MacRumors

Brazilian newspaper Folha reports [Google translation] that the Brazilian government has officially approved tax incentives that will allow Foxconn to begin producing iPads in the country. Interministerial Ordinance #34, signed on Monday and published in Brazil's official register today, specifically provides for a reduction in or exemption from certain taxes associated with the production of touchscreen tablet devices lacking a keyboard and weighing less than 750 grams.

According to ministerial decree 34 published Wednesday in the "Official Gazette", the company will be entitled to the benefits provided for in Decree 5906 of September 2006.

The determination provides for exemption or reduction of the IPI (Excise Tax), PIS and Cofins for companies investing in research and development of technology products.

The iPad 2 of course fits within those specifications, weighing in at just over 600 grams with only slight variation among the various models. The ordinance also permits the production of accessories, cables, power supplies and manuals associated with the allowed tablet devices. While the ordinance applies generically to tablet devices, it has clearly been written to support Foxconn's plans for the iPad.

Last April, Foxconn announced a major push to bring iPad production to Brazil, but the company's efforts were slowed as it negotiated with government officials over tax breaks and other issues. As recently as October the company had signaled its intention to begin production by December, and while the company has missed that target it now appears ready to move forward.

The launch of iPad production in Brazil comes at a key time for Apple, as CEO Tim Cook noted just yesterday during the company's earnings conference call that Brazil is its next area of emphasis after China among the "BRIC" countries with newly advanced economies. Russia and India are the other two countries in that grouping and Cook acknowledged that Apple has begun to "go deeper into Brazil" as its next target, although he cautioned against any expectations of Apple retail stores arriving in the country over the near term.

High import taxes on foreign-made goods have prevented Apple from making significant inroads in Brazil, with iPad pricing currently starting at the equivalent of US$925 for the 16 GB Wi-Fi iPad 2. With Foxconn moving iPad production to Brazil under the new tax incentives, Apple should be able to offer more competitive pricing on the device as production ramps up. Photos of a Brazilian-made 8 GB iPhone 4 showed up in late November, suggesting that Foxconn is also ramping up domestic production of new iPhone devices for Brazilian customers.

9to5Mac reports that it has received word from a "reliable" source at Foxconn that Apple is gearing up to begin production of the iPhone 5, suggesting that the company could be pushing for a mid-year launch more in line with pre-iPhone 4S debuts.

The source said various sample devices are also floating around (which vary slightly from one another) so it is impossible to tell which one will be the final. Some things in common with all of them, however, are:

- 4+ inch display (made by LG on at least one of them)
- No teardrop-shaped devices as were rumored in the lead up to the iPhone 4S. Samples so far have been symmetrical in thickness. Also longer/wider.
- None of the sample devices have the iPhone 4/4S form factor
- None of the devices are final versions

The report notes that the start of production seems to be coming several months ahead of last year's schedule, indicating that Apple could be targeting a launch well ahead of last year's October debut of the iPhone 4S. Consequently, Apple could be returning to its traditional iPhone launch pattern of an introduction at the company's Worldwide Developers Conference (typically held in June) with availability in the first batch of countries coming just a few weeks later.

Some of the details of today's report are very similar to those shared in an iLounge report from last November that also claimed a 4-inch next-generation iPhone 5 without a teardrop shape was being targeted for a summer launch.

Speculation on Apple's next-generation iPhone launch timing has been split, with some observers suggesting that the iPhone 4S was an anomaly for Apple and that it will return to the usual mid-year timeframe, while others have suggested that moving back to the mid-year launch would make for an extremely short lifecycle for the iPhone 4S.

Update: Daring Fireball's John Gruber specifically refutes the claim that iPhone 5 production is starting up. He also doubts the claim that the device is likely to be longer and wider that the current form factor, although he does not appear to suggest that he has specific knowledge on that aspect.

Reuters reports on new data from research firm Kantar Worldpanel ComTech showing that Apple slipped past Android by the narrowest of margins in fourth quarter U.S. smartphone sales, with Apple's iPhone taking 44.9% of the market and Android taking 44.8%.

"Apple has continued its strong sales run in the U.S., UK and Australia over the Christmas period," Dominic Sunnebo, global consumer insight director at the research firm said.

"Overall, Apple sales are now growing at a faster rate than Android across the nine countries we cover," Sunnebo added.

The results, driven by Apple's blockbuster quarter in the wake of the iPhone 4S launch, saw Apple double its U.S. sales share year-over-year while Android slipped from its 50% share a year ago. Apple yesterday reported sales of 37 million iPhones during the quarter, far exceeding expectations.

Kantar's report also focuses on Windows Phone, which continues to struggle despite the high-profile launch of Nokia's Lumia smartphones. Windows Phone's market share remains at less than 2% in all nine markets followed by Kantar.

According to a new report from Israeli business newspaper Calcalist (via 9to5Mac), Apple has begun hiring for its research and development center in Haifa, Israel with a goal of opening the center by the end of February. The report claims that Apple has already received "several hundred resumes" from engineers looking to work in the new center, which is being headed up by Apple's newly-hired Israeli high-tech executive Aharon Aharon.

The report notes that is likely to set up its research center near existing facilities run by Intel, Microsoft, and Phillips, with Apple seeking expertise in chip development, specifically with electrical circuits and hardware testing and verification.

Apple's new research center effort is a separate initiative from its recent acquisition of Israeli flash memory firm Anobit. Apple CEO Tim Cook noted on yesterday's earnings conference call that Anobit is currently being integrated into Apple's structure and that it will operate under hardware engineering chief Bob Mansfield. 9to5Mac reports that Apple has sent vice president Johny Srouji to oversee Anobit's operations in Israel. A native of Israel, Srouji worked for IBM and Intel (including several stints at those companies' operations in Israel) before joining Apple in 2008. Srouji is overseeing aspects of Apple's VLSI operations, which focus on chip design and implementation.

As noted by think broadband, a privacy flaw in the way UK carrier O2 handles web traffic on mobile devices has resulted in users' mobile numbers being sent to any website visited from the device as part of the headers in the HTTP requests. While O2 is apparently still investigating the situation, it appears to have the potential for significant privacy-related issues.

If you're reading this news article using your O2 mobile phone, you'll be pleased to know that O2 have already sent us your mobile phone number within the HTTP headers which normally contain information about how content can be displayed on your device. These headers are not normally seen by users, and usually not logged by most websites, but the flaw allows malicious sites to get more personal information about you than you may be willing to share.

For example, if you open an e-mail which includes references to external images, the mere action of opening the e-mail would divulge your phone number. This could be used by anyone undertaking a phishing attack or other scam to get more information from you. The opportunity to abuse this is potentially endless.

The issue was discovered by Twitter user @lewispeckover, who then set up a website to allow users to see what headers are being sent as part of their HTTP requests to websites.

He now notes that the headers coming from his device appear to have stopped showing his mobile phone number, although O2 has yet to issue an official statement on the matter. The company's Twitter account is continuing to blast out responses to concerned users, noting only that the company is looking into the situation and will issue an update when it knows more.

The issue is not exclusive to the iPhone and has the potential to affect all mobile data on the second-largest carrier in the UK, although some users have reported that they are not seeing their mobile numbers appearing in their HTTP request headers. The issue has the potential to for a significant impact on UK iPhone users, as O2 has proven to be a popular choice for iPhone users dating back to its status as the exclusive iPhone carrier in the UK when the device originally launched back in 2007.

Those familiar with the UK's privacy laws have indicated that mobile phone numbers are not considered protected information, but the disclosure of such numbers as part of standard HTTP requests does have the potential to carry implications for users.

Contrary to some reports, Apple CEO Tim Cook said today that the company hadn't seen any slowdown in iPad sales following the introduction of the much-hyped Kindle Fire tablet.

When asked by an analyst during today's quarterly earnings call about the impact on the iPad from lower priced tablets, Cook noted that the company sold a record 15.4 million iPads and that Apple doesn't consider "limited function tablets and e-readers to be in the same category as the iPad". A big reason for the iPads success, Cook believes, is that the ecosystem for the iPad is "in a class by itself".

We strongly believe in optimizing applications from day one to take advantage of the larger canvas. There are only a few hundred apps designed for the competition, versus more than 170,000 apps designed specifically for iPad. People who want an iPad won't settle for a limited function tablet.

Apple execs have said before, and Cook reiterated today, that they believe tablets will pass the PC market in units, and that in the United States according to IDC, tablets outsold desktop PC's last quarter on a unit basis.

Throwing down the gauntlet to other tablet makers -- who thus far haven't been able to mount a significant challenge to the iPad -- Cook finished by saying Apple was going to "continue to innovate like crazy" and that the company will continue to compete with any company currently shipping tablets, or anyone who may enter the market in the future.

The next generation iPad 3 with a high-resolution Retina Display is expected to be introduced in the next few months.

Apple sold 1.4 million Apple TV set-top boxes in the Q1 2012 quarter, Apple CEO Tim Cook disclosed during today's earnings call. Cook also disclosed that Apple sold 2.8 million Apple TVs in all of fiscal 2011, so the last quarter's results seem to represent a significance acceleration of sales for the product.

The current generation Apple TV was released at the beginning of fiscal 2011, which means Apple has sold 4.2 million 2nd Generation (iOS-based) Apple TVs in total. This is fairly impressive, especially considering Google's set-top box efforts have fallen flat thus far. However, even with these numbers, Tim Cook still considers Apple TV a "hobby" simply because on a dollar-for-dollar basis, the device barely makes a dent in Apple's earnings numbers.

Answering an analyst's question about Apple's living room plans for the future, Tim Cook dodged the obvious inference to an Apple-branded television set and instead noted:

We continue to add things to it, and I don't know about you but I couldn't live without it. We continue to pull the strings and see where it takes us.

In the past year, Apple has added support to Apple TV for the streaming service from Major League Baseball, the National Basketball Association, and the National Hockey League, among others.

After today's record breaking results, Apple will be holding a company-wide Town Hall for employees discussing some "exciting new things going on at Apple." Tim Cook sent a company-wide email to employees, as posted by 9to5Mac:

Thanks to everyone’s hard work, we’re off to a great start in 2012. Last week in New York we launched a groundbreaking initiative for education with iBooks textbooks, and today we reported the strongest quarter in Apple’s history.Please join me tomorrow morning at 10 a.m. in Town Hall. We’ll review our record-setting results and discuss some exciting new things going on at Apple.The meeting will be broadcast live to many sites in Cupertino and other Apple locations. Please check AppleWeb for details.

Tim

These town hall meetings are restricted to Apple employees and it's unlikely Cook will announce anything too exciting. However, details of the event invariably leak out, and may show Apple's changes and direction internally. The Town Hall is taking place on Wed, Jan 25th at 10am Pacific.

Apple today announced financial results for the fourth calendar quarter of 2011 and first fiscal quarter of 2012. For the quarter, Apple posted revenue of $46.33 billion and net quarterly profit of $13.06 billion, or $13.87 per diluted share, compared to revenue of $26.7 billion and net quarterly profit of $6 billion, or $6.43 per diluted share, in the year-ago quarter. Gross margin was 44.7 percent, compared to 38.5 percent in the year-ago quarter, and international sales accounted for 58 percent of the quarter's revenue. Apple's quarterly profit and revenue were both company records.

Apple shipped 5.2 million Macintosh computers during the quarter, a unit increase of 26 percent over the year-ago quarter. Quarterly iPhone unit sales reached 37.04 million, up 128 percent from the year-ago quarter, and the company sold 15.4 million iPods during the quarter, representing 21 percent unit decline over the year-ago quarter. Apple also sold 15.43 million iPads during the quarter, up 111 percent over the year-ago quarter. Apple set new company records for iPhone, iPad, and Mac sales during the quarter.

“We’re thrilled with our outstanding results and record-breaking sales of iPhones, iPads and Macs,” said Tim Cook, Apple’s CEO. “Apple’s momentum is incredibly strong, and we have some amazing new products in the pipeline.”

Apple's guidance for the second quarter of fiscal 2012 includes expected revenue of $32.5 billion and earnings per diluted share of $8.50.

Apple will provide live streaming of its Q1 2012 financial results conference call at 2:00 PM Pacific, and MacRumors will update this story with coverage of the conference call highlights.

Conference Call Highlights

- Highest quarterly revenue and earnings in Apple history.
- Numerous new records for quarterly iPhone, iPad, and Mac Sales
- Extremely pleased with momentum of the business
- Sales aided by inclusion of 14th week in the quarter.
- Net income increased 118% year-over-year, equal to half of net income generated over all of fiscal 2011
- Set new records for desktops and portables, up 26% year-over-year versus 0% growth for entire PC industry

➜ Click here to read rest of article...

Earlier this month, Verizon Wireless Chief Financial Officer Fran Shammo noted that the carrier had activated 4.2 million iPhones during the fourth quarter of 2011, more than doubling the previous quarter's sales on the momentum of the iPhone 4S launch and potentially signaling a blockbuster quarter for Apple in the iPhone market.

Verizon today officially announced its earnings for the fourth quarter of 2011, revealing in a conference call that the company actually activated 4.3 million iPhones during the quarter. With the carrier reporting total smartphone sales of 7.7 million units, the iPhone represented approximately 55% of the carrier's smartphone sales for the quarter.

Smartphones now account for 44% of Verizon's postpaid customer phone base, up from 39% in the previous quarter. That strong growth in smartphones such as the iPhone significantly reduced the carrier's margins in its wireless business during the quarter as absorbed the heavy upfront subsidies paid to manufacturers for the devices. Verizon will recover those costs over the length of customers' contracts, making carriers willing to take short term hits to profitability to lock in smartphone customers on lucrative service contracts.

Back in June of last year, IHS iSuppli reported that Apple had become the world's largest buyer of semiconductors in 2010, jumping past HP and Samsung to top the list with $17.5 billion in spending. Apple's lead was expected to grow in 2011 on continued strength of the iPhone, iPad, and MacBook Air, all of which contain substantial NAND flash memory, which has become a primary driver of semiconductor markets due to the booming mobile device landscape.

Research firm Gartner is out today with a new report that appears to utilize a somewhat different methodology in calculating semiconductor expenditures but which now comes to the same conclusion as IHS Suppli's earlier report. According to Gartner, Apple became the world's largest semiconductor customer in 2011 as measured by total silicon content in all products designed by Apple and its competitors, known as Design TAM.

Gartner pegs Apple's year-over-year growth for 2011 at 34.6%, easily topping the growth of other top semiconductor customers and allowing it to leapfrog Samsung and a sliding HP for the top spot in the rankings. According to the report, semiconductor purchases for Apple's products came in at $17.3 billion in 2011, ahead of Samsung's $16.7 billion and HP's $16.6 billion purchases.

iSuppli's report from last year highlighted the vast differences in Apple's and HP's markets, with Apple's semiconductor usage being driven by mobile devices and HP's by traditional computer products. Gartner notes that mobile devices and solid-state drives are indeed now the major drivers of semiconductor usage.

"The major growth drivers in 2011 were smartphones, media tablets and solid-state drives (SSDs)," said Masatsune Yamaji, principal research analyst at Gartner. "Those companies that gained share in the smartphone market, such as Apple, Samsung Electronics and HTC, increased their semiconductor demand, while those who lost market share in this segment, such as Nokia and LG Electronics, decreased their semiconductor demand.

Gartner distinguishes Design TAM from Purchasing TAM, which would attribute to a given company only the amount actually purchased by the company. As an example of the difference between the two metrics, semiconductors purchased by a third-party manufacturing partner would generally count toward the primary company's Design TAM but not its Purchasing TAM.

Details of Adam Lashinsky's new Inside Apple book set to debut tomorrow continue to surface, and while some of the ideas behind the company's "Apple University" program for training the next generation of executives were previously disclosed in Lashinsky's original Fortune piece on the topic and in a Los Angeles Times article last October, the new book takes a more extensive look at the concept.

As had been previously disclosed, Apple in 2008 hired Yale School of Management dean Joel Podolny to head up the Apple University initiative on management training. Several other professors, including Harvard business historian Richard Tedlow, came on board in consulting roles to help develop the curriculum. Classes were primarily taught by Apple executives, with guidance offered by Podolny and the other professors.

Examples of the case studies being taught at Apple University include the story of how Apple crafted its retail strategy from scratch and Apple's approach to commissioning factories in China. Wherever possible the cases shine a light on mishaps, the thinking being that a company has the most to learn from its mistakes.

Tedlow quietly retired from Harvard last year, and is now working full-time for Apple to add his expertise on U.S. business history to the Apple University curriculum. His lectures reportedly draw upon crises and missteps experienced by other major businesses, events which offer lessons to help Apple's future leaders avoid similar pitfalls and learn how to respond when faced with adversity.

[H]e is teaching them business lessons about other companies that the Apple executives can apply to their own situations. For instance, Tedlow has lectured Apple's PR staff on the Tylenol tampering crisis of 1982 and how the McNeil Consumer Products unit of Johnson & Johnson responded. He taught a class for executives about the fallen grocery store chain A&P as an example of what happened to a company that once dominated its field. Quipped an attendee: "We were all trying to figure out what A&P had to do with Apple."

Lashinsky notes it that will be interesting to watch how the company that shunned traditional business school business practices under Steve Jobs evolves over time now that academics have been brought in to help mold the next generation of Apple leaders. That evolution will, however, likely take years before it becomes apparent to the public.

From an advance copy of Adam Lashinsky's upcoming Inside Apple book, NetworkWorld notes an interesting bit of information about how Apple approaches retail packaging.

Perhaps it should be no surprise, given the elegance of some of Apple's product packages, but Apple is said to have a secretive packaging room where a package designer goes through hundreds of iterations to find the right combination:

One after another, the designer created and tested an endless series of arrows, colors, and tapes for a tiny tab designed to show the consumer where to pull back the invisible, full-bleed sticker adhered to the top of the clear iPod box. Getting it just right was this particular designer's obsession.

What's more, it wasn't just about one box. The tabs were placed so that when Apple's factory packed multiple boxes for shipping to retail stores, there was a natural negative space between the boxes that protected and preserved the tab.

NetworkWorld also points back to an old internal video created by Microsoft's own packaging team as a humorous look at branding and packaging issues for marketers. The video imagines if Microsoft were to redesign the iPod retail packaging:

Apple's obsession with even the product packaging is a reflection on Steve Jobs' views of the matter. Both Steve Jobs and Jonathan Ive are known to have spent time on the packaging of their products. From Walter Issacson's Steve Jobs biography:

"Steve and I spend a lot of time on the packaging," said Ive. "I love the process of unpacking something. You design a ritual of unpacking to make the product feel special. Packaging can be theater, it can create a story."