of Global Partners and Solutions. Since virtualizing the entire data center depends on being able to virtualize the computers, “we think the two approaches complement each other.”

But what about IBM, the world’s leading data center supplier and Cisco’s most important partner in recent years. I didn’t interview anyone from IBM, and I’m sure its executives will profess support, publicly. But the basic philosophy of Cisco’s new mantra can’t help but be threatening at some level. Ullal refers to servers, storage gear and other kinds of products as “peripherals” to the real platform of the future: the network. I’m sure IBM, a company that’s spent decades designing and building corporate data centers, doesn’t see itself as a peripheral maker. And Ullal says that as Cisco settles into this new role, it will begin rolling out many new services to help companies take advantage of its technology. Makes sense, but it will be interesting to see if Cisco can pull it off without encroaching on the turf of IBM’s Global Services division. “Cisco is trying to subsume control of the IT space,” says Frank Dzubeck, president of consultancy Communictions Network Architects. “They’ve got to be stepping on [some of its partners’] toes. It’s a question of how much it hurts before they start turning to other [partners].”

No doubt, Cisco won't enjoy any clear sailing. By the time the Nexus 7000 finally ships--it's not due out for another six months--it will face increased competition. Microsoft is pushing ahead with new virtualization plans. Brocade recently introduced a box called the DCF, for Data Center Fabric. And industry insiders expect Juniper Networks to announce a new switch for corporations at a Jan. 29 press event. Indeed, Juniper CEO Scott Kriens implies that Cisco made its announcement today in part to steal Juniper’s thunder. "I'm sure they knew we were having our little party in New York [tomorrow]."

Nikon Announces D60 D-SLR

(24hoursnews)Nikon is countering Canon's announcement of the Rebel XSi with the new D60 consumer D-SLR.

Nikon, Inc., today introduced the new D60 digital SLR camera, which provides consumers with stunning picture quality and versatility in an easy-to-use, compact camera design. The D60 joins Nikon’s award-winning line of D-series digital SLR cameras and shares a form factor similar to the D40 – Nikon’s smallest D-SLR camera ever. With 10.2 effective megapixels and a wealth of innovative and user-friendly features, the D60 enables both photo enthusiasts and those new to digital SLR photography to capture incredible images like never beforethe highly successful D40 and D40x, the D60, which offers some new features along with old favorites. Also announced today were three new lenses: the wide-angle PC-E Nikkor 24mm F/3.5D ED, the AF-S DS Nikkor 16-85mm, and the AF-S Touting it as the new entry-level D-SLR, Nikon has enhanced the resolution from the D40 with a 10.2 megapixel sensor (up from 6.1), and included Nikon's EXSPEED processor (previously seen in the D3 and D330 models) and enhanced active dynamic lighting. A couple of new features also included are a dual dust-removal system and what it calls its Airflow Control System. Essentially it's an air vent that is at the bottom of the camera and has air move away from the sensor when the shutter is depressed—it's an interesting design that should theoretically keep dust out completely.
The D60 also includes many of the D40x's enhancements over the D40, like a 2.5-inch LCD and in-camera image editing such as red eye correction. A new power-conserving feature shuts the LCD off when the optical viewer is being used. So when reviewing pictures and the need arises to take a picture, just snap the shot and the LCD will turn off automatically. Last but not least, a fun feature added to the D60 is a stop animation movie feature that will allow the user to string together up to 100 JPEG clips to produce a movie.
All in all, I was expecting a little more from Nikon to counter Canon's new XSi announcement. There really isn't that big a difference from the D40x, and I'd be willing to bet the price will be similar as well. Packaged with a 3X zoom Nikkor 18-55mm f/3.5-5.6G lens, the D60 will be available in February and pricing will be announced 30 days before the release.
The most interesting lens released today is the new 24mm tilt/shift lens. It basically allows the photographer to mechanically shift the lenas to increase perspective. I had a chance to preview it at CES and I can't wait to get it into our Labs and try it out. Essentially, it can correct linear distortion and correct the view to what an actual human eye sees. For example, the angle of a building may not come out looking correct as an eye would see it. This lens will correct for that and make it seem much more accurate. The 24mm Nikkor lens debuts in the spring for about $1,930.

Where is another 1.75 million iphone?Now on search.

iphone is the most hot product for year 2007.Apple said that it has sold 3.75 million iPhones through the end of last year, but AT&T has activated a bit less than 2 million phones. There was a moment of panic as investors imagined more than a million unsold iPhones piled up in the stock rooms of AT&T stores.
Upon reflection, several analysts have come to the conclusion that the vast bulk of these have been bought and unlocked to use on carriers other than AT&T in the United States and on European carriers who are Apple’s partners.
I was skeptical of this, as unlocking an iPhone is rather complex and risky proposition. But as I talked to Gene Munster, of Piper Jaffray, and A.M. Sacconaghi, Jr. of Sanford C. Bernstein, who were both convinced that there is widespread buying of unlocked phones, my skepticism abated a bit.
What about people who got the phones as Christmas presents and did not get around to activating them before the end of the year, I asked.
Mr. Sacconaghi said he believes that most people who got phones as gifts activated them right away.
“Typically people activate a phone within three days, and the holiday season is when you have the most time and if you are excited about a gift,” he said.
There are not, however, 1 million people who are going to steep themselves in the art of iPhone hacking. Rather, both analysts suggested that there are organized groups of gray market dealers who are buying up iPhones, unlocking them, and reselling them, largely overseas.
Mr. Munster, in fact, dispatched spies to monitor Apple stores in New York, San Francisco, and Minneapolis, who found that some 40 percent of the phones were sold to people who purchased more than one phone at a time.
“The majority of the people who were buying more than one phone were Asian, and they were bringing small buses of people who all buy more than one phone,” he said. Mr. Munster conjectured that many of the phones are being resold into Asia. It is hard to get an iPhone there and, he said, “With the value of the dollar, the cost of the phone is much less here.”
Mr. Munster estimates that of the 1.7 million phones not activated by AT&T 350,000 were sold through Apple’s partners in Europe, 512,000 were in inventory at AT&T and the European carriers, and 838,000 were sold and unlocked. Mr. Sacconaghi figures slightly fewer phones were sold in Europe and are in inventory, leaving 1 million unlocked phones.
I called Apple’s public relations department, which, as usual, declined to comment. On its conference call with analysts earlier this month, Apple said that a significant number of phones were sold and unlocked.
On the face of it, this isn’t good news for Apple. The company receives a payment estimated to be about $15 a month, from AT&T and other carriers, for iPhone accounts that are activated. So every unlocked phone is $360 of revenue forgone over the two year life of a contract.
But there are a few reasons why we shouldn’t shed a tear for Apple on this one.
For one, it shows great demand for the iPhone, especially because Apple has not made it easy for people deal in unlocked phones. With each software update it tries to close the software loopholes that allowed previous versions to be connected to unauthorized carriers (although hackers seem to always find new unlocking methods within weeks). And it restricts the number of iPhones people can buy at any one time.
Mr. Sacconaghi said it is possible that the gray market dealers, however, have overestimated demand and have a big inventory backlog themselves.
What is more, both Mr. Munster and Mr. Sacconaghi are convinced that Apple actually makes money on the iPhone without taking into account the payments from the carriers. Mr. Munster estimates that gross profit on each iPhone is about $50. That doesn’t take into account costs like development and marketing, but it’s still amazing given the product is so new in its life cycle. (The cost of making a product tends to go down faster than its selling price.) If true, Apple’s effective profits from the iPhone, taking into account the payments from carriers, are huge even if diluted because a quarter of the phones are being unlocked.
Moreover, Apple has several ways to reduce the percentage of phones that are being unlocked. The most significant plan is simply to expand the number of countries in which it sells the phones, giving buyers in Asia and Latin America a legitimate alternative to gray market dealers. If Apple still found all this to be a significant problem, it could certainly require customers to sign up for a service plan before they left the store. And it wouldn’t be a surprise if the next generation of iPhone, which Mr. Munster expects over the summer, has even tougher ways of keeping the phones locked.
Apple has several ways to reduce the percentage of phones that are being unlocked. I dont think that its necessary to restict.Its time to open monopoly lock

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